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3515	non-electoral	2021	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case No: 1105/2019 In the matter between: GLOBAL ENVIRONMENTAL TRUST FIRST APPELLANT MFOLOZI COMMUNITY ENVIRONMENTAL JUSTICE ORGANISATION SECOND APPELLANT SABELO DUMISANI DLADLA THIRD APPELLANT and TENDELE COAL MINING (PTY) LTD FIRST RESPONDENT MINISTER OF MINERALS AND ENERGY SECOND RESPONDENT MEC: DEPARTMENT OF ECONOMIC DEVELOPMENT, TOURISM AND ENVIRONMENTAL AFFAIRS THIRD RESPONDENT MINISTER OF ENVIRONMENTAL AFFAIRS FOURTH RESPONDENT MTUBATUBA MUNICIPALITY FIFTH RESPONDENT HLABISA MUNICIPALITY SIXTH RESPONDENT INGONYAMA TRUST SEVENTH RESPONDENT EZEMVELO KZN WILDLIFE EIGHTH RESPONDENT AMAFA AKWAZULU-NATALI HERITAGE COUNCIL NINTH RESPONDENT CENTRE FOR ENVIRONMENTAL RIGHTS AMICUS CURIAE MPUKUNYONI TRADITIONAL COUNCIL AMICUS CURIAE MPUKUNYONI COMMUNITY MINING FORUM AMICUS CURIAE THE ASSOCIATION OF MINE WORKERS AND CONSTRUCTION UNION AMICUS CURIAE THE NATIONAL UNION OF MINEWORKERS AMICUS CURIAE Neutral citation: Global Environmental Trust and Others v Tendele Coal Mining (Pty) Ltd and Others (1105/2019) [2021] ZASCA 13 (09 February 2021) Coram: PONNAN, SCHIPPERS, PLASKET AND NICHOLLS JJA AND LEDWABA AJA Heard: 03 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email. It has been published on the Supreme Court of Appeal website and released to SAFLII. The date and time of hand-down is deemed to be 10H00 on 09 February 2021. Summary: Interdict to stop coal mining – interpretation of statutes – National Environmental Management Act 107 of 1998 (NEMA) – environmental authorisation to undertake listed activity under s 24 – whether required by holder of mining right and environmental management programme in terms of the Mineral and Petroleum Resources Development Act 28 of 2002 – no case made out for interdict in founding papers – municipal approval of land use – Spatial Planning and Land Use Management Act 16 of 2013, KwaZulu-Natal Planning and Development Act 6 of 2008 and Mtubatuba Local Municipality Spatial Planning and Land Use Management By-Law, 2017 – not required by virtue of transitional arrangements – National Environmental Management Waste Act 59 of 2008 – waste management licence not required by reason of transitional provision – non-compliance with the KwaZulu-Natal Heritage Act 4 of 2008 – relocation of ancestral graves – no reasonable apprehension of harm – interdict refused. ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Seegobin J sitting as court of first instance): judgment reported sub nom Global Environmental Trust and Others v Tendele Coal Mining (Pty) Ltd and Others [2019] 1 All SA 176 (KZP). The appeal is dismissed. JUDGMENT Schippers JA: [1] The central issue in this appeal is whether the first respondent, Tendele Coal Mining (Pty) Ltd (Tendele), is mining without the necessary statutory authorisations and approvals. The matter arises from an unsuccessful application by the appellants in the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court), to interdict Tendele from continuing with any mining operations at its Somkhele Mine in Mtubatuba, KwaZulu-Natal (the mine). The appeal is with the leave of the high court. [2] The first appellant is Global Environmental Trust, established inter alia to preserve the planet and its natural resources. The second appellant, Mfolozi Community Environmental Justice Organisation, is a not-for-profit organisation, whose objects include the implementation of environmentally sustainable projects for the Fuleni community in northern KwaZulu-Natal (KZN). The third appellant and main deponent to the founding papers, Mr Sabelo Dumisani Dladla, an Eco-tourism Management student who lives in Nlolokotho, near the mine, withdrew from this appeal on 29 October 2020. Tendele consented to the withdrawal of the appeal and seeks no order for costs. In what follows I refer to the first and second appellants as ‘the appellants’. [3] The amici curiae represented in the appeal are the Centre for Environmental Rights (CER) and as a group, Mpukunyoni Traditional Council, Mpukunyoni Community Mining Forum, the Association of Mine Workers and Construction Union and the National Union of Mineworkers (the Mpukunyoni amici). The CER, in its written and oral submissions, contended that the high court erred in its interpretation of the relevant statutory provisions, and in ordering the appellants to pay Tendele’s costs. The Mpukunyoni amici submitted that the orders sought by the appellants, if granted, would ultimately lead to the closure of the mine which, in turn, would have disastrous effects on neighbouring communities. Facts [4] The basic facts can be shortly stated. The mine has one of the largest resources of open-pit mineable anthracite reserves in South Africa and is the principal supplier of anthracite to ferrochrome producers in the country. Ferrochrome is an essential component in the production of stainless steel. South Africa is one of the largest producers of ferrochrome in the world, second only to China. Tendele began mining operations in 2006 pursuant to the grant of an ‘old order’ mining licence and subsequently a mining right, and the approval of an Environmental Management Programme (EMP) under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). [5] The mine comprises a single mining area on Reserve No 3 (Somkhele) No 15822 (Reserve No 3). However, the mining operations are divided between five areas and separate mining rights and separate EMPs apply to the different areas. The Area 1 mining right was granted to Tendele on 21 May 2007 and the EMP applicable to that mining right, approved on 22 June 2007 by the former Department of Mineral Resources (DMR). The Areas 2 and 3 converted mining right was granted to Tendele on 1 February 2011. On 8 March 2013 this right was amended to include the KwaQubuka and Luhlanga areas. The EMP applicable to the Areas 2 and 3 converted mining right was approved on 30 March 2011. Amendments to this EMP to cater for the inclusion of the KwaQubuka and Luhlanga areas, were approved on 29 May 2012. The mining right in respect of Areas 4 and 5 was granted on 31 May 2016. The EMP applicable to this right was approved on 26 October 2016. [6] Tendele is actively mining only in Area 1 and the extended area of Area 2, namely the KwaQubuka and Luhlanga areas. The mine’s coal wash plants are located in Area 2. No mining operations are conducted in Area 3. Mining in Area 2 ceased in January 2012 due to depletion of anthracite reserves. Mining operations have not commenced in Areas 4 and 5. [7] In October 2017 the appellants sought an interdict to prevent Tendele from carrying on with any mining operations in the following areas: Area 1 as described in the mining right dated 22 June 2007; Areas 2 and 3 described in the mining right dated 30 March 2011; the KwaQubuka and Luhlanga areas described in an amendment to the mining right dated 8 March 2013; and a part of the Remainder of Reserve No 3 No 15822, in extent 21 233.0525 hectares, described in the mining right dated 26 October 2016. [8] The interdict was sought on the basis that Tendele was ‘non-compliant in respect of the permits or approvals required’ in relation to mining, environmental authorisation, land use, interference with graves and waste management. More specifically, the appellants alleged that Tendele has no environmental authorisation issued in terms of s 24(2) of the National Environmental Management Act 107 of 1998 (NEMA) to conduct mining operations. Tendele has no authority, approval or permission from a municipality to use land for mining operations. Tendele has no written approval in terms of s 35 of the KwaZulu-Natal Heritage Act 4 of 2008 (the KZN Heritage Act) to damage, alter or exhume traditional graves. Tendele does not have a waste management licence issued by the fourth respondent, the Minister of Environmental Affairs (the Environment Minister), under s 43(1) of the National Environmental Management: Waste Act 9 of 2008 (the Waste Act), or by the second respondent, the Minister of Minerals and Energy (the Mining Minister), in terms of s 43(1A) of the Waste Act. [9] Tendele opposed the application for an interdict, essentially on the following grounds. Tendele’s mining operations are undertaken in terms of valid mining rights and EMPs under the MPRDA. The legislative amendments introduced with effect from 8 December 2014, that gave effect to the so-called ‘One Environmental System’, in terms of which the holder of a mining right is required to have environmental authorisation for its operations, contain transitional arrangements for the continuation of mining operations lawfully conducted prior to those amendments. In terms of the One Environmental System, all the environmental aspects of mining are regulated through NEMA and all environmental provisions are repealed from the MPRDA.1 The mine operates 1 Minister of Mineral Resources v Stern and Others; Treasure the Karoo Action Group and Another v Department of Mineral Resources and Others [2019] ZASCA 99; [2019] 3 All SA 684 (SCA) para 21. The One Environmental System is expressly recognised in s 50A(2) of NEMA, which provides: lawfully, in compliance with the relevant land-use planning laws. The waste management activities by Tendele are authorised in terms of the transitional provisions of the Waste Act, which provide for the continuation of such activities lawfully undertaken prior to the amendment on 29 November 2013, of the list of waste management activities that have a detrimental effect on the environment. [10] Tendele accepted that it had previously removed or altered traditional graves without the necessary authorisation, but asserted that it did so after consultation with the families concerned. Since 2017 it has been working in collaboration with the ninth respondent, AMAFA aKwaZulu-Natali Heritage Council (AMAFA Heritage Council), and a comprehensive procedure for future relocation of graves has been established. [11] The high court (Seegobin J) dismissed the application with costs. Its main findings may be summarised as follows. The appellants failed to establish a proper cause of action: they did not identify precisely the activities undertaken by Tendele without the necessary environmental authorisation. Prior to the coming into force of the One Environmental System on 8 December 2014, the environmental impacts of mining were regulated exclusively under the MPRDA in terms of approved EMPs. Section 12(4) of the National Environmental Management Amendment Act 62 of 2008 (the 2008 NEMA Amendment Act), ‘Agreement for the purpose of subsection (1) means the agreement reached between the [Environment] Minister, the Minister responsible for water affairs and the Minister responsible for mineral resources titled One Environmental System for the country with respect to mining, which entails– (a) that all environment -related aspects would be regulated through one environmental system which is the principal Act [NEMA] and that all environmental provisions would be repealed from the Mineral and Petroleum Resources Development Act, 2002; (b) that the Minister sets the regulatory framework and norms and standards, and that the Minister responsible for Mineral Resources will implement provisions of the principal Act and the subordinate legislation as far as it relates to prospecting, exploration, mining or operations; (c) that the Minister responsible for Mineral Resources will issue environmental authorisations in terms of the principal Act for prospecting, exploration, mining or operations, and that the Minister will be the appeal authority for these authorisations; and (d) that the Minister, the Minister responsible for Mineral Resources and the Minister responsible for Water Affairs agree on fixed time-frames for the consideration and issuing of the authorisations in their respective legislation and agreed to synchronise the time-frames.’ which provides that an EMP approved under the MPRDA must be regarded as having been approved in terms of NEMA, has the status of an environmental authorisation under NEMA. The purpose of this transitional provision was to allow the holder of an EMP lawfully conducting mining operations as at 8 December 2014, to continue to do so after that date. This interpretation is supported by the presumption against the retrospective operation of statutes. [12] The high the court concluded that the Mining Minister was satisfied with Tendele’s EMPs and the manner in which it conducted its mining operations, because no action had been taken against Tendele in terms of s 12(5) of the 2008 NEMA Amendment Act. This provision states that if the Mining Minister is of the opinion that mining operations are likely to result in unacceptable pollution, ecological degradation or damage to the environment, the Minister may direct the holder of a mining right to take action to upgrade an EMP to address the deficiencies. In terms of s 24L(4) of NEMA, a competent authority empowered under Chapter 5 to issue an environmental authorisation (the Mining Minister), may regard ‘an authorisation in terms of any other legislation’ that meets all the requirements stipulated in s 24(4), as an environmental authorisation in terms of Chapter 5. Tendele’s EMPs constitute authorisations in terms of any other legislation. [13] The high court held that the laws relating to land use, requiring authority, approval or permission from the relevant municipality, do not apply to Tendele, whose mining operations predate the coming into force of those laws. Tendele does not require a waste management licence under the Waste Act since it was lawfully conducting mining operations in terms of approved EMPs. The appellants were not entitled to an interdict, since they failed to establish a reasonable apprehension that Tendele would exhume or relocate traditional graves without the necessary statutory safeguards. Environmental authorisation [14] The issue on this part of the case, is whether Tendele requires, in addition to a mining right and an EMP in terms of the MPRDA, environmental authorisation under NEMA for activities incidental to mining, specified as ‘listed activities’ in the relevant environmental impact assessment (EIA) regulations. Section 24F(1)(a) of NEMA prohibits the commencement of ‘listed activities’ without environmental authorisation. Listed activities are those identified in terms of ss 24(2)(a) and 24(2)(d) of NEMA. [15] Acting in terms of s 24(2)(a) of NEMA (and its predecessor, s 21 of the Environment Conservation Act 73 of 1989 (ECA)) the Environment Minister has identified numerous listed activities requiring environmental authorisation. Since the first list of activities was published on 5 September 1997 in terms of the ECA,2 until the most recent list published on 4 December 2014 under NEMA,3 there have been amendments and additions to, and removal and replacement of, listed activities in the EIA regulations. No proper cause of action? [16] The appellants alleged that normally, mining is a listed activity which has an impact on the environment and thus requires environmental authorisation in terms of NEMA. However, they did not identify the listed activities that Tendele allegedly commenced without environmental authorisation, nor the date on which those activities commenced. Counsel for Tendele submitted that this was fatal to 2 ‘The Identification under Section 21 of Activities which may have a Substantial Detrimental Effect on the Environment GN R1182, GG 18261, 5 September 1997’ (as amended). 3‘List of Activities and Competent Authorities Identified in terms of Sections 24(2) and 24D GN R983, 984 and 985, GG 38282, 4 December 2014’ (as amended). their case, with the result that the issue as to the proper interpretation of the MPRDA and NEMA concerning an environmental authorisation contemplated in NEMA, did not arise on the founding papers. This submission is unsound, for the reasons advanced below. [17] First, there is nothing in the answering affidavit that even suggests that the application should be dismissed because the appellants failed to state the listed activities conducted by Tendele without environmental authorisation. Neither did Tendele oppose the application on the basis that it was not engaged in any listed activity. Instead, Tendele’s sole defence was that no environmental authorisation under NEMA was necessary because its mining operations were conducted in terms of its mining rights and EMPs issued under the MPRDA. [18] What crystallised as the main issue between the parties, is easily explained in the light of the facts leading up to the application, set out in the founding affidavit. In June 2017 the appellants’ attorney wrote to the DMR and the Department of Environmental Affairs (DEA), stating that Tendele was conducting activities listed in the EIA Regulations Listing Notices (no details were given), and requesting a copy of all environmental authorisations issued to Tendele, together with supporting documentation. The DMR replied that the EMPs issued under the MPRDA were deemed to be EMPs issued under NEMA, and that any environmental authorisations issued by the DEA was in the process of being transferred to the DMR for monitoring and compliance. [19] It turned out that Tendele has no environmental authorisation in terms of NEMA to conduct any listed activity. Indeed, this is common ground. Its approach throughout was that it did not require environmental authorisation because the environmental impacts of mining were regulated exclusively by the MPRDA in terms of approved EMPs. In June 2017 Tendele issued a public statement that according to the statutory framework that governed mining in South Africa, the ECA and NEMA did not apply to mining operations at the relevant time. [20] The appellants therefore approached the high court, claiming that Tendele is mining unlawfully because it has no environmental authorisation in terms of s 24 of NEMA. Unsurprisingly, the founding affidavit states that this is ‘common cause from the correspondence’; and the high court noted that whether Tendele was required to obtain environmental authorisation under s 24, was an issue for determination. The facts thus show that the appellants had no reason to anticipate any dispute as to whether Tendele’s mining operations triggered any listed activity. This is buttressed by the fact that Tendele at no stage, raised such dispute. Had Tendele denied that its mining operations triggered any listed activities, the appellants could have dealt with such denial in their founding or replying papers. [21] There was accordingly no dispute between the parties as to whether Tendele was conducting listed activities. Solely for these reasons, Tendele’s argument has no merit: it is opportunistic and contrived. But even if there was any dispute of fact as to whether Tendele’s mining operations included listed activities, it should be resolved against Tendele. As this Court stated in Wightman:4 ‘When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the test [for the resolution of factual disputes in motion proceedings] is satisfied . . . If that does not happen it should come as no surprise that the court takes a robust view of the matter.’ 4 Wightman t/a J W Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; 2008 (3) SA 371 (SCA) para 13. [22] Secondly, Seegobin J, dealing with environmental authorisations and listing notices prior to the amendments which came into effect on 8 December 2014, said this: ‘It seems that prior to 8 December 2014 mining per se was not a listed activity, however anyone intending to embark on mining would of necessity have to perform certain activities which were listed activities (e.g. establishing infrastructure for bulk transportation of water; facilities for the storage of fuel; clearing indigenous vegetation covering more than 1 hectare, etc) and would therefore have required environmental authorisation for those activities in terms of s 24.’ [23] This is a dictum by Rogers J in Mineral Sands Resources,5 which in my view is correct. Given that mining inevitably involves the performance of listed activities, the high court’s criticism that the founding affidavit ‘does not go far enough to establish a proper cause of action’, is baffling. [24] Thirdly, the inescapable inference to be drawn from the facts in the papers, and the nature and extent of Tendele’s mining operations (according to the answering affidavit, ‘Somkhele has one of the largest resources of open-pit mineable anthracite reserves in South Africa’), is that Tendele conducts listed activities as contemplated in the EIA listing notices. Open pit mining of necessity involves clearing indigenous vegetation covering more than one hectare. The answering affidavit states that Tendele has not yet commenced mining operations in Areas 4 and 5 – comprising 21 233 hectares (more than 200 km²) and some ten times larger than the areas covered by the other mining rights combined. [25] Further, Tendele conducts conventional truck and shovel mining operations using explosives, and it utilises water in bulk supply at its coal washing plants 5 Mineral Sands Resources (Pty) Ltd v Magistrate for the District of Vredendal, Kroutz NO and others [2017] 2 All SA 599 (WCC) para 8. located in Area 2. As stated in the affidavit of the Mpukunyoni amici, and as Tendele’s main deponent, Mr Jan du Preez, must know, an investment for the establishment for a third wash plant, which would add an additional 400 000 tonnes of saleable energy product to the 1.2 million tonnes of anthracite produced per annum, has been approved. Environmental authorisation is required for the establishment of facilities for the storage of fuel; infrastructure for the bulk transportation of water; and buildings and structures for the storage of explosives. [26] Finally, the question whether Tendele is mining unlawfully because it has no environmental authorisation in terms of s 24 of NEMA was squarely raised on the papers. This question is specifically relevant to the mining right granted to Tendele in 2016, which covers Areas 4 and 5 where mining has not yet commenced. The answering affidavit states that even after the introduction of the One Environmental System in 2014, which requires the holder of a mining right to obtain environmental authorisation under NEMA, this does not apply to Tendele whose mining operations remain lawful by virtue of transitional arrangements. [27] For these reasons, I am unable to agree with the high court’s criticism that the appellants failed ‘to establish a proper cause of action on the issue of any illegality on the part of Tendele’. But quite apart from the pleadings issue, as rightly submitted by the CER, it is necessary for this Court to pronounce on the interpretive question for two reasons. First, the high court’s order stands until it is set aside by this Court and is binding in KZN. This, as appears from Mineral Sands Resources,6 gives rise to a divergence of interpretation of the relevant statutory provisions in the KZN Division and other Divisions in the country. Second, the absence of clarity and certainty concerning the correct interpretation 6 Mineral Sands fn 5. will potentially weaken the environmental protections sought to be achieved by s 24 of the Constitution and NEMA. This, in turn, would result in the flouting of environmental standards and undermine the rule of law.7 The MPRDA does not cover environmental impacts of mining [28] As stated above, the high court accepted that prior to the commencement of the One Environment System on 8 December 2014, anyone intending to mine would of necessity undertake listed activities and require environmental authorisation in terms of s 24 of NEMA. Despite this, the court held that the decision to grant a mining right and approve a mining EMP, ‘effectively constituted the environmental authorisation to conduct the mining activity’. [29] Counsel for the appellants argued that the high court was wrong to hold that the environmental impacts of mining were regulated exclusively through the MPRDA and the requirement to obtain an EMP under that Act before commencing mining. The high court’s interpretation, it was argued, collapses NEMA into the MPRDA, instead of allowing each statute to regulate environmental matters in tandem. [30] Counsel for Tendele, however, submitted that the MPRDA was enacted to cover the field in relation to the environmental impacts and management of mining-related activities. The legislature, so it was submitted, made the implementation of the MPRDA subject to the principles in s 2 of NEMA, but left the interpretation thereof and decision-making in the hands of the functionaries of the DMR in accordance with the MPRDA and the regulations made under it. 7 The rule of law, enshrined in s 1 of the Constitution, requires that legislation be enacted and publicised in a clear and accessible manner to enable people to regularise their conduct and affairs accordingly. A decision on the proper construction of NEMA is necessary for mines to regulate their conduct and affairs lawfully. [31] Both the MPRDA and NEMA are statutes that give effect to the right to have the environment protected for the benefit of present and future generations, enshrined in s 24 of the Constitution.8 It is a settled principle that courts are required to interpret statutes purposively, in conformity with the Constitution and in a manner that gives effect to the rights in the Bill of Rights.9 In Fuel Retailers,10 the Constitutional Court said: ‘The role of the courts is especially important in the context of the protection of the environment and giving effect to the principle of sustainable development. The importance of the protection of the environment cannot be gainsaid. Its protection is vital to the enjoyment of the other rights contained in the Bill of Rights; indeed, it is vital to life itself.’ [32] The Constitutional Court has explained NEMA’s structural and integrative role regarding the protection of the environment, as follows: ‘NEMA was enacted as a general statute that coordinates environmental functions performed by organs of state. It also provides for “co-operative environmental governance by establishing principles for decision-making on matters affecting the environment”. As is evident from the long title, NEMA was passed to establish a framework regulating the decisions taken by organs of state in respect of activities which may affect the environment. It lays down general principles which must be followed in making decisions of that nature.’11 8 Maccsand (Pty) Ltd v City of Cape Town and Others [2012] ZACC 7; 2012 (4) SA 181 (CC) para 8. Section 4 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) states that when construing its provisions, any reasonable interpretation consistent with its objects (which includes giving effect to s 24 the Constitution) must be preferred. Section 24 of the Constitution provides: ‘Environment Everyone has the right– (a) to an environment that is not harmful to their health or well-being; and (b) to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that– (i) prevent pollution and ecological degradation; (ii) promote conservation; and (iii) secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.’ 9 Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2001 (1) SA 545 (CC) para 23; Independent Institute of Education (Pty) Ltd v KwaZulu-Natal Law Society and Others [2019] ZACC 47; 2020 (2) SA 325 (CC) paras 1-2. 10 Fuel Retailers Association of Southern Africa v Director-General: Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and Others 2007 (6) SA 4 (CC) para 102. 11 Maccsand fn 8 para 9, footnotes omitted. [33] These mandatory principles, set out in s 2(1) of NEMA, must be applied when an organ of state takes any decision in terms of NEMA or any statutory provision concerning the protection of the environment, and guide the interpretation, administration and implementation of NEMA and any other law concerned with environmental protection or management.12 [34] Consistent with these principles, sustainable development and sustainable use and exploitation of natural resources are at the core of the protection of the environment. Thus, s 2(4)(a) of NEMA imposes sustainable development which requires that a ‘risk-averse and cautious approach is applied’ whereby ‘negative impacts on the environment and on people’s environmental rights be anticipated and prevented, and where they cannot be altogether prevented, are minimised and remedied’.13 NEMA requires that the environment be protected by securing ‘ecologically sustainable development and use of natural resources while promoting justifiable economic and social development’.14 [35] The integrative approach to the protection and management of the environment is emphasised in the language of NEMA itself. Section 2(4)(b) states: ‘Environmental management must be integrated, acknowledging that all elements of the environment are linked and interrelated, and it must take into account the effects of decisions on all aspects of the environment and all people in the environment by pursuing the selection of the best practicable environmental option.’ 12 Section 2(1) of NEMA provides: ‘The principles set out in this section apply throughout the Republic to the actions of all organs of state that may significantly affect the environment and– (a) . . . (b) serve as the general framework within which environmental management and implementation plans must be formulated; (c) serve as guidelines by reference to which any organ of state must exercise any function when taking any decision in terms of this Act or any statutory provision concerning the protection of the environment; (d) . . . (e) guide the interpretation, administration and implementation of this act, and any other law concerned with the protection or management of the environment.’ 13 Sections 2(4)(a)(vii) and 2(4)(a)(viii). 14 Preamble to NEMA. [36] As already stated, s 24(2)(a) of NEMA empowers the Environment Minister to identify ‘activities which may not commence without environmental authorisation from the competent authority’. It must be stressed that s 24(2)(a) is not confined to activities that relate specifically to mining: once an activity has been listed in terms of that provision, environmental authorisation to conduct that activity must be obtained. Listed activities, as stated, include establishing infrastructure for the bulk transportation of water and facilities for the storage of fuel, and clearing indigenous vegetation.15 So, nothing turns on the fact that listed activities specifically related to mining, identified by the Environment Minister in terms of s 24 of NEMA and published in the EIA Regulations of 21 April 2006, never came into force.16 [37] NEMA defines ‘environmental authorisation’, inter alia, as ‘the authorisation by a competent authority of a listed activity or specified activity in terms of this Act’. It defines a ‘competent authority’ in respect of a listed activity as, ‘the organ of state charged by this Act with evaluating the environmental impact of that activity and, where appropriate, with granting or refusing an environmental authorisation in respect of that activity’. [38] Section 24F(1)(a) underscores the need for an environmental authorisation as a prerequisite for a listed activity. When Tendele’s first EMP was approved in 2007, s 24F of NEMA provided: ‘24F Offences relating to commencement or continuation of listed activities (1) Notwithstanding any other Act, no person may– 15 Mineral Sands Resources fn 5 para 8. 16 ‘List of Activities and Competent Authorities identified in terms of sections 24 and 24D of the National Environmental Management Act, 1998 GN R387, GG 28753, 21 April 2006’, items 7 and 8 of the Schedule. (a) commence an activity listed or specified in terms of s 24(2)(a) or (b) unless the competent authority or the Minister responsible for mineral resources, as the case may be, has granted an environmental authorisation for the activity. . . .’ [39] It is clear, simply from the above provisions of NEMA, that an environmental authorisation granted by a competent authority under NEMA is not the same thing as an EMP approved under the MPRDA. In Minister of Mineral Resources v Stern (to which we were not referred),17 this Court assumed, without deciding, that an environmental authorisation under NEMA is essentially the same as an EMP. In my view, it is not. An environmental authorisation is required for the commencement of an activity identified in a listing notice. The impacts of listed activities on the environment are assessed in order ‘to give effect to the general objectives of integrated environmental management’ in Chapter 5 of NEMA,18 which lays down rigorous processes for that assessment. [40] Further, NEMA defines an ‘environmental management programme’ (a NEMA EMP) as meaning ‘a programme required in terms of section 24’.19 Section 24N provides that the competent authority ‘may require the submission of an environmental management programme before considering an application for an environmental authorisation’. The main function of a NEMA EMP is to set out the proposed management, mitigation, protection and remedial measures that will be undertaken to address the environmental impacts of listed activities. It is not the function of a NEMA EMP to determine the activities which an applicant is authorised to undertake.20 17 Minister of Mineral Resources v Stern and Others fn 1 paras 44-45. 18 Section 24(1) of NEMA. 19 Section 1 of NEMA. This definition was inserted by s 1(g) of the National Environmental Management Amendment Act 62 of 2008. 20 Mineral Sands Resources fn 5 para 170. [41] By contrast, an EMP under the MPRDA is unrelated to a listed activity envisaged in s 24(2)(a) of NEMA. The MPRDA defined an EMP as ‘an approved environmental management programme contemplated in section 39’. Section 39(1) of the MPRDA, which has been repealed with the coming into force of the One Environmental System, required an applicant for a mining right to conduct an EIA and submit an EMP. The requisites for an EIA and EMP were prescribed in regulations 48-51 of the Mining Regulations.21 Section 23(5) of the MPRDA provided that a mining right came into effect on the date on which the EMP was approved in terms of s 39(5). [42] Section 38(1) of the MPRDA required the holder of a mining right to consider, investigate assess and communicate the impact of its mining on the environment as contemplated in s 24(7) of NEMA; and to manage all environmental impacts in accordance with its EMP. The main functions of an EMP under the MPRDA, is to establish baseline information concerning the affected environment; to investigate, assess and evaluate the impact of mining operations on the environment; to develop an environmental awareness plan describing the manner in which the applicant intended to inform its employees of any environmental risks; and to describe the manner in which it intended to modify, remedy, control or stop pollution or environmental degradation.22 21 The Mineral and Petroleum Resources Development Regulations published under ‘GN R527, GG 26275, 23 April 2004’. 22 Section 39(3) of the MPRDA provided: ‘An applicant who prepares an environmental management programme or an environmental management plan must- (a) establish baseline information concerning the affected environment to determine protection, remedial measures and environmental management objectives; (b) investigate, assess and evaluate the impact of his or her proposed prospecting or mining operations on- (i) the environment; (ii) the socio-economic conditions of any person who might be directly affected by the prospecting or mining operation; and (iii) any national estate referred to in section 3 (2) of the National Heritage Resources Act, 1999 (Act 25 of 1999), with the exception of the national estate contemplated in section 3 (2) (i) (vi) and (vii) of that Act; (c) develop an environmental awareness plan describing the manner in which the applicant intends to inform his or her employees of any environmental risks which may result from their work in the manner in which the risks must be dealt with in order to avoid pollution or the degradation of the environment; and [43] The distinction drawn between an environmental authorisation in terms of NEMA and an EMP under the MPRDA in the cases, is thus not surprising. As already stated, it was rightly asserted in Mineral Sands Resources,23 that mining typically involves listed activities and therefore the holder of a mining right requires environmental authorisation in terms of s 24 of NEMA. Likewise, the court in Mining and Environmental Justice Community Network SA,24 followed the integrative approach to the protection of the environment, enjoined by NEMA. In an application to review and set aside a decision permitting coal mining in a protected wetlands area, it held that in order for a party to conduct mining activities, it must obtain a mining right and approval of an EMP in terms of the MPRDA, as well as environmental authorisation for listed activities in terms of s 24 of NEMA.25 [44] Solely for these reasons, the high court’s finding that ‘the environmental impacts of mining were regulated exclusively under the MPRDA (2002) in terms of approved EMPs’, is erroneous. First, it is at odds with the plain wording of the provisions of both the MPRDA and NEMA, in particular the requirements of NEMA concerning an environmental authorisation, referred to in paragraphs 28- 31 above, as well as the general objectives of integrated environmental management laid down in Chapter 5 thereof. Second, Maccsand makes it clear that the MPRDA cannot be read to override the applicability or requirements of other laws.26 Indeed, and as stated in Maccsand, s 23(6) of the MPRDA expressly renders a mining right granted under that Act subject to ‘any relevant law’.27 (d) describe the manner in which he or she intends to- (i) modify, remedy, control or stop any action, activity or process which causes pollution or environmental degradation; (ii) contain or remedy the cause of pollution or degradation and migration of pollutants; and comply with any prescribed waste standard or management standards or practices.’ 23 Mineral Sands Resources fn 5 paras 7, 8 and 17. 24 Mining and Environmental Justice Community Network of South Africa and Others v Minister of Environmental Affairs and Others [2019] 1 All SA 491 (GP). 25 Mining and Environmental Justice Community Network of SA fn 22 para 4. 26 Maccsand fn 8 para 45. 27 Maccsand fn 8 para 44. Section 23(6) provides: [45] There is no provision in the MPRDA or NEMA which suggests that decision-making in relation to the environmental impacts of mining is left to functionaries of the DMR. The converse is true: s 38 of the MPRDA, prior to its repeal with effect from 8 December 2014, enjoined the holder of a mining right at all times to give effect to the general objectives of integrated environmental management laid down in Chapter 5 of NEMA; and to consider, investigate assess and communicate the impact of its mining on the environment as contemplated in s 24(7) of NEMA. The very purpose of Chapter 5 – containing the prohibition against the commencement of listed activities without environmental authorisation – is the integrated environmental management of activities. Section 24(1) of NEMA states, in terms, that the purpose of the identification of listed activities is to give effect to the general objectives of integrated environmental management laid down in Chapter 5. [46] The mandatory objectives of integrated environmental management in Chapter 5 of NEMA plainly apply to mining and related activities. These include the integration of the s 2 principles into all decisions that may significantly affect the environment; identifying and evaluating actual and potential impacts on the environment and options for mitigation of activities; and ensuring that the effects of activities on the environment are adequately considered before actions are taken.28 ‘A mining right is subject to this Act, any relevant law, the terms and conditions stated in the right and the prescribed terms and conditions and is valid for the period specified in the right, which period may not exceed 30 years.’ 28 Section 23 of NEMA provides: ‘(1) The purpose of this chapter is to promote the application of appropriate environmental management tools in order to ensure the integrated environmental management of activities, (2) The general objective of integrated environmental management is to– (a) promote the integration of the principles of environmental management set out in section 2 into the making of all decisions which may have a significant effect on the environment; (b) identify, predict and evaluate the actual and potential impact on the environment, socio-economic conditions and cultural heritage, the risks and consequences and alternatives and options for mitigation of activities, with a view to minimising negative impacts, maximising benefits, and promoting compliance with the principles of environmental management set out in section 2; [47] What is more, s 24(7) of NEMA, to which the holder of a mining right is expressly subject, provides that the procedures for the investigation, assessment and communication of the potential impact of activities must, at a minimum, provide for ‘co-ordination and co-operation between organs of state in the consideration of assessments where an activity falls under the jurisdiction of more than one organ of state’.29 This is a powerful indicator that the MPRDA does not cover the environmental impacts of mining; neither does it leave decision-making on those impacts solely to functionaries of the DMR. [48] That the MPRDA does not cover the field, is made even clearer in ss 24(8)(a), 24K and 24L of NEMA. These provisions were inserted by s 2 of the 2008 NEMA Amendment Act30 (ie after the enactment of the MPRDA) and came into effect on 1 May 2009. Section 24(8)(a) of NEMA provides that authorisations obtained under any other law (such as the MPRDA) for an activity listed in terms of NEMA, do not absolve an applicant from obtaining authorisation under NEMA: ‘Authorisations obtained under any other law for an activity listed or specified in terms of this Act does not absolve the applicant from obtaining authorisation under this Act unless an authorisation has been granted in the manner contemplated in section 24L.’ [49] Section 24L(1) of NEMA provides for the alignment of environmental authorisations. More specifically, it states that where a listed activity contemplated in s 24 of NEMA is also regulated in terms of another law, the (c) ensure that the effects of activities on the environment receive adequate consideration before actions are taken in connection with them; (d) ensure adequate and appropriate opportunity for public participation in decisions that may affect the environment; (e) ensure the consideration of environmental attributes in management and decision-making which may have a significant effect on the environment; and (f) identify and employ the modes of environmental management best suited to ensuring that particular activities pursued in accordance with the principles of environmental management set out in section 2.’ 29 Section 24(7)(g) of NEMA. 30 National Environmental Management Amendment Act 62 of 2008. authority empowered under that other law to authorise that activity and the competent authority authorised to issue an environmental authorisation under NEMA, may exercise their respective powers jointly by issuing separate authorisations or an integrated environmental authorisation.31 This, however, does not remove the requirement of an environmental authorisation under NEMA to conduct a listed activity.32 In terms of s 24L(4), a competent authority empowered to issue an environmental authorisation under NEMA may regard an authorisation in terms of any other legislation that meets the requirements of NEMA, as an environmental authorisation under NEMA. [50] Section 24K(1) of NEMA authorises the Environment Minister or an MEC responsible for environmental affairs to ‘consult with any organ of state responsible for administering legislation relating to any aspect of an activity that also requires environmental authorisation under [NEMA] in order to coordinate the respective requirements of such legislation and to avoid duplication’. [51] What all of this shows, is that the provisions of NEMA apply alongside those of the MPRDA relating to mining rights and EMPs, and there is no basis to restrict the application of Chapter 5 of NEMA, as Tendele seeks to do. The two laws serve different purposes within the competence of the authorities responsible for their administration. Maccsand illustrates the point.33 A company, Maccsand, had been granted a mining right to mine under the MPRDA. In terms of that right it was authorised to enter and bring on to the relevant land, equipment and 31 Section 24L of NEMA provides: ‘Alignment of environmental authorisations- (1) If the carrying out of a listed activity or specified activity contemplated in section 24 it is also regulated in terms of another law or a specific environmental management Act, the authority empowered under that other law or specific environmental management Act to authorise that activity in the competent authority empowered under Chapter 5 to issue an environmental authorisation in respect of that activity may exercise their respective powers jointly by issuing– (a) separate authorisations; or (b) an integrated environmental authorisation. 32 City of Cape Town v Maccsand (Pty) Ltd and Others 2010 (6) SA 63 (WCC) paras 10 and 11. 33 Maccsand fn 8. materials to construct surface, underground or undersea infrastructure required for the purposes of mining. Maccsand contended that because it had various rights under the MPRDA, it did not need to obtain planning consent by the City of Cape Town under the Land Use Planning Ordinance 15 of 1985. Rejecting this contention, the Constitutional Court said: ‘If it is accepted, as it should be, that LUPO regulates municipal land planning and that, as a matter of fact, it applies to land which is the subject matter of these proceedings, then it cannot be assumed that the mere granting of a mining right cancels out LUPO’s application. There is nothing in the MPRDA suggesting that LUPO will cease to apply to land upon the granting of a mining right or permit. By contrast, section 23(6) of the MPRDA proclaims that a mining right granted in terms of that Act is subject to it and other relevant laws.’34 [52] Moreover, the high court’s interpretation is inconsistent with the constitutional injunction to interpret statutes in a way that gives the right to protection of the environment its fullest possible effect. The principles in s 2 of NEMA must guide the interpretation, administration and implementation of NEMA and any other law concerned with environmental protection or management, such as the MPRDA: not the other way around. Otherwise construed, NEMA is deprived of direct force in relation to mining activities, and effectively sidestepped. Its mandatory principles would then only be applied insofar as they are reflected in the MPRDA and the separate environmental authorisation required for listed activities in s 24(2) of NEMA, would be rendered nugatory. [53] This interpretation, contrary to Tendele’s assertion and the high court’s finding, does not result in a ‘duplication’ of regulatory functions, nor ‘competing 34 Maccsand fn 8 para 44, affirmed recently in Maledu and Others v Itereleng Bakgatla Mineral Resources (Pty) Ltd and Another [2018] ZACC 41; 2019 (2) SA 1 (CC) para 106: ‘This conclusion also finds support in this Court's decision in Maccsand. In Maccsand, this Court held that the exercise of a mining right was subject to any other laws bearing on such a right. The MPRDA was not read to override the applicability or requirements of other statutes, such as the Land Use Planning Ordinance, that may impact upon mining activity’. and contradictory but mandatory directions’ by regulatory authorities. As shown above, s 24K(1) of NEMA refutes any duplication argument. In any event a similar argument was rejected in Maccsand:35 ‘Another criticism levelled at the finding of the Supreme Court of Appeal by Maccsand and the Minister for Mineral Resources was that, by endorsing a duplication of functions, the Court enabled the local sphere to veto decisions of the national sphere on a matter that falls within the exclusive competence of the national sphere. At face value this argument is attractive but it lacks substance. The Constitution allocates powers to three spheres of government in accordance with the functional vision of what is appropriate to each sphere. But because these powers are not contained in hermetically sealed compartments, sometimes the exercise of powers by two spheres may result in an overlap. When this happens, neither sphere is intruding into the functional area of another. Each sphere would be exercising power within its own competence. It is in this context that the Constitution obliges the spheres of government to cooperate with one another in mutual trust in good faith, and to coordinate actions taken with one another. The fact that in this case mining cannot take place until the land in question is appropriately rezoned is therefore permissible in our constitutional order. It is proper for one sphere of government to take a decision whose implementation may not take place until consent is granted by another sphere, within whose area of jurisdiction the decision is to be executed. If consent is, however, refused it does not mean that the first decision is vetoed. The authority from whom consent was sought would have exercised its power, which does not extend to the power of the other functionary. This is so in spite of the fact that the effect of the refusal in those circumstances would be that the first decision cannot be put into operation. This difficulty may be resolved through cooperation between the two organs of state, failing which, the refusal may be challenged on review.’ [54] In Fuel Retailers,36 the issue was whether environmental authorities had considered the social, economic and environmental impacts of constructing a filling station. In resisting an application to review and set aside its decision authorising the construction of the filling station, the relevant government department contended that issues of need and desirability had been considered by 35 Maccsand fn 8 paras 47-48; Telkom SA SOC Limited v City of Cape Town and Another [2020] ZACC 15; 2020 (10) BCLR 1283 (CC) para 35. 36 Fuel Retailers fn 10 para 86. the local authority when it decided the application to rezone the property for the purpose of constructing the filling station. Therefore, so it was contended, the local authority did not have to reassess those issues. The Constitutional Court rejected this contention and held that each functionary operates within the purpose and ambit of its own enabling statutory provisions when taking administrative action. Thus, the satisfaction of the requirements of a specific section or Act does not equate to satisfaction of a similar requirement in a different section or Act. The court said: ‘The environmental authorities assumed that the duty to consider need and desirability in the context of the Ordinance imposes the same obligation as the duty to consider the social, economic and environmental impact of a proposed development as required by the provisions of NEMA. They were wrong in that assumption.’ [55] It follows that the decision to grant a mining right and approve an EMP in terms of the MPRDA, may not be implemented without an environmental authorisation, if the holder of that right and EMP undertakes a listed activity as envisaged in NEMA. The presumption against the retrospective operation of statutes simply does not arise: the requirement of an environmental authorisation under NEMA does not take away or impair Tendele’s mining right or EMP under the MPRDA.37 [56] This is confirmed by the language of the transitional provisions themselves. The relevant provisions of s 12 of the 2008 NEMA Amendment Act, as amended by Act 25 of 2014 provide: ‘(2) An application for authorisation of an activity that is submitted in terms of Chapter 5 of [NEMA] and that is pending when this Act takes effect must, despite the amendment of [NEMA] by this Act, be dispensed with in terms of Chapter 5 of [NEMA] as if Chapter 5 had not been amended. 37 Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines v Chairman, National Transport Commission and Others; Transnet (Autonet Division) v Chairman National Transport Commission and Others 1999 (4) SA 1 (SCA) para 12. … (4) An environmental management plan or programme approved in terms of the [MPRDA] immediately before the date on which this Act came into operation must be regarded as having been approved in terms of [NEMA] as amended by this Act.’ [57] Three points should be made. First, the transitional provisions do not dispense with an environmental authorisation as a prerequisite for undertaking a listed activity: the opposite is true. Second, an EMP approved under the MPRDA does not have the status of an environmental authorisation under NEMA. That much is clear from the definitions in NEMA.38 And third, s 12(4) means no more than that an EMP approved under the MPRDA must be accepted as an EMP issued in terms of NEMA. An EMP is but one of the prescribed environmental management instruments referred to in s 24(5) of NEMA. Put differently, the introduction of the One Environmental System with effect from 8 December 2014, did not retroactively deprive Tendele of its EMPs approved under the MPRDA. The Minister’s failure to act: a relevant consideration? [58] In support of its finding that Tendele’s EMPs were valid under the transitional provisions, the high court referred to the Environment Minister’s power under s 12(5) of the 2008 NEMA Amendment Act to direct the holder of an old order mining right to upgrade an EMP to address any deficiencies that may lead to unacceptable environmental consequences. The court said: ‘To date the Minister has not acted against Tendele in terms of s 12(5) of the NEMA Amendment Act, 2008. This suggests to me that the Minister is thus far satisfied about Tendele’s approved EMPs and the manner in which it conducts its mining operations at Somkhele . . . 38 An ‘environmental authorisation’ includes the authorisation by a competent authority of a listed activity or specified activity in terms of NEMA. An ‘environmental management programme’ means a programme required in terms of s 24 of NEMA. It seems to me that the Minister is well aware of Tendele’s operations at Somkhele and that they are conducted in terms of approved EMPs. He also seems to be satisfied that such EMPs adequately address the environmental impacts of such operations at Somkhele. If the Minister was not so satisfied he would not have granted Tendele further mining rights as he did in 2016 to expand its mining operations in Reserve 3.’ [59] The high court erred. It is impermissible to interpret a statute according to the conduct or practice of a government functionary. The Constitutional Court put it thus:39 ‘Missing from this formulation is any explicit mention of a further fundamental contextual change, that from legislative supremacy to constitutional democracy. Why should a unilateral practice of one part of the executive arm of government play a role in the determination of the reasonable meaning to be given to a statutory provision? It might conceivably be justified where the practice is evidence of an impartial application of a custom recognised by all concerned, but not where the practice is unilaterally established by one of the litigating parties. In those circumstances it is difficult to see what advantage evidence of the unilateral practice will have for the objective and independent interpretation by the courts of the meaning of legislation, in accordance with constitutionally compliant precepts. It is best avoided.’ [60] For the above reasons, and having regard to the language, context and purposes of the relevant statutory provisions, 40 I have come to the conclusion that environmental authorisation to conduct a listed activity, in terms of s 24(2) of NEMA, is a requirement for mining. Consequently, Tendele’s mining operations are unlawful. The appropriate relief is set out below. Land use approvals 39 Marshall and Others v Commission for the South African Revenue Service [2018] ZACC 11; 2018 (7) BCLR 830 (CC) para 10. 40 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18, approved in Airports Company South Africa v Big Five Duty-Free (Pty) Ltd [2018] ZACC 33; 2019 (5) SA1 (CC) para 9. [61] The appellants’ case that Tendele’s mining activities are unlawful because it has not obtained municipal approval for its mining operations, may be outlined as follows. Tendele does not have municipal approval to develop the land on which it conducts mining operations, as contemplated in s 38 of the KwaZulu- Natal Planning and Development Act 6 of 2008 (the KZN Planning Act). Section 48(3) of that Act prohibits any development without municipal approval. Tendele also does not have permission to use the land (Reserve No 3) for ‘mining purposes’ as envisaged in the Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA). It also requires approval of a ‘mining operation’ as defined in Schedule 2 to the Mtubatuba SPLUMA By-Law of January 2017 (The Mtubatuba By-Law). [62] In this Court the appellants accepted that the KZN Planning Act which came into force on 1 May 2010, and SPLUMA, which commenced on 1 July 2015, do not apply retrospectively. Accordingly, mining operations by Tendele prior to the commencement of these statutes are lawful. This however, so it was contended, does not apply to new mining which may be conducted after the commencement of the KZN Planning Act and SPLUMA, in terms of the mining right granted to Tendele in 2016. [63] Section 38(1) KZN Planning Act provides: ‘The development of land situated outside the area of the scheme may only occur to the extent that it has been approved by the municipality in whose area the land is situated.’ Section 38(3) defines ‘development’ as follows: ‘[T]he carrying out of building, construction, engineering, mining or other operations on, under or over any land, and a material change to the existing use of any building or land without subdivision.’ [64] It is evident from this definition that the KZN Planning Act was not intended to regulate existing mining. Tendele’s mining operations do not fall within the definition of development in s 38(3), since it was already conducting mining operations on Reserve No 3 when the KZN Planning Act came into force. That mining does not constitute a material change to the existing use of land. [65] Aside from this, it was not the appellants’ case that the exercise of the mining right granted to Tendele in 2016 in respect of Areas 4 and 5, would constitute a material change to the existing use of land. Had such a case been pleaded, Tendele would have been able to put up evidence to show that the mining which is to take place in terms of the Areas 4 and 5 right, does not constitute a new use of land, but merely an extension of the existing use of the same land, ie mining on another portion of Reserve No 3; or that future mining is related to the mining that has been conducted at the mine to date. [66] The same applies to the attack based on SPLUMA. It is unsustainable, both on the pleadings and a proper construction of the relevant statutory provisions. In terms of s 26(2), land may be used only for the purposes permitted by a land use scheme, by a town planning scheme (until such a scheme is replaced by a land use scheme), ‘or in terms of subsection (3)’. Section 26(3) provides for the continuation, after the commencement of SPLUMA, of certain land uses in specific circumstances: ‘Where no town planning or land use scheme applies to a piece of land, before a land use scheme is approved in terms of this Act, such land may be used only for the purposes listed in Schedule 2 to this Act and for which such land was lawfully used or could lawfully have been used immediately before the commencement of this Act.’ One of the land use purposes listed in Schedule 2 is ‘mining purposes’, defined in the Schedule as, ‘purposes normally or otherwise reasonably associated with the use of land for mining’. [67] Self-evidently, the purpose of s 26(3) is to maintain the existing land use regime applicable to land, in respect of which no town planning scheme or land use scheme applied when SPLUMA came into force, until a land use scheme is approved in terms of SPLUMA. It achieves this by permitting the use of land for certain purposes to continue where such land was lawfully being used for that purpose immediately before commencement of SPLUMA. It follows that the provisions of the Mtubatuba By-Law cannot trump the provisions of SPLUMA. Tendele’s mining operations are not in breach of SPLUMA or the Mtubatuba By- Law. Waste Management [68] The founding affidavit states that there are massive stockpiles of waste rock at the mine and that Tendele’s mining activities result in liquid coal waste and coal sludge or slurry. The process of crushing and washing coal produces liquid waste along with huge stockpiles of solid waste. Attached to the affidavit are photographs depicting huge mining dumps and rock dumps. The appellants alleged that the waste produced by Tendele falls within the definition of ‘hazardous waste’ in Schedule 3 to the Waste Act, which includes ‘residue stockpiles’ and ‘wastes from the pyrolytic treatment of coal’.41 The concept ‘residue stockpile’ includes waste derived from a mining operation and which is stockpiled, and wastes resulting from mining.42 Tendele does not have a waste management licence as required by the Waste Act and is therefore mining illegally. [69] Section 20 of the Waste Act provides that no person may commence, undertake or conduct a waste management activity, except in accordance with a 41 In Schedule 3 to the Waste Act, ‘“hazardous waste” means any waste that contains organic or inorganic elements or compounds that may, owing to the inherent physical, chemical or toxicological characteristics of that waste, have a detrimental impact on health and the environment and includes hazardous substances, materials or objects within business waste, residue deposits and residue stockpiles as outlined. . . ’. 42 In Schedule 3 to the Waste Act, ‘“residue stockpile” means any debris, discard, tailings, slimes, screening, slurry, waste rock, foundry sand, mineral processing plant waste, ash or any other product derived from or incidental to a mining operation and which is stockpiled, stored or accumulated within the mining area for potential re-use, or which is disposed of, by the holder of a mining right, mining permit or, production right or an old order right, including historic mines and dumps created before the implementation of this Act’. waste management licence or the requirements or standards determined in terms of s 19(3). A ‘waste management activity’ is defined as an activity listed in Schedule 1 or published by notice in the Gazette under s 19. [70] In terms of s 19 of the Waste Act, the Environment Minister on 29 November 2013, published a list of waste management activities that have or are likely to have a detrimental effect on the environment (the 2013 listing notice). Regulation 7(1) of the 2013 listing notice states: ‘A person who lawfully conducts a waste management activity listed in this schedule on the date of the coming into effect of this notice may continue with the waste management activity until such time that the Minister by notice in the Gazette calls upon such person to apply for a waste management licence.’ [71] It was argued on behalf of the appellants that the high court’s conclusion that Tendele’s conduct was lawful because the Minister had not called upon it to apply for a waste management licence, was wrong because it incorrectly ascribed to the Minister the power to determine the legality of Tendele’s conduct. This, so it was argued, undermines the judicial function: the courts should determine the legality of conduct. It was also argued that regulation 7(1) cannot, in effect, immunise Tendele against obtaining a waste management licence, especially where this occurs due to the inaction of the Minister. [72] These arguments, however, do not assist the appellants, for two reasons. The first is that a notice of waste management activities in terms of s 19(1) of the Waste Act, ‘may contain transitional and other special arrangements in respect of waste management activities that are carried out at the time of their listing’.43 Regulation 7(1) is thus specifically authorised. The second is that the appellants have not challenged the constitutionality of regulation 7(1). This regulation is not 43 Section 19(3)(c) of the Waste Act. void or non-existent, but exists as a fact and remains lawful until it is set aside.44 The appellants have not established that Tendele is mining unlawfully because it does not have a waste management licence. Relocation of traditional graves [73] Section 35 of the KZN Heritage Act provides that before any grave may be damaged, altered, exhumed or removed, prior written consent must be obtained from AMAFA Heritage Council. The Council must be satisfied that an applicant has made concerted efforts to engage the relevant communities affected, and that those communities have agreed to the relocation of graves.45 [74] Ms Shiela Berry, a trustee of the first appellant, in her affidavit states that when Tendele started mining, there were many graves on the mining site which were exhumed and moved to another graveyard with no regard for the Zulu people’s deep respect for their ancestors. This graveyard is situated on a slope, and some of the graves have been undercut by rain and are slumping. In some of the graves body parts can be seen. [75] Mr Du Preez states that Tendele ‘did not appreciate the process that the mine was required to follow in order to relocate traditional graves’, and that its failure to obtain authorisation ‘was due to a bona fide oversight’. This is improbable. On its own version, Tendele’s consultant, Groundwater Consulting 44 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA) para 26; Merafong Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017(2) SA 211 (CC) para 36. 45 Section 35 of the KZN Heritage Act provides: ‘General Protection: Traditional burial places – 35.(1) No grave– (a) not otherwise protected by this Act; and (b) not located in a formal cemetery managed or administered by a local authority, may be damaged, altered, exhumed, removed from its original position, or otherwise disturbed without the prior written approval of the Council having been obtained on written application to the Council. (2) The Council may only issue written approval once the Council is satisfied that– (a) the applicant has made a concerted effort to consult with communities and individuals who by tradition may have an interest in the grave; and (b) the applicant and the relevant communities or individuals have reached agreement regarding the grave.’ Services (GCS), had advised it in 2007 already, that grave relocation needed to be dealt with separately from a heritage impact assessment. Tendele engaged AMAFA Heritage Council only in 2017 – some 10 years later. In its report to Tendele in December 2007, GCS described the importance of gravesites to the community as follows: ‘Many of the local residents place great religious significance on gravesites. This strong reverence for graves emerges from the belief that the spirit (ithongo or moya, in Zulu) of individual persons continue to maintain an active interest in and affect the living (mostly relatives). Spirits of deceased relatives are referred to as ancestors (ukhokho, in Zulu) and much of their interactions with their living descendants take place with reference to their graves. Consequently, graves have developed into sites of particular social significance and not only stand as symbols of the relationship between the living and the dead, but also represent a locale where these relationships can be articulated and find expression. It is largely the practice of ancestor worship that has led graves to acquire a particularly strong cultural significance that they have. Residents in the area regard ancestor worship as an ancient religious practice.’ [76] It appears from the answering papers that prior to consulting AMAFA Heritage Council, Tendele had entered into detailed agreements with members of the community for the relocation of graves. In terms of this agreement, the relatives of deceased persons were paid an amount of R8 500 ‘in respect of all Family Graves’, located in the mining area. The agreement states that ‘“all Family Graves” means the total of all graves [of relatives of the person concluding the agreement] located at the Premises’. [77] The answering affidavit states that all relocations of traditional graves have taken place in consultation with the affected families and communities, and that Tendele has engaged in consultations with AMAFA Heritage Council to ensure that its conduct in relation to traditional graves complies with the law. At a meeting with the Council on 8 May 2017, Tendele gave an undertaking that in future, no graves would be exhumed or relocated without the necessary permits. [78] On the strength of this undertaking and Tendele’s engagements with AMAFA Heritage Council, the high court stated that the Council ‘would have said something regarding Tendele’s conduct if it was not satisfied with the manner in which traditional graves were being relocated’. It held that the appellants failed to make out a proper case for an interdict. [79] Whether the relocation of graves is unlawful cannot be decided by reference to the view taken by the AMAFA Heritage Council. It is common ground that Tendele has removed or altered traditional graves in violation of the KZN Heritage Act. That plainly, was unlawful. It is conduct grossly inconsistent with the Constitution, and invalid. [80] Given the particular circumstances of this case, it is my considered view that although the appellants asked for an interdict in the notice of motion, a declaratory order would constitute appropriate relief.46 This order should not be suspended, since Tendele does not conduct unplanned mining. It must know in advance which graves need to be relocated and it has demonstrated that it is able to comply with the provisions of the KZN Heritage Act. Relief [81] The appellants sought an order interdicting Tendele from carrying on with any mining operations in Areas 1, 2 and 3 on Reserve No 3; the KwaQubuka and Luhlanga areas on Reserve No 3; and one part of the remainder of Reserve No 3, ‘until further order’ of the high court. Although the appellants did not ask for a declaratory order, such an order would be just and equitable in the circumstances, for the reasons stated below. 46 Economic Freedom Fighters and Others v Speaker of the National Assembly and Another [2017] ZACC 47; 2018 (2) SA 571 (CC) para 211. [82] Section 172(1)(a) of the Constitution applies. It provides that conduct inconsistent with the Constitution must be declared invalid. The court has no discretion. In terms of s 172(1)(b) the court has a discretion to grant just and equitable relief, either independently or together with a declaratory order.47 The power in s 172(1)(b) to make any order that is just and equitable is not limited to declarations of invalidity; and ‘is so wide and flexible that it allows Courts to formulate an order that does not follow prayers in the notice of motion’.48 [83] In the exercise of this wide remedial power, the Constitutional Court has highlighted the need for courts to be pragmatic in crafting just and equitable remedies.49 A pragmatic approach that grants effective relief – that upholds, enhances and vindicates the underlying values and rights entrenched in the Constitution50 – and which will allow Tendele, the primary employer in Mtubatuba, to continue mining while it brings itself into compliance with NEMA, is called for in this case. [84] If Tendele’s mining operations are brought to a grinding halt, this would have catastrophic consequences. The mine is the primary driver of economic activity in Mtubatuba. It employs over 1000 people and 83% of its employees live in the Mpukunyoni area surrounding the mine. According to the Integrated Development Plan of the Mtubatuba Municipality, mining is one of the major employment sectors in the municipality; and the unemployment rate in the area 47 Section 172(1) of the Constitution provides: ‘172 Powers of courts in constitutional matters (1) When deciding a constitutional matter within its power, a court- (a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency; and (b) 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 conditions, to allow the competent authority to correct the defect.’ 48 Economic Freedom Fighters fn 46 paras 210- 211. 49 Electoral Commission v Mhlope and Others [2016] ZACC 15; 2016 (5) SA 1 (CC) para 132. 50 Fose v Minister of Safety and Security 1997 (3) SA 786 (CC) para 34. which previously was at 59.7%, had improved to 39% in 2011, as a result of the mining operations at Somkhele. [85] The Mpukunyoni amici submitted that if mining operations were to stop, the South African anthracite market would be wiped out, which would have a knock-on effect on the ferrochrome industry that employs more than 20,000 people and is a major exporter in the South African economy. Tendele has also made significant investments in the development of the area, which include the provision of apprenticeships, training in farming activities, adult basic education and training, bursaries and student teachers. Between December 2006 and December 2016, Tendele spent R719 million on local community employee salaries; R54 million on community projects in accordance with approved social and labour plans annexed to the Tendele mining rights; and R300 million on procuring services from community-based black economic empowerment companies. [86] The termination of mining operations, even temporarily, would be the death knell of the Mtubatuba economy and would result in the loss of the livelihood of the Mpukunyoni community, together with significant benefits described above. For these reasons, Tendele and the Mpukunyoni amici have asked this Court to grant Tendele an opportunity to regularise its position in relation to the requisite statutory approvals. Costs [87] The high court stated that there was ‘no reason why costs should not follow the result’ and ordered the appellants to pay Tendele’s costs. Tendele has since abandoned the costs order. However, a notice of abandonment does not overturn the judgment of the court a quo, which remains on the public record and is available to persons researching or seeking a direction on costs in an environmental law dispute. There is no public record that the costs order was abandoned. [88] It is trite that a judgment stands unless it is rescinded, or set aside by an appellate court. The abandonment of a judgment is a unilateral act which operates ex nunc and not ex tunc. It precludes the party who has abandoned its rights under the judgment from enforcing it, but the judgment still exists with all its intended legal consequences.51 [89] An award of costs involves the exercise of a discretion. It is a settled principle that an appellate court does not lightly interfere with the exercise of a true discretion, unless it is shown that the discretion was not exercised judicially, more specifically, that the decision could not reasonably have been reached by a court properly directing itself to the relevant facts and principles.52 The CER submitted that the high court did not exercise its discretion judicially when it ordered the appellants to pay Tendele’s costs, and that the costs order should be overturned whatever the outcome of the appeal. [90] The costs order not only has an obvious chilling effect on the enforcement of a constitutional right,53 but the high court also disregarded the protection against an adverse costs order contained in NEMA itself. Section 32(2) states: ‘A court may decide not to award costs against the person who, or group of persons which, fails to secure the relief sought in respect of any breach or threatened breach of any provision of this Act, including a principle contained in Chapter 1, or of any provision of a specific environmental management Act, or any other statutory provision concerned with the protection of the environment or the use of natural resources, if the court is of the opinion that the person or group of persons acted reasonably out of a concern for the public interest or in the interest 51 Engen Petroleum Ltd v Paargen Erf 116 (Pty) Ltd t/a Impala Motors and Others [2018] ZANWHC 27 para 9. 52 Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (9) BCLR 1113 (CC) para 107. 53 Biowatch Trust v Registrar Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC) para 21. of protecting the environment and had made due efforts to use other means reasonably available for obtaining the relief sought.’ [91] It is clear from the founding papers that the appellants were seeking to enforce the right to have the environment protected, contained in s 24 of the Constitution, as well as the provisions of NEMA and various other environmental management statutes. The application for the interdict was brought in the public interest, the interests of the people residing in the vicinity of the mine affected by mining operations and in the interests of the appellants’ members, as envisaged in s 38 of the Constitution. [92] In the light of the facts and principles outlined above, the order directing the appellants to pay Tendele’s costs is not one that could reasonably have been made. The high court failed to exercise its discretion judicially and the costs order must be set aside. [93] In the result, I would make the following order: The appeal succeeds with costs, including the costs of two counsel. The order of the high court is set aside and replaced with the following: ‘2.1 It is declared that the commencement or continuation of mining operations by the first respondent on the properties listed below (the properties) is unlawful and unconstitutional, unless and until it has been granted an environmental authorisation in terms of the National Environmental Management Act 107 of 1998 (NEMA), to undertake the relevant listed activities contained in the List of Activities and Competent Authorities Identified in terms of Sections 24(2) and 24D of NEMA, published under Government Notices R983, 984 and 985, in Government Gazette 38282 of 4 December 2014: (a) Area 1 on Reserve No 3 (Somkhele) No 15822, measuring 660.5321 hectares as described in the mining right dated 22 June 2007; (b) Areas 2 and 3 on Reserve No 3 (Somkhele) No 15822, measuring 779.8719 hectares as described in the mining right dated 30 March 2011; (c) The KwaQubuka and Luhlanga areas on Reserve No 3, measuring 706.0166 hectares as described in the mining right dated 8 March 2013; (d) Areas 4 and 5 on part of the remainder of Reserve No 3 No 15822, in extent to 21233.0525 hectares as described in the mining right dated 26 October 2016. 2.2 It is declared that the first respondent’s commencement or continuation of mining operations on the properties is unlawful and unconstitutional, unless and until it has obtained written approval in terms of s 35 of the KwaZulu- Natal Heritage Act 4 of 2008 to damage, alter, exhume or remove any traditional graves from their original positions. 2.3 The order in paragraph 2.1 above is suspended for a period of 12 months to enable the first respondent to obtain the requisite environmental authorisation. In the event that the first respondent does not obtain that authorisation within the said period, it shall be entitled to apply to this Court for an extension of the period, setting out the steps taken to obtain environmental authorisation; the status of that application; and why a further suspension of the order in paragraph 2.1 is necessary. 2.4 The first respondent is ordered to pay the costs of the application, including the costs of two counsel.’ __________________ A SCHIPPERS JUDGE OF APPEAL Ponnan JA (Plasket and Nicholls JJA and Ledwaba AJA concurring): [94] Motion proceedings, said Harms DP in National Director of Public Prosecutions v Zuma, ‘are all about the resolution of legal issues based on common cause facts’.54 He added: ‘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.’ [95] In motion proceedings, the affidavits constitute both the pleadings and the evidence.55 The issues and averments in support of a party’s case should appear clearly therefrom.56 They serve, not just to define the issues between the parties, but also to place the essential evidence before the court. An applicant must therefore raise in the founding affidavit the issues as well as the evidence upon which it relies to discharge the onus of proof resting on it. [96] It is impermissible for an applicant in motion proceedings to make out a new case in reply. As Cloete JA pointed out in Minister of Land Affairs and Agriculture v D & F Wevell Trust, ‘[t]he reason is manifest ─ the other party may well be prejudiced because evidence may have been available to it to refute the 54 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); 2009 (1) SACR 361 (SCA); 2009 (4) BCLR 393 (SCA); [2009] 2 All SA 243 (SCA) para 26. 55 Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA) para 28. 56 Minister of Land Affairs and Agriculture and Others v D & F Wevell Trust and Others [2007] ZASCA 153; 2008 (2) SA 184 (SCA) para 43. new case on the facts. The position is worse where the arguments are advanced for the first time on appeal’. [97] In my view, this is precisely such a case. Seegobin J appeared to recognise as much in his judgment on the application for leave to appeal,57 when he observed: ‘I immediately point out that the applicants’ case was very poorly pleaded on the papers. This much was fairly and properly conceded by Mr Ngcukaitobi in the present application. The applicants had simply failed to make out a proper case for an interdict in their founding papers. I considered that the factual allegations relied on were, for the most part, incorrect and unsubstantiated. The application was accordingly dismissed for the reasons set out in the judgment.’ [98] That, ought to have led to the dismissal of the application for leave to appeal. Surprisingly, it did not. The learned judge proceeded to hold: ‘Despite the difficulties in the papers and my misgivings about the applicants’ prospects, I have listened intently to the submissions advanced by all counsel in the present application. In view of the various pieces of legislation involved as well as issues of interpretation and questions of legality that may arise I am persuaded that an appeal would have reasonable prospects of success. I also consider that it may also be in the public interest to have some finality on the issues raised by the applicants. For these reasons I am persuaded that leave to appeal should be granted.’58 [99] If, indeed, the appellants ‘had simply failed to make out a proper case’ in their founding papers for the relief sought, it is difficult to comprehend why the learned judge took the view that the matter was nonetheless deserving of the attention of this Court. If, as he correctly points outs, the factual allegations relied 57 Global Environmental Trust and Others v Tendele Coal Mining (Pty) Ltd and Others [2019] ZAKZPHC 62 para 7. 58 Global Environmental Trust fn 57 para 8. upon by the appellants were, ‘for the most part, incorrect and unsubstantiated’, that, one would have thought, would have been the end of the matter. [100] Seegobin J felt impelled to grant leave to the appellants to appeal, because in his view there were ‘issues of interpretation and questions of legality that may arise’. What those were, he did not elaborate. And, how one would get to those issues, given the evident unreliability of the appellants’ allegations, remained unexplained. Despite this, my colleague Schippers JA inclines to the view that the appeal must succeed. Needless to say, I do not agree. [101] The appellants seek an order interdicting the first respondent (Tendele), from conducting mining operations at its Somkhele mine. They contend that Tendele is mining without the necessary statutory authorisations and approvals. The interdict sought is far reaching. If granted, it would have the effect of closing Tendele’s operations. More the reason, one would think, for a proper case to have been made out on the papers. [102] The appellants say that Tendele’s current mining operations are unlawful because it has no: (i) environment authorisation issued in terms of s 24 of the National Environmental Management Act 107 of 1998 (NEMA); (ii) land use authority, approval or permission from any municipality having jurisdiction; (iii) waste management licence issued by the fourth respondent, the Minister of Environmental Affairs (the Minister) in terms of s 43 of the National Environmental Management: Waste Act 59 of 2008 (the Waste Act); and (iv) written approval in terms of s 35 of the KwaZulu-Natal Heritage Act 4 of 2008 (the KZN Heritage Act) to damage, alter, exhume or remove any traditional graves. [103] Tendele began its mining operations in 2006 pursuant to the grant of an ‘old order’ mining licence and subsequently a mining right, and the approval of an Environmental Management Programme (EMP), granted and approved in terms of the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA). The Somkhele Mine comprises a single mining area on Reserve No 3. However, the mining operations are divided amongst five areas and separate mining rights and EMP’s apply to the different areas. The mining right in respect of Area 1 was granted to Tendele on 21 May 2007. The EMP applicable to the Area 1 mining right was approved on 22 June 2007. The Areas 2 and 3 converted mining right was granted to Tendele on 1 February 2011. On 8 March 2013, the right was amended to include the KwaQubuka and Luhlanga areas. The EMP attaching to the mining right of Areas 2 and 3 was approved on 30 March 2011. Amendments to this EMP, to cater for the inclusion of the KwaQubuka and Luhlanga areas were approved on 29 May 2012. The Areas 4 and 5 mining right was granted on 31 May 2016. The EMP applicable to this right was approved on 26 October 2016. [104] Tendele is only actively mining in Area 1 and the extended area of Area 2, namely, the KwaQubuka and Luhlanga areas. The Mine’s coal wash plants are located in Area 2. Mining operations are not being undertaken in Area 3. Mining operations ceased in Area 2 in January 2012, due to depletion of the anthracite reserves. Mining operations have not yet started in Areas 4 and 5. The second and third appellants have launched review proceedings to, inter alia, set aside the mining right granted in respect of Areas 4 and 5. [105] The appellants seek to interdict all of Tendele’s mining operations, until it has obtained the authorisations referred to in paragraph 96 above, which it says are required. In the view that I take of the matter, which is evidently much narrower than that of my colleague, Schippers JA, the high court correctly refused to grant the relief sought. As to (i) [106] The appellants contend that Tendele is mining unlawfully because no environmental authorisation as contemplated by NEMA has been issued to it. According to the appellants, such environmental authorisation was required both prior to 8 December 2014, when the One Environmental System was introduced and, after that date. [107] The question of whether Tendele was required to obtain an environmental authorisation as required by s 24F(1)(a) of NEMA does not arise on the papers, because the appellants failed to allege that Tendele is conducting any of the listed activities at Somkhele. The appellants’ founding affidavit lacks the necessary allegations to sustain this ground of unlawfulness. Section 24F(1)(a) of NEMA prohibits the commencement of ‘listed activities’ in the absence of environmental authorisation. Listed activities are those identified in terms of s 24(2). [108] Acting in terms of this section (and its predecessor, s 21 of the Environment Conservation Act 73 of 1989 (the ECA)), the Minister identified the activities that may not commence without environmental authorisation. Since the first list of activities was published in terms of the ECA on 5 September 1997, the list of activities has been replaced and amended on several occasions. New activities have been added; the definition of certain activities has been amended and some activities have been removed. [109] Any allegation that Tendele has breached s 24F(1)(a) of NEMA, at a bare minimum, had to identify: (a) the listed activity alleged to have been commenced without environmental authorisation; and (b) the date on which that activity commenced. The appellants did not plead these essential facts in their founding affidavit. The sum total of the appellants’ evidence in the founding affidavit on this score was the following: ‘Normally speaking, mining is a listed activity which has an impact on the environment and as such an Environmental Authorisation (“EA”) must be obtained in terms of the National Environmental Management Act 107 of 1998 (NEMA).’ [110] Tendele’s answering affidavit set out why, as a matter of law, it contended that there is no requirement for environmental authorisation for its mining operations. It also pointed out that, under the ECA, authorisation under any environmental legislation was not required for mining operations or activities directly related thereto. Given the case that it was called upon to answer, Tendele’s answering affidavit was a perfectly legitimate response. It bore no onus or evidentiary duty. [111] In their replying affidavit, the appellants stated: ‘It is accepted that there are no listed activities related to “mining” as a special category. However, there are a host of listed activities which relate to mining. These are set out in a table which is annexure ‘R1’ hereto.’ That was the high-water mark of the appellants’ case. Annexure R1 contains a list of the activities requiring environmental authorisation under NEMA. The appellants made no effort, even in reply, to identify which of the activities Tendele was allegedly undertaking, nor when Tendele allegedly commenced them. [112] Indeed, as pointed out in Minister of Land Affairs and Agriculture v D & F Wevell Trust: ‘It is not proper for a party in motion proceedings to base an argument 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 . . . A party cannot be expected to trawl through lengthy annexures to the opponent’s affidavit and to speculate on the possible relevance of facts therein contained. Trial by ambush cannot be permitted.’59 [113] In any event, by the time of the replying affidavit it was already too late. These are the kinds of allegations that should have been included in the founding affidavit so that Tendele could answer them. On appeal, the appellants try to escape this difficulty by casting a duty or onus on Tendele to have supplied the missing allegations, either in its answering affidavit or the correspondence. They say that it was clear from the pre-litigation correspondence that the appellants lacked sufficient detail to enumerate which activities triggered specific listed activities; that it was common cause from the correspondence that Tendele was conducting listed activities and, that Tendele ought to have denied that it was engaged in any listed activities or explained what listed activities it was undertaking. But, that is to cast a duty on Tendele that, in law, it simply did not bear. [114] The appellants submit that Tendele ought to have supplied the allegations that were missing from the founding affidavit, because those facts were peculiarly within Tendele’s knowledge. In support of this proposition, they rely on Wightman t/a J W Construction v Headfour (Pty) Ltd and Another.60 But Wightman does not assist them. As it was put in Wightman, ‘[w]hen the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer’,61 a bare denial will not suffice to create a dispute of fact. However, as Wightman made plain: ‘[t]here will of course be 59 Minister of Land Affairs fn 56 para 43. 60 Wightman t/a J W Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; [2008] 2 All SA 512 (SCA); 2008 (3) SA 371 (SCA). 61 Wightman fn 60 para 13. instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him’.62 This is precisely such a situation. There was nothing to deny because the appellants did not aver sufficient facts that called for more. If anything, they were mistaken about the elements of their cause of action. In the circumstances, Tendele had no duty to supply the missing allegations. [115] It follows that on the papers as they stand, one simply does not get to the issue of the proper interpretation of NEMA. As to (ii) [116] The appellants contend that Tendele is undertaking mining operations in contravention of the KwaZulu-Natal Planning and Development Act 6 of 2008 (the KZN Planning Act) and the Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA). The appellants accept that the KZN Planning Act and SPLUMA do not apply to any of Tendele’s operations that occurred prior to the commencement of those statutes. They now limit their attack to mining, which they say, will occur in the future in respect of the mining right of Areas 4 and 5. In heads of argument filed on behalf of the appellants, it is contended that the use of the land covered by the Areas 4 and 5 mining right ‘to commence mining would be to convert that land to a new purpose by “making use of its resources”’. [117] The contention is unsustainable. In the first place, it was not pleaded by the appellants. As a result, the necessary factual allegations are nowhere to be found in the appellants’ affidavits. Tendele was also never afforded an opportunity to respond to such a case. In the second place, the appellants’ contention treats the mining that will occur in Areas 4 and 5 in the future as if unrelated to the mining 62 Ibid. that has occurred to date at Somkhele. As explained above, the Somkhele Mine (including the area forming the subject of the Areas 4 and 5 mining right) comprise a single mining area on Reserve No 3. Tendele’s mining operations commenced on Reserve No 3 in 2006 before both the KZN Planning Act and SPLUMA commenced.63 [118] Be that as it may, two of the relevant local municipalities have confirmed that no planning approval or land use approval is required for the continuation of mining operations by Tendele. As to (iii) [119] The appellants contend that Tendele’s operations are unlawful as it does not have a waste management licence for its activities as required by the Waste Act. The appellants failed to identify any aspect of Tendele’s operations that would require a waste management licence. This ground of alleged unlawfulness is accordingly unsustainable on the pleadings. [120] That aside, in terms s 20 of the Waste Act, no person may commence, undertake or conduct a waste management activity except in accordance with a waste management licence or the requirements or standards determined in terms of s 19(3). A ‘waste management activity’ is defined in s 1 as any activity listed in Schedule 1 or published by notice in the Gazette under s 19. Section 19 empowers the Minister by notice in the Gazette to publish a list of waste management activities. On 29 November 2013 the Minister published the list of waste management activities (the 2013 notice) that have or are likely to have a detrimental effect on the environment.64 The 2013 notice contains transitional 63 The KZN Planning Act commenced on 1 May 2010 and SPLUMA commenced on 1 July 2015. 64 ‘List of Waste Management Activities that have, or are likely to have, a detrimental effect on the environment GN R921, GG 37083, 29 November 2013.’ provisions, the purpose of which is to regularise the affairs of persons who were in the process of conducting waste management activities at the time of the publication of the notice. [121] Regulation 7(1) of the 2013 notice provides: ‘A person who lawfully conducts a waste management activity listed in this Schedule on the date of the coming into effect of this Notice may continue with the waste management activity until such time that the Minister by notice in a Gazette calls upon such person to apply for a waste management licence.’ Tendele’s mining operations and any waste management activity that it was conducting, were being lawfully conducted in terms of its mining rights and approved EMP’s at the time of the coming into effect of the 2013 notice. Tendele was therefore entitled to continue conducting such activity, until called upon by the Minister to apply for a waste management licence. The Minister has not called upon Tendele to do so. [122] Moreover, the interdict that the appellants seek is plainly too broad in relation to the right sought to be protected. The alleged unauthorised undertaking of waste management activities in terms of the Waste Act could not possibly entitle the appellants to an interdict shutting down Tendele’s entire mining operation. At best, they would only be entitled to relief in respect of a specified listed activity, assuming that such activity had been identified in their pleadings, which, as already stated, the appellants had failed to do. As to (iv) [123] Tendele accepts that it has previously removed or altered traditional graves, without being in possession of the necessary authorisations from the Amafa aKwaZulu-Natali Heritage Council (Amafa). It points out in its answering affidavit that it has since taken steps to rectify its past failures. Tendele details a series of engagements between it and Amafa, which has not been meaningfully disputed by the appellants in reply. [124] Tendele stated in its answering affidavit: ‘There is no reasonable apprehension that Tendele will in future alter, relocate, damage or exhume any traditional graves without the necessary authorization from Amafa. Tendele has unequivocally committed itself to working with Amafa and the community to ensure that future relocations comply with the letter and the spirit of the law. I am advised and accordingly submit that the [appellants’] complaints about Tendele’s conduct in relation to traditional graves does not entitle them to any interdictory relief, far less an interdict against the entire mining operation at Somkhele.’ [125] As it was put in National Council of Societies for the Prevention of Cruelty to Animals v Openshaw: ‘An interdict is not a remedy for past invasion of rights but is concerned with present or future infringements. It is appropriate only when future injury is feared. Where a wrongful act giving rise to the injury has already occurred, it must be of a continuing nature or there must be a reasonable apprehension that it will be repeated.’65 [126] There are no facts in this matter that would justify any reasonable apprehension that Tendele will again relocate or exhume graves without the appropriate approval. Moreover, here as well, even if the appellants’ complaint were to be accepted, the alleged unauthorised removal of the traditional graves, could not possibly entitle them to an interdict shutting down the entire mining operation. [127] In the result, I would dismiss the appeal. Tendele, commendably does not seek costs. 65 National Council of Societies for the Prevention of Cruelty to Animals v Openshaw [2008] ZASCA 78; [2008] 4 All SA 225 (SCA); 2008 (5) SA 339 (SCA) para 20. _________________ V M Ponnan Judge of Appeal APPEARANCES For Appellants: T Ngcukaitobi SC (with M Mazibuko) Instructed by Youens Attorneys, Pietermaritzburg Phatshoane Henney Attorneys, Bloemfontein For Respondents P Lazarus SC N Ferreira Instructed by Malan Scholes Inc, Johannesburg Claude Reid Inc, Bloemfontein For Amicus Curiae, Centre for Environmental Rights M Du Plessis SC T Palmer S Lushaba Instructed by Centre for Environmental Rights, Cape Town Phatshoane Henney Attorneys, Bloemfontein For Amici Curiae: Mpukunyoni Community Mining Forum D Sibuyi The Association of Mine Workers and Construction Union D Sibuyi The National Union of Mineworkers D Sibuyi Instructed by DMS Attorneys, Johannesburg Pieter Skein 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: 9 February 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 Global Environmental Trust and Others v Tendele Coal Mining (Pty) Ltd and Others (1105/2019) [2021] ZASCA 13 (09 February 2021) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal against an order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg. The issue before the SCA was whether Tendele Coal Mining (Pty) Ltd, the respondent, is mining without the necessary statutory authorisations and approvals. The SCA held that the appellants, Global Environmental Trust and Mfolozi Community Environmental Justice Organisation did not make out a case in their founding papers that the respondent was conducting listed activities requiring environmental authorisation as contemplated in s 24 of the National Environmental Management Act 107 of 1998 (NEMA). The SCA also found that the respondent did not require municipal approval for land use in terms of the Spatial Planning and Land Use Management Act 16 of 2013; or a waste management licence under the National Environmental Management: Waste Act 9 of 2008, because of transitional arrangements in these statutes. The appellants’ application for an interdict to prevent the relocation of ancestral graves was also refused on the basis that the appellants failed to establish a reasonable apprehension of harm. In a separate minority judgment it was held that respondent’s mining operations were unlawful and unconstitutional without an environmental authorisation under s 24 of NEMA. This order was suspended for one year to enable the respondent to obtain the necessary environmental authorisation. It was also held that an order declaring that the respondent’s mining operations is unlawful and unconstitutional unless it obtained approval in terms of the KwaZulu-Natal Heritage Act 4 of 2008, to alter or remove additional graves, was appropriate. ~~~~ends~~~~
1528	non-electoral	2008	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 719/07 In the matter between: THE MUNICIPALITY OF THE CITY OF CAPE TOWN APPELLANT v MARINA GUILIETTA READER FIRST RESPONDENT IAN DONALD PEPLOE SECOND RESPONDENT JULIA PATRICIA IKIN THIRD RESPONDENT ETHEKWINI MUNICIPALITY AMICUS CURIAE Neutral citation: City of Cape Town v Reader (719/2007) [2008] ZASCA 130 (14 November 2008) Coram: Cameron JA, Lewis JA, Jafta JA, Mlambo JA et Combrinck JA Heard: 21 August 2008 Delivered: 14 November 2008 Summary: Interpretation of s 62 of the Local Government: Municipal Systems Act 32 of 2000 – the provision does not afford an appeal to objectors to grant of planning permission. ORDER On appeal from: Cape High Court, (Davis J, NC Erasmus J and H Erasmus J sitting as the Full Court on appeal from a single judge). (1) The appeal is dismissed with costs, including costs occasioned by the employment of two counsel. JUDGMENT JAFTA JA (MLAMBO JA concurring) [1] The issue in this appeal is whether s 7(2)1 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) precluded the first and second respondents (the applicants) from seeking an order reviewing and setting aside a decision of the appellant (the municipality) until they had exhausted internal remedies. The applicants instituted review proceedings in the Cape High Court for an order setting aside the municipality’s approval of the third respondent’s building plans. The challenged approval was granted in terms of s 7 of the National Building Regulations and Building Standards Act 103 of 1977. 1 Section 7(2) provides: ‘(2) (a) Subject to paragraph (c), no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted. (b) Subject to paragraph (c), a court or tribunal must, if it is not satisfied that any internal remedy referred to in paragraph (a) has been exhausted, direct that the person concerned must first exhaust such remedy before instituting proceedings in a court or tribunal for judicial review in terms of this Act. (c) A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interests of justice.’ [2] The municipality and the third respondent opposed the application. Relying on s 7(2) of PAJA, the municipality argued in limine that the application ought to be dismissed on the basis that the applicants had failed to invoke the municipality’s internal appeal procedure in terms of s 62 of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act). Veldhuizen J upheld this argument and dismissed the application without considering the merits. [3] On appeal to the Full Court the order issued by Veldhuizen J was reversed. The Full Court held that the provisions of s 7(2) of PAJA do not apply to the present case because the internal appeal in question did not constitute a ‘viable internal remedy’ for the applicants. The judgment of the Full Court is reported sub nom Reader & another v Ikin & another 2008 (2) SA 582 (C). The present appeal is with special leave of this court. [4] In this court Ethekwini Municipality was admitted as an amicus curiae. Counsel addressed useful argument to the court on the proper interpretation of s 62 of the Systems Act. The court appreciates the assistance derived from all submissions presented in the case. [5] The facts are common cause. The applicants and the third respondent are owners of adjoining immovable properties in Sea Point, Cape Town. The third respondent’s property lies to the north of the first applicant’s property and the second applicant’s property is located on the eastern side. These properties are located in an area zoned for single dwelling units. There is one house built on each property. [6] In terms of the municipality’s zoning scheme regulations, it is permissible to build a three-storey house in the area. Before the approval of the third respondent’s building plans, her house was a single storey building. Having decided to extend it in 2003 and convert it into a double storey house, she submitted plans to the municipality for approval. On 20 February 2003 the municipality approved her plans and construction commenced on her property. [7] The construction on the third respondent’s property attracted the attention of the applicants and led to an enquiry at the municipality. They were informed that the construction was lawful and that the building plans relating thereto had been approved. The municipality’s building control officer – Mr Neil Moir – informed the first applicant that the third respondent would be adding a ‘second storey’ to her house. The first applicant was unhappy as she held the view that the proposed building would ‘obliterate [her] view of the sea’; compromise the privacy of her home; and reduce the value of her property by the amount of R350 000. [8] The applicants, as already mentioned, instituted review proceedings challenging the validity of the approval mainly on the ground that jurisdictional facts necessary for the exercise of the power to approve building plans did not exist at the time of the approval. They contended that the decision–maker ought to have considered a recommendation to grant approval by the building control officer and that he must have been satisfied that the erection of the building in question would not probably or in fact disfigure the area; be unsightly or objectionable; and would not derogate from the value of neighbouring properties. [9] The building was completed while the application was pending in the court of first instance. The applicants asked, in addition to the order setting aside the approval, that the third respondent be directed to demolish the building in question. As stated earlier, the court of first instance dismissed the application on the basis that the applicants had, in contravention of s 7(2) of PAJA, prematurely approached it before exhausting internal remedies. [10] In this court counsel for the municipality attacked the Full Court’s interpretation to the effect that s 62 of the Systems Act did not provide a ‘viable internal remedy’ for the applicants and that as a result s 7(2) of PAJA did not apply to their case. The Full Court’s conclusion was based on the effect s 62(3) has on the scope of an appeal under the section. The Full Court held that in terms of s 62(3) once a right had accrued as a result of the impugned decision, that ‘decision cannot be reversed on an appeal if the reversal takes away the right initially granted’.2 [11] Having observed that an unlawful administrative action may, in appropriate cases, give rise to a legal consequence, the Full Court said: ‘For these reasons, s 62(1) read with s 62(3) of the Systems Act does not appear to provide any viable internal remedy to an aggrieved party such as appellant in the present dispute. The mechanism created by ss 62(1) and 62(3) of the Systems Act provides an appeal for a party aggrieved by the initial decision but does not extend to third parties who contend that their rights or legitimate expectations have been adversely affected by the decision. The latter group, however, has a right of access to a court to set aside such a decision. In my view Veldhuizen J erred in holding that appellants were required to exhaust an internal remedy in terms of s 62 before approaching a court, as the section did not provide appellants an internal remedy, as envisaged in terms of s 7(2) of PAJA.’3 [12] Generally speaking s 7(2) excludes, albeit temporarily, the court’s 2 Reader v Ikin 2008 (2) SA 582 (C) (above) para 25. 3 Id para 32. jurisdiction on review proceedings where there is provision for an internal remedy. In those circumstances the aggrieved person’s right of access to courts or other independent and impartial tribunals is denied until he or she has exhausted the internal remedy. The subsection is couched in peremptory terms which oblige every reviewing court to decline to hear a review application brought under PAJA until the aggrieved party has exhausted internal remedies.4 Recently in Nichol this court said: ‘Under the common law, the mere existence of an internal remedy was not, by itself, sufficient to defer access to judicial review until the remedy had been exhausted. Judicial review would in general only be deferred where the relevant statutory or contractual provision, properly construed, required that the internal remedies first be exhausted. However, as is pointed out by Iain Currie and Jonathan Klaaren, “by imposing a strict duty to exhaust domestic remedies, [PAJA] has considerably reformed the common law”. It is now compulsory for the aggrieved party in all cases to exhaust the relevant internal remedies unless exempted from doing so by way of a successful application under s 7 (2) (c). Moreover, the person seeking exemption must satisfy the court of two matters: first, that there are exceptional circumstances, and second, that it is in the interest of justice that the exemption be given.’5 [13] The issue of exemption from exhausting an internal remedy does not arise in the present case simply because no application therefor was made to the reviewing court. As a result it is not necessary to consider whether the requirements for an exemption have been met. The validity of s 7(2) was not challenged in these proceedings and therefore I proceed on the assumption that it is consistent with the Constitution. The question for consideration is whether s 62 of the Systems Act affords the applicants an internal remedy contemplated in s 7(2) of PAJA. The answer to this question lies in the interpretation of s 62. 4 Nichol & another v Registrar of Pension Funds & others 2008 (1) SA 383 (SCA). 5 Id para 15. [14] Section 62 of the Systems Act provides: ‘(1) A person whose rights are affected by a decision taken by a political structure, political office bearer, councillor or staff member of a municipality in terms of a power or duty delegated or sub-delegated by a delegating authority to the political structure, political office bearer, councillor or staff member, may appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the date of the notification of the decision. (2) The municipal manager must promptly submit the appeal to the appropriate appeal authority mentioned in subsection (4). (3) The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision. (4) When the appeal is against a decision taken by – (a) a staff member other than the municipal manager, the municipal manager is the appeal authority; (b) the municipal manager, the executive committee or executive mayor is the appeal authority, or, if the municipality does not have an executive committee or executive mayor, the council of the municipality is the appeal authority; or (c) a political structure or political office bearer, or a councillor – (i) the municipal council is the appeal authority where the council comprises less than 15 councillors; or (ii) a committee of councillors who were not involved in the decision and appointed by the municipal council for this purpose is the appeal authority where the council comprises more than 14 councillors. (5) An appeal authority must commence with an appeal within six weeks and decide the appeal within a reasonable period. (6) The provisions of this section do not detract from any appropriate appeal procedure provided for in any other applicable law.’ [15] Section 62(1) lays down two threshold requirements. The first is that the decision appealed against must have affected the rights of the appellant. The second is that such decision ought to have been reached in the exercise of a delegated power. In this matter it is common cause that the building plans concerned were approved in terms of a delegated power. What needs to be considered is whether the present applicants satisfied the first requirement. If not, it cannot be held that there was an internal remedy which they ought to have exhausted before approaching the high court. [16] On the construction of s 62(1) it must be shown that the decision to approve the plans itself affected the rights of the applicants. Since the issue in the present case was raised as a point in limine, I accept that a mere allegation of this fact will suffice. Absent such allegation, however, the finding that the approval affected the rights of the applicants cannot be made. [17] In their papers the applicants have not alleged that the approval itself affected their rights. All that they have alleged in challenging the approval is that its subsequent execution – the erection of the building – affected their rights. Hence the complaint that the value of their properties was diminished by the building in question. If the third respondent had not erected it after obtaining approval, the applicants’ sea view could not have been obliterated and there could not have been a derogation from the value of their properties. This must be borne in mind in determining whether it has been shown that the approval had affected the applicants’ rights. [18] As it was the municipality which raised the issue that the applicants were obliged to invoke the remedy in s 62 before approaching the court, it is necessary to look for the essential allegation in its answering affidavit. It does not make the allegation that the decision affected the applicants’ rights. On the contrary, Mr Craig Thomas Rolfe – the municipality’s Principal Plans Examiner – states: ‘41. As stated before, as [the municipality’s] decision to approve [third respondent’s] application did not materially and adversely affect the Applicants’ rights, they had no right to be heard either in terms of the Act, or the Constitution, before the building plans were approved.’ And later he repeats the same allegation: 45.2 Applicants were not given notice as [the municipality] was satisfied that its decision to approve [third respondent’s] application would not materially and adversely affect any of the Applicants’ rights.’ [19] The above allegation by the municipality is correct in the light of the finding made in Walele v The City of Cape Town & others.6 In that case the Constitutional Court considered whether objectors such as the present applicants were entitled to a pre-approval hearing, in the context of s 3 of PAJA.7 The Constitutional Court interpreted s 3 and said: ‘On a proper construction of section 3, the applicant’s claim to a hearing can only succeed if he establishes that the decision to approve the building plans materially and adversely affected his rights or legitimate expectations. The parties involved in the application for the approval were the respondents and the City. The applicant was not a party to that process nor was he entitled to be involved. The building plans concerned were drawn at the instance of the respondents who wanted to erect the four-storey block of flats on their own property. The granting of the approval could not, by itself, affect the applicant’s rights.’ [20] Before us, counsel for the municipality argued that the finding in Walele turned closely on the interpretation of PAJA. That finding, said counsel, does not mean that the unlawful approval of building plans did not give a neighbour affected thereby a right of appeal in terms of s 62 of the Systems Act. 6 2008 (6) SA 129 (CC); [2008] ZACC 11. 7 Section 3(1) of PAJA provides: ‘Administrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.’ [21] Although the finding in Walele was based on the interpretation of s 3 of PAJA, there are similarities between that section and s 62(1) in so far as the requirements for invoking each section are concerned. The language used in these sections is similar and the requirement common to both sections is that the challenged decision must affect the rights of the aggrieved party. Since in this case the impugned decision is the approval of the third respondent’s building plans, it must be shown in the manner mentioned above that this decision has affected the applicants’ rights. [22] There can be no doubt that on the authority in Walele, it cannot be said that the impugned approval affected the applicants’ rights for purposes of founding a claim for a pre-decision hearing. The question that arises, therefore, is whether it can be said that the same decision affects their rights for purposes of an appeal in terms of s 62(1). To hold that it does will introduce an illogicality. In my view, if the decision concerned does not affect the applicants’ rights for purposes of a hearing, it must equally not affect their rights for purposes of an appeal. It is difficult – if not impossible – to imagine a situation where an approval of building plans does not affect the objectors’ rights for purposes of a pre-decision hearing while at the same time it affects their rights for purposes of an appeal. [23] Moreover, s 62(1) requires that the person whose rights are affected by the decision be notified of it so that he or she can note an appeal within 21 days from the date of notification. Notification must follow a decision which affects the aggrieved party’s rights. In this matter notification was not given presumably because the municipality held the view that the approval did not affect the applicants’ rights. This view is inconsistent with the requirement of s 62(1). This is a further indication that s 62 was not designed to apply to cases of objectors to the approval of building plans, whose objection is ordinarily raised against the execution of the plans and not the approval itself. Therefore, I conclude that s 62 does not apply to cases such as the present. [24] But even if the section applied to such cases, the present application ought not to have been dismissed because one of the threshold requirements was not met. As mentioned earlier, it was not alleged that the decision which is challenged by the applicants affected their rights. This makes it unnecessary to interpret the other parts of s 62 and as a result I decline the invitation by the parties that we should construe the whole section. It is also not necessary to consider whether the reasons given by the Full Court for its decision are correct or not. Suffice it to say it reached the correct decision. It follows that the appeal must fail. [25] Lewis JA rejects the construction of s 62(1) which ascribes to it the meaning that before a party can invoke the section, it must be shown that the decision appealed against has affected the rights of the appellant (para 33) and concludes that a successful appeal under s 62(1) ‘would necessarily entail the outcome that the decision would be revoked or varied – contrary to s 62(3)’ (para 34). I disagree. Section 62(3) does not insulate the decision forming the subject matter of the appeal, itself, from variation or even revocation. What is protected by the subsection is the rights which have accrued as a result of such decision. The subsection stipulates that no variation or revocation of the decision may detract from accrued rights. In other words, once the appeal authority contemplates revoking or varying the decision appealed against, s 62(3) comes in to play and such revocation or variation ought not to affect the rights which accrued as a result of the impugned decision. For example, in this case the revocation or variation of the approval granted would not affect the third respondent’s right to build. Whether this could constitute appropriate relief for the applicants is a different matter, and the answer thereto lies in what is meant by an internal remedy contemplated in s 7(2) of PAJA. [26] In the result the appeal is dismissed with costs, including costs occasioned by the employment of two counsel. ________________ C N JAFTA JUDGE OF APPEAL LEWIS JA (CAMERON JA and COMBRINCK JA CONCURRING) [27] I have had the benefit of reading the judgment of my colleague Jafta and agree with him that the appeal should be dismissed. However, I write separately because I consider that there is a narrower and more direct path to that outcome, based on a construction of what seems to me to be the clear meaning of s 62 of the Systems Act. In my view, that provision cannot be invoked at all by neighbours, such as the applicants in this case, who have not been party to a municipal planning permission application. [28] The essential dispute between the parties is whether s 62 of the Systems Act confers on the applicants a viable right of appeal. I shall refer to the parties and the legislation in the same way as Jafta JA has done. The applicants argue that, once the municipality approved the neighbour’s plans to which they object, their only right of appeal lay to a review board constituted under s 9 of the National Building Regulations and Building Standards Act 103 of 1977 (the NRB Act). Section 9(1) of that Act provides that a person who feels aggrieved by the refusal of a local authority to grant approval in respect of the erection of a building may appeal to a review board. The section is plainly inapposite to this case. The municipality contends instead that s 62 of the Systems Act afforded the applicants a right of appeal, and that, having failed to exercise it (for it is common cause that they did not), s 7(2) of PAJA blocks their right to challenge the approval in a court of law. [29] The resolution of this question will, as the amicus ably demonstrated, and the parties agreed, have immense practical implications for local governance in this country; for, if s 62 affords a right of appeal – any right of appeal – to those aggrieved by municipal planning decisions, their exercise of those rights must be accommodated before the decision can be implemented. [30] But s 62 clearly gives no general right of appeal to those who object to municipal planning permissions and decisions. As I see it, s 62 (1) gives only one whose rights are directly affected by a decision, taken by a person delegated to make such decision, a right to appeal against that decision within the strictures of s 62. That raises the question as to who has a right directly affected by the decision. Although on an initial reading it might appear that anyone who is in some way affected by a decision to grant permission to build (a neighbour, say, who believes that his or her property rights are in some way diminished) may appeal, that cannot be. How can a person not party to the application procedure itself appeal against the decision that results? And the Constitutional Court held in Walele, to which Jafta JA refers (para 19 of his judgment), that neighbours in the position of the applicants (although they may later challenge the lawfulness and regularity of the permission accorded) have no entitlement to be party to the approval process itself. [31] This interpretation, that objecting neighbours and others have no right of appeal at all under s 62, is borne out by s 62(3): ‘The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision’ (my emphasis). It seems plain that the purpose of s 62 as a whole is to give to the dissatisfied applicant for permission – and to no one else – an opportunity for the matter to be reheard by a higher authority within the municipality. It is only the aggrieved applicant, who has failed to secure the permission sought in his or her application, who is afforded a right of appeal under s 62. For if it were otherwise any appeal would be pointless: only those affected by the grant of permission, or a decision favourable to an applicant, would wish to apply and they could not succeed if the appeal resulted in a revocation or variation of a right that has accrued to the applicant. [32] Section 62 thus grants no viable appeal at all to a person not party to the planning permission application (or, for that matter, by any other section in the Systems Act). It makes no difference, in my view, whether the objection is to the decision itself, or to the implementation of the decision – for instance by starting building works – or to the completion of that process. It is the decision made by the municipality or its delegee in the case of the application itself that may be appealed against – but only if the outcome of the appeal does not detract from the rights of the successful applicant. [33] For this reason, I find myself regretfully unable to accept the construction of the section suggested by Jafta JA (paras 17 and 23). He states that the applicants had not objected to the decision itself but to the execution of the building works pursuant to it. The fact that the third respondent had actually not only started, but also completed, the building work for which permission was granted is not, in my respectful view, relevant. The third respondent acquired a right from the municipality and it is of no consequence to the question whether objecting neighbours and others had a right of appeal under s 62 that she acted on it. [34] A successful appeal against the grant of planning permission by the municipality under s 62(1) would necessarily entail the outcome that the decision would be revoked or varied – contrary to s 62(3). The fact that the beneficiary of the decision acted on the decision by building, and the extent of the building, thus cannot be relevant in determining whether the Systems Act affords the applicants any right to appeal. It therefore does not matter whether in claiming relief the applicants stated their complaint to be the building works, pursuant to permission, or the permission itself. [35] Thus in my view, the applicants – and neighbours in their position who are not party to an application or an objection to the grant of permission to act by a municipality – are not afforded an appeal under s 62. The very wording of the section precludes it. If they are entitled to relief of any kind outside the NBR Act or the Systems Act, it can only be a review under PAJA. And since s 62 does not afford them a viable appeal there is no internal remedy that can first be exhausted before applying for a review of the decision. [36] This approach differs from that in the judgment of Jafta JA in that it essentially accords with the approach of the full court which Jafta JA finds unnecessary to consider. In my view, the entire reasoning and approach of the full court should be affirmed.8 [37] For these reasons I agree with Jafta JA that the appeal should be dismissed with costs including those consequent on the employment of two counsel. ________________ C H LEWIS JUDGE OF APPEAL 8 Counsel for the municipality referred this court to a decision of Olivier AJ in the Cape High Court, Syntell (Pty) Ltd v The City of Cape Town & another (unreported judgment, case 17780/2007, handed down on 13 March 2008), in which that court sought to distinguish the case before it from that now before us, having regard to the judgment of the full court in this matter. The issue before that court was the right of an unsuccessful tenderer to appeal in terms of s 62 of the Systems Act. Since no final tender had been awarded, the court held that an appeal under s 62 was not precluded by the decision of the full court. The question of a tenderer’s right to appeal as it emerged in that case is not before us. APPEARANCES: FOR APPELLANT: A G Binns-Ward SC ATTORNEYS: Cliffe Dekker Inc CAPE TOWN Claude Reid Attorneys BLOEMFONTEIN FOR RESPONDENT: S P Rosenberg SC ATTORNEYS: Dykman Attorneys (1st and 2nd Resp) CAPE TOWN Bisset Boehmke McBlain (3rd Resp) CAPE TOWN Webbers BLOEMFONTEIN FOR AMICUS CURIAE: P J Olsen SC A A Gabriel Linda Mazibuko & Associates DURBAN Matsepes Inc BLOEMFONTEIN	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Today, the Supreme Court of Appeal (the SCA) has delivered a judgment dismissing with costs, an appeal by the City of Cape Town (the City) against a decision of the Cape High Court in terms of which a defence raised by the City was rejected. The facts giving rise to the case were the following. Mrs Marina Reader and Mr Ian Peploe of Sea Point, Cape Town objected to the approval of building plans of Mrs Julia Ikin. The plans in question were approved by the City and Mrs Ikin built a double-story house on her property in terms of the approved plans. Her neighbours complained that the building obstructed their view of the sea and diminished the value of their properties. The parties own adjacent properties in Sea Point. Both Mrs Reader and Mr Peploe instituted a review application in the Cape High Court, challenging the validity of the permit to build and seeking an order for the demolition of Mrs Ikin’s house. They cited her and the City as respondents. In opposing the application the City contended that the applicants should have exhausted domestic appeals before approaching the court and as a result their application must be dismissed. Veldhuizen J upheld this defence and without consideration of the merits, dismissed the application. On appeal to the Full Bench, the above finding was set aside. The Full Bench found that s 62 of the Local Government: Municipal Systems Act 32 of 2000, on which the City had relied, did not afford objectors to building permits a “viable internal appeal” and therefore Mrs Reader and Mr Peploe were not obliged to exhaust internal appeals before launching their application. The Full Bench reversed the order granted by the single judge. On a further appeal to the SCA the provisions of s 62 of the Municipal Systems Act were interpreted and the judgment of the Full Bench was confirmed.
3674	non-electoral	2021	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 815/2019 In the matter between: JASON THOMAS ROHDE APPELLANT and THE STATE RESPONDENT Neutral citation: Rohde v The State (Case no 815/2019) [2021] ZASCA 134 (5 October 2021) Coram: SALDULKER, VAN DER MERWE, MOCUMIE and MOKGOHLOA JJA and POTTERILL AJA Heard: 16 August 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 5 October 2021. Summary: Criminal law – correctness of conviction of murder and obstructing the course of justice – dependent on whether deceased was manually strangulated – proved beyond reasonable doubt on evaluation of forensic pathologists’ evidence – own observations of trial court in respect of exhibit not put to witnesses – deceased not victim of sustained assault – sentence imposed afresh. ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Salie-Hlophe J sitting as court of first instance): 1 The appeal against the convictions on counts 1 and 2 is dismissed. 2 The appeal against the sentences is upheld. 3 The order of the court a quo in respect of sentence is set aside and replaced with the following: ‘(a) On count 1 the accused is sentenced to 15 years’ imprisonment. (b) On count 2 the accused is sentenced to three years’ imprisonment. (c) The sentence on count 2 is ordered to run concurrently with the sentence on count 1. (d) The accused is declared unfit to possess a fire-arm.’ 4 The abovementioned sentences are deemed to have been imposed on 27 February 2019. JUDGMENT Saldulker and Van der Merwe JJA (Mocumie and Mokgohloa JJA and Potteril AJA concurring) Introduction [1] Over the weekend of Friday 22 July 2016 to Sunday 24 July 2016, a well-known real estate company held its annual conference at the Spier Hotel near Stellenbosch in the Western Cape. Mr Jason Thomas Rohde, the chief executive officer of the company, attended the conference. His wife, Ms Susan Francis Rohde, accompanied him to the venue and attended the social events associated with the conference. During the morning of 24 July 2016, however, Ms Rohde (the deceased) was found dead in the bathroom of their suite at the hotel. This was shocking news, all the more so because the deceased was only 47 years of age; the caring mother of three adolescent daughters; in excellent health and a strong-willed and tenacious person. [2] In due course Mr Rohde (the appellant) was charged in the Western Cape Division of the High Court with the murder of the deceased (count 1) and with defeating or obstructing the course of justice (count 2). Count 2 was based on the allegation that subsequent to the murder of the deceased, the appellant had rearranged the scene of the crime in an attempt to represent that the deceased had committed suicide. The matter proceeded to trial before Salie-Hlophe J. After a protracted hearing the trial court convicted the appellant on both counts. It sentenced him to an effective term of imprisonment of 20 years, that is, 18 years’ imprisonment on count 1 and five years’ imprisonment on count 2, of which three years’ imprisonment were ordered to be served concurrently with the sentence on count 1. The trial court refused the appellant’s application for leave to appeal against the convictions and sentences, but this Court subsequently granted him such leave to appeal. [3] The issue at the heart of the appeal is whether the deceased died as a result of smothering and/or manual strangulation, as the respondent alleged, or whether she committed suicide by hanging herself from a hook affixed to the inside of the bathroom door with the use of the cord of an electric hair curler, as was the appellant’s case. The central question is whether the respondent proved beyond a reasonable doubt that the deceased had been killed or whether there was a reasonable possibility that she might have committed suicide. If it was proved that the deceased had been smothered and/or throttled to death by hand, the convictions on both counts must stand. That is so because there is no doubt that only the appellant could have killed the deceased and altered the crime scene to resemble a suicide by hanging. If, on the other hand, there is a reasonable possibility that the deceased took her own life, the appellant, would, of course, be entitled to an acquittal on both counts. As we shall show, the answer to the question turns principally on the expert forensic pathological evidence, which we analyse in detail below. The evidence of the pathologists must be considered against the background and in the context of the evidence set out below. Background [4] During the middle of 2015, the appellant entered into a clandestine extramarital affair with a co-employee, Ms Jolene Alterskye. This was revealed to the deceased on 28 February 2016, when she discovered a card that Ms Alterskye had left for the appellant in his luggage. True to her character, the deceased immediately confronted the appellant. The appellant admitted the love affair. On the instructions of the deceased he called Ms Alterskye there and then, with his cell phone on speaker, and called off the affair. Nevertheless, as could be expected, the appellant’s affair had a profound effect on the deceased’s emotional state and on the state of their matrimonial relationship. As a result, the deceased attended several sessions with a psychologist, Ms Jane Francis Newcombe. The couple also underwent marriage counselling under the guidance of Ms Carol Nader. Both Ms Newcombe and Ms Nader testified at the trial. Unbeknown to the deceased and to Ms Newcombe and Ms Nader, however, the appellant had in the meantime rekindled the love affair with Ms Alterskye. Evidence concerning the deceased’s mental state [5] Ms Newcombe is a psychologist that the deceased consulted. They had eight sessions since May 2016. During these sessions the deceased informed Ms Newcombe that her husband had an extramarital relationship with Ms Alterskye. The affair had begun in June 2015. Although the appellant made a commitment to stop the affair, the deceased found it difficult to cope with the fact that the appellant had lied to her, struggled to overcome the appellant’s infidelity and to cope with the hurt and anguish caused thereby. [6] The deceased said that the appellant was frustrated about her anxieties and was irritated with her constantly talking about the affair. The deceased wanted to repair the relationship with the appellant but found it difficult to manage the anger and the turmoil that she felt. She said that the affair had turned her life upside down. The deceased feared that she and the appellant would continue to treat each other badly, that she would continue to live in fear and that her family would be exposed to the tension at home. Their marital relationship had been loving, but became distant. [7] The deceased was anxious when the appellant travelled to Cape Town for his work. She did not tell her family or friends about the affair lest the appellant would be held responsible or disliked. All their friends saw them as a perfect couple. There was no one to talk to about what was happening to her emotionally. This was distressing to her as she was trying to deal with her problems on her own. [8] The deceased informed Ms Newcombe that the appellant was angry because she wanted to accompany him to the conference in Stellenbosch and was looking for reasons for her not to attend. The deceased wanted to attend the conference for her and the appellant to be seen as a strong, intimate couple and so that Ms Alterskye would not think that there was space for her to be in a relationship with the appellant. [9] In the last session with Ms Newcombe, there was a discussion to the effect that if she discovered that the affair was still ongoing, the deceased planned to leave the conference and go to her sister who resided in Cape Town. On the Friday evening of the conference, the deceased called her from the Spier Hotel and told her that she had been complimented at the conference for being beautiful and that she had no reason to feel threatened by younger women. Ms Newcombe considered that the deceased was distressed, anxious but not depressed. They had discussed that the deceased had nothing to be ashamed about and was entitled to be there. During the conversation between her and the deceased, which lasted about ten minutes, the deceased came across as being in control and ready to engage in the activities of the evening at the hotel. Later that same evening, she received a message from the deceased that said that she had greeted Ms Alterskye and that she wished she never had to meet her again. [10] Ms Newcombe was of the view that the deceased had not given up on life and had several protective factors which would have prevented her from being suicidal. The deceased was very involved with and invested in her children. She cared about their development and discipline. She was involved in charitable work in her community. She had close friends and was well liked by others. There was no evidence of impulsivity or acting out behaviour. She progressed well during therapeutic sessions, and had no chronic mental challenges. She gave no indication of potential suicidal behaviour. [11] Ms Nader was a marriage counsellor to the appellant and the deceased. They had engaged her in marriage counselling sessions with a view to restoring their marriage relationship. Their marriage had taken a strain as a result of the appellant’s extramarital affair. Her early impressions of the behaviour of the deceased during the sessions concerned her, and she referred the deceased for onward psychological and medical intervention. Despite Ms Nader’s advice not to do so, the deceased insisted to attend the upcoming conference at Spier. This took place during their last session on 20 July 2016. She was informed by the appellant on 27 July 2016 that the deceased had committed suicide. [12] Dr Larissa Panieri-Peter is a forensic psychiatrist. She confirmed that the appellant had during September 2016 been referred to her for an independent psychiatric evaluation. The purpose was for her to conduct a broad forensic psychiatric assessment as well as to comment on any findings that might or might not in forensic psychiatric terms be congruent or incongruent with an intimate partner homicide. In addition, she was requested to conduct a retrospective independent psychiatric assessment, a so-called psychological autopsy, of the deceased, based on her known history. She was also specifically requested to comment on any features pertaining to the deceased that might or might not, in forensic psychiatric terms, be congruent or incongruent with suicide.1 [13] According to Dr Panieri-Peter, there was evidence from observed facts, reports of professionals, the appellant, other persons closely linked to the appellant and previous witness testimonies, that the affair resulted in a drastic change in the deceased’s demeanour. In addition, Dr Panieri-Peter considered that the deceased’s insecurities, vulnerabilities, genetic risk factors to suicide, narcissistic traits, perfectionism and need for the world to see her as being perfect, resulted in the deceased suffering from major depression which increased her risk of suicide. 1 Psychological autopsy, psychiatric autopsy, retrospective death assessment, reconstructive evaluation and equivocal death analysis. This is a procedure for investigating a person's death by reconstructing what the person thought, felt and did preceding his or her death. [14] She disagreed with Ms Newcombe that the deceased was not a suicide risk. Even though she confirmed that Ms Newcombe was in a better position than her to make an assessment, because she had consulted with the deceased personally, she believed that the deceased was not properly assessed by the psychologist. However, Dr Panieri-Peter’s evidence was based on what she had been told by unidentified and identified people. The identified persons did not include family or close friends of the deceased, except for one of her daughters. They elected not to be interviewed by Dr Panieri-Peter. [15] Prior to the commencement of the evidence of Dr Panieri-Peter, counsel for the respondent, who had been furnished with her report, indicated that he objected to admission of evidence in accordance with the report. The trial court ruled, however, that it would allow the evidence and that it would ‘decide ultimately what weight to attach to the evidence of this witness’. The witness proceeded to give the evidence set out above. She was nevertheless not permitted to conclude her evidence. When the court reconvened on the following morning, the trial judge, without affording counsel an opportunity to address her, made the following ruling: ‘In view of the fact that this is my attitude, and unless there’s anything that this witness would like to draw to the Court’s attention other than what’s set out in the report further examination is disallowed. It follows that Mr van Niekerk is not required to cross-examine this witness and this Court furthermore has no questions for this witness. Accordingly this witness would be excused, thank you.’ We shall revert to the reasons for and the effect of this ruling. Factual evidence [16] It is common cause that the appellant called the reception desk at the hotel at 08h22 on 24 July 2016 for assistance to open the bathroom door of the suite. Mr Desmond Daniels, a maintenance worker, was dispatched to unlock the door. He testified that he had received a report that the bathroom door could not open. He went to the room and knocked on the door, which was opened by the appellant. He testified that the appellant informed him that the bathroom door could not open. He turned the handle of the door but the door could not open. He used a screwdriver to open the door. [17] On opening the door, he saw a person’s legs on the floor under the basin. He opened the door approximately 15 centimeters. The door opened with ease and there was no resistance when he pushed the door open. He saw the person’s legs from the knees to the feet. The appellant called out to the deceased and went past Mr Daniels into the bathroom. He waited outside the bathroom, where he faced the wall. After the appellant went into the bathroom, there was silence for about 2 to 3 seconds, then the appellant called him to come and help him. [18] When he entered the bathroom the appellant asked him to assist in removing an electric cord from the neck of the deceased. The appellant held her under the arms from the back so that she faced the witness. The deceased was completely naked and not breathing, and there was a cord around her neck. He illustrated how the cord was hanging around the deceased’s neck and from the hook behind the door. The cord was not tight around the neck as he could remove it easily with the appellant holding the deceased. Mr Daniels removed the cord and then went out of the bathroom. The appellant remained in the bathroom with the deceased in his arms. [19] He confirmed that the door could be unlocked or locked from the outside by using a screwdriver, teaspoon or coin. Under cross-examination, he said that he was not told by the appellant that there was someone inside the bathroom. He opened the door and the body was not against the door. [20] Mr Mark Thompson knew the appellant and worked with him. He attended the conference at the Spier Hotel. After breakfast on Sunday 24 July 2016 he heard from colleagues that there was trouble in the appellant’s room. He went there and arrived at the room at approximately 08h32. He saw the deceased’s body lying on the bathroom floor and the appellant seated next to her. The appellant asked for help. He had never performed cardiopulmonary resuscitation (CPR), but he felt he had to do something and proceeded to heavily compress the deceased’s chest and to blow into her mouth. He attempted to resuscitate her for between half an hour and 45 minutes. He realised that the deceased’s body was cold and that she was dead. During this time the appellant also blew into the deceased’s mouth. The deceased’s nose began to bleed and the witness wiped off the blood with a tissue and started to compress her chest again. Under cross-examination he said that even though his arms were aching and he knew that the deceased was dead, he kept going with the CPR-attempt. [21] Mr Peter Norton, who is married to the deceased’s sister, was notified on the Sunday morning of the death of the deceased. He went to the Spier Hotel and found the appellant there with other relatives, including the father of the deceased, Mr Neville Holmes. Mr Holmes enquired from the appellant as to what had happened. The appellant explained that he and the deceased had had a fight. Mr Holmes asked to see the appellant’s hands. Mr Norton said that he looked at the appellant’s hands when he showed them to Mr Holmes, and that there were no marks on his hands. The evidence of Mr Norton was not disputed. [22] It is necessary to make reference to the evidence of Captain Marius Petrus Joubert and of Colonel Sharlene Otto. Captain Joubert is an expert in forensic crime scene and bloodstain pattern analysis. Colonel Otto is an expert in DNA analysis. The evidence of these witnesses was not disputed. Captain Joubert attended the scene on the afternoon of 24 July 2016. He found the body of the deceased still lying on the bathroom floor. He observed several bloodstains at the scene. A number of the bloodstains were on the floor in the bedroom, in the passage between the bedroom and the bathroom and in the bathroom. He also found bloodstains on a pillowcase on the right-hand side of the bed (looking at it from the foot), on a pillowcase on the floor to the right of the bed, as well as on the bedsheet and duvet cover. Captain Joubert took extensive photographs of the scene, including of the body of the deceased and of the bloodstains. [23] Colonel Otto analysed samples that had been taken from the bloodstains. She found the DNA of the deceased in the bloodstains on the floor of the passageway and bathroom, as well as on the duvet cover, the bedsheet, the pillowcase on the bed and the pillowcase on the bedroom floor. She also detected the DNA of the appellant in samples taken from the bloodstains on the bathroom floor, the duvet cover and the pillowcase on the bedroom floor. Captain Joubert expressed the opinion that the bloodstains that had emanated from the appellant were caused by ‘most probably a very insignificant small cut’ that the appellant may not have been aware of at the time. He also said that the appellant’s blood may have been deposited at any stage during his stay in the room, that is, from Friday 22 July 2016. It was common cause that scrapings that had been taken from underneath the fingernails of the deceased contained only her DNA. [24] In his defence, the appellant testified that he had met the deceased in 1989, and they had married in 1993. They lived in Australia for some years, after which they returned to South Africa. They had three daughters: their first daughter and then twin daughters. He described the deceased as a perfectionist who was committed to her goals. She would deal with confrontation head on, whilst he would shy away from it. He testified that their relationship had its ups and downs. Whilst their verbal altercations were awful, they never escalated into physical violence. He said that the deceased was devastated and was consumed by his affair with Ms Alterskye. Their relationship suffered as the deceased vacillated between anger and anxiety, which was exacerbated by him withdrawing emotionally from her. Although they attended sessions with a marriage counsellor, he continued with the extra-marital affair. He admitted that he had led a double life, lying to the deceased, his therapist and the marriage counsellor. He testified that the deceased had insisted on attending the conference at the Spier Hotel. The deceased wanted to ensure that he was not seeing Ms Alterskye and also to show that he and the deceased were together. However, the appellant was afraid that the deceased would confront Ms Alterskye and cause a scene. [25] They arrived at the Spier Hotel at noon on the Friday. They attended the award ceremony on the Saturday evening, which ended at about 22h30. On their way to their hotel room, two co-employees who passed them, invited him to join them at an after-party. The deceased insisted that they return to the suite and would not let him go. Whilst the deceased was undressing he went into the bathroom and began to type a message to Ms Alterskye on his cell phone. The deceased became aware thereof. The deceased was enraged. He retaliated verbally, and wanted to leave the suite. The deceased attempted to physically prevent him from leaving the room. They physically grabbed at and pushed each other. In order to get her out of his way, the appellant grabbed the deceased by the neck and shoved her. During the altercation she was also struck on the side of her face by the soft part of his forearm. He insisted that the deceased had not been injured by these actions at all. [26] He managed to leave the suite. The deceased followed him. She was wearing a white towelling gown and no shoes. He got to the room where the after-party was being held and sat on the bed opposite Ms Alterskye. The deceased stood in the doorway telling him to leave the room. He was embarrassed and was afraid that there would be an altercation between Ms Alterskye and the deceased. He got up and left the room. On the way to their room, the deceased grabbed him from behind. He swung his arm back and hit her on the nose with his elbow. Her nose did not bleed. On the way the deceased also fell between a small ledge and a flower bed and cut her toe. In the hotel room the deceased complained about her bleeding toe. He also noticed a graze on her left eyebrow. He undressed and got into the bed. He told the deceased that they were ‘finished’. She continued to rant, calling him an adulterer and a cheat. [27] He fell asleep and did not know at what time the deceased went to bed. The following morning at 7 am, the deceased woke him up and informed him that she had received messages from Ms Alterskye. The deceased was furious and continued to rant. He saw the deceased walk towards the bathroom and heard her shut the door. He fell asleep again. Sometime later he woke up, and tried to get into the bathroom to prepare for the conference breakfast programme. He called out to the deceased to open the door. He thought she was having a bath. He got dressed. He then phoned the deceased and heard her phone ringing in the bathroom. He became concerned and called reception for a maintenance person. He then tried to push the bathroom door open, kicked it and nudged it with his shoulder. [28] Mr Daniels arrived and the appellant informed him that the bathroom door was locked. Mr Daniels unlocked the door and stepped back. The appellant opened the door a couple of inches, until the door was blocked. The door only partially opened as the deceased was behind the door. The deceased was hanging behind the door in a crouched position. He picked up the deceased and called Daniels to assist him, as he would not have been able to remove the cord from her neck. It was not a loose knot but was very tight around her neck. He testified that Mr Daniels ‘wiggled’ the knot and slipped it over her head. [29] He testified that the cord depicted in photographs taken by the police is exactly how the cord was tied to the hook and how the cord was left. He indicated that he had no recollection of how many times the cord was wrapped around her neck. However, he was certain that the tension was taut. He immediately laid the deceased down. Before he proceeded with mouth-to-mouth breathing and chest compressions, he noticed saliva coming out of the left side of the deceased’s mouth. He had not previously done CPR. He blew into her mouth and continued to do this until Mr Thompson arrived. He, together with Mr Thompson, continued performing CPR until the paramedics arrived, who after performing certain tests declared the deceased dead on the scene. He denied having caused the deceased's death, in any manner, and further denied obstructing the course of justice by tampering with the scene. Pathologists’ evidence [30] Four specialist pathologists testified at the trial. The respondent called Dr Akmal Coetzee-Khan and Dr Deidrè Kay Abrahams. Dr Geanas Perumal and Dr Isak Adriaan Johannes Loftus testified for the defence. [31] Dr Coetzee-Khan testified that he was employed by the Department of Health of the Western Cape Provincial Government at the Vredenburg Forensic Pathology Laboratory. Its area of responsibility included the district of Stellenbosch. Dr Coetzee-Khan is an experienced forensic pathologist. By July 2016 he had performed nearly 3 000 medical- legal post-mortem examinations. These included a significant number of cases of hanging, strangulation and suffocation. [32] At the request of the South African Police Service (SAPS), Dr Coetzee-Khan attended the scene at the Spier Hotel on 24 July 2016. He arrived there at approximately 12h45. He made notes of his observations immediately after the completion of his inspection of the scene. He made use of these notes to compile an incident scene report on 28 July 2016. The injuries to the deceased that he had observed on the scene were more fully described in the report of the post-mortem examination of the body of the deceased that we shall refer to shortly. However, there are a few aspects of Dr Coetzee- Khan’s incident scene report and his evidence in respect thereto, that need mentioning in the light of the argument presented to us on behalf of the appellant. [33] In the incident scene report, Dr Coetzee-Khan stated that the death of the deceased took place at approximately 05h40 on 24 July 2016. In his evidence in chief he explained that he had based this estimation on a calculation that death had occurred 7 hours and 30 minutes prior to 13h10 (when the calculation was made). He said that this meant that there was a 95 percent probability that death occurred at 05h40, with the possibility of a 2.8 hour (2 hours and 48 minutes) deviation either way. [34] During cross-examination, however, he conceded that he had misinterpreted the chart generally used for calculating estimations of this nature (referred to as a nomogram). The nomogram provides a crude estimate of time of death based on the actual or adjusted rectal temperature of the body, the mass of the body and the relevant ambient temperature. Dr Coetzee-Khan conceded that on the temperatures and mass that he had applied to the nomogram, he should have said that there was a 95 percent probability that death had occurred during the period from 2 hours 48 minutes prior to 05h40 to 2 hours 48 minutes subsequent to 05h40, that is, between 02h52 and 08h28. [35] Dr Coetzee-Khan also stated in the incident report: ‘Post-mortem lividity is well established, fixed and located posteriorly with contact pallor over the shoulder blades and buttocks. There is no lividity noted anteriorly over the lower limbs. The features of lividity is not consistent with death in an upright position. The post-mortem lividity would indicate death in a supine and lying position.’ He reiterated this position in his evidence in chief. [36] Lividity is reddish or blueish colouring caused by hypostasis. Hypostasis can for present purposes be described as the accumulation of blood in the lower parts of a body after death, as a result of gravity. The parts of the body that were in contact with the relevant surface at the time when hypostasis developed would typically not exhibit lividity but pallor (paleness). Post-mortem lividity generally commences within 30 to 60 minutes after death, takes about three to four hours to establish and should be completely established after about six hours. [37] During cross-examination Dr Coetzee-Khan accepted that hypostasis and lividity could only indicate the position of the body at the time when they developed. Thus, if a person dies in a vertical position but the body is within 30 to 60 minutes thereafter placed in a horizontal position, lividity would be established in the horizontal position. In the light hereof, Dr Coetzee-Khan conceded that the lividity that he had observed could be consistent with the deceased being placed on her back on the bathroom floor within 30 to 60 minutes after she had died as a result of hanging. [38] In the incident scene report Dr Coetzee-Khan stated that he had recommended to the SAPS that the case be investigated as a possible homicide, that the appellant be examined for injuries and that his passport ‘be removed until investigative process is complete to prevent him fleeing the country’. When he was taken to task in cross- examination for making these recommendations, he said that the first two recommendations had been based on his observations at the scene and the last on his previous experiences when potential suspects had fled the country. He commented that it was up to the SAPS to accept or ignore the recommendations. [39] Dr Coetzee-Khan performed the autopsy on the deceased on 26 July 2016 at the Paarl Forensic Pathology Laboratory. He continuously made contemporaneous notes of his observations and findings during the procedure. He used these notes to compile the formal medical-legal post-mortem examination report that was handed in as an exhibit at the trial. More than 150 colour photographs that had been taken during the autopsy, were also handed in as exhibits. [40] External examination of the body by Dr Coetzee-Khan revealed that the deceased had sustained multiple fresh bruises, abrasions and scratch marks. In view of the findings of the court a quo that we shall deal with in due course, it is necessary to tabulate these injuries. There were abrasions to the right inferior temporal scalp and right lateral upper neck. There was a scratch mark on the angle of the right lower jaw, a scratch mark on the left lower jaw and three scratch marks on the left interior neck. Dr Coetzee-Khan opined that the scratch marks were caused by fingernails. He also observed a haematoma to the left upper eyelid with an associated abrasion. This indicated blunt trauma to the face. [41] He noted an abrasion on the left shoulder with associated bruising. These injuries indicated blunt trauma in the nature of having fallen on or been dragged over a rough surface. There was bruising of the left knee and anterior lower legs. He found bruising and abrasion marks on the knuckles of the left hand, as well as bruising of the left wrist and forearm. The injuries to the arm, wrist and hand were defence type injuries. Dr Coetzee- Khan noted small abrasions on the big toe and second toe of the left foot and the second toe of the right foot. It was accepted at the trial that the deceased was a person that bruised easily. When the appellant’s aforesaid version was put to Dr Coetzee-Khan, his response was to the effect that he accepted that most of the aforementioned bruises and abrasions (but not the scratch marks) could be consistent therewith. [42] Dr Coetzee-Khan testified that there was a contusion of the posterior scalp. A contusion usually means a bruise (haematoma) that does not involve the skin. This was an indication of blunt force to the back of the head. When this was questioned in cross- examination, Dr Coetzee-Khan convincingly explained that he had cut into the scalp contusion to ensure that it was not an artefact (a defect or abnormality that occurred after death). [43] He detected fractures of the third, fourth and fifth ribs anteriorly on the right-hand side, with surrounding haemorrhages (bleeding) of the intercostal muscles. He also observed haemorrhages of the right anterior chest wall which was indicative of blunt force or trauma to that side of the chest. He conceded that the rib fractures and associated haemorrhages might have been caused by a vigorous attempt at CPR, especially by an unskilled person. He said that there was no fracture of the left ribs and pointed out that this was borne out by the relevant photographs. He further testified that there was contusion of both lungs anteriorly. He accepted, however, that CPR could also have caused the bruising of the lungs. [44] Dr Coetzee-Khan noted pallor over the tip of the nose, as well as the upper and lower lips. The nose was also slightly deviated to the right. He said that in combination with pharyngeal soft tissue haemorrhages and congestion (increased blood circulation) at the base of the tongue, these features were consistent with external airway obstruction (smothering). He did also say, however, that on its own, pallor is not diagnostic of smothering and that congestion is a non-specific indication of asphyxia (lack of oxygen). [45] There was no food in the stomach. It did, however, contain approximately 100 millilitres of fluid consisting predominantly of blood. In addition, the small intestines contained 100 to 200 millilitres of altered blood. As there was no source of this blood in the digestive channel (such as an ulcer), the deceased must have swallowed the blood. This meant that over a period of time she had swallowed what was referred to in evidence as a cup of blood (the ingested blood). She could only have done so whilst alive. Dr Coetzee-Khan’s opinion was that the contusions of the lungs had been the source of the ingested blood. He said that she had most likely coughed up the blood before ingesting it. [46] Dr Coetzee-Khan proceeded to give a detailed description of a ligature imprint on the neck of the deceased. In this regard the expert witnesses were agreed that in the case of hanging with a ligature around the neck, friction would generally cause abrasion (removal of the superficial layer of the skin), leading to vital reaction of the skin and tissue affected by the ligature. The vital reaction would cause the ligature imprint post mortem to have a parchment-like (parched) and leathery appearance. If, on the other hand, a ligature was applied post mortem, there could be no vital reaction and the ligature imprint would have a blanched or pale character. There may in such a case be some redness above and below the ligature mark, but that would not be vital reaction but simply displacement of the blood from the blanched area (hyperaemia). One could feel the parched and leathery character of an ante-mortem ligature mark. It therefore goes without saying that for purposes of determining whether a ligature imprint was made before or after death, a physical examination thereof should be preferred over the viewing of photographs of the ligature imprint. [47] The witness testified that the ligature mark was incomplete. It was situated only on the front and left sides of the neck. It was put to Dr Coetzee-Khan that Dr Perumal had observed a more or less horizontal linear mark at the back of the neck and he was shown photographs thereof. He responded that the mark might have been an artefact caused by the wooden block that had been placed underneath the neck/shoulder area for purposes of dissection of the neck. He pointed out that the mark at the back of the neck on the photographs did not appear parched or leathery. [48] The mark was more or less horizontal but sloped slightly upwards where it terminated just before the right ear. On the left, it did not enter into the hairline. He said that the mark was not parched or leathery. He testified that the reddened area that could be seen above and below the ligature mark on the left side of the neck, was not vital reaction but post-mortem displacement of blood. He said that in his experience the use of the cord of the electric hair curler on the scene for hanging, would, unlike a softer ligature such as a scarf, have caused friction abrasion. Thus, the absence of vital reaction and resultant parched and leathery imprint was not consistent with ante-mortem application of the ligature. [49] The experts also agreed that in attempting to determine whether this was a case of hanging or manual strangulation, it was crucial to perform a bloodless neck dissection. The essence of this procedure is the creation of a bloodless field by draining as much blood as possible from the neck area, followed by a layered dissection of the muscles and tissue of the neck. Because the neck tissue is dissected layer by layer, it is not possible to repeat this procedure. [50] During the bloodless neck dissection performed by Dr Coetzee-Khan, he detected multiple haemorrhages. He detected these haemorrhages at the following locations in the neck: (a) the right sternocleidomastoid muscles; (b) the left sternocleidomastoid muscles; (c) the left anterior neck muscle under the jaw; (d) the left anterior muscles of the cervical spine column; (e) the right submandibular gland; (f) the left para-tracheal lymph node and soft tissue; and (g) the left thyroid-hyoid ligaments and left side of the thyroid gland. [51] He also observed a fracture of the left superior horn of the thyroid cartilage, with surrounding haemorrhages, indicative of ante-mortem fracture. He dissected the hyoid bone out. This is a u-shaped bone between the chin and the thyroid gland that supports the tongue muscles. The hyoid bone was intact. This was clearly depicted on a photograph. There were, however, haemorrhages to the left of the hyoid bone. [52] For convenience, and unless the context indicates otherwise, we refer to the fracture of the thyroid cartilage and the aforesaid haemorrhages collectively as ‘the neck injuries’. All the neck injuries were located well above the ligature mark. Some of them were directly underneath scratch marks that we have referred to. Importantly, a number of the neck injuries were situated deep into the structures of the neck. The neck injuries thus indicated that considerable force had been applied to the neck that was unrelated to the ligature imprint. The neck injuries were situated on both sides of the neck and were consistent with strangulation by hand. Dr Coetzee-Khan concluded that these observations were consistent with asphyxia following manual strangulation and external airway obstruction and that the features of the ligature imprint were consistent with post-mortem application to the neck. [53] Dr Abrahams testified that she was the head of the clinical unit of the Paarl Forensic Pathology Laboratory and as such she was the superior of Dr Coetzee-Khan. She said that she had performed approximately 9 000 autopsies, many of which were similar to the case in question. She attended the autopsy of the body of the deceased at the request of Dr Coetzee-Khan, to provide ‘a second pair of eyes’, as it was presumed that the case would attract a lot of attention. Dr Abrahams confirmed the observations of Dr Coetzee- Khan at the autopsy in all respects. She said that they found that the deceased had been manually strangled and that there was evidence of external airway obstruction or suffocation. [54] Dr Perumal had been in private practice as a forensic pathologist from 1994 to 2016. During 2016 he took up an appointment as chief forensic pathologist of the Department of Health of the Mpumalanga Province. He is a very experienced forensic pathologist, having performed in excess of 10 000 autopsies. [55] Dr Perumal performed a second autopsy on the body of the deceased on 1 August 2016 in Braamfontein. He also took photographs of the body. He explained that for various reasons a second autopsy is not ideal. These reasons include that in the reconstruction process (stitching up) of the body after an autopsy, it is not fully returned to the original anatomical position, that it is not easy or at times possible to reconstitute dissected organs or tissue to their original state and that changes are brought about by the onset of decomposition. To this may be added that some features observed at the first autopsy may no longer be available, such as, in this case, the ingested blood. Nevertheless, Dr Perumal’s autopsy confirmed the major part of what had been observed at the first autopsy. At the conclusion of Dr Perumal’s evidence much of the evidence of Dr Coetzee- Khan and Dr Abrahams that had been disputed during cross-examination, were no longer in dispute. In what follows we discuss the remaining areas of dispute, difference or uncertainty. [56] Dr Perumal observed that the sixth rib on the right had also been fractured, in addition to the three rib fractures detected at the first autopsy. He observed ‘a bit of haemorrhage’ associated with these fractures, which indicated that they had occurred whilst there was some blood circulation. He also noticed fractures of the second to fifth ribs on the left. There was no haemorrhage associated with these fractures, which indicated that they had been sustained after blood circulation ceased. In addition, he observed a fracture of the middle part of the sternum, also with no associated haemorrhage. [57] He expressed the opinion that the fractures of the ribs and sternum, the lung contusions and the haemorrhages of the right interior chest wall could have been caused by attempted CPR. He said that it was not apparent from the photographs that there was pallor of the tip of the nose or the lips. He stated that he did not regard pallor of the nose and lips as objective indicators of smothering. A facial flap dissection, on the other hand, would reveal whether there were underlying bruises of the facial tissue. Unlike Dr Coetzee- Khan, Dr Perumal performed a facial flap dissection and found no evidence of smothering. [58] Dr Perumal testified that the blood in the stomach and altered blood in the small intestines indicated that there had been two episodes of ingestion of blood. He said that it was virtually impossible for the ingested blood to have emanated from the pulmonary contusions, as opposed to a vascular injury in the lung. His opinion was that the ingested blood had emanated from bleeding of the deviated nose. [59] Dr Perumal accepted that the application of a smooth ligature after death, would leave an imprint that was not parched or leathery. In his evidence, Dr Perumal glossed over what he had recorded in his autopsy report in respect of the ligature mark, an aspect that we shall return to. He said that ‘making room for changes in the few days . . . I’d rather defer to the photos taken earlier’. He proceeded to give evidence to the effect that these photographs (taken by Captain Joubert and at the first autopsy) showed that the bulk of the ligature mark had a parched and leathery appearance. This formed the basis of his evidence that, for the most part, the ligature imprint exhibited ante-mortem vital reaction. [60] Importantly, Dr Perumal did not dispute the evidence that the neck injuries were not situated underneath the ligature mark but were located well above it. Although he repeatedly stated that these types of injuries were frequently seen in cases of hanging, he did not provide an explanation for their distant location from the ligature mark until right at the end of his evidence in re-examination. There he said that as a result of the pull of the body in hanging and the convulsions that occur as part of the process of death ‘a lot of the injuries that are observed, if not all that were observed can be observed in hanging’. [61] Dr Perumal also referred to the evidence of the appellant that he had observed that a trickle of saliva flowed from the left corner of the mouth of the deceased. Ultimately his opinion was encapsulated in the following: ‘I just want to say because, as I explained at various stages, the findings in the neck could well be as a result of throttling or manual strangulation and I indicate to the Court there are two competing causes . . ., and the injuries that we see could be seen in both scenarios, but because of the appearance of the ligature mark and the saliva, I favoured the version that, or the cause of death that it is more likely to be hanging. The probability is more likely to be hanging. But there is no way I can stand before this Court and say that manual strangulation . . ., is excluded beyond any reasonable doubt. So . . ., I’m not saying in this report that that’s the only diagnosis that I’m entertaining.’ [62] Dr Loftus is a forensic and anatomical pathologist. Since 1994 he practiced predominantly as an anatomical pathologist. He did not perform an autopsy on the body of the deceased. His opinions were based on the evidence that had been presented in the case, especially the photographic evidence. [63] He agreed with Dr Perumal that the contusions of both lungs could be related to CPR attempts. He also said that in his opinion the ingested blood did not emanate from the lung contusions. The reason for this was that had the lung injuries been so serious as to cause the deceased to cough up and swallow the said quantity of the ingested blood, she would in all probability also have aspirated (inhaled) blood. Aspirated blood would have caused a leopard skin appearance of the surface of the lungs and there was no sign thereof. [64] Unlike Dr Perumal, Dr Loftus was adamant that there was no fracture of the left superior horn of the thyroid cartilage. He insisted that the defect in the cartilage was an artefact, caused by an incision during the first autopsy. Also, unlike Dr Perumal, he attempted to show that some of the neck injuries corresponded directly to the ligature imprint. We shall analyse this evidence shortly. Trial court judgment [65] The trial court found that Ms Newcombe and Ms Nader were reliable witnesses who gave evidence in a credible and trustworthy manner. In respect of Mr Daniels, it held that the differences between his statements and his evidence were not material. It said that notwithstanding the shortcomings in his evidence, it was reliable and credible in all material respects. The court a quo also accepted the evidence of Mr Thompson. The expert evidence of Dr Coetzee-Khan and Dr Abrahams impressed the court. It found their evidence to be trustworthy. It held that the same could not be said of the evidence of Dr Perumal and Dr Loftus. In essence, the court regarded their evidence as not objective. Finally, it rejected the evidence of the appellant as not reasonably possibly true. [66] The court referred to the pillowcase on the bed with bloodstains that had emanated from the deceased. It can be accepted that two further marks on this pillow were mascara marks that had originated from the deceased as well. The court said that this pillowcase had been on the side of the bed where the appellant slept and that the deceased had not slept on it. The court proceeded to say: ‘The Court is able to see for itself that the markings on this pillow are identical to the markings on the face of the deceased, as noted at the time of her death. The bloodstain on the left of the pillow, consistent with the abrasion on her left eye, is imprinted twice on the pillow, one slightly above that of the other. This is consistent with the imprint caused by a repeat smothering action, consistent with the pillow being pushed down more than once in order to sustain the pressure on the face of the deceased and to get a further grip in the course of smothering her.’ [67] As to what had transpired after 07h00 on the morning of 24 July 2016, the court a quo said that the evidence painted a ‘vivid picture’, which included the following: ‘Heated exchanges on the bed must have led to physical violence. At this point the deceased is on the right of the accused and in all likelihood he struck a punch at her, whilst on the bed, hitting her left eye and causing the abrasion to her left occipital bridge with his ring bearing fist. At some point during this “wrestling match” the accused manually strangled the deceased. The evidence clearly reveals that the accused manually strangled the deceased and smothered her with a pillow and exerted pressure on her chest resulting in her ribs being broken. Possibly it was at this point that the accused sustained a bleeding defensive wound to his finger. For how long he remained in this position is uncertain, but when he got up, he devised a plan to set a scene telling a story of the deceased ending her own life.’ Fair trial [68] In its aforesaid ruling during the testimony of Dr Panieri-Peter, the trial court held that the whole of her evidence, including the evidence foreshadowed in her report, was inadmissible. It essentially reasoned that the witness purported to usurp the function of the court and that the evidence was irrelevant. This was true of some, but not all, of the evidence of Dr Panieri-Peter. The appellant correctly contended that the evidence of Dr Panieri-Peter as to whether the deceased had been depressed and had been a suicide risk, was relevant and admissible. The appellant was entitled to lead this evidence, at least to counter the contrary evidence of Ms Newcombe and Ms Nader. The court a quo therefore erred in not allowing this part of the evidence of Dr Panieri-Peter. [69] We are satisfied, however, that this irregularity did not result in an unfair trial. The important point is that in her evidence prior to the ruling, Dr Panieri-Peter fully set out her opinion in this regard and the reasons therefor. That evidence forms part of the record before us and we are able to afford it the weight that it would deserve. And in the light of the conclusion that we have reached, it is not necessary to analyse this evidence. Evaluation of pathologists’ evidence [70] We now turn to an evaluation of the divergent opinions of the pathologists. It is well established that this requires a determination of whether and to what extent their opinions are founded on logical reasoning or are otherwise valid. It is about the cogency of the underlying reasoning which lead the experts to their conflicting opinions. See Michael and Another v Linksfield Park Clinic (Pty) Ltd and Another 2001 (3) SA 1188 (SCA) paras 36- 39; Minister of Transport NO and Another v Du Toit and Another 2007 (1) SA 322 (SCA) para 16; and Buthelezi v Ndaba 2013 (5) SA 437 (SCA) para 14. [71] It is true that Dr Coetzee-Khan erred in respect of the estimation of the time of death and the role of lividity in respect of the cause of death. However, the calculation in terms of the nomogram could provide no more than a crude estimation. Dr Coetzee-Khan’s incorrect estimation was made without knowledge of the appellant’s version and could not have been aimed at discrediting it. We cannot fathom how this could detract from the reliability of the observations at the first autopsy and resultant conclusions. The same applies to the error in respect of the role of lividity in the incident scene report. On the evidence as a whole the contention that the recommendations to the SAPS indicated that Dr Coetzee-Khan had prejudged the matter, is baseless. At best for the appellant, Dr Coetzee-Khan might have missed the ligature mark at the back of the neck and/or the post-mortem fractures of the ribs on the left and the sternum. Even so, in our view, nothing turns hereon. [72] There were some troubling aspects of the evidence of Dr Abrahams. These included her stance that a forensic pathologist employed by an accused person would invariably not be impartial, her attempt to defend the errors in respect of the time of death and the role of lividity that Dr Coetzee-Khan had conceded and the general rigidity of her opinions. There is, however, no reason to question the factual corroboration that her evidence provided to that of Dr Coetzee-Khan. [73] It will be recalled that Dr Loftus did not perform an autopsy. His suggestion that he performed a digital bloodless field dissection, was quite inaccurate; he only viewed photographs. He jumped to conclusions, which he then expressed in the strongest of terms. To illustrate, he pointed to a darkened area between the clay tiles on the bathroom floor that was visible on photographs taken by Captain Joubert. There were several such areas visible on the photograph, but he pointed to the one between the knees of the body of the deceased on the floor. He not only said that that was fluid, but that it was urine that the deceased had passed at that spot at the moment when she died. He said: ‘M’Lady, I believe that and I’m saying it from a position of after taking everything into account, I believe that beyond reasonable doubt the deceased on that morning hanged herself in the bathroom, she didn’t die, she didn’t die instantaneously, she was rescued if I can call it or taken off from the ligature mark, off from ligature and she was unsuccessfully resuscitated. In that period taken off or let’s say since the ligature exerted its face until whenever she passed the urine that was the process of dying.’ [74] Dr Perumal initially also said that, in his opinion, the thyroid cartilage had inadvertently been incised during the neck dissection. In his later evidence he made it clear that he accepted that this was an ante-mortem fracture. This concession had a sound foundation. Both Dr Coetzee-Khan and Dr Abrahams testified that the neck dissection had been performed with care, there were haemorrhages associated with the fracture and the jagged edges thereof could be seen on a close up photograph taken at the first autopsy. Dr Loftus’s insistence that this was an artefact was not founded on logical reasoning. [75] As we have said, Dr Loftus attempted to show that (some of) the neck injuries were in fact spatially related to the ligature mark. In an attempt to show why Dr Coetzee-Khan and Dr Abrahams had erred in this regard, he said that it was technically difficult to correlate the external neck injuries with the internal injuries, because of what he termed the hyperextension of the neck during the bloodless neck dissection. That he had erred in this regard or why, was not put to Dr Coetzee-Khan in cross examination. Dr Abrahams was confronted with this but testified that they had taken the possibility of distortion into account. It apparently did not occur to Dr Loftus that it was infinitely more difficult for him to perform the correlation exercise at least because, as he lamented, the photographs had been taken from different angles and distances. [76] In a presentation that formed part of his evidence, Dr Loftus indicated that the haemorrhages of the left sternocleidomastoid corresponded with or appeared to correspond with the ligature mark. His presentation did not deal with any of the other neck injuries in this manner. In evidence he said that the ‘quite extensive’ haemorrhages of the submandibular gland were in line with the ligature mark. This was plainly wrong. When he dealt in evidence with the aforesaid presentation in respect of the haemorrhages of the left neck muscles, he unexpectedly said that they were in fact not in line with the ligature mark. He suggested that this did not matter, as these haemorrhages had probably been caused by severe muscle contractions during a convulsive death. His evidence in respect of the location of the other neck haemorrhages in relation to the ligature mark was vague and inconclusive. His evidence on this subject was unconvincing, to say the least. [77] For these reasons the opinions of Dr Loftus that differed from that of the other pathologists were unacceptable. [78] As we have said, for Dr Perumal the parched and leathery appearance of the ligature mark and the alleged dribbling of saliva tipped the scale in favour of hanging. But this is what he had to say in respect of the ligature mark in his autopsy report: ‘Ligature imprint, almost circumferential around the neck. The imprint was for the most part, comprised of a centrally blanched area, averaging 5mm wide. Parts of these blanched areas had associated hyperaemic areas above and below the blanched imprint. The imprint anteriorly sloped upwards towards the right. The imprint on the back of the neck was almost transverse but sloped upwards towards the right. The lack of friction abrasions related to the ligature and the lack of associated oozing of serous fluid, is the reason why there is no dry, parched leathery ligature mark. There were bruises in the imprint on the left side anterolaterally. The imprint in this case is consistent with a smooth ligature like an electrical cord. There were no abrasions or bruises related to the superior or inferior aspects of the ligature imprint.’ [79] According to the evidence a parched and leathery ligature mark is created when the ‘oozing of serous fluid’ as a result of friction abrasion dries out. Thus, two important observations must be made. First, this description of the appearance of the ligature mark was almost identical to that of Dr Coetzee-Khan. Secondly, as we have demonstrated, Dr Perumal’s evidence was that the smooth electrical cord in question had caused extensive friction abrasion and a parched and leathery appearance of the ligature imprint. [80] There was no suggestion in the evidence that the ligature mark could have undergone a metamorphosis during the period between the first and second autopsies. By latching onto the earlier photographs to support an opinion directly contrary to his detailed written report, Dr Perumal illogically and unacceptably adjusted his opinion on a crucial aspect of the case. It follows that the evidence of Dr Coetzee-Khan and Dr Abrahams as to the appearance of the ligature mark was correctly accepted. [81] Only the appellant testified that saliva had dribbled from the deceased’s mouth. Whatever the reliability of this observation, it could have little weight on its own. Thus, the main pillar of Dr Perumal’s essential reasoning crumbled. In the circumstances logical reasoning dictates that the neck injuries were caused by manual strangulation and that the ligature was applied post mortem. Final analysis [82] On the evidence it is reasonably possible that all or most of the bruises and abrasions that the deceased sustained, could have been caused by the fall and the altercations that the appellant described. It is not possible to determine how the scalp injury could have been sustained. Dr Coetzee-Khan conceded that the right rib fractures and the contusions of the lungs could have been caused by attempted CPR. The opinion of Dr Perumal that the same could apply to the bleeding of the right anterior chest wall was well supported by authority. [83] The trial court erred in finding that the deceased had been smothered. There are three reasons why this finding cannot stand. The first is that the trial court made a material factual error. The pillowcase that it examined had been found on the right hand side of the bed where the deceased slept. The evidence of the appellant in this regard was supported by that of Captain Joubert. Secondly, we accept that there may be circumstances in which a court may have regard to its own observations in respect of an exhibit before it. But save in exceptional circumstances where the observation is clear for all to see (including an appeal court), it should not be relied upon unless it was put to the relevant witnesses and/or the accused person to afford them an opportunity to respond thereto. The far-reaching observations of the trial court in respect of the photograph of the pillowcase were not put to any witnesses or to the appellant and could by no means be said to be clear. The trial court’s reliance on its own observations was wholly unjustified. In the third place, the aforesaid evaluation of the expert evidence demonstrated that external airway obstruction was not proved beyond reasonable doubt. [84] That the deceased did not hang herself, is also supported by the following factors. It is not possible to find beyond reasonable doubt that the source of the ingested blood was the lung contusions. Thus, it is reasonably possible that the ingested blood emanated from nose bleeds. But this also must count against the appellant. According to the evidence the deceased took good care of herself and of her appearance and was not a person to delay things. It is not conceivable that she would not attend to two episodes of nose bleeds but would rather swallow 200 to 250 millilitres of blood, unless she was somehow incapacitated. That is an indication that she did not hang herself. [85] Counsel for the appellant fairly conceded that there was no reason to doubt the evidence of Mr Daniels in respect of the removal of the cord from the neck of the deceased. He said that the cord had been loosely around her neck and that he easily removed it without having to untie any knot. This too, points away from suicide by hanging. Finally, the fingernail scratch marks that were related to the neck haemorrhages correspond with strangulation by hand. [86] For these reasons we are satisfied that the respondent proved beyond reasonable doubt that the deceased was killed by manual strangulation and that only thereafter the ligature was applied to her neck. It follows that the court a quo correctly convicted the appellant on both counts. [87] However, it must regrettably be said that save for the findings that the appellant strangled the deceased and attempted to stage her suicide, the court a quo’s ‘vivid picture’ constituted speculation in respect of both content and sequence. There was no evidential basis for the finding that the appellant had punched the deceased with his ring bearing fist. We have already pointed out that it is reasonably possible that the deceased was not smothered and that the right rib fractures were caused by attempted CPR. It will be recalled that Mr Norton testified that the appellant had no injury on his hands shortly after the incident and that Captain Joubert said that the minute quantities of the appellant’s blood could have been deposited at any stage during his stay in the room. These matters need mentioning because they impact on the question of an appropriate sentence, to which we now turn. Sentence [88] It will be recalled that the trial court sentenced the appellant to an effective term of 20 years’ imprisonment. The trial court, of course, sentenced the appellant on the basis of its factual findings referred to above. In its judgment on sentence, the court a quo accordingly said that the injuries that the appellant had inflicted on the deceased ‘were successive and incremental’ until they were fatal. On the trial court’s findings, the appellant executed a sustained assault on the deceased that included hitting her with his fist, repeatedly smothering her and applying such force to her chest that she suffered rib fractures and lung contusions. [89] For the reasons already mentioned, these findings do not withstand scrutiny. The appellant must be sentenced on count 1 on the basis that he unlawfully and intentionally killed the deceased by manual strangulation but did not assault her in any other way. It follows that this Court should consider sentence afresh. [90] Section 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 prescribes a minimum sentence of 15 years’ imprisonment in respect of count 1, unless there are substantial and compelling circumstances that justify a departure from the prescribed sentence. In S v Malgas 2001 (1) SACR 469 (SCA), Marais JA said that courts should not depart from the prescribed sentence lightly and for flimsy reasons which could not withstand scrutiny. Substantial circumstances must compel a departure from the prescribed sentence on the basis that it would be disproportionate in the circumstances of the case. [91] The appellant’s personal circumstances are on record. He was 47 years of age at the time of the commission of the offence. He has three adult daughters. He has been a successful businessman and is capable of making a valuable contribution to society. He is a first offender. [92] However, the appellant committed a very serious crime. He murdered his wife in a brutal and callous manner. The deceased’s death must be devastating to her daughters and those who loved her. Regrettably violence against women and children has become a pervasive phenomenon internationally and this country has in recent times seen gender- based violence increase to intolerable and unacceptable proportions. The sentence of this Court must reflect the abhorrence of society with regard to violence against women. Furthermore, it is very important to bear in mind that the appellant is unrepentant and takes no responsibility for his crimes. [93] After due consideration of all the relevant facts and circumstances, we find no substantial and compelling circumstances that justify a departure from the prescribed sentence of 15 years’ imprisonment on count 1. In our view a sentence of three years’ imprisonment is appropriate in respect of count 2. In the light of the cumulative effect of the sentences imposed, the sentence on count 2 should in terms of s 280(2) of the Criminal Procedure Act 51 of 1977 be ordered to run concurrently with the sentence on count 1. As the appellant served part of his sentence prior to his release on bail pending the appeal, the sentences must in terms of s 282 of the Criminal Procedure Act be deemed to have been imposed on 27 February 2019. [94] In the result the following order is made: 1 The appeal against the convictions on counts 1 and 2 is dismissed. 2 The appeal against the sentences is upheld. 3 The order of the court a quo in respect of sentence is set aside and replaced with the following: ‘(a) On count 1 the accused is sentenced to 15 years’ imprisonment. (c) On count 2 the accused is sentenced to three years’ imprisonment. (c) The sentence on count 2 is ordered to run concurrently with the sentence on count 1. (d) The accused is declared unfit to possess a fire-arm.’ 4 The abovementioned sentences are deemed to have been imposed on 27 February 2019. _______________________ H SALDULKER JUDGE OF APPEAL _______________________ C H G VAN DER MERWE JUDGE OF APPEAL Appearances: For appellant: F van Zyl SC and W King SC Instructed by: Witz Inc Attorneys, Johannesburg Michael du Plessis Attorneys, Bloemfontein For respondent: L J van Niekerk Instructed by: Director of Public Prosecutions: Western Cape, Cape Town Director of Public Prosecutions: Free State, 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: 5 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 Rohde v The State (815/2019) [2021] ZASCA 134 (5 October 2021) The Supreme Court of Appeal (SCA) today dismissed an appeal against the convictions and upheld an appeal against the sentences of the appellant, Mr Jason Thomas Rohde. On 8 November 2018, Mr Rohde was convicted in the Western Cape Division of the High Court, Cape Town by Salie-Hlophe J (the trial court) on two counts; namely, the murder of his wife, Ms Susan Francis Rohde, the deceased (count 1); and defeating or obstructing the course of justice (count 2). Count 2 was based on the allegation that subsequent to the murder of the deceased, the appellant had rearranged the scene of the crime in an attempt to represent that the deceased had committed suicide. On 27 February 2019, the appellant was sentenced to an effective term of imprisonment of 20 years; that is, 18 years’ imprisonment on count 1 and five years’ imprisonment on count 2, of which three years’ imprisonment were ordered to be served concurrently with the sentence on count 1. The trial court refused the appellant’s application for leave to appeal against the convictions and sentences, but the SCA subsequently granted him such leave to appeal. The facts of the matter were as follows. Over the weekend of Friday, 22 July 2016 to Sunday, 24 July 2016, a well-known real estate company held its annual conference at the Spier Hotel near Stellenbosch in the Western Cape. Mr Rohde, the chief executive officer of the company, attended the conference. His wife, Ms Rohde, accompanied him to the venue and attended the social events associated with the conference. During the morning of 24 July 2016, however, Ms Rohde was found dead in the bathroom of their suite at the hotel. The issue at the heart of the appeal was whether the deceased died as a result of smothering and/or manual strangulation, as the respondent alleged, or whether she committed suicide by hanging herself from a hook affixed to the inside of the bathroom door with the use of the cord of an electric hair curler, as was the appellant’s case. The central question was whether the respondent proved beyond a reasonable doubt that the deceased had been killed by the appellant, or whether there was a reasonable possibility that she might have committed suicide. The SCA found that the respondent had proved beyond reasonable doubt that the deceased was killed by manual strangulation and that only thereafter the ligature was applied to her neck. Thus, the trial court correctly convicted the appellant on both counts. However, the SCA found that the trial court erred in finding that the deceased had been smothered. There were three reasons why this finding could not stand. The first was that the trial court made a material factual error. The pillowcase that it examined had been found on the right-hand side of the bed where the deceased slept. The evidence of the appellant in this regard was supported by that of Captain Joubert. Secondly, the far-reaching observations of the trial court in respect of the photograph of the pillowcase were not put to any witnesses or to the appellant and could by no means be said to be clear. The trial court’s reliance on its own observations was thus wholly unjustified. In the third place, the aforesaid evaluation of the expert evidence demonstrated that external airway obstruction was not proved beyond reasonable doubt. The SCA found further that it must regrettably be said that save for the findings that the appellant strangled the deceased and attempted to stage her suicide, the court a quo’s ‘vivid picture’ constituted speculation in respect of both content and sequence. There was no evidential basis for the finding that the appellant had punched the deceased with his ring bearing fist. Moreover, that it was reasonably possible that the deceased was not smothered and that the right rib fractures were caused by attempted cardiopulmonary resuscitation (CPR). The SCA found that these matters impacted on the question of an appropriate sentence. Accordingly, in respect of sentence the SCA held that the appellant must be sentenced on count 1 on the basis that he unlawfully and intentionally killed the deceased by manual strangulation, but did not assault her in any other way. The SCA found after due consideration of all the relevant facts and circumstances, that no substantial and compelling circumstances justified a departure from the prescribed sentence of 15 years’ imprisonment on count 1. In addition, a sentence of three years’ imprisonment was appropriate in respect of count 2. The sentence on count 2 was ordered to run concurrently with the sentence on count 1. The sentences were deemed to have been imposed on 27 February 2019. ~~~~ends~~~~
3145	non-electoral	2007	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 25/2006 Reportable In the matter between: THE CHAIRPERSONS’ ASSOCIATION APPELLANT and MINISTER OF ARTS & CULTURE FIRST RESPONDENT THE CHAIRMAN OF THE SOUTH AFRICAN GEOGRAPHICAL NAMES COUNCIL SECOND RESPONDENT THE MUNICIPALITY OF MAKHADO THIRD RESPONDENT CORAM: HOWIE P, FARLAM, BRAND, JAFTA et CACHALIA JJA HEARD: 19 FEBRUARY 2007 DELIVERED: 29 MARCH 2007 SUMMARY: Administrative Law – PAJA s 6(2)(e)(iii) – name change of Louis Trichardt to Makhado reviewed and set aside. Neutral citation: This judgment may be referred to as The Chairpersons’ Association v Minister of Arts and Culture [2007] SCA 44 (RSA). ________________________________________________________ FARLAM JA INTRODUCTION [1] This is an appeal from a decision of Legodi J sitting in the Pretoria High Court in which he dismissed the appellant’s application for an order reviewing and setting aside (1) the decision of the first respondent, the Minister of Arts and Culture, in terms of s 10(1) of the South African Geographical Names Council Act 118 of 1998 approving the change of the name of the town Louis Trichardt to Makhado, and (2) the first respondent’s decision in terms of s 10(5) of Act 118 of 1998 to reject the appellant’s objection to his approval of the said name change. [2] The judgment on appeal has been reported: see Chairpersons’ Association v Minister of Arts and Culture and Others 2006 (2) SA 32 (T). The appellant is the Chairpersons’ Association, a voluntary association, which according to its Constitution was set up ‘to promote good corporate governance in a transparent manner and to promote good relationships amongst all cultural, racial, religious and business groups in the greater Makhado Municipal Area’. The first respondent is the Minister for Arts and Culture. The second respondent is the chairman of the South African Geographical Names Council a body established by s 2 of Act 118 of 1998, as amended. (In what follows I shall refer to Act 118 of 1998 as ‘the Act’ and to the South African Geographical Names Council as ‘the Names Council’.) The third respondent is the Municipality of Makhado, against which no relief was claimed and which was joined as a respondent after the review proceedings were instituted. RELEVANT STATUTORY PROVISIONS [3] According to its long title the purposes of the Act are ‘(t)o establish a permanent advisory body known as the South African Geographical Names Council to advise the Minister responsible for arts and culture on the transformation and standardisation of geographical names in South Africa for official purposes; to determine its objects, functions and methods of work; and to provide for matters connected therewith’. [4] Section 1 is the definitions section. It contains the following definition of ‘standardisation’: ‘In this Act, unless the context indicates otherwise – . . . “standardisation” means – (a) determination of – (i) the name to be applied to each geographical feature; and (ii) the written form of that name; and (b) the regulation by an appropriate authority of a geographical name, its written form and its application . . .’ [5] Section 2(1) provides for the establishment of the Names Council. Subsection (2) sets out the objects of the Names Council, as follows: ‘(2) The objects of the Council are- (a) to facilitate the establishment of Provincial Geographical Names Committees; (b) to ensure the standardisation of geographical names; (c) to facilitate the transformation process for geographical names; (d) to promote the use of standardised South African geographical names at international level; (e) to ensure the implementation of standardised geographical names in South Africa; and (f) to promote awareness of the economic and social benefits of the standardisation of geographical names.’ [6] Section 9, which sets out the powers and duties of the Names Council, reads as follows: ‘(1) The Council must- (a) set guidelines for the operation of Provincial Geographical Names Committees; (b) set standards and guidelines for local and provincial authorities in their respective areas of jurisdiction; (c) receive proposed geographical names submitted by State departments, statutory bodies, provincial governments, municipalities and other bodies or individuals; (d) recommend geographical names falling within the national competence to the Minister for approval; (e) advise the Minister on- (i) the standardisation of proposed new geographical names; (ii) existing geographical names not yet standardised; (iii) the changing, removing or replacing of geographical names; and (iv) geographical names and their orthography; (f) in consultation with provincial governments, identify existing geographical names in need of revision, and co-ordinate requests for advice on geographical names and standardisation; (g) communicate decisions and relevant information on geographical names approved in terms of section 10 (1) effectively to the various State departments, the public, and all other users of geographical names at national and international level by means of gazetteers, lists, maps and other published and electronic media; (h) liaise with- (i) national and international organisations concerned with geographical names; and (ii) cultural, historical and linguistic organizations; (i) in consultation with the Minister and the Provincial Geographical Names Committees, formulate policies, principles and procedures, taking cognisance of the United Nations resolutions and international practice with reference to the standardisation of geographical names; (j) perform any other duty imposed on it by this Act or any other law; and (k) not later than one month before the commencement of each financial year, submit a business plan containing such information as may be prescribed to the Minister for his or her approval. (2) The Council may- (a) exercise any power conferred on it by this Act or any other law; and (b) generally, do everything which is necessary to perform its duties referred to in subsection (1).’ [7] It is common cause between the parties that a change of name in respect of Louis Trichardt is, as it is described in s 9 (1)(d), a matter within the national competence. [8] Section 10, which deals with the approval and revision of geographical names, reads as follows: ‘(1) The Minister may approve or reject a geographical name recommended by the Council in terms of section 9 (1) (d). (2) A geographical name approved or rejected by the Minister in terms of subsection (1) must be published in the Gazette. (3) Any person or body dissatisfied with a geographical name approved by the Minister may, within one month from the date of publication of the geographical name in the Gazette, lodge a complaint in writing to the Minister. (4) The Minister may refer the complaint to the Council for advice whether or not to reject or amend a geographical name so approved. (5) The Minister must inform the complainant of the decision on the complaint and the reasons for the decision.’ [9] As this is an attack on the validity of an administrative decision it is also necessary to refer to s 6 of the Promotion of Administrative Justice Act 3 of 2000 (to which I shall refer in what follows by using its acronym ‘PAJA’). Section 6, as far as is material, reads as follows: ‘(2) A court or tribunal has the power to judicially review an administrative action if- . . . . . . (e) the action was taken – . . . (iii) because irrelevant considerations were taken into account or relevant considerations were not considered . . .’ GUIDELINES, POLICIES, PRINCIPLES AND PROCEDURES [10] It was common cause between the parties that the guidelines set in terms of s 9 (1)(a) and the ‘policies, principles and procedures’ formulated in terms of s 9 (1)(i) of the Act are to be found in a document available on the Names Council’s website a printout of which is annexed to the founding affidavit. [11] This document contains the following paragraphs, which are relevant in these proceedings: Provincial Geographical Names Committees (PGNCs) Provincial Geographical Names Committees are established in terms of Section 2(2) (a) of the South African Geographical Names Council Act (Act No. 118 of 1998). They are established by the Provincial department responsible for Arts and Culture after consultation with the SAGNC. Functions of a Provincial Geographical Names Committee • A PGNC is responsible for advising local authorities and working with them in ensuring that they apply the principles of the SAGNC to the names under their jurisdiction. • A PGNC makes recommendations to the SAGNC on the names of geographical features that fall within its provincial boundaries. It should do preparatory work for the submission of names to the SAGNC and is responsible for seeing that local communities and other stakeholders are adequately consulted.’ ‘Policies for standardisation Standardisation is based on: • the current orthographic (spelling) rules of the languages from which the names are derived; • the wishes of the local population, provided they are not in conflict with the principles of the SAGNC; • the historical use of the name; • redress, where a name is changed on the basis of historical consideration; • United Nations resolutions on the standardisation of geographical names; • any other relevant factors which the SAGNC may identify. Human rights and the South African Constitution Determining a name for a place requires balancing historical and linguistic considerations, communicative convenience, the spirit of a community and the spirit of the nation.’ ‘Can existing names be changed? Geographical names are part of the historical, cultural and linguistic heritage of the nation, which it is more desirable to preserve than destroy. One of the objects of the SAGNC is “to facilitate the transformation process for geographical names”. Application may be made for an existing geographical name to be changed if the applicant believes that it does not meet the Policies and Principles of the SAGNC. The application must be made on the same form that is used for new names, and should be accompanied by a detailed motivation and, where possible, supporting documents.’ ‘Who may apply for approval of a name? All government departments, provincial government, local authorities, the SA Post Office, property developers and any other body or person may apply. How standardising is done The SAGNC receives all applications for the approval of geographical names under its jurisdiction and ensures that proper consultation has taken place and that the name meets the Council’s requirements in all respects. The SAGNC takes the final decision on the form or forms of names and recommends them to the Minister. Once a name has been approved by the Minister, that name has been standardised. It is then published in the Government Gazette.’ FACTS [12] On Friday, 25 January 2002, the mayor of the third respondent was summoned to the office of the Provincial Member of the Executive Committee for Local Government and Housing of the Limpopo Province and told that the names of a number of towns in Limpopo Province, including that of Louis Trichardt, had to be changed because, as it was put, these names ‘reminded us of the history of oppressive colonial practices.’ [13] The following Wednesday, 30 January 2002, at a meeting of the council of the third respondent (which I shall call in what follows ‘the council’) the mayor announced that the name of the town had to change before the end of February 2002, and a sub-committee was appointed by the mayor to investigate the renaming of the town. [14] The next day, Thursday, 31 January 2002, the secretary to the mayor, Mr NP Magwala, issued an instruction to all ward councillors to convene people’s forums in their wards on Saturday, 2 February 2002, or Sunday, 3 February 2002, and stated that written submissions had to reach the secretary’s office before 16 February 2002. The ward councillors were requested in this communication to invite all stakeholders to attend a public hearing on Thursday, 7 February 2002, at 2 pm at the Louis Trichardt showground hall. [15] The following day, Friday, 1 February 2002, Mr Magwala issued a notice in the following terms: ‘CHANGING OF THE NAME OF THE TOWN This serves to inform you that the name of the town is about to be changed before the end of February. You are therefore requested to submit written representations to the Office of the Mayor, Civic Centre in the Reception Hall, Ground Floor on or before the 6th February 2002. You may either fax your proposal to 015 516 4392. The said proposed list of the name(s) must be signed by the writer(s).’ [16] On Wednesday, 6 February 2002, [not Thursday, 7 February 2002, the date mentioned in the communication to the ward councillors from the secretary to the mayor] a public meeting took place at the Louis Trichardt showground hall. It was attended by approximately 110 people. 55 new names were suggested for the town. The municipal manager requested the traditional leaders to direct the process. The dates for regional public hearings were announced as follows: 12 February 2002 – Vuwani; 13 February 2002 – Hlanganani; 14 February 2002 – Nzhelele; 17 February 2002 – Zoutpansberg. [17] The Vuwani meeting took place on 12 February 2002 and was attended by 51 people. The Hlanganani meeting was held at Rivoni on 13 February 2002, and was attended by 59 people. The meeting at Nzhelele was held on 14 February 2002, and was attended by 91 people. There is no information in the papers as to whether the Zoutpansberg meeting took place. [18] In some wards of the Makhado municipality meetings were held about the name change but they were poorly attended. In other wards no meetings were held. Included among these wards was ward 1. According to the councillor for the ward this was due to the short notice given. Ward 1, which comprises about 50% of the total jurisdictional area of the municipality, includes the town of Louis Trichardt west of the national road, all the businesses in that part of the town, the Buys Community and a number or rural communities. [19] On 21 February 2002 the report prepared by the committee appointed to investigate the renaming of the town was presented to the municipality’s executive committee. Its recommendation was that the town’s name be changed from Louis Trichardt to Makhado. On the same day the council resolved at a special meeting to change the name in accordance with the sub- committee’s recommendation. [20] On 26 February 2002 a meeting took place between representatives of the Soutpansberg Chamber of Commerce and the municipality’s executive council at which the chamber of commerce was requested to raise its objections to the name change in writing and the mayor stated that the name change would be put on hold until a formal meeting had been held with the chamber in order that its views could be heard after which the matter would be reconsidered. [21] On 27 or 28 February 2002, Mr Magwala sent a letter to the editor of the Zoutpansberger, a newspaper circulating in Louis Trichardt, which contained the following: ‘The Executive Committee of the Sakekamer in Louis Trichardt has approached the Executive Committee of the Municipality on Tuesday the 26 February 2002 whereby it raised its concerns in relation to the change of the name of the town. The Executive Committee of Sakekamer has been requested to bring in their concerns in writing after which a meeting will follow. It is the policy of this Municipality to listen to the concerns of all its citizens of structures within this Municipality. The Municipality has already sent a report to the MEC for Local Government and Housing Mr MJ Maswanganyi who will then ensure the necessary procedures are implemented to have the new name gazetted. In conclusion I must indicate that the new name of the town is MAKHADO. I hope that the above will clarify all the misunderstandings concerning this matter.’ [22] On 27 February 2002 the chamber of commerce wrote to Mr Magwala, referring to the letter he had written to the editor of the Zoutpansberger and pointed out that what he had said in the letter was in conflict with what had been said by the mayor the previous day at the meeting between representatives of the chamber of commerce and the executive council. [23] On 27 February 2002 the chamber also wrote to the mayor and the members of the executive committee asking for a meeting to be convened as soon as possible so that the name change could be discussed with the chamber. [24] On 11 March 2002 the chamber wrote to the secretary of the Names Council recording its objections to the change of name. [25] On 26 March 2002 the chairman and vice-chairman had a meeting with the Minister of Provincial and Local Government, Mr FS Mufamadi, who then wrote a letter to the mayor in which he stated that he urged both the chamber and the council, which he was informed were to have a meeting on the following day, to resolve the matter by dialogue and to find a settlement that would promote unity within Louis Trichardt and the Makhado municipal area. On 27 March 2002 the meeting between the Executive Committee and the Chamber of Commerce, to which Mr Mufamadi had referred, took place. At this meeting the chairman of the chamber stated that the mayor had agreed that the name change process would be halted but that it had not been. The mayor stated that his office was ready to clarify to the chamber ‘the process of the name change’. Later on in the meeting he said: ‘We consult politicians, not Chambers’. He also said that Mr Mufamadi would be told that the ward councillor for ward one, Councillor Helm, had not done her job and that the council would not revoke its decision. [26] On 2 April 2002 the chamber reported what had happened at the meeting of 27 March 2002 to Mr Mufamadi and requested him to intervene. [27] Although for some reason which was not explained the relevant correspondence is not before the court, it appears that at some stage prior to 21 May 2002 the council’s proposed name change was considered by the Names Council which referred it back to the council because there was already a Makhado township. The Names Council suggested that to avoid duplication the council should either submit a second choice or rename the existing Makhado and then allocate the name to Louis Trichardt. [28] On 25 June 2002 the council resolved that Makhado Township be renamed Dzanani Township and that its resolution of 21 February 2002 ‘be adhered to and that the application in this regard be confirmed with [the Names Council].’ [29] On 26 June 2002 the third respondent’s acting municipal manager applied to the Names Council for the names of Louis Trichardt and Makhado Township to be changed to Makhado Town and Dzanani Township respectively. Subsequently on 28 February 2003 a further application was made, this time by the third respondent’s municipal manager, for the name of Louis Trichardt to be changed to Makhado. It does not appear from the record what, if anything, had happened to the application of 26 June 2002, and why a further application was made on 28 February 2003. [30] On 14 March 2003 the Names Council held a meeting at which the applications, inter alia, for the change of the name of Louis Trichardt to Makhado Township and Makhado Township to Dzanani Township were considered. The minutes of the meeting, which were subsequently signed by the chairperson on 28 May 2003, do not contain a resolution stating that the Names Council recommended the proposed name changes and for approval by the first respondent. What the minutes contain on this point is the following: ‘Prof LF Mathenjwa [the chairperson] then presented the applications for and against the change of names from Mpumalanga. He asked for Council’s resolution on this issue. Dr Beukes said that a geographical name should be approved by the Minister after receiving recommendations from the SAGNC, and whoever had an objection had an opportunity to forward it to the Minister after the approved name had been published electronically and in the Government Gazette. The Council agreed with Dr Beukes and decided that the Unit should bring to the Minister’s attention that there were objections to the name changes from Limpopo and Mpumalanga. For example, the application for the change of name Jeppe’s Reef to Embhojeni should be recommended but sent to the Minister with a note saying that there was an objection to it.’ [31] On 9 May 2003 the Director-General of the Department of Arts and Culture wrote a memorandum to the first respondent, which, as far as is material, is in the following terms: ‘GEOGRAPHICAL NAMES RECOMMENDED BY THE SOUTH AFRICAN GEOGRAPHICAL NAMES COUNCIL (SAGNC) MEETING OF 14 MARCH 2003 FOR THE APPROVAL BY THE MINISTER INTRODUCTION 1. The SAGNC held a business meeting on 14 March 2003. At this meeting twenty-two names were recommended for your approval. DISCUSSION 2. The table of the recommended names is attached as Annexure A. 3. Out of the twenty-two recommended names, nineteen have a political significance and are of public interest (Annexure B). 4. The SAGNC would like to bring to your attention the correspondence you received from different stakeholders with regard to the change of name from Louis Trichardt to Makhado (Annexure C). 5. The SAGNC would also like to give you assurance that despite all objections and concerns regarding the name change, a proper consultation process was followed.’ . . . RECOMMENDATION 6. It is recommended that you approve the names as recommended by the SAGNC.’ [32] Among the list of new names which according to the Director-General had been recommended for approval were Dzanani and Makhado: these two names were also included in the list of names with a political significance. [33] On 15 May 2003 the first respondent approved the recommendations contained in paragraph 6 of the Director-General’s memorandum. [34] Two government notices dealing with the change of name of, inter alia, Louis Trichardt were published in the Government Gazette: viz Government Notice 712 of 6 June 2003 in which it was stated, inter alia, that the first respondent approved the place name Makhado in respect of the former Louis Trichardt ‘on the advice of the Names Council’, and Government Notice 864 of 20 June 2003 in which it was stated that the approval was given on 15 May, again ‘on the advice’ of the Names Council. (It is clear that the first Government Notice was incorrect and that it was replaced by the Government Notice of 20 June 2003, which correctly reflected the decision made by the first respondent.) [35] On 30 June 2003 the appellant’s attorney objected in terms of s 10 (3) of Act 118 of 1998 to the change of the name of the town of Louis Trichardt to Makhado. In an undated letter received by the appellant on 13 November 2003 the first respondent rejected the appellant’s objection. The reasons he gave in support of this decision were the following: ‘A process of and sufficient consultation was followed before this matter was finalized; publication in the Government Gazette was done in accordance with the Act; and the approved name is not in conflict with the principles and policies of the South African Geographical Names Council.’ APPELLANT’S CONTENTIONS [36] The appellant’s attack on the validity of the name change was based on three main contentions: viz (1) that the Names Council had not made a recommendation to the first respondent in terms of s 9 (1)(d) of the Act for the change of the name of Louis Trichardt to Makhado; (2) that the application for the name change had not been preceded, as it should have been, by proper consultation with all interested parties; and (3) that the first respondent in considering the objection under s 10 (3) did not properly apply his mind to the objections and if he had done so he would have realised that a proper consultation process had not been followed. The appellant also sought an order declaring s 10(3) and 10(4) of the Act to be unconstitutional. [37] In support of the contention that there had to be proper consultation before there was a name change the appellant relied on the paragraphs in the guidelines in which the functions of the Provincial Geographical Names Committees are set out and in which it is explained how standardising is done. [38] The attack on the constitutionality of s 10 (3) and 10 (4) of the Act was based on the contention that it is ‘inappropriate and not transparent that the same administrator reviews his own decision’. CONTENTIONS ADVANCED BY COUNSEL FOR FIRST AND SECOND RESPONDENTS [39] Counsel for the first and second respondents submitted that on a proper interpretation of the Act different considerations apply to the transformation of geographical names from those which apply to their standardisation. This case, they contended, was concerned with the concept of transformation, which relates to the rejection of names of towns by the community and the acceptance of a new name acceptable to the community with reference to its history and cultural values. [40] They contended further that it was no accident that s 9(1)(c) of the Act empowers a municipality to submit a proposal for a name change to the Names Council. They submitted that this may obviously be done to achieve transformation and that ‘(t)his provision of the Act coincides with the capacity of a municipality to represent its community as a consequence of democratic principles.’ They argued further that the scheme of the Act does not provide for consultation in the case of a name change which would achieve transformation as opposed to standardisation. Dealing with the guidelines set by the Names Council, they contended that they only applied to cases where place names were being standardised and not where they were being transformed. [41] It was also argued on behalf of the first and second respondents that the evidence was, as they put it, ‘overwhelming’ that the Names Council duly and properly considered the proposal and recommended the change of name to the first respondent. [42] Another contention advanced by counsel for the first and second respondents, supporting in this regard the approach adopted by the court a quo, was that the appellant’s attack on the first respondent’s decision to approve the name change recommended by the Names Council was materially defective because it had not sought to take on review the council’s decision to propose the name change. That decision, it was submitted, is valid and of full force and effect. The Names Council was not entitled to question the validity of the council’s decision to apply for a change of name. What the Names Council was enjoined to do, they submitted was ‘to consider the merits of the application and to recommend or not that the change of name be brought about by the Minister. DISCUSSION [43] I do not think there is any merit in the submission that it was ‘no accident’ that s 9(1)(c) of the Act empowers a municipality to submit a proposal for a name change and that that provision indicated that a municipal council being, as it were, a representative of the municipal community could propose a name change of a transformatory nature which the Names Council had to consider on its merits, without paying any regard to the question as to whether there had been an adequate process of consultation within the community. The first point to notice in this regard is that s 9(1)(d) not only provides for name changes to be proposed by municipalities but also by, amongst others, ‘other bodies and individuals’. Secondly the guidelines clearly apply both to standardising (in the narrow sense) and transformatory name changes. That this is so appears clearly from the reference in the paragraph headed ‘Policies of Standardisation’ to ‘redress’, where a name is changed on the basis of historical consideration. It also appears from the statement in the paragraph headed ‘Human Rights and the South African Constitution’ that determining the name for a place requires ‘balancing historical and linguistic considerations, . . ., the spirit of a community and the spirit of the nation’ and the inclusion of a reference to the ‘transformation process’ in the paragraph headed ‘Can existing names be changed?’ Thirdly, it is difficult to understand why the council would have required consultation, for example, on a question such as whether the correct spelling of ‘Messina’ should be “Musina”, but not have required consultation with those affected by the change of name of a place such as Louis Trichardt, the chief town in an area inhabited by persons belonging to various ethnic and linguistic groups. [44] I also reject the contention that the appellant’s application was defective because the appellant had not sought to review the council’s decision to propose the name change. The proposal as such changed nothing: it did not adversely affect the rights of any person and had no direct, external legal effect and was accordingly not covered by the definition of ‘administrative action’ in s 1 of PAJA. It was of no greater significance than any individual’s proposal. [45] In my opinion the statement in the guidelines that the Names Council ‘ensures that proper consultation has taken place’ is akin to a promise made by a public authority to follow a certain procedure, about which the Privy Council said the following in Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 622 (PC) at 638E-F: ‘When a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and implement its promise, so long as implementation does not interfere with its statutory duty. The principle is also justified by the further consideration that, when the promise was made, the authority must have considered that it would be assisted in discharging its duty fairly by any representations from interested parties and as a general rule that is correct.’ [46] The guideline is that before a proposal for a name change, even one of a transformatory nature, is considered, adequate consultation with local communities and other stakeholders must take place. In all the circumstances I think it clear that this guideline should have been implemented in the case of the Louis Trichardt name change. It is clear from the summary of the facts set out above that such consultation did not take place. Apart from the short notice given of meetings to be held by ward councillors, the holding of the meeting advertised for 7 February 2002 on 6 February 2002, the refusal to hold back the process during the discussions with the chamber of commerce and the statement by the mayor that ‘we consult politicians, not Chambers’, there was the assertion by the mayor that the councillor for ward one had not done her job: which amounted to an admission that her ward (which it will be recalled comprises about 50% of the total jurisdictional area of the municipality, including the town of Louis Trichardt west of the national road, all the businesses in that part of the town, the Buys Community and a number of rural communities) was not consulted. Whether it was the councillor’s fault or not is neither here nor there; the failure to consult is not disputed. [47] It follows from what I have said that the statement in the Director- General’s memorandum, which was before the first respondent when he approved the name change, to the effect that a proper consultation process had been followed was incorrect and was indeed a material misstatement of fact, which clearly influenced the first respondent in coming to the decision he did (as appears from the reasons he later gave when he rejected the appellant’s objection to the name change). [48] Under the law as it was before PAJA it was held by this court in Pepcor Retirement Fund v Financial Services Board 2003 (6) SA 38 (SCA) at paras 47 and 48 that a material mistake of fact was a ground for judicial review, provided the fundamental distinction between appeal and review was not blurred or eliminated. Cloete JA said (at para 47) that the doctrine of legality requires that the power conferred on a functionary to make decisions in the public interest should be exercised properly, ie on the basis of the true facts. In the Pepcor case it was held that the distinction referred to was not blurred or eliminated because the Registrar of Pension Funds, whose decision was being reviewed and to whom material misstatements of fact had been made, was entitled to act on the assumption that the correct facts had been placed before him. In this case the first respondent was entitled to assume that the fact conveyed to him by the Director-General, viz that there had been proper consultation, was correct. In my opinion the legal position as set out in the Pepcor case based as it is on the principle of legality still applies under PAJA, s 6(2)(e)(iii) of which provides that administrative action taken because ‘irrelevant considerations were taken into account or relevant considerations were not considered’ can be set aside on review. Where a decision is based on a material misstatement of fact it is clear that that subparagraph applies. [49] It follows from what I have said that even if one accepts that the Names Council did recommend the name change to the first respondent (which I am prepared to assume for the purposes of this judgment) the first respondent’s decision to approve the name change clearly cannot stand. This conclusion renders it unnecessary to decide whether the appellant’s contention that the first respondent lacked the power to approve the name change because the Names Council had failed to make a recommendation in this regard is correct. [50] In view of the fact that I have come to the conclusion that the appellant’s attack on the first respondent’s decision under s 10(1) must succeed it is unnecessary to deal with the attack on his decision to reject the appellant’s complaint lodged in terms of s 10(3). This is because the first respondent’s powers under s 10 (4) read with (5) are simply to reject or amend a name previously approved and not to validate an invalid decision made by him. It is also unnecessary to consider whether the appellant’s contentions regarding the constitutionality of s 10(3) and 10(4) of the Act are well-founded. ORDER [51] The following order is made: 1. The appeal is allowed with costs. 2. The order of the court a quo is set aside and replaced by the following: ‘1. The decision of the first respondent in terms of section 10(1) of the South African Geographical Names Council Act 118 of 1998, and published in Government Notice 864 of 20 June 2003, to approve the change of the geographical name of the town Louis Trichardt to Makhado is reviewed and set aside. 2. The first and second respondents are ordered to pay the costs of the applicant jointly and severally.’ …………….. IG FARLAM JUDGE OF APPEAL CONCURRING HOWIE P BRAND JA JAFTA 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: 29 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 The Supreme Court of Appeal today upheld an appeal brought by the Chairpersons’ Association of Limpopo Province and reviewed and set aside a decision made by the Minister of Arts and Culture on 15 May 2003 to change the name of the Limpopo town Louis Trichardt to Makhado. The Supreme Court of Appeal held that a guideline had been set by the South African Geographical Names Council to the effect that there had to be adequate consultation of affected communities and stakeholders before a name change was approved and that such consultation had not taken place in the case of Louis Trichardt. Despite this the Minister of Arts and Culture had been informed by the Director-General for Arts and Culture before he made the decision that there had been adequate consultation. The Minister was entitled, so the Supreme Court of Appeal held, to accept the correctness of this statement. In the circumstances the Minister’s decision had to be set aside as the misstatement was clearly material. The Supreme Court of Appeal went on to hold that the fact that the Minister later rejected an objection to the name change did not alter the position because he was not empowered, when considering an objection to a name change, to validate a previously invalid decision.
3961	non-electoral	2023	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 471/2021 In the matter between: THE MEMBER OF THE EXECUTIVE COUNCIL, EDUCATION, NORTH WEST PROVINCE APPELLANT and IZAK BOSHOFF FOSTER FIRST RESPONDENT GUILLAUME HENRI BOSHOFF FOSTER SECOND RESPONDENT THE LEOPARDS RUGBY UNION THIRD RESPONDENT KOSH SPORT & TRAUMA SERVICES FOURTH RESPONDENT And THE LEOPARDS RUGBY UNION FIRST THIRD PARTY KOSH SPORT & TRAUMA SERVICES SECOND THIRD PARTY Neutral citation: The Member of the Executive Council, Education, North West Province v Izak Boshoff Foster & Others (Case no 471/2021) [2023] ZASCA 11 (13 February 2023) Coram: VAN DER MERWE, MOCUMIE and CARELSE JJA and GOOSEN and MASIPA AJJA Heard: 9 November 2022 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 13 February 2023. Summary: Delict – negligence – whether public school hosting a sports tournament took reasonable steps to ensure the presence of competent and suitably equipped first aid provider. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Thobane AJ, sitting as court of first instance): 1 The appeal succeeds only to the extent set out in para 2 below. 2 Paragraph 2 of the order of the high court is set aside and replaced with the following: ‘The first defendant is directed to pay the first plaintiff’s costs, such costs to include the costs of two counsel.’ 3 The appellant is directed to pay the costs of the appeal, including the costs of two counsel. JUDGMENT Mocumie JA (Van der Merwe, Carelse JJA et Goosen AJA concurring): [1] Rugby (the sport code at the core of this appeal is defined in the Concise Oxford English Dictionary (12 ed) as ‘a team game played with an oval ball that may be kicked, carried, and passed by hand, in which points are won by scoring a try or by kicking the ball over the crossbar of the opponents’ goal’.1 [2] Despite it being a much-loved national sport in South Africa and played all over the world, because it involves physical contact, rugby is a dangerous sport in which players often sustain serious injuries; which may include permanent paralysis. Because of all the attendant risks, there has for many years been insistence on emergency measures, including professional first aid services, being available at rugby matches. One would therefore not expect a player to be injured by the 1 Concise Oxford English Dictionary 12ed at 1258; See also Roux v Hattingh [2012] ZASCA 132; 2012 (6) SA 428 (SCA) para 1. paramedics and/or people who are meant to attend to their injuries in an emergency, as it happened in this case.2 [3] The facts of this matter are briefly as follows. On 6 May 2006, the first respondent (who was 18 years of age at the time and in matric) played in a rugby tournament representing his school, Hoërskool Lichtenburg (herein after referred to as Lichtenburg) against Hoër Volkskool Potchefstroom (herein after referred to as Volkskool). The latter hosted the tournament. Both schools fall under the appellant, the Member of the Executive Council of Education: North West province (the MEC). The first respondent was tackled by a player from the opposing team and fell to the ground. Whilst on the ground another player fell on top of him. He sustained an injury to his neck as a result of the impact. Two first aid personnel carried him off the field without stabilising his neck with a spine board or solid neck brace. This caused the second injury to the first respondent. This matter revolves around the second injury. He was later taken by ambulance to Potchefstroom Medi-Clinic, where he received treatment. Thereafter, he was airlifted to Pretoria Hospital, where he underwent surgery twice. After the first operation, the doctors informed the first respondent that he would not be able to walk again. This remained the position despite the second operation. He was discharged on 15 September 2006, four months after the incident. [4] Following this tragic incident, the first respondent and his father, the second respondent, issued summons in the Gauteng Division of the High Court, Pretoria (the high court) in respect of the second injury, which was caused by the manner in which the first aid personnel carried the first respondent off the field without having stabilised his neck. The MEC was the first defendant in the high court whilst the first and second respondents (the respondents) were the first and second plaintiffs. The third and fourth respondents were respectively the third and fourth defendants as well as the first and second third parties.3 The third respondent settled the claim with the respondents. The fourth respondent, Kosh Sport & Trauma Services, did not 2 This is the essence of the words uttered by the second plaintiff, the father of the first plaintiff, in shock and disbelieve after his son was severely injured during a rugby game. 3 A third party claim refers to a claim made by a defendant during the course of legal proceedings with the intention of enjoining an individual or entity that is not involved in the original action to perform a related duty. One good example of a third party claim is an indemnity claim against a third party. In some situations, third party proceedings are undertaken to determine how negligence should be apportioned between a defendant and a third party (www//upcounsel.com Legal definition.) participate in the proceedings. By agreement between the parties the high court had to determine the issue of liability as formulated by the parties: ‘whether the first defendant is liable for the damages suffered, and if so to what specific extent and for what specific injuries. . . ’. [5] After proceeding to trial, the high court (per Thobane AJ), granted the following order: ‘1. The defendants are liable for 100% of proven or agreed damages suffered by the first plaintiff as a result of the manner in which first plaintiff was carried off the field on 6 May 2006; 2. The defendants are directed to pay the plaintiffs’ costs on a punitive scale as between attorney and client which costs shall include: 2.(1) Costs of procuring medico-legal reports, consultations, attending meetings and procuring joint minutes; 2.(2) Costs of all expert witnesses called by the plaintiffs; 2.(3) All costs of the action including costs consequent upon the employment of two counsel.’ (Emphasis added.) The effect of the order was that the second respondent’s claim was dismissed. [6] Thobane AJ was not available to hear the application for leave to appeal. The respondents also sought a variation of Thobane AJ’s order. Because of the unavailability of Thobane AJ, Potterill ADJP heard the application for leave to appeal together with the application for variation. She partly granted the variation sought, but refused leave to appeal. This Court subsequently granted leave to the appellant to appeal to this Court. Issues for determination [7] The central issue for determination is whether the MEC was liable for the second injury that the first respondent suffered on 6 May 2010 at the rugby match held at Volkskool. A secondary issue is whether Potterill ADJP was empowered to vary the order. For convenience, I commence with the secondary issue to dispose of it. The variation order [8] The respondents sought to vary the order in three respects. First, that the phrase ‘the defendants are liable’ in para 1 and ‘the defendants are directed to pay’ in para 2 be corrected to read ‘the first defendant’. Secondly, that para 1 of the order be amended to also make reference to the ‘second plaintiff’’ and thirdly that the injury for which the appellant is liable be described as envisaged in the separation order. As I shall show, the first and third proposed variations were granted. The second was refused and nothing further needs to be said about it. [9] Potterill ADJP made an order on the variation application as follows: ‘Prayer 2 of the application is thus not granted. Accordingly, paragraphs [54]1 and [54]2 are varied to read as follows: 54.1 The first defendant is liable for 100% of proven or agreed damages suffered by the first plaintiff as a result of the manner in which first plaintiff was carried off the field on 6 May 2006, which aggravated an existing cervical spine injury with neurological fall out at C7, to become an effective C5 motor deficit. [54]2 The first defendant is directed to pay the plaintiffs’ costs on a punitive scale as between attorney and client, which costs shall include: 2.(1) Costs of procuring medico-legal reports, consultations, attending meetings and procuring joint minutes. 2.(2) Costs of all expert witnesses called by the plaintiffs. 2.(3) All costs of the action including costs consequent upon the employment of two counsel. No order as to costs in this application.’ [10] Rule 42 of the Uniform Court Rules of Court provides: ‘(1) 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: . . . (b) An order or judgment in which there is an ambiguity, or patent error or omission, but only to the extent of the ambiguity, error or omission.’ (Emphasis added.) [11] The Constitutional Court in Minister of Justice v Ntuli,4 with reference to the seminal judgment of Firestone South Africa (Pty) v Genticuro AG,5 stated the following on whether a court may vary, correct or amend its own order: ‘The general principles of the common law applicable to the variation of orders of Court were summarised by Trollip JA in Firestone South Africa (Pty) Ltd v Genticuro AG as follows: “The general principle, now well established in our law, is that, once a court has duly pronounced a final judgment or order, it has itself no authority to correct, alter, or supplement it. The reason is that it thereupon becomes functus officio: its jurisdiction in the case having been fully and finally exercised, its authority over the subject-matter has ceased.” Certain exceptions to this general principle have been recognised and are referred to in Firestone. They are [i] variations in a judgment or order which are necessary to explain ambiguities, to correct errors of expression, [ii] to deal with accessory or consequential matters which were “overlooked or inadvertently omitted”, and [iii] to correct orders for costs made without having heard argument thereon. Trollip JA was prepared to assume in the Firestone case that the list of exceptions might not be exhaustive and that a Court might have a discretionary power to vary its orders in other appropriate cases. He stressed, however, that the “. . .assumed discretionary power is obviously one that should be very sparingly exercised, for public policy demands that the principle of finality in litigation should generally be preserved rather than eroded . . .”.’ [12] The high court was fully aware that in terms of the separation order, only the liability of the MEC was in issue. That is how the trial was conducted. And the high court determined that issue. The references in its order to ‘the defendants’ were therefore clearly patent errors that resulted in the order not giving effect to the high court’s true intention. It is trite that such errors may be corrected in terms of exception (ii) in Firestone. According to exception (iii), a court may ‘correct a clerical, arithmetical or other error in it judgment or order so as to give effect to its true intention . . .’.6 4 Minister of Justice v Ntuli 1997 (6) BCLR 677; 1997 (3) SA 772 (CC) para 22 -23. See also Ex parte Women’s Legal Centre: In re Moise v Greater Germiston Transitional Local Council 2001 (4) SA 1288 (CC); 2001 (8) BCLR 765 (CC); D E van Loggerenberg & E Bertelsmann Erasmus: The Superior Courts Practice at B1-22 with reference to Geard v Geard 1943 CPD 409. 5 Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A). 6 Firestone ibid at 307C ie to correct orders for costs made without having heard argument thereon. [13] Paragraph 1 of the order is ambiguous having regard to what the high court was called upon to decide in terms of the order it granted on the separation of issues under rule 33(4). It required the court to be specific on the description of the injuries. It clearly made the required finding but failed to reflect it in the order. This was an ambiguity, which could be corrected without changing the ‘sense and substance’ of the judgment or order. Thus, the addition of the words, ‘which aggravated an existing cervical spine injury with neurological fallout at C7, to become an effective C5 motor deficit. . .’ was in line with exception (ii) in Firestone.7 [14] On this basis, it is clear that Potterill ADJP acted within the powers vested in her. The variation of the order she granted was justified. The MEC fails on this secondary issue. [15] As I have said, the first respondent suffered a neck injury after a player fell on top of him whilst on the ground after he was tackled by a player from the opposing team a few minutes before. He was carried off the rugby field, against his protestation, by two first aid personnel, without stabilising his neck with a spine board or neck brace. It is undisputed that this caused the first respondent’s second injury. This is clear from the evidence of the two medical experts, Dr Edeling (for the MEC) and Dr Gianluca Marus (for the first respondent), who compiled their respective reports and thereafter a joint minute. [16] From the outset, the experts agreed that the first respondent had sustained an initial and second injury. The initial injury consisted of a dislocated fracture of the cervical spine at the C4/C5 level, with partial severing of the spinal cord that resulted in neurological fallout at C7. The second injury to the spinal cord resulted in full and permanent neurological fallout at C5. Although the two experts were initially not agreed on the cause of the second injury, they subsequently filed a joint minute, a ‘Further Qualification of Combined Neurosurgical Report, 5th June 2017 on Isak Boshoff Foster’. In it, they stated that: 7 Firestone fn 6 above at 307C para (i) therein states: ‘the principle judgment or order may be supplemented in respect of accessory or consequential matters. . .’Firestone para (ii) reads: ‘The court may clarify its judgment or order, if, on a proper interpretation, the meaning thereof remains obscure, ambiguous or otherwise uncertain, so as to give it effect to its true meaning, provided it does not alter the “sense and substance” of the judgment or order.’ ‘We now agree that there was a second deterioration in his neurological condition due to further spinal cord injury due to the neck not being appropriate[ly] immobilised while being transported off the field.’ [17] Both experts testified and explained their joint opinion. Thus, the experts were in agreement that the second injury was caused by the conduct of the first aid personnel in carrying the first respondent off the field. It is easy to understand that to carry a person with a suspected spinal injury off the field without carefully stabilising the neck of the person and with their head dangling about, may severely aggravate the initial injury. This joint opinion was therefore clearly cogent and based on logical reasoning. In the result, the high court correctly accepted the joint opinion. Liability of the MEC [18] I turn to the central issue before this Court, namely whether the MEC was liable for the second injury that the first respondent suffered on 6 May 2006 at the rugby match held at Volkskool. Section 60 of the Schools Act 84 of 1996 (the Schools Act) provides as follows: ‘Liability of State. — (1) (a) Subject to paragraph (b), the State is liable for any delictual or contractual damage or loss caused as a result of any act or omission in connection with any school activity conducted by a public school and for which such public school would have been liable but for the provisions of this section. . . . (3) Any claim for damage or loss contemplated in subsection (1) must be instituted against the Member of the Executive Council concerned.’ (Emphasis added.) [19] The rugby game was ‘an activity in connection with an educational activity’ as described in the Schools Act.8 It was admitted in the plea that the MEC would be liable for damages caused by a wrongful and negligent omission on the part of Volkskool . A legal duty to avoid negligently causing harm rested on it, based on the relationship of loco parentis, which the educators and coaches have vis-a-vis the learners as players during school games when the latter are in their custody.9 Wrongfulness was thus rightly not in dispute and neither was causation. In the result, the central question is whether the high court correctly held that Volkskool was 8 See definitions in the Act. 9 J A A Basson and M M Loubser (eds) Sport and the Law in South Africa (2000) at 5-30. negligent in failing to take reasonable steps to ensure the presence of a competent and properly equipped first aid provider. [20] From the outset, counsel for the MEC conceded that based on the evidence, which the first respondent presented, both schools, in particular Volkskool as the host school had to take reasonable steps to ensure that competent and sufficient first aid personnel were present at the games on 6 May 2006 to deal adequately with foreseeable injuries sustained by the first respondent and any other player on the day in question. [21] Counsel submitted that Volkskool could only be expected to take reasonable steps and provide the degree of care that was demanded by the prevailing circumstances. Volkskool denied that it was directly and solely responsible for the first respondent’s second injury because, on the common cause facts and experts’ opinion, the second injury was caused by the first aid personnel in the manner in which they carried the first respondent off the rugby field; without stabilising the neck of the first respondent. Relying on the minority judgment of this Court in Chartaprops 16 v Silberman (Chartaprops),10 it was contended that when Volkskool appointed the fourth respondent, as an independent contractor, it acted reasonably. He submitted that the fourth respondent had the necessary expertise and that Volkskool took reasonable steps under the circumstances. [22] Counsel for the MEC also submitted that there was one spine board available in the morning. At the time the first respondent was injured, it was being used at another sports field. An ambulance was available in the morning. According to the Rugby Guidelines: The Green Book, only two first aid personnel referred to as ‘first aid trainees’ were required. The Green Book makes no reference to their experience and qualifications. The third respondent provided five first aid personnel, including Mr van Staden, the sole director of the third respondent. They attended to the first respondent properly and immediately on the field. The Green Book prescribed ‘transport’, without any specification including an ambulance. The presence of a medical doctor is a recommendation, not a requirement. He argued that there was 10 Chartaprops 16 v Silberman 2008 ZASCA 115; 2009 (1) SA 265 (SCA); [2009] 1 All SA 197 (SCA). no evidence that linked the second injury to a lack of services on the day. He contended that even if this Court was to find that the steps undertaken were not sufficient, at the time the first respondent was injured, it was not necessary for Mr van Staden to have been registered with the HPCSA. He was experienced, well known at schools and his services had been used over the years, without any complaints. [23] Over and above, he submitted that according to Mr Bantjies, the Lichtenburg headmaster and coach of the first respondent’s rugby team, at the time of the incident, what Mr Meintjies (an educator and the sports organiser for the games at Volkskool) did was reasonable: Mr Meintjies obtained a quotation that had all the specifications for the games. In the quotation he also requested the qualifications of the employees of the fourth respondent. [24] In conclusion, he urged this Court to take into account that, the incident occurred in 2006, where only one first aid assistant was required to be present during a rugby game. Back then, so counsel submitted, the SA Rugby requirements were extremely low, but (he acknowledged) over time the requirements have increased. [25] As Scott JA aptly puts it in Sea Harvest Corporation (Pty) Ltd v Duncan Dock Cold Storage Pty Ltd,11 on negligence and its determination: ‘A formula for determining negligence which has been quoted with approval and applied by this Court time without measure is that enunciated by Holmes JA in Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-F. It reads: “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 to guard against such occurrence.”.’ 11 In Caparo Industries PLC v Dickman and Others [1990] 1 All ER 568 at 586, Lord Oliver observed: ‘the attempt to state some general principle which will determine liability in an infinite variety of circumstances serves not to clarify the law but merely to bedevil its development in a way which corresponds with practicality and common sense.’ [26] Volkskool is a well-resourced school in the North West Province. Its educators include dedicated sports events organisers, trained by the Department of Sports, (Arts), Recreation and Culture in partnership with Department of Basic Education. They are equipped to organise games and are fully aware of the basic requirements that must be in place at the commencement of every game.12 The school has the necessary resources to manage all sports codes during the various sports seasons. Its educators have the necessary experience and knowledge to ensure that there is inter alia equipment, proper facilities and emergency services available during the games. It is well-known that the school has hosted sports events including rugby for years. Any reasonable person in the position of Volkskoolwould have foreseen the harm that occurred: well knowing that rugby is a dangerous contact sport that often leads to injuries. Some more serious and with dire consequences, as in this case, than others. [27] Volkskool should have foreseen that if any neck injury was not treated properly and immediately, it could lead to a spinal injury. Volkskool therefore had to take reasonable measures to ensure the appointment of a first aid provider and personnel that were qualified for the job, if not qualified as prescribed by the Health Professional Council of South Africa (HPCSA) and in terms of the Green Book, at least experienced and competent to deal with neck injuries (typical in rugby games) and the kind of injury the first respondent suffered arising from the initial neck injury. [28] The first respondent (at 18 years then and not an expert in rugby or neck injuries) stated without contradiction that while he was lying on the field he could not feel his legs. When the two first aid personnel approached him, he protested more than once (three times as the record indicates) that they should not carry him off the field without a spine board. He said: ‘I did not know what was wrong with me…I just knew that they should use equipment to carry me off the field as I did not want anything that was wrong with me to worsen…I suspected I had a neck injury…As they were carrying me off the field my head fell backwards and frontwards and my head was loose. I was not able to keep my head still.’ 12 Department of Sport and Recreation South Africa, in partnership with the DBE, hosted the National School Sport Championships. [29] The evidence of the first respondent, as supported by that of eyewitnesses (Mr Mayne and a retired medical doctor) shows that the fourth respondent’s employees, in particular Mr van Staden, were hopelessly incompetent and ill- equipped. The facts speak for themselves. [30] What did Volkskool do to ensure that the first aid personnel were competent and properly equipped to do the job? Nothing really. It is on record that Volkskool engaged the services of the fourth respondent on the simple basis that Mr van Staden was well known in the area and had provided emergency first aid services for schools in the area. And that there had been no previous complaints about the fourth respondent. It was only discovered after this tragic incident that the fourth respondent did not have the necessary qualifications and competence to do the work. On the probabilities, reasonable enquiries would have uncovered that Mr van Staden had a certificate of an ambulance driver, which is not what the HPCSA prescribed (according to the evidence of Ms Nkoane of the HPCSA). Ms Nkoane stated without contradiction that anyone who dealt with such serious injuries (which the first respondent suffered) had to have received training in treating such injuries and should update themselves from time to time. It is on record that Mr van Staden obtained his certificate as an ambulance driver in 2006. The certificate did not mention any of his qualifications. In other words, reasonable scrutiny and even the most basic enquiry by Volkskool would have established very easily that Mr van Staden of the fourth respondent was not registered and did not have the necessary training required under the circumstances. This probably would have led to the discovery of the incompetence of Mr van Staden and his staff, as well as the lack of sufficient equipment. It was indeed ‘chilling… [to have] only one spine board available for all three sports disciplines’.13 [31] Contrary to what counsel for the MEC argued, this is not hindsight wisdom. On the evidence that the high court had before it, Volkskool acting in loco parentis; and as the host responsible for providing emergency services on the day in question, failed to take reasonable steps to ensure that competent and properly equipped first 13 The finding of the high court. aid personnel were available to deal with the clearly foreseeable possibility of serious injuries and their consequences. [32] In any event, Chartaprops14 does not assist the MEC at all for two reasons. First, counsel for the MEC relied on the minority judgment of Nugent JA, which is impermissible. The view pronounced in the majority judgment is binding precedent, which must be followed. Second, in Chartaprops, the appointed contractor was not manifestly imperitus.15 On the facts of this case, the fourth respondent through Mr van Staden was evidently imperitus. Volkskool made no effort to establish this and to find an alternative but went according to the mere say-so that Mr van Staden had provided the emergency services for many years without any complaint about his services. [33] It follows from what I have stated in the preceding paragraphs, on the basis of the first respondent’s unrefuted evidence supported by medical evidence; that the conclusion the high court reached cannot be faulted. The manner in which the first respondent was carried off the rugby field caused his second injury and the sequelae that flowed therefrom. The steps Volkskool took in preparation of the games to prevent the foreseeable injuries, were not reasonable under the circumstances. The appeal therefore ought not to succeed. Costs [34] Last, I turn to the issue of costs. It is trite that the determination of costs lies within the discretion of the court (of first instance). In recognition of this basic principle, a court of appeal will only interfere under limited circumstances ie where the trial court did not exercise its discretion judiciously or where it committed a material misdirection. The trial court mulcted the MEC in punitive costs for two reasons. First, that the MEC did not put up any defence to the action. Second, that because the experts were agreed, there was no dispute on the second injury and thus no reason for evidence to be led. What the high court lost sight of, however, was that the question of negligence was a material issue at the trial and was a matter of some complexity. The MEC was fully entitled to dispute that issue and to 14 Chartaprops fn 13 above. 15 Imperitus is defined in the English dictionary as inexperienced; ignorant. present evidence in respect thereof. It could not fairly be said that the MEC acted unreasonably in its conduct of the trial. Counsel for the first respondent therefore did not defend the punitive costs order with any enthusiasm. [35] The high court thus clearly committed a material misdirection that enjoins this Court to interfere in respect of punitive costs. For that reason, the order as to costs (to the extent that punitive costs were imposed) has to be set aside. The appeal should therefore succeed to the extent that paragraph 2 is amended. This, however, cannot be deemed to be success to the extent of entitling the appellant to the costs of partial success as it would be ordinarily. [36] In the result, the following order issues: 1 The appeal succeeds only to the extent set out in para 2 below. 2 Paragraph 2 of the order of the high court is set aside and replaced with the following: ‘The first defendant is directed to pay the first plaintiff’s costs, such costs to include the costs of two counsel.’ 3 The appellant is directed to pay the costs of the appeal, including the costs of two counsel. _______________________ B C MOCUMIE JUDGE OF APPEAL Masipa AJA (dissenting) [37] I have read the judgment of my colleague, Mocumie JA (the main judgment). Regrettably, I am unable to agree with its reasoning and conclusion. My disagreement primarily pertains to its endorsement of the high court's findings. For reasons that will become evident, I respectfully hold the view that the judgment of the high court was premised on an erroneous evaluation of the evidence and the law. [38] I agree with the main judgment in respect of its categorization of the issues to be determined as well as the conclusion reached in respect of the secondary issue. I however disagree with the conclusion that the appellant was liable for the secondary injury sustained by the first respondent. My dissent is based on whether a case for negligence has been made out against the appellant. The nature of the first and the second injuries were not issues for determination in this appeal and the appeal turns mainly on the issue of negligence. As was set out in Mashongwa v Passenger Rail Agency of South Africa,16 the test for negligence is whether a reasonable person in the appellant’s position would have reasonably foreseen harm befalling the respondent as a result of his conduct and if so, would have taken reasonable steps to prevent the harm. If he would have, did he take reasonable steps to avert the harm that ultimately occurred. [39] I similarly agree with the main judgment on the legal responsibility/liability imposed on the appellant in terms of the Schools Act. My view is borne out by the facts I set out hereinafter. In my view, what the main judgment omits are the facts relating to the steps taken by Volkskool in preparation of the matches. On 6 May 2006, when the first respondent was injured on his neck following a tackle, two first aid personnel carried him off the field without stabilising his neck with a solid neck brace and without a spine board. This resulted in the first appellant sustaining the second injury. The negligence in this matter revolves around the second injury. [40] Prior to a rugby match commencing, there are certain requirements which must be met. These requirements are set out by the South African Rugby Union 16 Mashongwa v Passenger Rail Agency of South Africa [2015] ZACC 36; 2016 (3) SA 528 para 31. (SARU). The minimum requirements in respect of first aid personnel for club and school matches in 2006 were: ‘1. PERSONNEL 1.1 a PERSON OR PERSONS SUITABLY TRAINED IN Emergency Field-Side Care (A Trained First Aider or Paramedic). 1.2 At least 2 trained first aid assistants 1.3 Referees/coaches who have first aid knowledge could be of immense value 1.4 Some form of transport should be readily available if it is not possible to have an ambulance on standby. An ambulance at the playing venue is the ideal. 1.5 The presence of a Sports Medicine Trained Doctor or a doctor experienced in treating sports injuries is highly recommended 2. FIRST AID EQUIPMENT 2.1 Trauma Board or any suitable Stretcher. 2.2 Acceptable First Aid Kit which should include the following: - (i) Splints (ii) Neck Braces (iii) Trauma Bandages (iv) Antiseptics and Strapping.’ A note was added as follows ‘If the minimum medical requirements at a field are not met, then a rugby match should not be allowed to take place. The referee must ensure that these basic minimum requirements are met before allowing the match to commence.’ [41] In order for the appellant to be held liable for the second injury sustained by the first respondent, it must be proven that the appellant was negligent. In my view, this was not proved. On the evidence, the applicant took all relevant steps to ensure compliance with the requirements set by SARU. I say so because prior to the rugby match, Volkskool engaged the services of the fourth respondent as a service provider. I accept, as was found by the main judgment, that the conduct of the first aid personnel in removing the first respondent from the grounds without a neck brace and without a stretcher was negligent. [42] According to the first respondent, as set out in his heads of argument, the appellant is not held vicariously liable for the failure of the fourth respondent and its employees. He contends that the appellant is liable for the negligence of the employees of Volkskool because they failed to vet and appoint suitably qualified, experienced and equipped first aid providers and to make sure that the service provider is adequately equipped to comply with its contractual obligations. [43] As regards the failure to vet the fourth respondent, the evidence is that the fourth respondent was a known service provider in Klerksdorp, Orkney and Potchefstroom. Its services were not only utilized by the local schools but was also used by the local university. Due to the fourth respondent’s busy schedule, Volkskool sent the fourth respondent dates of all the sporting competitions at the beginning of the year and he would quote them as and when necessary for each event. They pre- booked the fourth respondent. [44] As appears from the minimum requirements, it was not a requirement of SARU that a first aid service provider present at the matches should be registered with the Health Professions Council of South Africa (the HPCSA). Accordingly, the fact that it subsequently came to light that he was not registered is a red herring. The main judgment placed much reliance on this issue to arrive at a finding that the appellant failed to act reasonably to ensure that the fourth respondent was suitably qualified. [45] Mr Meintjies testified that he was responsible for planning the sports events for the periods 2002 to 2007. When he started at the school, Mr van Staden was already providing the services. They used the Leopard Rugby Union (the third respondent) referees for the match. As set out earlier, Volkskool was contracted to the fourth respondent. [46] A copy of Mr van Staden’s certificate was kept in the school sports file for contractors. This was required as it was necessary to know that Mr van Staden, the sole director of the fourth respondent, was qualified to do the work as set out in the Green Book for Rugby (the SARU requirements). According to Mr Bantjies, they followed a similar procedure. After requesting for first aid services from the fourth respondent, he received a quotation setting out costs for six first aid personnel, and the school paid in terms of the quotation. Meintjies had, prior to the first respondent’s incident, never heard of any incident involving the fourth respondent or Mr van Staden’s services. [47] The evidence of Ms Dara Kgomotso Nkoane of the HPCSA is relevant to the extent that it confirms that Mr van Staden qualified as an emergency care provider as was set out in his certificate issued by Cape Provincial Administration Ambulance Personnel Training Centre and irrelevant for the determination of the appellant’s liability. Had the registration been necessary, it would have been set out as a SARU requirement. In this regard, I differ from the main judgement. I am satisfied that the appellant satisfied itself that Mr van Staden was suitably qualified. Having received Mr van Staden’s certificate, being aware of his credentials and experience, it was reasonable to accept that he was suitably qualified. By way of analogy, when visits are made to doctor’s rooms daily to consult them, patients are treated without any enquiries from the HSPCA on whether the doctor is registered or even qualified. To expect that Mr Meintjies should have contacted the HSPCA to verify Mr van Staden’s qualifications is beyond the bounds of reasonableness. I accordingly agree with counsel for the appellant that when Volkskool appointed the fourth respondent as an independent contractor, it satisfied itself that it had necessary expertise, and its actions were reasonable under the circumstances. [48] In respect of ensuring that the fourth respondent was adequately equipped, regard must be had to the SARU requirements. Mr Meintjies testified that on the morning of the tournament after the reception, he met Mr van Staden and other first aid personnel. He believed the first aid personnel were employed at the nearby hospital and were using their time off to assist the fourth respondent. This evidence was not challenged. There were two fields, A and B, and four first aid personnel, meaning two per field. He conducted an inspection and was shown the first aid kit, ice, and a spine board on each field, a neck brace and straps. Mr van Staden told him that since they could not let an ambulance stand on the premises, he was in contact with the ambulance staff and would call them should it be necessary. It is not in dispute that there was a provincial hospital 400 metres from the school and an ambulance could be called from there if needed. The evidence of Mr Bantjies was that he saw an ambulance in the morning when he walked out from breakfast at Volkskool. [49] In order to satisfy the SARU requirements, Meintjies organized a referee from the Leopards Rugby Union. Mr Meintjies was satisfied that the requirements were met and his undisputed evidence was that having satisfied himself that the requirements were met, his role ended there. He then left for Klerksdorp for other school sporting activities, returning after the first respondent’s incident. When he enquired from Mr van Staden about the absence of the spine board when the first respondent was removed from the field, he was informed that they were used for prior injuries. Mr Mentjies’ evidence was not disputed. [50] On the evidence, the SARU requirements in respect of equipment required in rugby matches during 2006 were met. Having ensured compliance, it was reasonable for Mr Meintjies to leave the school since the responsibility shifted from the school to the referee. It was for the referee to ensure that all requirements were met before the rugby game could start. He had the authority to stop the game at any stage where there was non-compliance with the requirements. Accordingly, liability in this regard should be placed at the door of the referee and not the appellant. [51] In view of the reasons, I set out above, my view is that the first respondent failed to prove negligence on the part of the appellant. Consequently, the conclusion arrived at by the high court holding the appellant liable is, in my view, misguided. I would accordingly uphold the appeal with costs. _______________________ M B S MASIPA ACTING JUDGE OF APPEAL Appearances For appellant: S Joubert SC with J C Klopper Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For respondent: J D Maritz SC with P L Uys Instructed by: Gildenhuys Malatji Inc, Pretoria Pieter Skein 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: 13 February 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal The Member of the Executive Council, Education, North West Province v Izak Boshoff Foster & Others (Case no 471/2021) [2023] ZASCA 11 (13 February 2023) Today the Supreme Court of Appeal (SCA) dismissed an appeal from the Gauteng Division of the High Court, Pretoria (high court). The appellant, the MEC of Education, North West, was found liable in terms of s 60 of the South African Schools Act 84 of 1998 (the Act) for damages suffered by the first respondent as a result of the negligence and incompetence of a third party (first aid personnel) appointed by Hoër Volkskool Potchefstroom (Volkskool) to administer emergency medical service at a rugby tournament taking place at Volkskool premises. On 6 May 2006, the first respondent part took in a rugby tournament representing his school, Hoërskool Lichtenberg (Litchenburg) against Volkskool, which was hosting the tournament. The first respondent was injured during the match when another player fell on top of him subsequent to a tackle and he sustained a primary injury to his neck. The first respondent however, sustained a secondary injury when he was negligently carried off the field by the first aid personnel, without his neck being stabilized with a spine board or a solid neck brace, despite his protestations. The first respondent was subsequently informed that he would not be able to walk again. After being released from hospital, the first respondent issued summons in the high court against the MEC for the damages he had suffered. The high court held the MEC liable for the totality of damages suffered by the first respondent as well as all costs associated with the action on a punitive scale. In the majority judgment per Mocumie JA (Van der Merwe JA, Carelse JA and Goosen JA), the SCA found that the high court correctly applied its mind when it held the MEC liable for damages that the first respondent suffered based on the unrefuted expert medical evidence. The expert medical evidence supported the conclusion that his damages were caused by the manner in which he was carried off the field by the first aid personnel and the consequences which flowed therefrom. The SCA held further that Volkskool failed to take reasonable steps to ensure that the first aid personnel it employed were competent, properly equipped and available to deal with the clearly foreseeable possibility of serious injuries and their consequences which are inherent to the sport of rugby. The MEC was liable for the wrongful conduct of the school because rugby was found to be an activity connected to an educational activity as defined in s 60 of the Act. Section 60 brought about a legal duty to avoid delictual harm based on the principle of in loco parentis, in which the school or an educator assumes the role of a parent when learners are under their care and custody during sport and school activities. In the result, the SCA confirmed that the MEC was liable for the damages the first respondent had suffered and the appeal succeeded only to the extent of overturning the costs order from punitive to the ordinary scale. The minority judgment per Masipa AJA, was of the view that the Volkskool had acted reasonably in meeting the requirements set out for rugby matches by the South African Rugby Union (SARU) by ensuring that emergency medical staff were available, that the proper equipment was available prior to the tournament starting and that it contracted an independent third party to act as referee. She held further that once the SARU requirements were satisfied the responsibility shifted from the school to the referee to ensure that all requirements were met before the matches could even start and found accordingly that the first respondent failed to prove negligence on the part of the appellant. --------oOo--------
2304	non-electoral	2009	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA Case no: 687/2008 PIETER ETTIENNE JAFTHA Appellant and THE STATE Respondent Neutral citation: Jaftha v S (687/08) [2009] ZASCA 117 (25 September 2009) CORAM: LEWIS and MLAMBO JJA and LEACH AJA HEARD: 8 September 2009 DELIVERED: 25 September 2009 SUMMARY: Court of appeal entitled to consider new evidence on appeal and to impose a new sentence in exceptional cases where circumstances have changed after conviction and sentence. ORDER On appeal from the Cape High Court (Uijs and Horn AJJ) sitting as a full bench. (a) The appeal is upheld. (b) The judgment of the high court is set aside and in its place substituted an order allowing the appeal against the magistrate’s sentence. In its stead the following sentence is imposed: ‘The accused is sentenced to payment of a fine of R10 000 or to two years’ imprisonment.’ JUDGMENT Lewis JA ( Mlambo JA and Leach AJA concurring) [1] The appellant, Mr Pieter Jaftha, was charged with a contravention of s 122(1)(a) of the Road Traffic Act 29 of 1989 – driving a vehicle while under the influence of alcohol – on 29 November 1997. He pleaded guilty and was convicted on 22 April 1998 in the Montagu Magistrates’ Court. He was then 32 years old. It was the third time that he had been convicted of driving when under the influence of alcohol. Indeed, the third offence was committed after he had been convicted but before being sentenced for the second offence. The trial court sentenced Jaftha to three years’ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977. [2] In respect of the first offence, committed in May 1991, Jaftha was sentenced to pay a fine of R600 and to a period of six months’ imprisonment, wholly suspended for five years on the usual conditions. The second offence was committed on 23 August 1997: Jaftha was convicted on 13 October and sentenced on 10 December 1997 to a fine of R6 000, R4 000 of which was suspended, or three years’ imprisonment, two of which were suspended also on the usual conditions. Jaftha’s driving licence was also suspended for a period of five years. He paid the fines imposed on both occasions. The third offence, now in issue, was committed, as I have said, on 29 November 2007. [3] For this third offence, understandably, the magistrate considered that only a sentence of direct imprisonment under s 276(1)(h) was appropriate. Both a correctional supervision officer and a social worker recommended correctional supervision under s 276(1)(i) (that is with no prior period of imprisonment) as an appropriate sentence. They considered that Jaftha did not have a ‘drinking problem’, drinking only socially to relax; that he came from a stable family; worked for the family flower business (principally as a driver); had two young children who were financially dependent on him and could easily be monitored. [4] The magistrate took all these factors into account, but considered that a fine was not appropriate, and that correctional supervision under s 276(1)(h) was not sufficient in the circumstances. He regarded the two previous convictions as seriously aggravating. Moreover, Jaftha, when apprehended the third time, had a blood alcohol level four times above the legal limit. He had driven with two passengers and had committed the offence within a month of being apprehended and charged with the same offence of driving when drunk. The prior convictions and sentences had not deterred Jaftha and a more effective sentence was required. [5] Jaftha lodged an appeal against the sentence and instructed his attorney to proceed with it. He was released on bail of R2 000. His appeal was dismissed by the Cape High Court in 1999. But for some unexplained reason the magistrates’ court in Montagu was not informed by the Cape High Court that the appeal had been dismissed. Some nine years later, in July 2008, Jaftha’s brother was called by the investigating officer in Montagu, Captain Peterson: he had a warrant of arrest for Jaftha. Peterson advised Jaftha that his appeal had been unsuccessful. [6] Jaftha immediately applied to the Cape High Court for leave to appeal against the dismissal of his 1999 appeal. Uijs AJ, who had heard the appeal with Horn AJ, granted the application for leave to appeal to this court (Veldhuizen J concurring) in September 2008. The court condoned the late filing of the application for leave to appeal, taking into account that Jaftha was in no way to blame for the fact that he had never been advised that the appeal had been dismissed. [7] In that application Jaftha explained that he had assumed, when he heard nothing from his erstwhile attorney, that the appeal had been successful. The high court said that while it could not admit evidence as to what had transpired in the years since Jaftha had been convicted, it considered that another court might well take these factors into account, and that there was a good prospect that Jaftha might succeed on a further appeal. It therefore granted leave to appeal to this court. [8] Jaftha seeks to place further evidence as to his personal circumstances, in the form of an affidavit, before this court. He also argues that the trial court misdirected itself in imposing sentence. I shall deal first, briefly, with the argument that there were misdirections in the imposition of sentence by the trial court, warranting interference in the sentence by this court, and then turn to the further evidence. [9] Counsel for Jaftha argues that the magistrate did not give sufficient weight to the fact that Jaftha had shown remorse by pleading guilty. In my view that is of no consequence given that he had been apprehended when driving under the influence of alcohol, and had no real choice as to pleading guilty. [10] Second, it is argued that no account was taken of the fact that the suspended sentences imposed for the second offence would have come into operation and that Jaftha would have had to pay the fine of R4 000. Again I consider that to be irrelevant. It has no bearing on the third offence. [11] Third, no account was taken of the suspension of Jaftha’s licence for five years on his second conviction. I do not consider this to be a misdirection. It was not merely a part of the punishment, but also an important and justifiable measure taken in order to ensure that Jaftha did not endanger himself and others again. [12] Fourth, the magistrate in his reasons for judgment had placed emphasis on the prevalence of the crime of drunken driving and its effects on society: no opportunity was given to Jaftha to respond to the information that the magistrate took into account. I do not understand the argument: it is common for judicial officers to take note of the prevalence of the crime in issue and to seek to deter not only the accused but also others from committing that crime. This does not amount to taking judicial notice of a particular fact, or relying on personal knowledge which has a bearing on sentence. There was nothing for Jaftha to respond to. [13] Fifth, and lastly, the court had accepted the views of the social worker and the correctional supervision officer that Jaftha did not have an alcohol problem, when it is apparent that he did. The misdirection lies, it is argued, in the fact that the magistrate was not bound by the views expressed in the reports, and in failing to take note that Jaftha did indeed have a serious drinking problem. But no evidence to that effect was led and I think the magistrate should not have made any finding of the kind. [14] Accordingly, there are no misdirections to be found in the magistrate’s sentence and this court would not ordinarily interfere with the sentence, as indeed the high court did not on appeal to it. [15] I turn then to the second argument on appeal – that new evidence ought to be admitted to show that the sentence imposed ten years previously is now inappropriate. Ordinarily, of course, only facts known to the court at the time of sentencing should be taken into account.1 But the rule is not invariable. Where there are exceptional or peculiar circumstances that occur after sentence is imposed it is possible to take these factors into account and for a court on appeal to alter the sentence imposed originally where this is justified.2 1 R v Verster 1952 (2) SA 231 (A), R v Hobson 1953 (4) SA 464 (A) and Goodrich v Botha 1954 (2) SA 540 (A) at 546A-D. 2 S v Karolia 2006 (2) SACR 75 (SCA). [16] In this case, ten years had elapsed after conviction and sentence before a warrant for the arrest of Jaftha was issued. Miscommunciation between the officials of the high court and of the magistrates’ court was the cause of this extraordinary delay. Jaftha seeks now to explain why he did not question the outcome of his appeal to the high court, and to place before this court facts that show that imprisonment is no longer warranted. The State does not object to the application to place Jaftha’s evidence before us in the form of an affidavit. And it does not question the truth of the allegations. The State also accepts that the ten year delay is exceptional and that the sentence should be revisited. In my view, the sentence imposed ten years ago should be set aside and a new sentence considered. [17] I turn then to the evidence presented by Jaftha as to events in the ten year period between conviction and sentence and the lodging of this appeal. After his conviction, and during the course of 1998 Jaftha moved to Prince Alfred Hamlet. He had been contacted by his attorney for the payment of additional funds for the appeal, but cannot remember whether that was before or after he moved. He did not hear from the attorney again. He assumed that he would be contacted if his appeal to the high court were unsuccessful. He eventually assumed that he had succeeded and was thus a free man. He did not attempt to recover the R2 000 paid as bail since he had agreed that it would be used by the attorney for his fees. [18] On being told that a warrant for his arrest had been issued, Jaftha immediately contacted Peterson, the investigating officer. He was advised that it was only when there was an inspection at the Montagu Magistrates’ Court in May or June of 2008 that it was discovered that his appeal had been unsuccessful, and that that had not been communicated to the magistrates’ court. As I have said, Jaftha’s application for condonation for the late application for leave to appeal was granted as was leave to appeal. [19] The evidence that has a bearing on sentence, and is not contested by the State, is that after his conviction and sentence, Jaftha realized that he had a drinking problem. He has given up drinking altogether. He and his brothers have taken over their father’s business and now export flowers overseas. They have built up a successful business. He has married the mother of his children and they have a stable family life. All these facts were placed before the high court in the application for leave to appeal, as well as before the Director of Public Prosecutions: Western Cape, and the Clerk of the Montagu Magistrates Court. They were not contested. [20] This court debated with counsel for both Jaftha and the State whether the matter ought to be referred back to the trial court to hear evidence as to whether Jaftha has in fact been rehabilitated, and as to an appropriate sentence. However, since the State accepts the truth of Jaftha’s evidence that he no longer drinks alcohol, and since there seems to be no purpose in imposing a custodial sentence on Jaftha some ten years after his conviction and sentence, there appears to be no reason why this court should not itself impose an appropriate sentence. [21] The crime of which Jaftha was convicted is a serious one, made worse by the fact that it was his third conviction for driving when drunk. Accepting that he has been rehabilitated, we must nonetheless impose a sentence that will have a genuine deterrent and punitive effect. I consider that he should be sentenced to payment of a fine of R10 000 or imprisonment of two years. [22] (a) The appeal is upheld. (b) The judgment of the high court is set aside and in its place substituted an order allowing the appeal against the magistrate’s sentence. In its stead the following sentence is imposed: ‘The accused is sentenced to payment of a fine of R10 000 or to two years’ imprisonment.’ --------------------- C H Lewis Judge of Appeal APPEARANCES: For Appellant: P A Botha Instructed by: De Vries, De Wet Krouwkam Cape Town Symington & De Kok Bloemfontein For Respondent: M O Julius Instructed by: The Director of Public Prosecutions Cape Town The Director of Public Prosecutions Bloemfontein	SUPREME COURT OF APPEAL OF SOUTH AFRICA PRESS RELEASE 26 September 2009 STATUS: Immediate Jaftha v The State (687/08) [2009] ZASCA 117 (25 September 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 a sentence of three years’ imprisonment for driving under the influence of alcohol in Montagu, Western Cape. The conviction was the appellant’s third. The second offence of driving under the influence of alcohol was committed shortly before the third, and the appellant had already been convicted, though not yet sentenced, when the third offence was committed. Naturally the trial court regarded the previous convictions as seriously aggravating factors. Although this court would not normally have interfered in this sentence, it took into account the extraordinary fact that ten years had elapsed between the date when the appellant had lodged an appeal to the Cape High Court and the date when the appellant was informed that his appeal had failed and that a warrant for his arrest had been issued. It transpired that there had been a failure of communication between the high court and the magistrates’ court in Montagu. The Cape High Court granted leave to appeal to this court in 2008. The appellant placed an affidavit before this court explaining that he had assumed in the ten year interval that his appeal against the third conviction had been successful. He had stopped drinking alcohol altogether and was rehabilitated. He and his brothers had built up a successful business together. The State did not object to the evidence placed before the SCA, and did not counter any of the appellant’s claims. It accepted that the ten year lapse of time between conviction and the appeal to this court warranted a different sentence and that imprisonment was no longer an appropriate sentence. In the circumstances this court replaced the sentence imposed by the trial court with a sentence of a fine of R10 000 or two years’ imprisonment. ____________
3929	non-electoral	2022	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 163/2021 In the matter between: MESHACK MAPHOLISA N O APPLICANT and ADV K I A PHETOE N O FIRST RESPONDENT PROF S M DAWJEE N O SECOND RESPONDENT DR J BASSON N O THIRD RESPONDENT DR M N MABASA N O FOURTH RESPONDENT MS CHOKOE N O FIFTH RESPONDENT MS D P MTHIMUNYE-HLUYO N O SIXTH RESPONDENT DR P MILLER SEVENTH RESPONDENT THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA EIGHTH RESPONDENT MALINDA MILLER NINTH RESPONDENT VIOLET GAOLEBALE SENNA TENTH RESPONDENT Neutral citation: Mapholisa N O v Phetoe N O and Others (163/2021) [2022] ZASCA 168 (30 November 2022) Coram: PLASKET and MABINDLA-BOQWANA JJA and WINDELL, CHETTY and MALI AJJA Heard: 1 November 2022 Delivered: 30 November 2022 Summary: Administrative law – review of decision of one organ of state by another – whether review under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) or principle of legality – exhaustion of internal remedies – applicability of s 7(2) of PAJA or under principle of legality. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Fabricius J, sitting as court of first instance) : 1 Leave to appeal is granted with costs, including the costs of two counsel. 2 The appeal is upheld with costs, including the costs of two counsel. 3 The order of the high court is set aside and replaced with the following order: ‘1 The decision by the Professional Conduct Committee of the Medical and Dental Professions Board, as contemplated in the Health Professions Act 56 of 1974, constituted of the first to sixth respondents and taken on 3 July 2017 (the decision) is reviewed and set aside. 2 The decision is substituted with the following: “The point in limine is dismissed.” 3 The seventh respondent is directed to pay the applicant’s costs.’ JUDGMENT ___________________________________________________________________ Mali AJA (Plasket and Mabindla-Boqwana JJA and Windell and Chetty AJJA concurring): Introduction [1] This is an application for leave to appeal brought by the applicant, Mr Meshack Mapholisa in his official capacity (Mr Mapholisa). The application is against an order of the Gauteng Divison of the High Court, Pretoria (the high court) dismissing an application to review a decision of the Professional Conduct Committee (the PCC) of the Health Professions Council of South Africa (the HPCSA). After the high court refused leave to appeal, Mr Mapholisa petitioned this Court. It referred his application for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013, and directed that the parties be prepared to argue the merits of the appeal if called upon to do so. Factual background [2] Mr Mapholisa was appointed as a pro forma complainant by the Registrar of the HPCSA, in terms of the Health Professions Act 56 of 1974 (the Act), read with the Regulations Relating to the Conduct of Inquiries into Alleged Unprofessional Conduct under the Act (the regulations).1 As Mr Mapholisa brought the application for review, he litigated as an organ of state. So too is the body that took the decision under challenge. [3] The first to sixth respondents are members of the PCC, a committee established in terms of s 15(fA) of the Act, read with regulation 6 of the regulations. They are cited in their official capacities. The seventh respondent, Dr Percy Miller (Dr Miller) is a registered medical doctor under the Act and practising as such in the private sector. He was the respondent in a complaint of unprofessional conduct referred to the PCC. The eighth respondent is the HPCSA, a statutory body established in terms of s 2 of the Act. The ninth respondent is Ms Malinda Miller (Ms Miller). She lodged the complaint against Dr Miller. The tenth respondent is Ms Violet Gaolebale Senna (Ms Senna), who is now deceased. She was Dr Miller’s patient and the complaint laid against Dr Miller was in respect of his treatment of Ms Senna. Before dealing with the two points that arise in this application, it is necessary to consider the disciplinary system created by the Act and the Regulations. The disciplinary system and the complaint [4] The Act provides for the establishment of professional boards for the respective medical professions and the Medical and Dental Professions Board is one of those (the Board). The procedure for dealing with complaints against health professionals is set out in the regulations. Regulation 2 deals with the lodging of a complaint, requiring that the complaint must be in writing and be addressed either to the registrar of the HPCSA, the HPCSA itself or a professional board of the HPCSA. In terms of reg 4, 1 Regulations Relating to the Conduct of Inquiries into Alleged Unprofessional Conduct GN R102, GG 31859, 6 February 2009. the registrar is the official, who deals with the complaint initially, irrespective of whom it was addressed to, and may, for instance, call for more information. [5] The complaint is then referred to a preliminary committee. Its task is to scrutinise complaints and decide on the substance of same. In the process, the committee may dismiss frivolous complaints. It would proceed with complaints that appear to have merit. At this stage, the respondent is asked to state their case. The preliminary committee may dismiss a complaint if it is satisfied with the explanation given by the respondent. If, however, it is satisfied that there are grounds to proceed, it must refer the complaint to an inquiry.2 [6] In terms of reg 6, the chairperson of the appropriate professional board, on the request of the registrar, must appoint a PCC to enquire into the matter. The PCC hears the evidence and decides on the guilt or innocence of the respondent. In terms of reg 11(1), ‘the respondent or the pro forma complainant may appeal to the appeal committee against the findings or penalty of the professional conduct committee or both such finding and such penalty’. [7] In terms of reg 11(9), the appeal committee considers the appeal ‘on the papers’. Having considered representations and argument by the parties, it then must determine the appeal. In terms of reg 11(11), the decision of the appeal committee ‘will be of force and effect from the date determined by the committee and may be set aside by a High Court if approached in terms of section 20 of the Act’. Section 20 provides a right to appeal to the High Court against all decisions that may be made by the HPCSA or its structures. [8] On 8 July 2013, Ms Miller lodged a complaint with the HPCSA arising from doctor-patient interactions between Dr Miller and Ms Senna. Ms Miller made allegations of misconduct against Dr Miller. Based on these allegations, the Board appointed a Committee of Preliminary Inquiry (the prelim committee) to investigate the complaint and make a determination thereon. The prelim committee convened on 12 2 Regulation 4(8) of the regulations. December 2013 and resolved that Dr Miller was guilty of misconduct and that a penalty of a fine of R10 000 be imposed. [9] In his capacity as a pro forma complainant, Mr Mapholisa prepared charges against Dr Miller, which were served on Dr Miller on 11 February 2014. Dr Miller was given an option to accept or reject the admission of guilt fine determined by the prelim committee. Dr Miller rejected payment of this fine, after which a Professional Conduct Inquiry ensued. [10] At the inquiry a point in limine was raised on Dr Miller’s behalf. It was argued that Ms Miller, who laid the complaint, had no locus standi because she was not Dr Miller’s patient and was not in a position to provide evidence as to what transpired between Dr Miller and Ms Senna. On 3 July 2017, the PCC upheld the point in limine. The PCC furnished the following reasons for its decision: ‘ . . . the regulations are not clear on the issue of locus standi. The committee is now of the view that it must fall back on the rules of evidence and procedure, as clarified by the case of De La Rouviere v South African Medical and Dental Council. The committee therefore have decided that the complainant in this case [Ms Miller] has no locus standi and therefore the point in limine is upheld.’ [11] Mr Mapholisa approached the high court for the review and setting aside of the decision of the PCC. Dr Miller raised a point in limine namely that Mr Mapholisa had failed to exhaust the internal remedy of an appeal provided for in terms of the regulations, as he was obliged to do in terms of s 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA). The high court dismissed the application on the basis of the point in limine. The high court also dealt with locus standi issue that had been upheld by the PCC, concluding that the PCC had not acted irregulary. [12] The high court’s reasons for its finding that Ms Miller did not have standing were the following: ‘There is also another issue. The seventh respondent attended to his patient, the tenth respondent on 14 May 2012. The ninth respondent ( not the patient of the seventh respondent) laid a complaint with the council on 8 July 2014. The patient himself laid no complaint. The ninth respondent had no factual information upon which the Committee could rely. Applicant informed the Committee that he would not call the patient as a witness. There would therefore have been no admissible evidence before the Committee. Applicant in his reply to a request for Further Particulars stated that the complainant had cited from “a humanitarian perspective”. It is of course time that “any person” can lay a complaint in terms of the Regulations. The Regulations however makes detailed provisons for a “sifting” process, by way of “preliminary inquiry” for instance. The Regulations, with whom a [complaint] must be lodged, must also categorise it according to their significance and seriousness. It is therefore clear in my view that no every complainant has a right to be heard by a Committee totally irrespective of his or her knowledge of any alleged misconduct by a medical professional. Some admissible knowledge or intent would at least have to be present if the particular patient does not give evidence. The decision of the Committee was therefore correct.’ The issues [13] The principal issue that arises in this application is whether the high court was correct that the internal remedy of an appeal ought to have been exhausted in terms of s 7(2) of the PAJA, given that the review was brought by one organ of state against another. If the answer is ‘yes’, the application will be unsuccessful. If the answer is ‘no’, the merits of the matter may have to be decided, ie, whether the PCC’s decision to uphold the point in limine should be reviewed and set aside. The review of administrative action [14] Generally speaking, the decision-making of a statutory disciplinary body, such as the PCC, would constitute administrative action as defined in s 1 of the PAJA. It provides that administrative action means ‘any decision taken, or any failure to take a decision, by . . . an organ of state’ when ‘exercising a public power or performing a public function in terms of any legislation’ but does not include such species of public power as executive, legislative and judicial powers. Section 6(1) of the PAJA provides that administrative action is subject to review and s 6(2) sets out the grounds for review. [15] Section 7(2) places a procedural hurdle in the way of a person wishing to review an administrative action. It provides: ‘(a) Subject to paragraph (c), no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted. (b) Subject to paragraph (c), a court or tribunal must, if it is not satisfied that any internal remedy referred to in paragraph (a) has been exhausted, direct that the person concerned must first exhaust such remedy before insitituting proceedings in a court or tribunal for judicial review in terms of this Act. (c) A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interest of justice.’ [16] If s 7(2) applies, this would non-suit Mr Mapholisa because it is common cause that he has not exhausted the internal remedy of the appeal created by reg 11 and neither has he applied to be exempted from the obligation. Assuming for present purposes that the appeal procedure applies to a finding such as the one made by the PCC in this case, the result would be, if the PAJA applies, that the high court was precluded from reviewing the PCC’s decision, and thus correctly dismissed the application. [17] If, however, the PAJA does not apply, the position will be different. In order to determine whether or not the PAJA applies, it is necessary to consider the Constitutional Court’s decision in State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd (Gijima).3 The court found that the PAJA did not apply when an organ of state reviewed its own decision, and that the pathway to review in these circumstances is the principle of legality that is sourced in s 1(c) of the Constitution, the founding value of the rule of law. The reason for this conclusion was that s 33(1) of the Constitution, to which the PAJA gives effect, ‘ . . . creates rights enjoyed only by private persons’ and that ‘ . . . the bearer of obligations under the section is the State’.4 The court had earlier stressed that it was not considering ‘a scenario where an organ of state that is in a position akin to that of a private person (natural or juristic) may be seeking to review the decision of another organ of state’.5 It thus left open the question 3 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd (Gijima) [2017] ZACC 40; 2018 (2) SA 23 ( CC); 2018 (2) BCLR 240 (CC). 4 Ibid para 29. 5 Ibid para 2. that we are required to answer in this case, namely whether PAJA applies to one organ of state reviewing another organ of state. [18] It was argued on Dr Miller’s behalf that Gijima is only applicable to self reviews and that it does not apply to this matter because it concerns an organ of state reviewing the decision of another organ of state. I disagree. Despite the fact that in Gijima an organ of state sought to review and set aside its own decision, the Constitutional Court quite clearly reasoned that the rights under s 33 of the Constitution are enjoyed by private persons and not organs of state. This reasoning applies, it seems to me, whether an organ of state is reviewing its own decision, as in Gijima, or reviewing the decision of another organ of state, as in this case. [19] I am fortified in my conclusion by the view expressed by this Court in Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd when it remarked: ‘Although the scenario seemed to have been left open by the Constitutional Court in Gijima, it seems doubtful that the SIU would be regarded as being in a position akin to that of a private person. The Constitutional Court in Gijima went on to say “it seems inconsonant that the State can be both the beneficiary of the rights and the bearer of the corresponding obligation that is intended to give effect to the rights. This must, indeed, be an indication that only private persons enjoy rights under section 33”, and by extension under PAJA.’6 [20] There is an exception to the Gijima rule. It is that if an organ of state applies to review an administrative action when acting in the public interest, rather than in its own interest, it steps into the shoes of private persons, and then may use the PAJA.7 But the exception does not apply in this case. Mr Mapholisa makes no claim to act in the public interest and clearly stated in the founding affidavit that he brought the review 6 Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd [2021] ZASCA 90; [2021] 3 All SA 791 (SCA); 2022 (5) SA 416 (SCA) para 25. 7 See Hunter v Financial Sector Conduct Authority and Others [2018] ZACC 31; 2018 (6) SA 348 (CC); 2018 (12) BCLR 1481 (CC) para 49 and Compcare Wellness Medical Scheme v Registrar of Medical Schemes and Others [2020] ZASCA 91; 2021 (1) SA 15 (SCA) para 21. application ‘in my capacity as pro forma complainant’, duly appointed as such by the registrar of the HPCSA. [21] As the pathway to review in this case is the principle of legality under the common law, and not the PAJA, regulates the procedure. And the common law has no rule similar to s 7(2) of the PAJA. In fact, the common law approach to the exhaustion of internal remedies is to the exact opposite effect – that there is no duty to exhaust internal remedies, unless a statute places an obligation on a person to do so.8 As Jafta J said in Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining & Development Co Ltd, 9 where internal remedies are created, the common law rule is to the effect that ‘the choice was that of the aggrieived party either to pursue those remedies before going to a court of law or to proceed straight to seek the review of the offending decision in court’. The mere fact that an internal remedy has been created does not give rise to an inference that there is a duty to use it.10 [22] There is no indication in either the Act or the Regulations that parties to disciplinary proceedings must first exhaust internal remedies before they may apply to review administrative decisions taken against them. The result, is that, in this case, there was no obligation placed on Mr Mapholisa by the legislation to exhaust the internal remedy, and his failure to have done so did not stand in the way of the high court reviewing the decision of PCC. The high court erred in its conclusion to the contrary. 8 See L G Baxter Administrative Law (1984) at 720-723; Plasket ‘The Exhaustion of Internal Remedies and section 7 (2) of the Promotion of Administrative Justice Act 3 of 2000’ (2002) 119 SALJ 50 at 50- 51; see also Hoexter and Penfold Administrative Law in South Africa 3 ed (2021) at 745-746. 9 Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining & Development Co Ltd and Others [2013] ZACC 48; 2014 (3) BCLR 265 (CC); 2014 (5) SA 138 CC para 115. 10 See Bindura Town Management Board v Desai & Co 1953 (1) SA 358 ( A) at 362H-363H and Welkom Village Management Board v Leteno 1958 (1) SA 490( A) at 502G-503D. The merits of the review [23] As far as the merits are concerned, I think the issue is clear. It is so that the person who lodged the complaint against Dr Miller was not his patient. But the definition of the term ‘complainant’ in reg 1 of the regulations is wide enough to include her. It defines that term to mean ‘any natural or juristic person, group or professional body, including a professional association or society, a teaching or training institution, or any health care or related facility, that lodges a complaint against a registered person about alleged unprofessional conduct’. [24] The PCC found that Ms Miller did not have locus standi to lay a complaint. In terms of s 3(k) of the Act, one of the objects and functions of the the PCC is to exercise its powers and discharge its responsibilities in the best interest of the public and in accordance with national health policy determined by the Minister. The definition of complainant in reg 1 must be interpreted in this context. A wide group of persons and bodies are identified as potential complainants so as to protect the public effectively from professional misconduct by health professionals, and thus further the public interest. [25] The PCC seems to have been confused between two distinct concepts – who may lodge a complaint, on the one hand, and how a complaint may be proved on the other. Its reasoning appears to have been that because the complainant was not the victim of Dr Miller’s alleged unprofessional conduct, and thus could not give admissible evidence to prove it, she had no standing to lodge a complaint. In this the PCC made an error of law that was material, with the result that the decision to stop the disciplinary process was invalid. Conclusion [26] In my view, Mr Mapholisa has established reasonable prospects of success, with the result that his application for leave to appeal must succeed. He has also established that the high court erred in dismissing his application because he had not exhausted the internal remedy of an appeal, and that the PCC’s decision was tainted by irregularity. He must therefore succeed in his appeal. [27] In the result I make the following order: 1 Leave to appeal is granted with costs, including the costs of two counsel. 2 The appeal is upheld with costs, including the costs of two counsel. 3 The order of the high court is set aside and replaced with the following order: ‘1 The decision by the Professional Conduct Committee of the Medical and Dental Professions Board, as contemplated in the Health Professions Act 56 of 1974, constituted of the first to sixth respondents and taken on 3 July 2017 (the decision) is reviewed and set aside. 2 The decision is substituted with the following: “The point in limine is dismissed.” 3 The seventh respondent is directed to pay the applicant’s costs.’ _______________________________ N P MALI ACTING JUDGE OF APPEAL APPEARANCES For applicant: J C Uys SC and N Felgate Instructed by: K M Mmuoe Attorneys Inc, Johannesburg Lovius Block, Bloemfontein For seventh respondent: S L P Mulligan Instructed by: MacRobert Attorneys, Pretoria Neuhoff Attorneys, Bloemfontein.	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 NOVEMBER 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 Mapholisa N O v Adv K I A Phetoe N O (163/2021) [2022] ZASCA 168 (30 November 2022) Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against a decision of the Gauteng Division of the High Court, Pretoria (the high court). The issue before the SCA was whether the High Court was correct in dismissing an application to review a decision by an organ of state and in finding that the internal remedy of an appeal ought to have been exhausted in terms of s 7(2) of the PAJA, given that the review was brought by one organ of state against another organ of state. The appellant was appointed as a pro forma complainant by the Registrar of the HPCSA, in terms of the Health Professions Act 56 of 1974 (the Act), he litigated as an organ of state. So too is the body that took the decision under challenge. The first to sixth respondents are members of the PCC, a committee established in terms of s 15(fA) of the Act, read with regulation 6 of the Regulations. They are cited in their official capacities. The seventh respondent, Dr Percy Miller (Dr Miller) is a registered medical doctor under the Act and practising as such in the private sector. He was the respondent in a complaint of unprofessional conduct referred to the PCC. The eighth respondent is the HPCSA, a statutory body established in terms of s 2 of the Act. The ninth respondent is Ms Malinda Miller (Ms Miller). She lodged the complaint against Dr Miller. The tenth respondent is Ms Violet Gaolebale Senna (Ms Senna), who is now deceased. She was Dr Miller’s patient and the complaint laid against Dr Miller was in respect of his treatment of Ms Senna. At the inquiry a point in limine was raised on Dr Miller’s behalf. It was argued that Ms Miller, who laid the complaint, had no locus standi because she was not Dr Miller’s patient and was not in a position to provide evidence as to what transpired between Dr Miller and Ms Senna. On 3 July 2017 the PCC upheld the point in limine. The SCA found that, despite the fact that in Gijima an organ of state sought to review and set aside its own decision, the Constitutional Court quite clearly reasoned that the rights under s 33 of the Constitution are enjoyed by private persons and not organs of state. In concluding the above, the SCA was fortified by Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd when it remarked: ‘Although the scenario seemed to have been left open by the Constitutional Court in Gijima, it seems doubtful that the SIU would be regarded as being in a position akin to that of a private person. The Constitutional Court in Gijima went on to say “it seems inconsonant that the State can be both the beneficiary of the rights and the bearer of the corresponding obligation that is intended to give effect to the rights. This must, indeed, be an indication that only private persons enjoy rights under section 33”, and by extension under PAJA With regard to the merits of the review of the case the SCA found that the definition of the term ‘complainant’ in reg 1 of the regulations is wide enough to include ‘any natural or juristic person, group or professional body, including a professional association or society, a teaching or training institution, or any health care or related facility, that lodges a complaint against a registered person about alleged unprofessional conduct. , ~~~~ends~~~~
3203	non-electoral	2007	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT NOT REPORTABLE Case number : 433/06 In the matter between : MINNELDHEVI IRIS NAIDOO APPELLANT and THE STATE RESPONDENT CORAM : BRAND, LEWIS et COMBRINCK JJA HEARD : 4 SEPTEMBER 2007 DELIVERED : 14 SEPTEMBER 2007 Summary: Criminal Procedure – plea of guilty to attempted murder – Magistrate on the facts correct in not invoking s 113(1) of the Criminal Procedure Act Neutral citation: This judgment may be referred to as Naidoo v The State [2007] SCA 102 (RSA) COMBRINCK JA/ COMBRINCK JA: [1] This is an unusual case of a legally represented accused who pleaded guilty to a charge of attempted murder, made a full statement in terms of s 112(2) of the Criminal Procedure Act 51 of 1977 admitting all the essential elements of the offence, was convicted and then appealed against her conviction. The basis of the appeal is that as a consequence of evidence which emerged during the sentencing phase of the trial it should have appeared to the regional magistrate that the appellant may have a valid defence to the charge and she should accordingly have invoked the provisions of s 113(1) of the Act. [2] The appellant, a 35 year old widow, was charged in the Regional Court sitting at Verulam, Kwa-Zulu Natal with the crime of attempted murder. The charge sheet recorded that she was alleged to have ‘incited/instigated/procured a black male, Bonginkosi, to shoot the complainant (Selvin Pillay, also referred to in evidence as Roland Chetty) which would have resulted in his death and with intent to murder him’. I shall refrain from commenting on the drafting of this document. [3] On arraignment the appellant pleaded guilty and her attorney then read the following statement in terms of s 112(2) of the Act into the record: ‘1. I, the undersigned, MINNELDHEVI IRIS NAIDOO Confirm that I know and understand the charge that is being preferred against me as contained in the charge sheet. 2. I wish to plead Guilty to the charge of Attempted Murder, freely and voluntarily and without any threat or promise being made to me. 3. The facts upon which I plead guilty are as follows: 3.1 on or about April 2003, I received a telephone call from my youngest sister Visparani Chetty. 3.2 Visparani was extremely upset and told me that she had had an argument with her husband Roland Chetty and that he had assaulted her. She also asked to see me. 3.3 I immediately proceeded to her house. I was worried about her as this was not the first time she had been assaulted by Roland. 3.4 When I arrived at Visparani’s house, I calmed her down and we spoke about what had happened. She told me that she did not want Roland in her life anymore because she was tired of his behaviour. 3.5 I then told Visparani that I knew of someone who could help up with this problem and she told me to contact the person. 3.6 I then phoned Bonginkosi who used to come to our area quite often selling various items. I explained to him that Visparani was having problems with her husband and that we needed his assistance to get rid of her husband. 3.7 By getting rid of Roland, I mean that Bonginkosi must kill Roland. 3.8 Bonginkosi agreed to do so for a fee of R10 000.00 which was payable after Roland was killed. No amount would be paid before the killing. 3.9 It was also agreed with Bonginkosi that he would kill Roland by shooting him. This would be done at Roland’s house when Roland returned from work sometime between 18h00 and 18h30. 3.10 After my conversation with Bonginkosi I then telephoned Hollard Life. I proceeded to take out a life insurance policy on Roland’s life. The beneficiary on the policy was Visparani. 3.11 Approximately two weeks later, I went to Absa Bank, Phoenix Plaza. I deposited a sum of R124.00 into Roland’s account so that the debit order for the insurance policy could go off. I confirm that the account details were given to me by Visparani. 3.12 A few days later, I went to Visparani’s house with my friend Anand. 3.13 I confirmed with her that I had paid the amount into Roland’s account and that I was waiting for Bonginkosi to confirm the date that he would kill Roland. 3.14 I did not receive confirmation of the date from Bonginkosi but a few days later I heard that there had been a shooting incident at Visparani’s house and that Roland had been shot – but had not died as a result thereof. 3.15 I later learnt that Roland had sustained an injury to the shoulder where the bullet had grazed him. 3.16 I admit that I was aware at all material times that my actions were wrong and unlawful and that I had no right to try and kill Roland. 3.17 I also admit that due to his treatment of my sister, I intended to kill him by contracting Bonginkosi to shoot him. 3.18 I confirm that I have no defence in law for my actions. Dated at Verulam on this the 14th day of July 2004.’ [4] The magistrate recorded that she was satisfied that all the essential elements of the charge had been admitted and duly convicted the appellant. The court called for a probation officer’s report and after receipt of such report and hearing evidence in mitigation of sentence, the magistrate sentenced the appellant to five years’ imprisonment in terms of s 276(1)(i) of the Act. The appellant appealed to the full bench of the Natal Provincial Division against her conviction and sentence (leave was refused by the magistrate but granted on petition by the Judge President). The appeal was unsuccessful and with leave of the full bench the appellant now appeals to this court. [5] The basis of the appeal as formulated by counsel for the appellant is the following: The evidence of the probation officer and that of the appellant’s sister, Visperani (which appears to be the correct spelling of her name), led in mitigation of sentence disclosed that the appellant may have a defence to the charge she faces. That being so, the magistrate should have invoked the provisions of s 113(1) of the Act and recorded a plea of not guilty and required the State to proceed with its case. The magistrate not having done so, the appellant is entitled to an order from this court referring the matter back in terms of s 312 of the Act with the instruction that s 113(1) be invoked. [6] The passages in the evidence relied upon for these submissions are the following: First, as far as the probation officer is concerned, the following paragraphs in her report: ‘(vii) The accused discussed her plans with one Bonginkosi who was a vendor. She offered him R10 000 to execute the plans in the form of a hijacking. Payment would be made upon receipt of the insurance payout. (vii) The accused reported that approximately 2 days before the execution of the plans she and her sister decided to dispense with the plans, however, they could not contact Bonginkosi.’ Secondly, in the evidence of the appellant’s sister, the following passages: ‘MS NAIDOO [the defence attorney] Is it also correct that you knew that she was arranging the hitman? --- Yes, but we did stop it. Yes, now obviously an attempt was made on your husband’s life, so what do you mean when you say you did stop it? --- From the beginning I did agree to it and before the attempt could be carried out I told her to stop it but she said that she couldn’t get in touch with them. So she did try to stop it? --- Ja.’ And: ‘And when she suggested to you “let’s kill your husband”, what was your response? --- I was reluctant at first and over a period of time I adjusted to it. I told her to go ahead but I did stop it as well. You were reluctant at first, in what manner did you display your reluctance to her? --- I told her no and I told her like no.’ [7] The possible defences arising from these passages, submitted counsel, are twofold. The first is that the possibility exists that Bonginkosi, contrary to the agreement with the appellant, on his own volition went ahead and attempted to shoot and kill the complainant. That he would act in this manner was not subjectively foreseeable by the appellant. This argument was premised on the supposition that it had been agreed between Bonginkosi and the appellant that before the former would go ahead and carry out his part of the bargain, ie, shooting the complainant, the latter had to take out the insurance policy on the complainant’s life and then confirm with Bonginkosi that she had done so. Only then would a date for the execution of the complainant be agreed upon. Asked where evidence was to be found for this version of the agreement between the appellant and Bonginkosi, counsel conceded that there was no direct evidence but submitted that it be found as a necessary inference from the facts that this was what was agreed upon. [8] I am at a loss to understand how the version of the contract put forward by counsel can be gleaned from the facts, even by way of implication. Neither in the s 112(2) statement, nor in the report of the probation officer, is there any suggestion that Bonginkosi was to await confirmation of the fact that the insurance policy had been taken out before proceeding with the plan. Why, one asks rhetorically, after taking out the policy and depositing the money to cover the first premium, did the appellant not telephone Bonginkosi and tell him to go ahead, if that was their agreement? From the time frames revealed in the probation officer’s report we know that the appellant only purported to withdraw from the conspiracy two days before the actual shooting took place. She had by then telephonically taken out the policy and paid the premium two weeks later. Everything was therefore in place and yet the appellant didn’t phone Bonginkosi to confirm that he was free to go ahead. The reason is obvious. There was no such agreement. [9] The second defence which counsel submitted may have been open to the appellant is that on the evidence referred to she withdrew from the common purpose at a stage before her actions became in law an attempt to commit the offence. The full bench found that the appellant’s actions before she purported to withdraw, amounted to a completed attempt and her so-called withdrawal was irrelevant. Counsel, with reference to a number of decided cases, attacked this finding. It is unnecessary to enter into the debate of when an attempt in law is complete on a charge of incitement and procurement. I say this because on the evidence relied upon by counsel it cannot be said that there was a withdrawal by appellant from the common purpose. The appellant had set in motion a series of events which would have culminated in the death of the complainant. She had hired Bonginkosi for a fee to shoot and kill her intended victim, she had identified the victim, where he lived and what time he would be at home. She took out the insurance policy and paid the premium to ensure that she would be able to pay the assassin once the deed had been done. All this had taken place before she purported to withdraw. What evidence is there then that she attempted to interrupt the chain of events which she had set in motion? In her very full s 112 (2) statement there is no suggestion that she withdrew or attempted to withdraw from the common purpose. On her sister’s evidence it was she, Visperani, who decided not to go ahead. The only evidence that the appellant decided to withdraw is to be found in a quoted paragraph from the probation officer’s report. That only records that the appellant and her sister decided not to go ahead with the plan but could not contact Bonginkosi. Apart from the fact that there is a singular lack of detail as to what steps were taken to try and get hold of Bonginkosi, the least one could have expected, if there had been a genuine desire to withdraw, was that the appellant would warn the complainant of the imminent danger. The time and place had been agreed where the shooting was to take place. A timeous warning to the complainant would have averted the subsequent attempt on his life. It may also be noted that the purported attempt to contact Bonginkosi to call off the plan, gives the lie to the first defence raised. If, as was submitted, the execution of the plan by Bonginkosi was conditional, as outlined above, what was the necessity of attempting to contact Bonginkosi? He was not supposed to go ahead, so it was suggested, until the insurance policy was in place. [10] In summary, in my view, there is little or no evidence of a withdrawal from the common purpose on the part of the appellant which would have warranted the magistrate invoking the provisions of s 113(1) of the Act. [11] On the appeal against sentence, counsel submitted that the magistrate had erred and misdirected herself, that this court was accordingly at large to interfere and that an appropriate sentence would be one in terms of s 276(1)(h) of the Act. The first misdirection claimed by counsel was that the magistrate made a finding that the appellant was motivated by greed and when there was no evidence to support this finding. The beneficiary in terms of the policy was Visperani and she alone stood to gain. The magistrate did not find that the appellant was motivated by greed. She said in her judgment on sentence that there was an element of greed present. She got this from the probation officer’s report in which it was recorded that there was an element of monetary gain from the complainant’s death. I do not see how this can be construed as a misdirection. The second misdirection claimed was that the magistrate failed to take account of the fact that the appellant was not a danger to society. Counsel appears to have overlooked the following passage in the magistrate’s judgment: ‘The Court must also consider that you have taken responsibility for what you have done and in being first of all coming out clean about this from the outset, and that is an indication that you want to take responsibility, that the prognosis, so to speak, or the chances of you actually rehabilitating are quite strong and that means you don’t have to be forced to rehabilitate. It means that you can rehabilitate and that is good for society. It means that you would not be out there and become a risk for the rest of the people who would be concerned in this. The whole community would be at risk if you are not capable of rehabilitation and this is a crime, so naturally society has to be concerned about what the Court does about your sentence today.’ Counsel had to abandon reliance on the alleged third misdirection, namely that the magistrate had not taken into account that the complainant had forgiven the appellant after he was referred to a passage in the judgment where the magistrate clearly did have regard to this fact. Lastly, it was claimed that no weight was attached to the purported withdrawal from the common purpose by the appellant. As pointed out above, there was little or no evidence of a genuine withdrawal and the magistrate cannot be faulted for not taking this into account. There was, in my view, no misdirection on the part of the magistrate. That being so, it is trite that this court will not interfere. [12] I agree with the sentiments of the court a quo that the magistrate erred on the side of leniency when imposing sentence. The aggravating features far outweigh the mitigating factors. To hire an assassin to kill a family member for reward, surreptitiously take out a policy on his life and pay the first premium and then allow the execution to go ahead, is indeed a horrendous crime. A far more severe sentence was called for. [13] The appeal, both against conviction and sentence, is dismissed. …………………… P C COMBRINCK JUDGE OF APPEAL Concur: BRAND JA LEWIS JA	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Case number: 433/06 In the matter between MINNELDHEVI IRIS NAIDOO APPELLANT and THE STATE RESPONDENT From: The Registrar, Supreme Court of Appeal Date: 2007-09-14 Status: Immediate Minneldhevi Iris Naidoo, a widow of Phoenix, Durban, lost her appeal against her conviction of attempted murder and sentence of 5 years imprisonment subject to her release into correctional supervision in the discretion of the Commissioner for Correctional Services. Mrs Naidoo had pleaded guilty in the Regional Court, Verulam, to having hired an assassin for R10 000 to kill her sister’s husband who had been abusive towards her (the sister). She had taken out a R100 000 policy on the life of the intended victim with her sister as beneficiary. The assassin carried out his part of the bargain but fortunately only grazed the victim’s shoulder when shooting at him. Mrs Naidoo claimed in the SCA that she had decided not to go ahead with the plan and tried to stop the assassin before he did the shooting. The court held that there was insufficient evidence to support a claim that there was a genuine attempt to withdraw and confirmed the conviction and sentence.
3976	non-electoral	2023	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 867/2021 In the matter between: C W APPLICANT and G T RESPONDENT Neutral citation: C W v G T (867/2021) [2023] ZASCA 23 (13 MARCH 2023) Coram: MOLEMELA, MAKGOKA and HUGHES JJA and MJALI and SIWENDU AJJA Heard: 16 November 2022 Delivered: 13 March 2023 Summary: Exception – delictual claim – patrimonial damages based on alleged fraudulent misrepresentation inducing marriage and resulting in wasted wedding expenses. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Fisher J, sitting as a court of first instance): The application for leave to appeal is granted. The appeal is upheld with costs. The order of the high court is altered to read as follows: ‘The defendant’s exceptions to the plaintiff’s claims premised on the Lex Aquilia and Actio Iniuriarum, respectively, are dismissed with costs.’ The costs order of the high court in respect of the dismissal of the application for leave to appeal is set aside. The costs in respect of the application for leave to appeal in the high court and in this Court are to be costs in the action. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Molemela JA and Siwendu AJA concurring): Introduction [1] This is an application for leave to appeal against the upholding of an exception. The application concerns a claim for patrimonial damages instituted by the applicant, Ms W against the respondent, Mr T, on the ground of a fraudulent misrepresentation. The applicant alleges that such misrepresentation induced her to marry the respondent, as a result of which she incurred wedding expenses in an amount of R331 342.36. [2] The applicant instituted two claims in the Gauteng Division of the High Court, Johannesburg (the high court), one being the actio lex aquilia and the other being the actio iniuriarum. The respondent raised exceptions to the applicant’s claims. The exceptions for the claim based on the lex aquilia were upheld, whilst the exceptions based on the actio iniuriarum claim were dismissed. The applicant launched an application for leave to appeal in the high court, which was refused. She petitioned this Court for leave to appeal. This Court directed that the matter be referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. Consequently, the parties were forewarned that they be prepared, if called upon, to address the Court on the merits of the matter.1 The respondent elected to abide by this Court’s decision. [3] During the period between 8 November 2016 and 22 September 2018, the parties were in a romantic relationship. The applicant alleges that throughout their relationship, the respondent professed in words and deeds that he loved her, he wanted to marry her and remain married to her until parted by death. During the course of their relationship, he showered her with expensive gifts and lavish five-star holidays. On 31 March 2018, the respondent proposed to marry the applicant and presented her with an engagement ring worth R63 000. On 15 September 2018, the parties were married out of community of property with the accrual system. Thereafter, they jetted off on honeymoon to a private island off Pemba, in the Quirimbas Archipelago, Mozambique. This blissful relationship and union was short lived. [4] From about 22 September 2018, their blissful matrimonial relationship took a turn for the worst. The applicant states that the respondent’s conduct changed towards her. She alleged that he no longer showed her any love and respect, but instead he regularly abused and belittled her; he used profanity towards her; and generally treated her in contrast to how he treated her during their courtship. Furthermore, he often told her that she was ‘the biggest regret of his life and that he regretted marrying her’. On 18 November 2018, the respondent ordered the applicant to leave the marital home. On 11 December 2018, the respondent instituted divorce proceedings against the applicant. [5] The applicant alleges that on 24 December 2018 she became aware that the respondent had falsely represented to her, knowingly, that he loved and wanted to 1 MEC for Safety and Security (Eastern Cape Province) v Mtokwana [2010] ZASCA 88; 2010 (4) SA 628 (SCA); [2010] 4 All SA 583 (SCA) at 629C-D. remain married to her, when in fact he had known prior to the marriage that he considered the relationship between them to be ‘over’. On 29 January 2019, and with this knowledge at hand, the applicant launched action proceedings in the high court. She claimed that she was induced to marry the respondent when he wrongfully and intentionally made the representations that he did. As a result of the representations, she incurred wasted wedding expenses in the amount of R331 342.36. For the sake of completeness, the second claim, which is not the subject of this judgment, was for an amount of R500 000 for the impairment of the applicant’s dignity and reputation. [6] The respondent raised nine exceptions to the applicant’s particulars of claim, four in respect of the lex aquilia and five in respect of the actio iniuriarum. I do not propose to deal with each exception individually and maintain the characterisation by the high court as exceptions under the lex aquilia and under the actio iniuriarum, respectively. [7] The issue before this Court is whether the high court was correct in upholding the exceptions to the claim under the lex aquilia. [8] It is well established in our law that actions ex delictual are permitted stante matrimonio between spouses married out of community of property with the exclusion of marital power, as is the case in this matter. In Rohloff v Ocean Accident & Guarantee Corp Ltd,2 Malan JA stated the following: ‘I have considered all the available authorities with care and have come to the conclusion that actions ex delicto are, in our law, permitted stante matrimonio between spouses married out of community of property with exclusion of the marital power. Not only is this view supported by recognised Roman-Dutch commentators, but it appears to me, moreover, to be in accordance with justice, reason, common sense and public policy.’ Much later, in the Constitutional Court, in Van Der Merwe v Road Accident Fund,3 Moseneke DCJ stated: ‘Equally trite is that in a marital property regime where each spouse has a separate estate, the common-law restrictions on claims in delict has no place. That explains why the bar to suing one’s spouse does not extend to marriage out of community of property.’ 2 Rohloff v Ocean Accident & Guarantee Corporation Ltd 1960 (2) SA 291 (AD) at 304A. 3 Van Der Merwe v Road Accident Fund 2006 (6) BCLR 682 (CC); 2006 (4) SA 230 (CC) para 29. [9] I deem it necessary to restate the general principles applicable when dealing with an exception. A decision to uphold an exception is final in effect and dispositive of the legal issues between parties.4 Therefore, when assessing an exception, it ‘should be dealt with sensibly’, as it is ‘a useful mechanism to weed out cases without legal merit’.5 An exception is competent if the defect appears clearly ex facie the pleadings. The onus lies with the excipient to show that such pleadings are excipiable.6 When an exception is raised against the pleadings that do not disclose a cause of action, the averments pleaded by the plaintiff must be accepted as true.7 In Luke M Tembani and Others v President of the Republic of South Africa and Another,8 this Court restated that the test to be applied ‘is whether on all possible readings of the facts no cause of action may be made out; it being for the excipient to satisfy the court that the conclusion of law for which the plaintiff contends cannot be supported on every interpretation that can be put upon the facts’. [10] Distilled to the bare minimum, the allegation is that the respondent proclaimed that he loved the applicant and that he wanted to spend the rest of his life with her, hence, he proposed marriage, which was accepted. At that time, when he made this proclamation he did not honestly believe it to be true. It was this proclamation and the conduct of the respondent that induced the applicant to accede to his marriage proposal which resulted in her expending an amount totalling R331 342.36 in respect of wedding expenses. [11] I now turn to deal with the exception that was upheld by the high court relating to the claim in delict which constitutes the subject matter of this appeal. The high court 4 Maize Board v Tiger Oats Ltd and Others 2002 (5) SA 365 (SCA) at 373B-D; In Pretorius v Transport Pension Fund [2018] ZACC 10; 2018 (7) BCLR 838 (CC); [2018] 7 BLLR 633 (CC); 2019 (2) SA 37 (CC) (Pretorius v TPF) at 44E, the Constitutional Court stated: ‘The dismissal of an exception is not usually finally dispositive of the legal issue at stake, unlike the upholding of an exception on the basis that the claim is bad in law.’ 5 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 3. 6 Luke M Tembani and Others v President of the Republic of South Africa and Another [2022] ZASCA 70 (SCA) (Tembani v President of RSA) para 14. 7 Marney v Watson and Another 1978 (4) SA 140 (C) at 144. 8 Tembani v President of RSA fn 8 above para 14; Trustees for the time being of Children’s Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others [2012] ZASCA 182; 2013 (2) SA 213 (SCA); [2013] 1 All SA 648 (SCA); 2013 (3) BCLR 279 (SCA) (Children’s Resource Centre Trust) para 36. accepted these facts as correct and it considered the respondent’s contention that the lex aquilia should not be extended. It proceeded from the premise that ‘[a] fraudulent misrepresentation leading to marriage and which results in pure economic loss is not recognised under the lex aquilia’ and that there was ‘. . . no reason why the aquilian remedy should be extended to [the applicant] who must be regarded as having been in the position to both appreciate and manage the risks attendant on an unsuccessful marriage, but who decided not to do so’. The high court then concluded that the enquiry is one of wrongfulness and it reasoned that the case was one where ‘. . . social, economic and other costs are too high to justify the use of the law of delict for the resolution of the issue’. The high court was steadfast in its view that this sort of claim was not recognised in our law and it would not be in the public interest to extend the lex aquilia to allow such a claim. [12] In the high court, the applicant contended that the case she made out was one of pure economic loss arising from a fraudulent misrepresentation, which was prima facie wrongful and unjust. Furthermore, the fact that such representation resulted in a marriage, does not change conduct that is prima facie wrongful into conduct that is lawful. The applicant stated that this affirmation is well established in our law. In support of this contention, the applicant relied on the decision in Rex v Myers,9 where it was stated that a person who makes a false statement without an honest belief in the truth thereof is guilty of fraud. In Rex v Myers, the court quoted with approval the English law decision of Derry v Peek, wherein Lord Herschell said: ‘. . . [F]raud is proved when it is shown that a false representation has been made (1) knowingly or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false.’10 [13] The applicant submitted that the high court misdirected itself when it struck out her claim for pure economic loss, as that claim had reasonable prospects of success. [14] In Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd (Lillicrap), this Court observed that South African law ‘. . . does not extend the scope of the Aquilian action to new situations unless there are positive policy considerations 9 Rex v Myers [1948] 1 All SA 354 (A); 1948 (1) SA 375 (A) at 382. 10 Ibid. which favour such an extension’.11 Expressing itself in the context of delictual liability for pure economic loss premised on a claim for damages allegedly suffered as a result of the respondent’s negligence in the design of an aquarium, this Court in Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd explained that ‘[w]hen a court is requested in the present context to accept the existence of a “legal duty”, in the absence of any precedent, it is in reality asked to extend delictual liability to a situation where none existed before. The crucial question in that event is whether there are any considerations of public or legal policy which require that extension’.12 I am of the view that the present case falls into the realm of the circumstances described in the two cases mentioned above. The high court was indeed being asked to extend delictual liability to a novel situation for which there is currently no precedent in our courts. [15] Another aspect for consideration, is the alleged claim of fraudulent misrepresentation made intentionally to induce the applicant. In the second judgment, my brother Makgoka JA deals with this extensively. Save to add that the loss suffered by the applicant need not have been intended by the respondent, it is sufficient that the applicant acted upon the fraudulent representation. This Court dealt with such delictual action in the context of a contract in Standard Bank of South Africa Ltd v Coetsee,13 and stated the following: ‘In my view it is not necessary, generally, in a delictual action based on a fraudulent misrepresentation that it should be alleged and proved that the representor intended to occasion the loss which the representee suffered. All that is necessary to allege and prove is that the representor made a false representation which he intended, whatever his motive might have been, the representee to act upon. The loss or damages which the representee suffered need not have been intended by the representor, it must simply have followed as a result of the representee acting upon the false representation.’ 11 Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd [1958] 1 All SA 347 (A); 1985 (1) SA 475 (A) at 504D-H. 12 Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2007] 1 All SA 240 (SCA); 2006 (3) SA 138 (SCA) para 12. 13 Standard Bank of South Africa Ltd v Coetsee 1981 (1) SA 1131 (A) at 1145A-B. [16] In Country Cloud Trading v MEC, Department of Infrastructure Development,14 the Constitutional Court summarised the approach our law takes to wrongfulness by pointing out that the wrongfulness enquiry focuses on ‘the [harm- causing] conduct and goes to whether the policy and legal convictions of the community, constitutionally understood, regard it as acceptable. It is based on the duty not to cause harm – indeed to respect rights – and questions the reasonableness of imposing liability’. As mentioned before, the respondent’s exception questioned the existence of a legal duty not to cause harm in relation to the specific facts of this case. The challenge for the respondent was that the averments made in the particulars of claim were insufficient for purposes of answering the crucial question posed in Lillicrap: whether there are any considerations of public or legal policy that require the extension of the Aquilian remedy to the circumstances of the case.15 That being the case, the respondent’s exception was misconceived.16 Based on the same reasoning, the respondent failed to establish that the particulars in support of the patrimonial damages claim were excipiable on every interpretation that can be attached to them.17 It is on that basis that the exception ought to have been dismissed. In any event, the issue concerning whether the net of the Aquilian remedy ought to be cast wider is an aspect that will, in due course, be dealt with by the high court during the trial. [17] Therefore, for the reasons alluded to above and the principles laid down in the authorities mentioned above, it follows that the application for leave to appeal must be granted and the appeal must succeed. [18] In the result, the following order is granted: The application for leave to appeal is granted. The appeal is upheld with costs. The order of the high court is altered to read as follows: ‘The defendant’s exceptions to the plaintiff’s claims premised on the Lex Aquilia 14 Country Cloud Trading v MEC, Department of Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1 (CC). 15 Compare Trustees for the time being of Children’s Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others [2012] ZASCA 182; 2013 (2) SA 213 (SCA); [2013] 1 All SA 648 (SCA); 2013 (3) BCLR 279 (SCA) paras 36-37. Also see Tembani and Others v President of the Republic of South Africa and Another [2022] ZASCA 70 (SCA) paras 14-20. 16 Ibid. 17 Telematrix (Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 2. and Actio Iniuriarum, respectively, are dismissed with costs.’ The costs order of the high court in respect of the dismissal of the application for leave to appeal is set aside. The costs in respect of the application for leave to appeal in the high court and in this Court are to be costs in the action. ___________________ W HUGHES JUDGE OF APPEAL Makgoka JA (Mjali AJA concurring): [19] I concur in the order proposed in the judgment of Hughes JA (the first judgment). I write separately as my conclusion is based on a different approach. I engage the jurisprudential premise on which the high court’s judgment rests. I highlight my disagreement with the reasoning of the high court, and provide a juridical framework within which the exceptions should have been adjudicated upon. I set out the facts to the extent necessary to give context to this judgment. [20] The parties were married out of community of property on 15 September 2018, after a courtship of close to three years. The applicant alleged that merely a week after the marriage was celebrated, the respondent started exhibiting distasteful conduct towards her, manifested in verbal and emotional abuse; threats and insults; and an accusation of theft. Just over two months later, the respondent ordered her to leave the matrimonial home, and shortly thereafter, the respondent instituted an action to end the marriage. [21] In a separate action, the applicant claimed R331 342.36 from the respondent, being the monies she spent for the parties’ wedding celebration. The applicant alleged that when the respondent proposed marriage to her, he already considered their romantic relationship to have broken down, yet failed to disclose this fact to her. In other words, he knew his presentation (the marriage proposal) to be false and that he no longer wanted to continue with the relationship. She only became aware of this fact in December 2018. In paragraph 7 of her particulars of claim, the applicant alleged that the respondent made the representation ‘. . . wrongfully, intentionally, and with the intention of inducing [her] to marry him . . . ’. Accordingly, her claim was based on the respondent’s alleged fraudulent misrepresentation. [22] The respondent met the applicant’s particulars of claim with four exceptions, the gravamen of which was this: our law did not recognise a claim for pure economic loss arising from a failed marriage, and as such, the particulars of claim did not disclose a cause of action. To find that his conduct was wrongful, the court would have to extend the lex aquilia to allow for such a claim, and that it would be contrary to the legal convictions of the community to do so. [23] A claim for pure economic loss usually arises from a negligent causation (misstatement or omission) and is not regarded as prima facie wrongful.18 Its wrongfulness depends on the existence of a legal duty, the imposition of which is a matter of judicial determination involving criteria of public or legal policy.19 The respondent’s submissions found favour with the high court. As part of its policy considerations, the high court placed considerable emphasis on the choice of the parties’ marital property regime. It said that if the parties ‘. . . do not decide to enter into an ante-nuptial contract, they become, on their marriage, subject to a community of property regime which has, as its foundation, a fair and equal sharing of economic resources between the spouses’. (Italics and underlining added.) [24] It is not clear why the parties’ choice of a marital property regime became a focal point in the reasoning of the high court. The emphasised remarks in the preceding paragraph suggest that the Judge considered the parties to be married in community of property, and that, that constituted a bar to the applicant’s claim. This is 18 Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd [2008] ZASCA 134; 2009 (2) SA 150 (SCA); [2009] 1 All SA 525 (SCA) para 12; Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2005] ZASCA 109; 2006 (3) SA 138 (SCA); [2007] 1 All SA 240 (SCA) para 12. 19 Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A); [1979] 2 All SA 270 (A) at 833D-834A; Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A) at 568B-C. despite the fact that the Judge had already mentioned, correctly so, that the parties are married out of community of property. In respect of such spouses, this Court, over six decades ago in Rohloff v Ocean Corporation,20 removed the rule which barred delictual actions between them. Given this settled legal position, it is difficult to understand the high court’s particular focus on this aspect, especially because it was not raised by any of the parties in their pleadings. [25] The high court went on to explain that to allow an aquilian action in the circumstances of the case would impermissibly intrude into the parties’ right ‘. . . freely to determine their financial relationships within their marriage. . .’. Such right of choice, the high court said, ‘. . . should be given pre-eminence over the right to be recompensed for economic loss which has accrued as a result of conduct which occurred before the marriage even if that conduct led to the marriage’. The issue, said the high court, impacted on the ‘parties right to dignity – to be accorded the respect which will allow them the autonomy to regulate the financial consequences of their lives together’. [26] The court expanded on its reasoning: ‘The potential insecurity that such litigation would introduce into the operation of the chosen property regime of the parties to the marriage is also an important consideration. It would be difficult to allocate this liability in the context of the complex economic relationships that are engendered by marriage and are sought to be rationalized on its dissolution.’ (Emphasis added.) [27] There are several difficulties with some of the high court’s pronouncements. First, it is not clear what the parties’ ‘financial relationships within the marriage’ has to do with the applicant’s claim. If anything, in a marriage, none of the parties is entitled to fraudulently misrepresent their intentions to the other, causing them loss. This case is about misrepresentation, which, if established, could potentially result in the annulment of the marriage as being voidable at the applicant’s instance. 20 Rohloff v Ocean Accident and Guarantee Corporation Ltd 1960 (2) SA 291 (A) at 310F. [28] The unqualified statement by the high court that any conduct (even fraudulent) which leads to a marriage cannot give rise to a claim for loss, is of doubtful legal soundness. As I endeavour to demonstrate in this judgment, our law sets its face against fraudulent misrepresentation, and almost invariably, regards it as wrongful. As to the high court’s reference to the parties’ ‘right to dignity’, it is not at all clear in what context the Judge raised it. [29] The high court also said that the applicant ‘. . . must be regarded as having been in the position to both appreciate and manage the risks attendant on an unsuccessful marriage, but [had] decided not to do so’. The court continued: ‘Indeed the premise of the fraudulent misrepresentation sought to be relied on by the [applicant] encompasses metaphysical questions as to the nature and meaning of love and, to my mind, whether such things are capable of proof in a court of law is questionable.’ [30] Again, with respect to the learned Judge, the applicant’s complaint has nothing to do with the ‘risks’ associated with an unsuccessful marriage (to which the law attaches no consequence). There is nothing in her particulars of claim to suggest that the applicant complains as a bitter spouse because her marriage had failed. Her complaint is about the fact that she was induced into the marriage by the respondent’s fraudulent misrepresentation. Had the applicant’s allegation ended here, the high court’s reasoning would have had some foundation. But the applicant goes further, and alleges that as a result of the misrepresentation, she incurred a loss which she would not have incurred, had the misrepresentation not been made. Thus, her complaint is about a fraudulent misrepresentation which induced a marriage and resulted in loss. At exception stage, the court was not called upon to decide on the merits of the applicant’s claim and on issues whether indeed the respondent ever loved the applicant. It was to determine whether the necessary assertions were made in the particulars of claim in order to sustain a cause of action. [31] Most of the policy considerations taken into account by the high court appear to be based on the concern about the negative impact a claim such as asserted by the applicant would have on a marriage relationship. But this ignores an important consideration: a claim of this nature would inevitably arise once a marriage relationship breaks down, as demonstrated by the facts of this case. The applicant only sued the respondent once it was clear that the relationship had but all ended, and after the respondent had instituted divorce proceedings. Therefore, under such circumstances, there would be nothing left of the marriage relationship to preserve. In my view, therefore, none of the policy considerations discussed by the high court should have resulted in the upholding of the respondent’s exceptions. [32] Apart from the policy considerations, the high court went on to question what it perceived to be the applicant’s poor judgment in: (a) electing to pay for the relevant wedding expenses; (b) not opting for what the learned Judge considered ‘a less expensive wedding’; (c) not having dealt with such expenses in an ante-nuptial agreement. The learned Judge also expressed a view that ‘. . . it is common for parties to dictate that one or the other will be entitled to the wedding gifts in the event of divorce’. [33] This being the exception stage, it was not open for the high court to go beyond the applicant’s factual averments and question their efficacy. The issues raised by the high court were not part of the respondent’s exceptions. The learned Judge brought to bear her own subjective views on (a) how wedding gifts should be regulated between spouses, (b) whether the wedding expenses should have been incurred in the first place, and (c) the reasonableness of such expenses. This is plainly impermissible. [34] For purposes of determining the exception, the factual averments by the applicant must have been accepted as correct, unless they appeared to be manifestly false.21 Although the high court referred to this principle, it is clear from how it treated the applicant’s averments that it merely paid lip service to it. Had it applied the principle, it would have accepted that: (a) the respondent made a fraudulent misrepresentation to the applicant (b) the misrepresentation induced the applicant into the marriage; (c) as a result of the misrepresentation she incurred the wedding expenses; (d) but for the misrepresentation she would not have incurred the expenses; (e) the wedding expenses were necessary and reasonable. 21 Trinity Asset Management (Pty) Ltd and Others v Investec Bank Limited [2008] ZASCA 158; 2009 (4) SA 89 (SCA); [2009] 2 All SA 449 (SCA) para 55. [35] I turn now to the respondent’s exceptions, and how they should have been approached. As mentioned already, the respondent’s exceptions were predicated on the contention that the applicant’s particulars of claim did not disclose a cause of action. The test in this regard is trite: the court asks the question whether upon any construction of the particulars of claim, no cause of action is disclosed.22 The exceptions could only be upheld if this question was answered in the affirmative. The onus is on an excipient such as the respondent, to establish this.23 This should have been the starting point for the high court in considering the exceptions. Unfortunately, it did not embark upon such an enquiry. I do so now, in the light of the averments in the particulars of claim. [36] As mentioned already, the applicant’s cause of action is based on fraudulent misrepresentation. In Geary & Son (Pty) Ltd v Gove,24 the requirements of this cause of action were stated to be: (a) representation by the other party; (b) knowledge by the representor that the representation is false; (c) that the representation induced the representee to act; (d) that the representee suffered damages as a result.25 Ordinarily, upon proof of these requirements on a balance of probabilities, wrongfulness is established.26 This is because a fraudulent misrepresentation which causes pure economic loss to another has always been prima facie wrongful by virtue of the actio doli.27 [37] In the present case, the applicant has made all the necessary averments in her particulars of claim. Despite this, on the reasoning of the high court, the applicant’s 22 See Fairoaks Investment Holdings (Pty) Ltd and Another v Oliver and Others [2008] ZASCA 41; 2008 (4) SA 302 (SCA); [2008] 3 All SA 365 (SCA) (Fairoaks) para 12; Theunissen and Others v Transvaalse Lewendehawe Koop Bpk 1988 (2) SA 486 (A) at 500E; Trustees for the Time Being of the Children’s Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others [2012] ZASCA 182; 2013 (3) SA (SCA); 2013 (3) BCLR 279 (SCA); [2013] 1 All SA 648 (SCA) para 36. 23 Fairoaks fn para 12. 24 Geary & Son (Pty) Ltd v Gove 1964 (1) SA 434 (A). 25 Ibid at 441D. 26 In Geary & Son (fn 6) Steyn CJ suggested, in an obiter dictum that in addition, the claimant had to prove that the representor had intended to cause him the loss by the false representation. In Standard Bank of South Africa Ltd v Coetsee 1981 (1) SA 1131 (A) at 1145A-B, Joubert JA explained that this dictum was made in view of the special circumstances alleged in the pleadings in that case, involving as it did, unlawful competition. Otherwise, this was generally not a requirement in a delictual action based on misrepresentation. 27 Matthews and Others v Young 1922 AD 492 at 505. See also, Bill Harvey’s Investment Trust (Pty) Ltd v Oranjegezicht Citrus Estates (Pty) Ltd 1958 (1) SA 479 (A). particulars of claim do not disclose a cause of action. The only reason for that conclusion is that the parties were married. Taken to its logical conclusion, the result of the high court’s reasoning would be this: had the fraudulent misrepresentation induced any other contract, the applicant’s particulars of claim would have disclosed a cause of action, but because it induced marriage, and resulted in loss, no cause of action is disclosed. [38] Differently put, the applicant should be non-suited only because her damage arose from the marriage contract. This, in my view, would result in an absurdity and an artificial differentiation between two categories of persons who had suffered loss, both due to misrepresentation. To my mind, the fact that the parties are married, should make no difference in the determination of wrongfulness on the facts of the present case. The reasoning of the high court ignores the prima facie wrongfulness of a fraudulent misrepresentation. As explained by this Court in Minister of Finance and Others v Gore NO:28 ‘[I]t is hard to think of any reason why the fact that the loss was caused by dishonest (as opposed to bona fide negligent) conduct, should be ignored in deciding the [wrongfulness] question. We do not say that dishonest conduct will always be wrongful for the purposes of imposing liability, but it is difficult to think of an example where it will not be so.’29 [39] As I see it, this is one of the cases where a finding of fraud ‘inevitably leads to a finding of wrongfulness,’ as remarked in mCubed International (Pty) Ltd v Singer NNO.30 Were the case to be determined on this footing, there would be no need to extend the lex aquilia. In a different but not unrelated context, it was held in Lillicrap v Pilkington Brothers31 that when the existing law provided adequate means for the plaintiff to protect itself against loss, there was no call for the lex aquilia to be extended.32 This may well be the case here. 28 Minister of Finance and Others v Gore NO 2007 (1) SA 111 (SCA); [2006] ZASCA 98; [2007] 1 All SA 309 (SCA). 29 Ibid para 87. 30 mCubed International (Pty) Ltd v Singer NNO [2009] ZASCA 6; 2009 (4) SA 471 (SCA); [2009] 2 All SA 536 (SCA) para 34. 31 Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A) (Lillicrap). See also, Trustees, Two Oceans Aquarium Trust fn 1 above. 32 Ibid at 500H-I. [40] However, should it be that wrongfulness cannot be established without the enquiry whether the lex aquilia should be extended, as postulated by the high court, there should be public policy considerations. As mentioned already, fraud unravels everything. It is therefore conceivable that in that enquiry, the respondent’s fraudulent misrepresentation not only evokes moral indignation, but also that the legal convictions of the community demand that it be regarded as wrongful.33 [41] In Dawood and Another v Minister of Home Affairs and Others,34 it was pointed out that because marriage and the family are social institutions of vital importance, entering into marriage therefore is to enter into a relationship that has public significance as well. Therefore, the public has an interest that the institution of marriage is not brought about through fraudulent misrepresentation. Thus viewed, the respondent’s fraudulent misrepresentation is inimical to all that a marriage encapsulates, among others, fidelity, trust, mutual support and loyalty. Given all these, public policy considerations could well result in the respondent’s fraudulent misrepresentation being deemed wrongful. [42] Professor Neethling35 puts it well: ‘There can be no doubt that when the defendant [respondent] proposed marriage to the plaintiff [the applicant] and had already considered that their romantic relationship had broken down irretrievably, he had a legal duty to disclose this to her (see the Attorneys Fidelity Fund case par 107 and McCann v Goodall Group Operations (Pty) Ltd 1995 2 SA 718 (C) 721 726 as to the failure to disclose information). This duty to speak was even stronger in light of the fact that marriage is a social institution of vital importance . . . and the defendant nevertheless fraudulently induced her into a marriage which was doomed from the start.’36 [43] It must also be borne in mind what was said in Absa v Moore,37 (in the context of fraud inducing a contract) that whether fraud unravels a contract, depends on its 33 Minister van Polisie v Ewels 1975 (3) SA 590 (A) at 597A-B. 34 Dawood and Another v Minister of Home Affairs and Others; Shalabi and Another v Minister of Home Affairs and Others; Thomas and Another v Minister of Home Affairs and Others [2000] ZACC 8; 2000 (3) SA 936; 2000 (8) BCLR 837. 35 Neethling ‘The Availability of the Actio Legis Aquiliae and the Actio Iniuriarum Between Spouses’ 2021 TSAR 602. 36 Ibid 607-608. 37 Absa Bank Limited v Moore and Another [2016] ZACC 34; 2017 (1) SA 255 (CC); 2017 (2) BCLR 131 (CC). victim, not the fraudster.38 Thus, where the victim of fraudulent misrepresentation seeks relief, as is the case here, it does not lie in the mouth of the misrepresentor (the respondent in this case) to assert that the legal convictions of the community are such that his conduct should not give rise to a claim. [44] Another important policy consideration in the enquiry whether aquilian liability for pure economic loss should be extended or not, is the risk of indeterminate liability. As explained in Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng,39 ‘. . . if claims for pure economic loss are too freely recognised, there is the risk of “liability in an indeterminate amount for an indeterminate time to an indeterminate class.”’40 [45] There would have been risk of indeterminate liability had the applicant based her claim only on the mere fact of the marriage having been unsuccessful due to conduct of the respondent. A need to limit liability could thus arise, lest the flood-gates open for spouses aggrieved by their failed marriages, resulting in indeterminate claims and amounts. However, on the facts of this case, there can be no issue of indeterminate liability. The basis for liability is clearly circumscribed and delineated by the applicant’s factual allegations, especially that of fraudulent misrepresentation. The loss suffered by the applicant is both finite and determinate. Also, as Professor Neethling41 correctly points out, there was no possibility of multiplicity of actions, as similar situations where fraudulent conduct induces a marriage will be few and far in between. [46] Given all these weighty juridical and policy considerations, the judgment of the high court cannot stand. The judgment has received severe criticism in academic reviews, which criticism, based on the views expressed in this judgment, is with respect, trenchant.42 In all the circumstances, it cannot tenably be asserted that on 38 Ibid para 39. 39 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1) SA 1 (CC); 2014 (12) BCLR 1397 (CC). 40 Ibid para 24. 41 Fn 15 above at 608. 42 See for example, Professor J C Sonnekus ‘Erkenning van deliktuele remedies: ‘n Bevestiging van ‘n beskermingswaardige regsbelang of tog ‘n bedreiging vir ‘n sosiale instelling soos modern huwelik? 2021 (84) THRHR and Neethling (fn 15 above). every possible construction of the applicant’s particulars of claim, no cause of action is disclosed. Accordingly, the exceptions should have been dismissed. For these reasons I agree with the order of the first judgment. ______________________ T MAKGOKA JUDGE OF APPEAL Molemela JA [47] I have read the first and second judgments authored by my colleagues. I concur in the first judgment. My reasons are set out below. [48] The factual matrix has already been correctly set out in the first judgment. Research conducted by our court’s researchers revealed that there is currently no precedent for a delictual claim premised on facts similar to those presented in the particulars of claim in the context of fraudulent misrepresentation.43 The notice of exception speaks for itself,44 and the issues posed therein are self-explanatory. The 43 We were referred to this Court’s judgment in Van Jaarsveld v Bridges [2010] ZASCA 76, an appeal to this court arising from a delict in the context of a breach of promise. 44 The Notice of Exception was, in relevant parts, formulated as follows: ‘PLEASE TAKE NOTICE that the defendant hereby excepts to the plaintiff’s particulars of claim on the basis that they fail to disclose a cause of action and/or are vague and embarrassing and/or that the court lacks jurisdiction to adjudicate the matter. The basis of the exception is set out below. . . . . First Exception The plaintiff’s particulars of claim do not disclose a cause of action in respect of her claim for wasteful expenditure for one or more or all of the following reasons: 8.1. The misrepresentations alleged by the plaintiff are not actionable; 8.2. No claim exists in law for a wrongful proposal of marriage in the circumstances pleaded by the plaintiff. 8.3. No cause of action for wrongful marriage is known in the law of contract or delict. 8.4. The defendant’s expression of love towards the plaintiff even if later found to have been insincere, does not amount to an actionable misrepresentation. 8.5. The defendant’s statement that he wished to marry the plaintiff cannot amount to a misrepresentation in that the parties did in fact get married consequent upon the statement by the defendant that he wished to marry the plaintiff. 8.6. The defendant’s statement or representation that he wished to remain married to the plaintiff until parted by death, even if found to have been made with reservation or sincere, cannot in fact or in law amount to an actionable misrepresentation. 8.7. An insincere statement of love prior to parties becoming engaged and/or entering into a marriage cannot found an action for damages. summons, to which the particulars of claim were attached, was the only pleading filed before the high court. On the averments alleged in the particulars of claim, there were insufficient facts before the high court to assist it in the determination of whether there are policy considerations that require the extension of the lex Aquilia in the specific circumstances of this case. It is for that reason that I agree that the issue whether the net of the Aquilian action is indeed being cast wider, as contended for by the respondent, is a matter that can only be tested and decided by the trial court with the benefit of all the pleadings and evidence. Implicit in this finding is that the respondent Second Exception 9. It is not clear from the particulars of claim whether the actionable wrong relied upon is the alleged misrepresentations or the failure on the part of the defendant to disclose to the plaintiff before they got married that he considered the relationship between them to be ‘over’. 10. In any event, doubts or reservations that the defendant may have had about the success of their marriage after the betrothal do not give rise to an actionable wrong. 11. The plaintiff does not specify the nature of the duty allegedly owed by the defendant to the plaintiff and the facts and circumstances in which such duty arises. 12. The particulars of claim do not allege, imply or infer a causal nexus between the alleged misrepresentations, namely an insincere expression of love, and the alleged breach of a legal duty to disclose that the relationship was over. Third Exception The alleged truth or otherwise of the representations are not reasonably capable of determination and cannot found a basis for action in damages against the defendant for wasteful expenditure. In this regard: 13.1. The plaintiff does not define what is meant by ‘love’ in the context in which it is pleaded. 13.2. An expression of love by one or both parties is not an essential element of a betrothal or of a marriage. Accordingly, the absence or an insincere expression of love by the defendant does not found a basis on which the plaintiff can hold the defendant liable in damages; 13.3. The defendant’s statement that he loved the statement is of a subjective nature. It is difficult to define, quantify, measure and prove and as such, the matters in issue (as pleaded by the plaintiff) are not reasonably and/or practicably capable of determination by a court of law; 13.4 No causal link has been alleged between the defendant's alleged insincere expression of love towards the plaintiff and the failure of their relationship and indeed, it would unreasonable and impracticable for the court to embark on an examination as to whether the breakdown of their relationship (either before or after the marriage) was caused by the defendant’s insincerity as regards his love for the plaintiff. 14. The boni mores of society and the legal convictions of the community do not extend the concept of wrongfulness to circumstances where one party after the breakdown and intended dissolution of the marriage complains that the marriage was induced by an expression of love made by the other party made which was not genuine. . . . . 16. The law ought to refrain from compelling and enforcing proper and/or ethical marital conduct directly or indirectly by legal measures. This includes claims for damages arising from expressions of love that are subsequently found not to have been genuine. Intimate and private personal relationships between consenting adults should not be regulated by law in the manner and to the extent contended for by the plaintiff. . . . . 19. The plaintiff’s claim for wasteful expenditure is for pure economic loss. It is contrary to the boni mores and legal convictions of the community to extend claims to disappointed spouses based on the facts alleged by the plaintiff. This would open the flood gates of litigation and inundate our courts with an untold number of damages claims. 20. IN THE PREMISES, the facts alleged by the plaintiff do not give rise to a claim against the defendant in damages as alleged or at all alternatively, the particulars of claim are vague and embarrassing and prejudice the defendant.’ did not discharge the onus of showing that the particulars of claim are excipiable on every interpretation that could reasonably be attached to them.45 On this ground alone, the appeal ought to succeed. [49] Moving on to specific issues pertaining to the elements of the appellant’s delictual claim, it is trite that wrongfulness is a requirement for liability that is separate from fault. Equally trite is the principle that ‘fraud unravels all’ and that ‘a fraudulent misrepresentation that induces the conclusion of a transaction causing pure economic loss is a delict’. That said, due regard must be paid to the fact that in the context of the issues posed in the exception, the question is not only whether the alleged misrepresentation is actionable, but also whether a false representation was made. While it could, in the abstract, be argued that it is inconceivable that public policy considerations could dictate that the respondent be absolved from liability for his alleged fraudulent conduct because intention does not usually assume an important role in Aquilian liability for patrimonial loss, it must be borne in mind that this Court has recognised that there are instances where intention plays a pivotal role in the process of adjudicating a delictual claim, such that ‘intent will then be an integral part of the element of wrongfulness’.46 The judgments of this Court alluded to in paragraphs 15, 16 and 17 of the first judgment clearly illustrate the need to take context into account. Having considered all the issues posed in the exception against the backdrop of the context provided by the factual matrix, I am of the view that the paucity of facts in this matter is an impediment to a context-specific discussion on fraud and its ramifications. For all the reasons mentioned above, I agree with the reasoning and conclusion of the first judgment. ________________________ M B MOLEMELA JUDGE OF APPEAL 45 Tembani v President of RSA fn 8 above para 14. 46 Media 24 v SA Taxi Securitisation 2011 (5) SA 329 (SCA) para 12. Appearances For applicant: D Milne Instructed by: Van Rensburg Pillay Jonker Inc, Johannesburg Honey Attorneys, Bloemfontein For respondent: No appearance	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 13 MARCH 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal CW v GT (867/2021) [2023] ZASCA 23 (13 March 2023) Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against a decision of the Gauteng Division of the High Court, Johannesburg (the high court). The issue before the SCA was whether the high court was correct in upholding the exceptions to the claim under the lex aquilia. During the period between 8 November 2016 and 22 September 2018, the parties were in a romantic relationship. The applicant alleged that throughout their relationship, the respondent professed in words and deeds that he loved her, he wanted to marry her and remain married to her until parted by death. During the course of their relationship, he showered her with expensive gifts and lavish five-star holidays. On 31 March 2018, the respondent proposed to marry the applicant and presented her with an engagement ring worth R63 000. On 15 September 2018, the parties were married out of community of property with the accrual system. From about 22 September 2018 their blissful matrimonial relationship took a turn for the worst. The applicant stated that the respondent’s conduct changed towards her. She alleged that he no longer showed her any love and respect but, instead he regularly abused and belittled her; he used profanity towards her; and generally treated her in contrast to how he treated her during their courtship. On 18 November 2018, the respondent ordered the applicant to leave the marital home. On 11 December 2018, the respondent instituted divorce proceedings against the applicant. The applicant alleged that on 24 December 2018 she became aware that the respondent had falsely represented to her, knowingly, that he loved and wanted to remain married to her, when in fact he had known prior to the marriage that he considered the relationship between them to be ‘over’. On 29 January 2019, and with this knowledge at hand, the applicant launched action proceedings in the high court. She claimed that she was induced to marry the respondent when he wrongfully and intentionally made the representations that he did. As a result of the representations, she incurred wasted wedding expenses in the amount of R331 342.36. The respondent raised nine exceptions to the applicant’s particulars of claim. The high court held that that this sort of claim was not recognised in our law and it would not be in the public interest to develop the common law to entertain such a claim. The SCA held that the respondent’s exception questioned the existence of a legal duty not to cause harm in relation to the specific facts of this case. The challenge for the respondent was that the averments made in the particulars of claim were insufficient for purposes of answering the crucial question posed in Lillicrap: whether there are any considerations of public or legal policy that require the extension of the Aquilian remedy to the circumstances of the case. That being the case, the respondent’s exception was misconceived. Based on the same reasoning, the SCA held that the respondent failed to establish that the particulars in support of the patrimonial damages claim were excipiable on every interpretation that could be attached to them. In his concurring judgment, Makgoka JA engaged with the jurisprudential premise on which the high court’s judgment rests. Makgoka JA held that the reasoning of the high court ignored the prima facie wrongfulness of a fraudulent misrepresentation. In her concurring judgment, Molemela JA held that on the averments alleged in the particulars of claim, there were insufficient facts before the high court to assist it in the determination of whether there are policy considerations that require the extension of the lex Aquilia in the specific circumstances of this case. It was for that reason that Molemela JA agreed that the issue of whether the net of the Aquilian action is indeed being cast wider, as contended for by the respondent, is a matter that could only be tested and decided by the trial court with the benefit of all the pleadings and evidence. ~~~~ends~~~~
2269	non-electoral	2009	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 325/08 PIETER ARNOLDUS CRONJE NO First Appellant ENVER MOHAMED MOTALA NO Second Appellant NEDBANK LIMITED Third Appellant and HILLCREST VILLAGE (PTY) LTD First Respondent CRYSTAL COOPER DE LA PIERRE NO Second Respondent Neutral citation: Cronje v Hillcrest Village (325/08) [2009] ZASCA 81 (17 July 2009) Coram: STREICHER ADP, LEWIS, VAN HEERDEN JJA, GRIESEL & BOSIELO AJJA Heard: 14 MAY 2009 Delivered: 17 JULY 2009 Summary: Section 420 of Companies Act 61 of 1973 – application to avoid dissolution of liquidated company - unlikelihood of avoidance yielding a financial benefit to applicant, inaction and delay on the part of applicant factors to be taken into account in exercise of court’s discretion. ORDER On appeal from: High Court, Pretoria (Mavundla J sitting as court of first instance) The appeal is upheld with costs. In the case of the second and third appellants such costs are to include the costs of two counsel. The order by the court below is set aside and replaced with the following order: ‘The application is dismissed with costs.’ JUDGMENT STREICHER ADP (LEWIS, VAN HEERDEN JJA, GRIESEL & BOSIELO AJJA concurring) [1] This is an appeal against a judgment in the High Court, Pretoria in terms of which Mavundla J, in an application by the first respondent, Hillcrest Village (Pty) Ltd (‘Hillcrest’), and the second respondent, the trustees of the CMT Trust (‘CMT’), declared the dissolution of a company, Waterkloofspruit Projects (Pty) Ltd (in liquidation) (‘WKP’), to have been void and ordered certain ancillary relief. The appeal is with the leave of the court below. [2] The respondents’ founding affidavit is only 11 pages long but after receipt of the appellants’ answering affidavits they filed a replying affidavit consisting of 131 pages containing new matter. The appellants thereupon filed a supplementary answering affidavit dealing with the new matter. The court below dismissed an argument by the appellants that it should not have regard to new matter in the replying affidavit and proceeded to deal with the matter on the basis also of such new matter. However, it was either unaware of the existence of the supplementary answering affidavit or chose to ignore it. Mavundla J stated in his judgment: ‘Besides, the respondents, it would seem, never sought to file further affidavits to deal with what they contend is now a new ground, ie the fraud’ and later ‘I have taken note of the fact that the fifth, sixth and seventh respondents did not seek leave of the Court to deal with what is alleged to be new matters being raised in the replying affidavit.’ However, according to the respondents the appellants had been given leave to deal with the new matter. Before us the matter was, therefore, argued as if the replying affidavit formed part of the founding affidavit and as if the answering affidavit and supplementary answering affidavit constituted the answer to these founding affidavits. That is the sensible way to deal with the matter. One can certainly not have regard to the new matter in the replying affidavit and ignore the supplementary answering affidavit. [3] The Plascon Evans rule applies and the facts will be stated in accordance with that rule. On 19 October 1994 WKP purchased Erf 1856 Waterkloof Ridge from the City Council of Pretoria (‘the City Council’). The property was to be developed as part of an upmarket security village, Waterkloof Boulevard, consisting of 113 residential stands and 107 cluster stands. In terms of the agreement of sale WKP was obliged to create a nature park at a cost of not more than R2 158 000 on the remainder of Erf 1856. At that stage the remainder of Erf 1856 comprised ‘29,5902 hectare of disturbed land’ within a natural valley formed by the Waterkloofspruit which bisects the site. BOE Private Bank and Trust Company Ltd (‘BOE’) guaranteed WKP’s obligation to create a nature park. BOE also made available to WKP an amount of R14 200 000 secured by a mortgage bond over the property for purposes of funding a turnkey development on the property. [4] On 3 February 2000 a lease agreement was entered into between the City Council and WKP which committed WKP, in addition to the development of the park, to the long term maintenance of the park at an initial rental amount of R5 000 per year. In terms of the lease agreement the lessee was obliged to commence with the development of the park within 60 days of signing of the lease agreement and to complete the park within a 12-month period. WKP failed to do so. As a result the City Council, on 13 October 2000, in terms of the guarantee referred to above, claimed payment by BOE of an amount of R2 158 000. [5] It became apparent that the work that had already been done in respect of the project had deviated from the approved site and landscape development plans resulting in substantial damage being effected to an already seriously disturbed site. BOE thereupon undertook to complete the project on behalf of WKP. [6] WKP was entirely dependent on the funding provided by BOE to complete the development and it had become clear prior to 2000 that it was unable to meet its obligations vis-à-vis BOE, the City Council in respect of rates and taxes, and other creditors. In consequence of WKP’s financial constraints BOE, during 2000, advanced a further loan of R10,8m to WKP secured by a mortgage bond, for purposes of restructuring the development. In that year and at the request of Mr Edward de la Pierre (‘De la Pierre’) who acted on behalf of WKP, BOE mandated Pam Golding Properties to launch a marketing campaign in respect of the stands in the development. BOE incurred all the costs of this campaign. But although the campaign was driven with the assistance of De la Pierre it failed, mainly because potential purchasers were interested only in stands in respect of which transfer could not yet be given because of problems with the sub-division and installation of services. As a result BOE considered itself as not having any alternative but to foreclose its mortgage bond. At about this time another creditor applied for the liquidation of WKP. In an attempt to avoid the liquidation De la Pierre was willing to conclude a sale agreement with one Da Silva, on whom BOE pinned its hopes to undertake the completion of a substantial portion of the development. Da Silva purchased the cluster stands and undertook to pay to BOE the purchase price in respect of each cluster stand purchased upon completion of building operations on the relevant stand and the sale thereof to a third party. In terms of the Da Silva agreement BOE undertook to provide services to the cluster stands at its cost. [7] The Da Silva agreement was signed by De la Pierre on 18 July 2000. Three days later, on 21 July 2000, WKP also gave a general power of attorney to BOE in respect of the disposition of the remaining unsold subdivisions of Erf 1856 and undertook not to interfere or in any way participate in the marketing and selling of the properties. In terms of the general power of attorney BOE undertook to effect payment of an amount not exceeding R5,1m in reduction of any lawful and current debt due by WKP to its sundry debtors. Pursuant to the general power of attorney serious attempts were made to market the properties and BOE settled the claims of various creditors of WKP involving an amount of approximately R5m. [8] BOE believed that with Da Silva’s involvement at least a substantial portion of the project could be successfully completed. However, subsequent to the conclusion of the agreement of sale, WKP contended that De la Pierre had no authority to conclude the agreement and refused to ratify it. By that time Da Silva had commenced with construction. De la Pierre then claimed that the stands had a value which BOE considered to be unrealistic and adopted an attitude which BOE considered to be unreasonable, unreliable and uncooperative. In the circumstances BOE considered itself not to have any option other than to apply for the liquidation of WKP. [9] On 14 February 2001 WKP was placed in liquidation and Mr Cronje, the first appellant, and Mr Motala, the second appellant (hereinafter jointly referred to as the liquidators), were appointed as provisional liquidators. The liquidators applied to the Master for authority in terms of s 386(2A) and (2B) of the Companies Act 61 of 1973 to sell the immovable property of WKP by way of public auction ‘met bekragtiging onmiddelik na afloop van die veiling’. In its request for authority it stated that the amount owing by WKP to BOE as mortgagee was R29 442 461.59, that it would not be possible to recover the amount from the proceeds of the auction, that in addition to a capital loss BOE would also have to write off approximately R400 000 interest per month and that BOE would have to pay rates and levies of approximately R180 000 per month to the Local Transitional Council. The liquidators stated: ‘Die voorwaardes van die voorgenome verkoop van die onroerende eiendomme is kortliks soos volg: (‘n afskrif van die voorgenome Verkoopsvoorwaardes hierby aangeheg vir u meer volledige verwysing) Die eiendomme word elkeen apart opgeveil, en word voetstoots verkoop, elk onder `n aparte koopkontrak. 10% van die verkoopprys in kontant op ondertekening van die verkoopsvoorwaardes. Die balans koopprys tesame met 16% rente per jaar, bereken vanaf datum van veiling tot datum van oordrag in die naam van die koper, beide dae ingesluit, binne 30 dae vanaf veilingsdatum per bank of bouvereniging waarborg. Die verkoping vind plaas met onmidelike bekragtiging na afloop van die veiling, en is geen bekragtigingsperiode van krag nie. . . . Voor dat die individuele standplase opgeveil word, word dit in die vooruitsig gestel dat die ontwikkeling as `n geheel opgeveil sal word, om sodoende te verseker dat die maksimum voordeel vir die verbandhouer verkry sal word.’ The conditions of sale provided that the auctioneer could reject any bid without giving a reason. [10] The auction took place on 20 March 2001. Although it was well attended no bidding interest was shown and there was no realistic expectation of a selling price in respect of the stands which would be remotely close to the outstanding balance owed to BOE at the time. As a result BOE considered itself not to have any choice ‘but to buy in the project as it was the only creditor’. It did so by offering a nominal amount of R100 000 and that bid was accepted by the auctioneer obviously on instruction of the provisional liquidators. [11] Before the auction, on 6 March 2001, an agreement of settlement was concluded between Gilboa Properties Ltd (‘Gilboa’), Hillcrest and other debtors of WKP on the one hand and WKP and BOE on the other hand. In terms of this agreement – (i) it was recorded that R5,2m was owed by these debtors to WKP and that some of these debtors had bound themselves as sureties and co- principal debtors to BOE in respect of the obligations of WKP to BOE in terms of a loan by BOE to WKP; (ii) the debtors undertook, jointly and severally, to pay to WKP an amount of R10m together with interest at the rate of 16,5 per cent per annum; (iii) the debtors had to deliver share certificates in respect of 20 million Gilboa shares together with share transfer forms as security in respect of the obligations undertaken by them. (iv) the debtors waived any claims that they might have against WKP and BOE. [12] On 24 August 2001 the parties to the first settlement agreement and the trustees of CMT, being De la Pierre, De la Pierre’s wife and one Jan Boshoff entered into a second settlement agreement in terms of which it was agreed that CMT would deliver share transfer forms in respect of the Gilboa share certificates that had already been delivered, that the liquidators could sell the shares on the Johannesburg Stock Exchange and that the proceeds would be applied in reduction of the debt of R10m. Because of ‘the fact that there was a minimal market for the shares’ Hillcrest borrowed R3m against security of a mortgage bond over its property and paid the amount to WKP in reduction of the debt of R10m. In terms of yet a further agreement of settlement (‘the third settlement agreement’) concluded on 23 August 2002 the parties to the second settlement agreement agreed that Hillcrest would transfer the immovable property known as Gilboa House to BOE at a price equal to the amount owing to BOE in terms of the mortgage bond over the property (being R6,9m), that the Gilboa shares which had not been sold (20 775 000 less 600 000) would be redelivered to CMT and that, against transfer of the property, CMT and the other parties would be absolved from their obligation to pay the amount of R10m to WKP and from their obligations to BOE in terms of any suretyships. Effect was given to this agreement. [13] A first and final liquidation and distribution account was confirmed by the Master on 13 December 2002 and WKP was dissolved on 25 June 2004. According to the liquidation and distribution account BOE, having paid the other creditors, was the only creditor that proved a claim against WKP. It proved a claim of R29 297 229,13 secured by a mortgage bond. Its security realised only R100 000 (plus VAT) and an additional R720 000 (plus VAT) in respect of two stands separately auctioned which, after deduction of deductible costs, entitled it as a secured creditor to a dividend of R784 527,23 leaving it with a concurrent claim in an amount of R28 512 701,90 in respect of which it received a dividend of R3 619 804,73. The only other assets reflected are a cash balance of R688 008,92, an amount of R82 210,34 refundable by SARS and an amount of R4 209 812,22 payable by BOE. The latter amount is made up as follows: Proceeds of Gilboa shares R 109 812,22 Proceeds of loan to Hillcrest R3 000 000,00 Net value of the Gilboa House property R1 100 000,00 [14] BOE suffered a loss of approximately R7m in respect of the project. It recovered approximately R28,5m from the disposal of the stands it purchased at the auction. In addition it credited its WKP account with an amount of R4,1m in respect of the Gilboa House property which was transferred to it as part payment of the debt of R10m and received a dividend of approximately R4,4m from the liquidators. R4.1m is the difference between R11m which De la Pierre claimed the value of the property to have been and the R6.9m owed in terms of the mortgage bond held by BOE over the property. The balance owing by WKP to BOE at the time of the liquidation was approximately R29,3m to which should be added R14,5m in respect of post liquidation interest and expenses. [15] De la Pierre did not attend the auction and did not object to the sale. But he became aware of articles in the Pretoria News to the effect that banks which were repossessing properties bought these properties at reduced prices, resold them later at a profit and did not pass the profits on to the original owners. According to the newspaper the ‘country’s banking adjudicator’ said that this kind of profiteering ‘flies in the face of common law and the Code of Banking Practice’. He then started investigating the matter and those investigations gave rise to the present application by Hillcrest, of which De la Pierre is the sole director, as first applicant and CMT as second applicant. In terms of the application the applicants prayed for an order: That the dissolution of WKP be declared void in terms of s 420 of the Companies Act 61 of 1973. That the liquidation and distribution account be re-opened. That the Master of the High Court be ordered to appoint new liquidators to wind up WKP. [16] In their founding affidavit Hillcrest and CMT alleged that the sale to BOE was void because, contrary to the provisions of s 82(1) of the Insolvency Act 24 of 1936, the auction had not been advertised in the Government Gazette as a result of which the protection afforded by s 82(8) to a purchaser in good faith was not available to BOE because BOE had acted mala fide. They alleged furthermore that in the event of the auction sale being declared void Hillcrest would have a claim against WKP, Cronje and BOE because of the transfer of Gilboa House to BOE. CMT is alleged also to have an interest in the matter as cessionary of all Gilboa’s rights ‘in and to all claims which Gilboa . . . may have against BOE Bank Ltd . . . or any other third party, in respect of Gilboa’s rights as shareholder in Waterkloofspruit Projects (Pty) Ltd’ in terms of a cession dated 7 May 2001. The cession provides that the claims referred to are in terms of the cession ‘not limited to any specific cause of action and includes any claim or claims which emanate or might emanate from or in respect of the liquidation of Waterkloofspruit Projects (Pty) Ltd and/or any claims in respect of the Waterkloof Boulevard Project.’ [17] Section 420 of the Companies Act reads: ‘When a company has been dissolved, the Court may at any time on an application by the liquidator of the company, or by any other person who appears to the Court to have an interest, make an order, upon such terms as the Court thinks fit, declaring the dissolution to have been void, and thereupon any proceedings may be taken against the company as might have been taken if the company had not been dissolved.’ The court below held that Hillcrest and CMT as sureties in respect of the indebtedness of WKP to BOE had an interest in the setting aside of the dissolution of WKP. It held that CMT also had such an interest as a cessionary of the rights of Gilboa, the sole shareholder of WKP. [18] As sureties Hillcrest and CMT, in the ordinary course, would have had an interest in the winding-up of WKP in that, upon payment of WKP’s debt, they would have had a right of recourse against WKP. However, they entered into agreements of settlement with BOE and WKP in terms of which (i) they settled all claims which WKP and BOE had or might have had against them and (ii) they waived any claims that they might have had against WKP. As a result they no longer, as sureties, had any interest in the winding up of WKP. As cessionary of the rights of Gilboa, the sole shareholder of WKP, the only interest that CMT can have in avoiding the dissolution of WKP can be its entitlement to a surplus upon completion of the winding up. [19] As indicated above the respondents contended in their founding affidavit that the sale of the properties at the auction was invalid because it had not been advertised in the Government Gazette as required by s 82(1) of the Insolvency Act 24 of 1936. The section reads as follows: ‘82 Sale of property after second meeting and manner of sale (1) Subject to the provisions of sections eighty-three and ninety the trustee of an insolvent estate shall, as soon as he is authorized to do so at the second meeting of the creditors of that estate, sell all the property in that estate in such manner and upon such conditions as the creditors may direct: . . . Provided that if the creditors have not prior to the final closing of the second meeting of creditors of that estate given any directions the trustee shall sell the property by public auction or public tender. A sale by public auction or public tender shall be after notice in the Gazette and after such other notices as the Master may direct and in the absence of directions from creditors as to the conditions of sale, upon such conditions as the Master may direct.’ [20] In their replying affidavit the respondents alleged that BOE had committed a series of frauds and that the conduct of Cronje and Motala is inexplicable in the absence of them having colluded with BOE. The properties had previously been sold to Da Silva for R30m and Cronje and Motala colluded with BOE to ensure that they were sold to BOE for R100 000. They allege furthermore that in terms of s 31 of the Insolvency Act, in the event of the dissolution of WKP being set aside, Cronje, Motala and Nedbank, the third respondent, as successor to BOE1 would be liable to WKP for substantial amounts having regard to their collusive dealings immediately prior to the liquidation. [21] The court below referred to the fact that the properties had been sold for R100 000 while they were clearly much more valuable and stated that the allegations of fraud and collusion required to be investigated. The court expressed the view that had these facts, as also the non-compliance with the provisions of s 82(1) of the Insolvency Act, been brought to the attention of the Master, he would probably not have confirmed the liquidation and distribution account. For these reasons the court below declared the dissolution of WKP void, ordered the re-opening of the liquidation and distribution account, ordered the Master to appoint new liquidators and ordered the appellants to pay the costs occasioned by their opposition to the application. [22] Section 82(1) of the Insolvency Act deals with the sale of property after the second meeting of creditors and is not applicable to the auction of WKP’s property. The auction sale was a sale authorised by the Master in terms of s 386(2B) of the Companies Act before a general meeting of WKP’s creditors had been convened. The court below therefore erred in considering the section to be of application in respect of the auction sale. [23] In terms of s 31(1) of the Insolvency Act which, in terms of s 340 of the Companies Act, applies mutatis mutandis to companies being wound up and unable to pay their debts, a court may after the liquidation of a company set aside any transaction entered into by the company 1 The rights and obligations of BOE were transferred to Nedbank Ltd in accordance with the provisions of s 54 of the Banks Act 94 of 1990 with effect from 1 January 2003. before the liquidation, whereby the company in collusion with another person disposed of property belonging to the company in a manner which had the effect of prejudicing the company’s creditors or of preferring one of his creditors above another. Section 31(2) provides for the recovery of the loss suffered by the company as a result of the collusive disposition from the other person, for the imposition of a penalty payable by such person and for forfeiture of the other person’s claim against the estate of the company if such person is a creditor of the company. The section deals with transactions by the liquidated company before its liquidation, ie at the time when De la Pierre was in control and before Cronje and Motala had been appointed as liquidators. There is therefore no merit in the allegation that, in terms of the section, Cronje, Motala and Nedbank would be liable to WKP for substantial amounts should the dissolution of WKP be avoided. [24] That several irregularities were committed in the liquidation of WKP is clear. The Master authorised the sale of the individual stands subject to the whole development being auctioned first to ensure that the maximum benefit for the bondholder be obtained. I interpret that authority to mean that the project as a whole could be auctioned and thereafter the individual stands, whereupon the most advantageous offer or offers could be accepted. None of the parties contended that the Master’s authority should be interpreted differently. However, individual stands were never offered for sale at the auction. According to Cronje it became clear at the auction that ‘due inter alia to the failure by [WKP] (controlled by De la Pierre) to comply with the provisions regarding subdivision, the provisions regarding the development of the park . . . and the generally incomplete and stagnant condition of the development as a whole no parties were prepared to purchase individual erven.’ But according to Adams, at the time Regional General Manager: Property Finance of BOE, BOE’s purpose in holding the auction was to attract a willing and able contractor/developer to take over the project. He said that, based on BOE’s experience at the time, BOE realised that it would not be legally possible nor financially viable to dispose of the stands individually, and that there was no realistic prospect of a high enough bid to settle the total outstanding debt of WKP. There may well, therefore, never have been an intention to offer the individual stands for sale at the auction. However that may be, the auction was not conducted in the manner authorised by the Master. [25] In terms of s 342 and s 391 of the Companies Act the assets of a company being wound up must be applied in payment of the costs incurred in the winding-up and of the claims of creditors and, unless the company’s memorandum otherwise provides, any surplus assets available must be distributed by the liquidators among the members according to their rights and interests in the company. It follows that not only the creditors but also the members of a company have an interest in the proper winding-up of a company. See in this regard Van Zyl NO v Commissioner for Inland Revenue 1997 (1) SA 883 (C) at 891C-E where Hodes AJ said: ‘It should be remembered that a company in liquidation is administered not only for the benefit of creditors, but that the liquidator is obliged to take the interests of members into account. In terms of s 342 (1) of the Companies Act, if there is a surplus after payment to creditors, this goes to members. The interest of members in the proper winding-up of the company is recognised in ss 360(1), 386(3)(a) and 387(1) of the Companies Act.’ See also Concorde Leasing Corporation (Rhodesia) Ltd v Pringle-Wood NO & another 1975 (4) SA 231 (R) at 234 in fine to 235A where Beadle ACJ said that it is clear from the authorities and a matter of common-sense that the liquidator in the winding-up of a company owes a duty both to that company and to the creditors. ‘He owes a duty to the company to see that its assets are realised and its liabilities minimised to the best possible advantage of the company and he owes a duty to the creditors to see that they suffer the least loss and receive the most advantageous dividend.’ [26] In the liquidation application it was stated that the properties had a value of R26,702m. People were interested in the stands as is evidenced by the Da Silva agreement, enquiries made by one Rojahn before the sale, and the sale of stands by BOE to Dotcom Trading 635 (Pty) Ltd shortly after the auction. No bidding interest may have been shown at the auction when the project as a whole was offered for sale but that did not prove that there were no buyers who were interested in buying the properties. The mere fact that the auction was well attended indicated that there were people who were interested in the properties. The properties constituted BOE’s security in respect of its claim of more than R29m against WKP. It would therefore not have agreed to a sale of the properties to a third party at a price substantially lower than the value (R26,702m) it had placed on the properties. Fourie, the deponent to Nedbank’s answering affidavit, himself stated that he did not dispute ‘that it would have been obvious to potential bidders that [BOE] would not confirm any bid unless a substantial amount could be derived from the proceeds of the auction for purposes of settling at least part of [BOE’s] exposure.’ The fact that no bidding interest was shown, therefore, did not indicate that the project had virtually no value; all it indicated was that nobody was prepared to pay an amount which was considered acceptable to BOE. In these circumstances the offer of R100 000 by BOE should not have been accepted. BOE was not entitled to preferential treatment as a buyer and an offer which would not have been acceptable if made by another buyer should not have been acceptable if made by BOE. The offer was nevertheless accepted by the liquidators. In doing so they did not act in the best interests of WKP. It should have been obvious to them that the property as a unit was much more valuable than R100 000 and that a much higher price could be obtained for it. However, it would seem that they did not realise that they owed a duty to the company. Confirmation that that was the case is to be found in the supplementary answering affidavit deposed to by Cronje where he said: ‘BOE would remain the preferent creditor and the largest creditor by far would determine what the liquidators would or would not do.’ [27] Counsel for BOE submitted that it was ludicrous to suggest that BOE paid R100 000 for the properties. According to him the purchase consideration was R100 000 plus the waiver of BOE’s claim of R29m against WKP. However, there is no evidence that BOE waived its claim. On the contrary, it is clear that it did not do so. But although BOE paid only R100 000 (plus VAT) for the properties, it in effect placed a value of R100 000 on its security with the result that, in terms of the liquidation and distribution account, it, in the event, received a dividend of R784 527,23 in respect of its secured claim and R3 619 804,73 in respect of the balance of its claim as a concurrent claim. Had it not purchased the property it would have received (up to a maximum of R29m plus interest, being its secured claim) the selling price of the properties plus the dividend of R3 619 804,73 less the additional costs relating to the selling of the properties. The additional costs would have included the costs relating to the installation of services. The amount that it would have received in these circumstances less the dividends BOE received plus the R100 000 (plus VAT) purchase price paid thus, in effect, constitutes the amount it cost BOE to acquire the properties. [28] In terms of the first settlement agreement an amount of R10m was payable by Hillcrest and other debtors to WKP. R3m was paid by Hillcrest to WKP in reduction of the debt. In respect of the balance of R7m payable by the debtors to WKP it was agreed that Hillcrest would transfer the property known as Gilboa House to BOE at a price equal to the amount owing to BOE in terms of BOE’s mortgage bond over the property and that the remaining debt of R7m would thereby be extinguished. The liquidators were parties to the agreement and by agreeing as aforesaid they simply relinquished an asset, namely WKP’s entitlement to R7m, in favour of BOE. Once again the liquidators did not act in the best interests of the company. However, in calculating its loss as a result of the project, Nedbank did credit its WKP account with R4.1m being the difference between the R11m De la Pierre claimed the value of the property to have been and the R6.9m owed in terms of the mortgage bond held by BOE over the property. [29] In the light of these irregularities I am satisfied that in the event of the dissolution of WKP being avoided WKP may well have a claim against the liquidators in respect of the dereliction of their duty to act in the best interests of the company. The question then arises whether in these circumstances the dissolution of WKP should have been declared void by the court below. [30] Section 420 confers a discretion on a court, on application by a person who appears to the court to have an interest, to make an order, upon such terms as the Court thinks fit, declaring the dissolution of a company to have been void. As stated above, the court below did not have regard to the supplementary answering affidavits filed by the appellants. It therefore, failed properly to apply its mind to the matter. It follows that we may substitute our view as to how the court below should have exercised its discretion, whether or not the discretion to be exercised in terms of s 420 is a discretion in the wide or the narrow sense.2 In the circumstances and as no argument was addressed to us as to the nature of the discretion, I do not intend expressing any view as to whether it is a discretion in the wide or narrow sense. [31] The appellants submitted that the avoidance of WKP’s dissolution would not benefit CMT as, considering BOE’s concurrent claim, there is no prospect of a surplus being available for distribution to the members of WKP. I agree that it would seem highly unlikely that CMT would be able to prove that had these irregularities not been committed there would have been a surplus available for distribution to the members of WKP. De la Pierre used to be in control of WKP and knew what the market conditions were like. On his version he was not even aware of the auction but was under the impression, as a result of Deeds Office print-outs that he had seen, that the properties had been sold for R100 000 each. He says that it was only in about May 2004 that he ascertained from his attorneys that there had been an auction. The appellants deny this version but if it were true his disinterest in the winding-up proceedings is a clear indication that he did not consider that there was any possibility of the winding-up yielding a surplus for distribution to members. Moreover, De la Pierre said that R100 000 per stand would have been well below market value but would possibly have been acceptable in the 2 See the discussion in Bookworks (Pty) Ltd v Greater Johannesburg Tansitional Metropolitan Council and Another 1999 (4) SA 799 (W) at 804H-808C. circumstances. At that price the auction would have yielded a mere R13,7m, some R15,5m less than the amount owing to BOE, and services still had to be installed. BOE took over the project in order to minimise its losses and was able to restrict such losses to approximately R7m. There is no reason to believe that the liquidators would have been able to do any better. [32] De la Pierre contends that the Da Silva agreement proves that the reasonable market value of the unsold stands, some six months prior to the auction, was R30m, to which R8,4m should be added in respect of the improvements erected by Da Silva on 14 of them; that BOE, Cronje and Motala had fraudulently ensured that interested buyers would be under the mistaken belief that, sold as a lot, BOE would not accept any bid unless it was way above a reasonable market value; and that the intention was to ‘torpedo’ the auction so as to ensure that ‘BOE would acquire the lot at a ridiculously low price so as to continue with the Da Silva agreement’. [33] Da Silva had a builder’s lien over the improvements erected by him and, therefore, for purposes of determining whether any surplus for distribution to members could be achieved, the amount of R8,4m should be left out of the reckoning. Furthermore, the Da Silva agreement does not afford evidence that the stands could have been sold for R30m. First, if the unsold stands in fact had a market value of R30m, De la Pierre would never have allowed the liquidators to proceed with the sale of the stands for R100 000 each as he allegedly thought they were doing. Second, Da Silva had to take transfer of the stands within a period of 12 months, did not have to pay interest on the purchase price of the first 20 stands he took transfer of for a period of nine months, and, on the subsequent stands he took transfer of, for a period of six months from date of transfer. Third, payment of the purchase price in respect of the stands had to be effected upon completion of building operations on the stand and the sale thereof to a third party only. Fourth, BOE undertook responsibility for the provision of services to the stands at its cost. As regards the alleged fraud the appellants deny that they ensured that interested buyers would be under the mistaken belief that sold as a lot, BOE would not accept a bid unless it was way above a reasonable market value. It is improbable that they would have done so but in any event it is on the appellants’ version that the matter has to be decided. [34] Counsel for CMT submitted that an interest relied upon in an application for the avoidance of a dissolution in terms of s 420 need not be one which is firmly established or highly likely to prevail. In this regard he relied on Re Wood and Martin (Bricklaying Contractors) Ltd [1971] 1 All ER 732 (Ch) at 736 in which Megarry J said in respect of the similarly worded s 352 of the UK Companies Act 1948: ‘It does not, I think, have to be shown that the interest is one which is firmly established or highly likely to prevail: provided it is not merely shadowy, I think it suffices for the purpose of s 352.’ In the present case the chances of an avoidance of the dissolution of WKP yielding any financial benefit to CMT seems to me to be remote. But, even if they are such that it can be said that CMT has a financial interest in the avoidance of the dissolution, the remoteness thereof is in my view a factor to be taken into account in the exercise of the discretion vested in a court to avoid or not avoid the dissolution. [35] Other factors to be taken into account are the following. WKP was placed in liquidation on 14 February 2001 and the auction took place on 20 March 2001. In terms of s 363 of the Companies Act the directors of WKP were required to make out a statement as to the affairs of the company and lodge copies thereof with the Master within 14 days of the winding-up order, and in terms of s 364(1)(b) the Master should have convened a meeting of members for the purpose of considering that statement and nominating a person or persons for appointment as liquidator or liquidators. The members could therefore have nominated a person as liquidator and the person so nominated would have been appointed by the Master unless he was disqualified from being nominated or appointed as liquidator, or failed to give the security mentioned in s 375(1), or was a person who in the opinion of the Master should not be appointed as a liquidator of the company (s 370(1)). Cronje and Motala were appointed as liquidators. They prepared a first and final liquidation and distribution account which was confirmed by the Master on 13 December 2002. Confirmation by the Master could have taken place only after the account had lain open for inspection as prescribed in s 408 and if no objection had been lodged or an objection had been lodged but had been withdrawn or had not been sustained by the Master or a court. Thereafter the company was dissolved on 27 May 2004. [36] Gilboa and not CMT was a member of WKP. It ceded all claims that it could have against BOE or any other third party ‘in respect of [its] rights as shareholders in Waterkloofspruit Projects (Pty) Ltd’ and not its rights as a shareholder. It should have been aware of how the liquidators had dealt with WKP’s property, it is not alleged that it was not so aware and it could have done something about the matter if it did not approve. De la Pierre alleges that he became aware that there had been an auction only in 2004. Coming from the person who was in control of WKP up to the time of its liquidation I find that hard to believe, especially in the light of the fact that, in terms of the deed of cession he took cession of Gilboa’s claims as a shareholder against WKP on 7 May 2001, less than two months after the auction. However, if true, CMT, notwithstanding its cession, must have been completely disinterested in the liquidation process. In either event and having regard to Gilboa’s inaction and the remote possibility of an avoidance of the dissolution yielding a surplus, the dissolution should in my view not be avoided pursuant to an application by CMT launched some five years after the auction, more than three years after the confirmation of the liquidation and distribution account and almost two years after the dissolution of WKP. See in this regard Goodman v Suburban Estates Ltd (in liquidation) & others 1915 WLD 15 at 26 where Mason J said in respect of an application for the avoidance of the dissolution of a company: ‘I [do not] think this extraordinary relief should be afforded to an applicant, who has acquiesced in the action which he complains of, or has been guilty of laches in invoking the assistance of the Court.’ [37] Section 408 of the Companies Act provides that the Master’s confirmation of a liquidation and distribution account ‘shall have the effect of a final judgment, save as against such person as may be permitted by the Court to re-open the account after such confirmation but before the liquidator commences with the distribution’. Because the confirmation has the effect of a final judgment an applicant for a reopening of the account must show grounds for restitutio in integrum such as justus error or dolus before a court will order the re-opening of the account (see Kilroe-Daley v Barclays National Bank Ltd 1984 (4) SA 609 (A) at 626G-H). No case of justus error or dolus in respect of the account has been made out by the respondents. [38] For these reasons the court below should in the exercise of its discretion have dismissed the application. [39] The respondents in their affidavits and in the heads of argument filed in this court made numerous allegations of fraud and collusion on the part of the appellants. The allegations were made without spelling out the factual basis thereof so as to enable a court properly to deal therewith and before us counsel for the respondents was unable to give a coherent and comprehensible exposition as to precisely what constituted the fraud. Counsel for the appellants submitted that the respondents should in the circumstances be ordered to pay the appellants’ costs on the attorney and client scale. However, because it is the irregularities referred to above that gave rise to the application I do not think that the appellants should be awarded their costs on the attorney and client scale. [40] The following order is made: The appeal is upheld with costs. In the case of the second and third appellants such costs are to include the costs of two counsel. The order by the court below is set aside and replaced with the following order: ‘The application is dismissed with costs. _________________________ P E STREICHER ACTING DEPUTY PRESIDENT APPEARANCES: For appellant: M P van der Merwe (1st) S du Toit SC (2nd) T A L L Potgieter (2nd) J G Wasserman SC; G D Wickins (3rd) Instructed by: Tintingers Inc, Pretoria (1st) Symington & De Kok, Bloemfontein Savage Jooste & Adams, Pretoria (2nd) Naudes, Bloemfontein Cliffe Dekker Hofmeyr (3rd) c/o Weavind & Weavind, Pretoria Webbers, Bloemfontein For respondent: D A Bregman SC Instructed by: Kobus Boshoff & Associates c/o Van Rensburg Inc, Pretoria 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: 17 July 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. * * * P A CRONJE NO & OTHERS v HILLCREST VILLAGE (PTY) LTD & ANOTHER The appellants appealed against an order made in the High Court, Pretoria in terms of which the High Court, after the liquidation of a company Waterkloofspruit Projects (Pty) Ltd, declared the dissolution of the company void, ordered the re- opening of the liquidation and distribution account and ordered the Master to appoint new liquidators. The company purchased Erf 1856 Waterkloof Ridge from the City Council of Pretoria and proceeded with the development of a security village, Waterkloof Boulevard, consisting of 113 residential stands and 107 cluster stands. However, because of financial difficulties the company was liquidated before the completion of the development but after some of the stands had been sold. The remainder of the stands was offered for sale on an auction. When no other bids were received the liquidators accepted a bid by BOE, the bondholder, and sold the property to BOE for the nominal amount of R100 000. At the time of the liquidation the balance owing by the company to BOE in terms of the bond was approximately R29,3m and in its application for the liquidation of the company BOE had stated that the value of the property was R26,702m. It would have been obvious to potential purchasers that a sale at a price substantially lower that the value of R26,7m would not be confirmed and that explains why no bids exceeding R100 000 were received at the auction. The liquidation of the company was thereafter finalised, a liquidation and distribution account was confirmed and the company was dissolved. BOE had before the auction settled the company’s debts and was the only creditor who proved a claim against the company. Some five years after the auction, more than three years after the confirmation of the liquidation and distribution account and almost two years after the dissolution of the company the respondents applied for the dissolution to be avoided. The court had a discretion to do so on an application by a person who appeared to have an interest. The SCA held that the only interest that the respondents could have was the entitlement of the second respondent, as cessionary of the rights of the sole shareholder of the company, to a surplus upon completion of the winding-up of the company. The High Court referring to the respondents’ allegations that BOE had acted fraudulently and that the conduct of the liquidators was inexplicable in the absence of them having colluded with BOE stated that the allegations of fraud and collusion required to be investigated and declared the dissolution to have been void. The Supreme Court of Appeal held that the liquidators owed a duty to the company to see to it that its assets were realised to the best possible advantage of the company. It should have been obvious to them that the property was much more valuable than R100 000 and that a much higher price could be obtained for it. In these circumstances the offer of R100 000 by BOE should not have been accepted. BOE was not entitled to preferential treatment as a buyer and an offer which would not have been acceptable if made by another buyer should not have been acceptable if made by BOE. In the light of this irregularity and others the SCA was satisfied that in the event of the dissolution of the company being avoided the company may well have a claim against the liquidators in respect of the dereliction of their duty to act in the best interests of the company. However, the SCA considered the chances of an avoidance of the dissolution of the company yielding any financial benefit to the shareholder of the company to be remote and for this reason, as also the inaction of the shareholder for several years held that the dissolution should not have been avoided by the High Court. For these reasons the SCA upheld the appeal and set aside the order by the High Court.
3355	non-electoral	2020	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 231/19 In the matter between: SOUTH DURBAN COMMUNITY ENVIRONMENTAL ALLIANCE APPELLANT and MEC FOR ECONOMIC DEVELOPMENT, TOURISM AND ENVIRONMENTAL AFFAIRS: KWAZULU-NATAL PROVINCIAL GOVERNMENT FIRST RESPONDENT CAPITAL PROPERTY FUND LIMITED SECOND RESPONDENT Neutral citation: South Durban Community Environmental Alliance v MEC for Economic Development, Tourism and Environmental Affairs: KwaZulu-Natal Provincial Government (Case no 231/19) [2020] ZASCA 39 (17April 2020) Coram: PETSE DP and PONNAN, SWAIN, MAKGOKA and NICHOLLS JJA Heard: 6 March 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on Friday the 17th day of April 2020. Summary: National Environmental Management Act 107 of 1998 (NEMA) – s 24 – construction of logistics park – environmental authorisation granted by Department – s 43 of NEMA – unsuccessful appeal to MEC – unsuccessful review on facts of appellate decision of MEC – failure to demonstrate uncontentious and objectively verifiable facts resulting in a different decision – failure to seek review of decision of Department – conflation of grounds of review and appeal – appeal dismissed. ORDER On appeal from: KwaZulu-Natal Division of the High Court, Durban (Vahed J, sitting as court of first instance): Save for setting aside the order of costs of the court below, the appeal is dismissed. JUDGMENT Swain JA (Ponnan JA concurring): [1] The construction of what is described as ‘a logistics park’, located on the site of the old Clairwood Park Racecourse in the South Durban Industrial Basin(the Basin), has given rise to the present dispute. The logistics park comprises warehouses, vehicular parking and a distribution yard, to service heavy haulage vehicles transporting containers to and from the logistics park. The need for a logistics park in this location was said to arise from its proximity to the port of Durban and the fact that 70 to 80 per cent of all cargo that lands there, leaves the eThekwini Municipality. [2] The second respondent, Capital Property Fund Limited, (Capital) wished to construct the logistics park and applied for and received authorisation from the KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs (the Department) in terms of s 24 of the National Environmental Management Act 107 of 1998 (NEMA), to do so. The appellant, the South Durban Community Environmental Alliance, (the Alliance) is an environmental justice non-governmental organisation, which seeks to promote and achieve environmental justice for residents and communities of the South Durban area. It initially opposed the grant of the authorisation, and thereafter pursued an internal appeal to the first respondent, the MEC for Economic Development, Tourism and Environmental Affairs, KwaZulu-Natal Province (the MEC), in terms of s 43 of NEMA. [3] Central to the appeal by the Alliance was the assertion that the logistics park would produce vehicular emissions of disproportionate scale and that the Basin and the communities residing within it, which had a negative history of serious air pollution from heavy industry, were at high risk for exposure to significant levels of ambient air pollution. This was said to arise from their geographic relationship with certain sources of air pollutants, including two major petroleum refineries and a pulp and paper manufacturer. The MEC, however, dismissed the appeal on 25 January 2016. [4] Dissatisfied with the dismissal of the appeal, the Alliance then launched an application in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), before the KwaZulu-Natal Division of the High Court, Durban (the high court), on 22 July 2016, for the judicial review and setting aside of the decision of the MEC, and for the remittal of the matter to the MEC for reconsideration. The review application was heard on 13 December 2017 and judgment was handed down a year later on 19 December 2018, in which the application was dismissed with costs. Leave to appeal to this court was thereafter granted by the high court on 12 February 2019. [5] Before dealing with the merits of the appeal, it is necessary to deal with a preliminary issue raised by the court with the parties, at the hearing of the appeal. This was that the appellant had only sought a review of the MEC’s appellate decision and had not sought a review of the decision of the Department, granting the authorisation. In Wings Park Port Elizabeth (Pty) Ltd v MEC, Environmental Affairs, Eastern Cape and Others 2019 (2) SA 606 (ECG) para 34, Plasket J dealt with the converse situation. A review was only sought of a decision of the Department of Environmental Affairs, which had been appealed to the MEC Environmental Affairs, Eastern Cape, in terms of s 43 of NEMA. It was held that in the absence of a review of the MEC’s appellate decision, the setting-aside of the decision of the Department would be academic and of no practical effect, because the appellate decision would stand, even if the decision at first instance was set aside. The review application was accordingly refused on this basis alone. [6] Of relevance to the present matter is what Plasket J stated at paras 33 and 34: ‘When a decision favourable to an applicant has been taken at first instance, but reversed on internal appeal, however, it is only the appellate decision that needs to be reviewed: if the review is successful, the decision at first instance will be revived . . . When an applicant has suffered an unfavourable decision at first instance and it is confirmed on appeal, the situation is somewhat different. Both decisions must be taken on review and, for the applicant to achieve success, usually both decisions will have to be set aside . . . In these circumstances, had only one decision been attacked, whether at first instance or on appeal, the other would have remained in place.’ (Authorities omitted.) In the present appeal, the Alliance suffered an unfavourable decision at first instance, when the Department granted the authorization, which was confirmed on appeal to the MEC. [7] Because the Alliance had only attacked the appellate decision of the MEC, the decision of the Department at first instance, would ordinarily have remained in place. However, the Alliance submitted that the remedy sought was not only the review and setting aside of the MEC’s appellate decision, but its reconsideration. In reconsidering the appeal the MEC would be entitled to set aside the decision of the Department. In Magaliesburg Protection Association v MEC: Department of Agriculture, Conservation, Environment and Rural Development, North West Provincial Government and Others [2013] ZASCA 80; [2013] 3 All SA 416 (SCA) para 53, it was held that an appeal in terms of NEMA was ‘a wide one enabling a full hearing’. [8] In Sewpersadh v The Minister of Finance and Another [2019] ZASCA 117; [2019] 4 All SA 668 (SCA) para 20, the appellant had only sought an order setting aside the appeal board’s decision, without challenging the initial decision of the treasury. The following was stated: ‘For some reason he did not challenge the initial decision of the Treasury. It would probably have been better had he done so. It was pointed out in Wings Park that when an applicant has suffered an unfavourable decision at first instance which is confirmed on an internal appeal, both decisions must usually be taken on review in order to have the decision set aside. This is because if just the appeal decision is set aside, the first decision that was the subject of the internal appeal will continue to stand should it, too, not be set aside on review. The failure to target the original decision is, however, not necessarily fatal to a review in such circumstances, and much depends upon the nature of the decision at first instance and the remedy sought on review. Here the proceedings before [the] Appeal Board do not amount to a simple rehearing as in the case of a true appeal but, rather, are akin to proceedings de novo in as much as the Appeal Board can receive further evidence and make further enquiries. In my view, this is a case where a failure to target the original decision does not preclude relief. Certainly, if the Appeal Board’s decision is substituted on review with an order which overturns the Treasury’s initial decision, no harm can be done’. (Emphasis added.) [9] This court in Sewpersadh para 42, concluded that there was no purpose in referring the matter back to the appeal board for reconsideration, as this court was in as good a position as the appeal board, to make a decision on the particular facts. The following was stated: ‘That seems to be the best approach, as it does away with the difficulty that I mentioned earlier in this judgment of the original order standing until it is reconsidered by the Appeal Board, and serves to avoid both further delay and unnecessary costs . . . When this was drawn to the attention of the parties, they were agreed that if this court should find for the appellant, we should direct that he be paid his pension.’ (Authorities omitted.) The problems occasioned by the failure of the appellant to challenge the initial decision of the treasury, were therefore resolved by agreement between the parties, that the initial decision of the treasury be set aside and replaced with an order granted by this court. There is, however, no such agreement between the parties in the present appeal. [10] In addition, although this court in Sewpersadh was of the view that the initial decision of the treasury could be set aside by the appeal board, thereby obviating the need for a review of the decision of the treasury, there is a further unique and distinguishing feature in the present appeal. This is that the four grounds advanced by the Alliance for the review of the MEC’s appellate decision, are identical to four of the grounds of appeal advanced by the Alliance in challenging the decision of the Department, in the appeal to the MEC. In other words, what were originally described as grounds of appeal, are now described as grounds of review. [11] Central to the present appeal and the review of the appellate decision of the MEC, is the finding by the high court, that the main issue was whether the air quality in the vicinity of the proposed logistics park was likely to be significantly affected, by the proposed activity. In dismissing the application on its merits, the high court concluded that the Alliance had not put forward any evidence in support of its complaints and assertions, with regard to air quality. The four grounds raised all have as a common theme, that the high court in reaching this conclusion, failed to appreciate the correct facts. The Alliance submitted that the Department and the MEC also ignored facts which rendered their decisions unsustainable. [12] The conflation of grounds of review with grounds of appeal, gives rise to difficulties which are compounded by the inherent problems that may arise, in distinguishing between review and appeal proceedings. In Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and Arbitration 2007 (1) SA 576 (SCA) para 31, this was said to be caused by the following factors: ‘This is partly because process-related scrutiny can never blind itself to the substantive merits of the outcome. Indeed, under PAJA the merits to some extent always intrude, since the court must examine the connection between the decision and the reasons the decision-maker gives for it, and determine whether the connection is rational. That task can never be performed without taking some account of the substantive merits of the decision.’ Such an examination is of particular relevance in the present appeal, where it is alleged that the Department and the MEC ignored facts, which rendered their decisions unsustainable. [13] As a general rule all administrative decisions are treated as valid until a court has pronounced upon its validity and set it aside. Importantly in the present context the MEC exercised an appellate power. The original grounds of appeal have now been dressed up as grounds of review. Prof C Hoexter Administrative Law in South Africa 2 ed (2012) at 111, commenting upon the dictum in Rustenburg Platinum Mines, points out that the distinction between review and appeal nevertheless continues to be asserted in the courts as it reflects the separation of powers, which is a fundamental pillar of our constitutional order. In accordance with this doctrine, it is unacceptable for Judges to pronounce on the merits of administrative decisions, as this would constitute a usurpation of the functions entrusted to the executive branch by the Constitution. Prof Hoexter then states the following: ‘A more realistic approach, as I suggest in the context of review for reasonableness, may be to accept the illusory nature of the distinction at the stage of scrutiny and to attempt rather to observe its spirit at the point of judicial intervention. This is because judicial scrutiny, even of the merits, is not dangerous in itself. It is only when that scrutiny is translated too readily into intervention (setting aside) that it becomes objectionable, for the court may well be imposing its own idea of what the right decision would be.’ [14] In Wings Park, after a review of the relevant authorities, Plasket J went on to state the following: ‘[46] My conclusion from the cases I have discussed is that, as a general rule, when an administrative action is subject to an internal appeal, review proceedings must, at least, be directed at the appellate decision. Whether it is only the appellate decision that may be challenged may depend on the nature of the decision at first instance and the remedy sought by the applicant. In most instances, however, both decisions will have to be challenged.’ This may well have been the kind of matter, where both decisions should have been challenged. That, in and of itself, ought to have led to the failure of the Alliance’s application before the court below. However, I make no firm finding in that regard and shall, in its favour, proceed to a consideration of the substantive merits of the application. [15] Before turning to the substantive merits, it is necessary to record that in refusing the application, the high court upheld two points in limine raised by Capital but held that the review application should, in any event, fail on its substantive merits. At the hearing of the appeal, the parties were agreed that that if we were inclined to dismiss the appeal on its merits, we could pass over the points in limine. [16] The high court in dismissing the application on its merits, concluded that the Alliance had not put forward any evidence in support of its complaints and assertions, with regard to air quality and stated that: ‘In its appeal, which served before the first respondent, it simply stated, without evidence, that the logistics park would generate “disproportionate” vehicular emissions. In its founding affidavit it “contends”, without evidence, that the cumulative impacts arising from the environmental authorisation will “. . . add to past and continuing adverse environmental impacts emanating from industrial activities in South Durban. . .”. Even in reply, when the applicant belatedly put up Professor Cairncross’ affidavit to bolster its case, he confined himself to generalised criticism of the method adopted by Mr Gaze, and did not express an opinion that the construction and operation of the logistics park was likely to have a significant effect on the environment from the point of view of air quality.’ [17] The high court then concluded that there was: ‘. . . no evidence tending to establish that the logistics park is likely to have a significant effect on the environment from the point of view of air quality.’ And that: ‘Once it is accepted that the effect of the proposed logistics park, including its cumulative effect, is likely to be negligible, then all of the grounds of review fall away. There is no basis for me to find that a mandatory condition of the empowering legislation was not complied with, or that relevant factors were not taken into account by the first respondent in deciding to dismiss the appeal.’ [18] The Alliance submitted that the high court erred in its understanding of the term ‘significant effect’ and in finding that the Alliance’s failure to establish that the development would have a significant negative effect on air quality and community health was entirely dispositive of the grounds of review and the entire application itself. In support of this submission the Alliance relied upon the following dictum in Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC) para 44: ‘Doing this kind of exercise is no different from any other assessment to determine whether administrative action is valid under PAJA. In challenging the validity of administrative action an aggrieved party may rely on any number of alleged irregularities in the administrative process. These alleged irregularities are presented as evidence to establish that any one or more of the grounds of review under PAJA may exist. The judicial task is to assess whether this evidence justifies the conclusion that any one or more of the review grounds do in fact exist.’ [19] In this appeal, the Alliance advances the following four grounds, as the basis for its submission that the high court erred in refusing to review the appellate decision of the MEC. As pointed out above, these grounds were also advanced as grounds of appeal in the appeal to the MEC. They are as follows: (a) The MEC failed to properly take account of the findings and recommendations of the South Durban Health Studies of 2002 and 2007, which were respectively undertaken by the Nelson Mandela Medical School and the University of Michigan Medical School. The Alliance submitted that these studies showed the levels and extent of the negative impact contributed by developments, polluting industries and vehicle trucking emissions. This amounted to a reviewable irregularity and ground of review in terms of s 6(2)(e)(iii) of PAJA. (b) In the scoping report and the environmental impact assessment report prepared by the environmental assessment practitioner, retained by Capital, when dealing with the ‘description of the environment’, failed to ‘specifically and in detail describe the environment by reference to air quality and the state of health of the community affected by the proposed development’. This was said to be a necessary pre-condition for the proper and lawful exercise of the MEC’s discretion on appeal. (c) The Occutech Equality Impact Report presented by Capital was inadequate, in that it failed to comply with the mandatory requirements of reg 32 of the National Environmental Management Act (107/1998): Environmental Impact Assessment Regulations, GN R982, GG 38282, 4 December 2014, regulating specialist processes and reports. Consequently, the reliance by the MEC on the findings contained in this report, rendered his decision reviewable in terms of s 6(2)(b) of PAJA. (d) The MEC in deciding the appeal failed to consider how the proposed development would adversely affect environmental justice, by distributing adverse environmental impacts in a manner which unfairly discriminated against any person, particularly vulnerable and disadvantaged persons. The MEC dismissed the appeal despite the fact that the Environmental Impact Assessment Report had made it clear, that the affected community was one with a history of environmental injustice, due to adverse air quality impacts from the surrounding industry. The failure by the MEC to consider the principle of environmental justice, constituted a failure to take into account a relevant consideration, as contemplated by s 6(2)(e)(iii) of PAJA. [20] The MEC submitted that all of these grounds of review were based upon the assertion that he ignored certain facts, which rendered the decision reviewable, but that in the present appeal the Alliance did not clarify precisely what facts were ignored, nor their materiality. In addition, in the appeal to the MEC, the Alliance did not properly set out the facts that it maintained had not been considered by the Department. [21] Before dealing with the grounds of review advanced by the Alliance in the appeal, it is necessary to deal with the principles of judicial review based on errors of fact. In Pepkor Retirement Fund and Another v Financial Services Board and Another 2003 (6) SA 38 (SCA) para 48, the following was stated: ‘Recognition of material mistake of fact as a potential ground of review obviously has its dangers. It should not be permitted to be misused in such a way as to blur, far less eliminate, the fundamental distinction in our law between two distinct forms of relief: appeal and review. For example, where both the power to determine what facts are relevant to the making of a decision, and the power to determine whether or not they exist, has been entrusted to a particular functionary (be it a person or a body of persons), it would not be possible to review and set aside its decision merely because the reviewing Court considers that the functionary was mistaken either in its assessment of what facts were relevant, or in concluding that the facts exist. If it were, there would be no point in preserving the time-honoured and socially necessary separate and distinct forms of relief which the remedies of appeal and review provide.’ [22] In Dumani v Nair and Another 2013 (2) SA 274 (SCA) para 32, the following was stated: ‘In none of the jurisdictions surveyed by the authors have the courts gone so far as to hold that findings of fact made by the decision-maker can be attacked on review on the basis that the reviewing court is free, without more, to substitute its own view as to what the findings should have been – ie an appeal test. In our law, where the power to make findings of fact is conferred on a particular functionary – an “administrator” as defined in PAJA – the material- error-of-fact ground of review does not entitle a reviewing court to reconsider the matter afresh. This appears, in the context of the particular ground of review being considered, from para 48 of Pepcor, quoted in para [29] above; and in the context of review generally, from the following passage in the judgment of O’Regan J in Bato Start Fishing (Pty) Ltd v Minister of Environmental Affairs and Others 2004 (4) SA 490 (CC) (2004 (7) BCLR 687: [2004] ZACC 15) para 45: “Although the review functions of the Court now have a substantive as well as a procedural ingredient, the distinction between appeals and reviews continues to be significant. The Court should take care not to usurp the functions of administrative agencies. Its task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution.” The ground must be confined to the situation, as in the English law . . . “to a fact that is established in the sense that it is uncontentious and objectively verifiable. . . .”.’ [23] I consider that the present state of the law in this regard, is correctly set out in the following dictum, in the case of Airports Company South Africa v Tswelokgotso Trading Enterprises CC 2019 (1) SA 204 (GJ) para 12: ‘In sum, a court may interfere where a functionary exercises a competence to decide facts but in doing so fails to get the facts right in rendering a decision, provided the facts are material, were established, and meet a threshold of objective verifiability. That is to say, an error as to material facts that are not objectively contestable is a reviewable error. The exercise of judgment by the functionary in considering the facts, such as the assessment of contested evidence or the weighing of evidence, is not reviewable, even if the court would have reached a different view on these matters were it vested with original competence to find the facts.’ [24] Based upon these authorities the MEC submitted that for the Alliance to succeed, it had to demonstrate that he left out ‘uncontentious and objectively verifiable’ facts, which were material in nature and which would have resulted in a different decision, had they been taken into account by him. The MEC submitted that there were no common cause, incontrovertible or objectively ascertainable and material facts presented by the Alliance, which ought to have been considered by him, over and above the material placed before him. It is against the background of these principles, that I turn to consider the Alliance’s four grounds of appeal. First ground of appeal: The MEC failed to properly take account of the findings and recommendations of the South Durban Health Studies. [25] The Alliance submitted that the MEC had failed to comply with a mandatory and material condition prescribed by an empowering provision, in terms of s 6(2)(b) of PAJA, and had failed to consider relevant facts, in terms of s 6(2)(e)(iii) of PAJA. The Alliance alleged that the environmental assessment practitioner, the Environmental Impact Assessment Report, the Department and the MEC had all failed to ‘consider and take into account the findings and recommendations of the two South Durban Health Studies’. [26] The argument presented by the Alliance to the MEC on appeal, was that no research was done to obtain these studies and that these health studies compiled by consultants and specialists were not considered, with the result that the increase in trucking would further jeopardise the lives of people in South Durban. In response, Capital submitted that it had dealt with air quality, had referred to the noise and air quality reports and had submitted that there would not be a significant decrease in air quality in the area, and that the potential cumulative noise increase and air-quality decrease would be ‘nominal and relatively insignificant during operation’ of the logistics park. [27] The MEC in his decision noted that the Alliance had drawn his attention to these health studies and noted that the complaint of the Alliance, was that these studies had not been considered in the decision-making process. The MEC submitted, however, that on the facts and in terms of the rule in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634G-I, it was established that he did consider the health studies. The MEC found that Capital had adequately addressed the concerns over quality and noise impacts, and he had considered these issues throughout the environmental authorisation process. [28] The finding by the MEC was as follows: ‘The Appellant has not demonstrated that there were any shortcomings in the assessment referred to above. I am therefore not in a position to take the Appellant’s concerns any further. . . The Appellant’s concerns were considered (in the EIA and the decision-making process) but the Appellant ignores that consideration and merely reiterates its concerns on appeal without substantiating these or introducing new evidence to counter the assessments conducted during the assessment process.’ [29] I agree with the submission by the MEC that the Alliance in the proceedings before the MEC and the high court, introduced generalised complaints that the health studies ought to have been considered, that the recommendations in the health studies ought to have been considered and implemented and that the MEC ought to have required further studies on such matters to be undertaken. The MEC submitted that the Alliance raised generalised complaints about the absence of pertinent facts, without presenting any evidence on what the facts were, and why such facts were material to his decision. In my view, it is clear that there were no common cause, incontrovertible or objectively ascertainable and material facts presented by the Alliance, which ought to have been considered by the MEC, over and above the material placed before him. The first ground of review therefore falls to be dismissed. Second ground of appeal: The failure to describe the receiving environment with reference to air quality and health. [30] The Alliance submitted that it ‘was a necessary pre-condition for the proper and lawful exercise of the MEC’s discretion’, that the scoping report and environmental impact report had to include ‘specifically and in detail’, a description of the environment ‘by reference to air quality and the state of health of the community, affected by the proposed development’. The Alliance submitted that the failure to do so, resulted in ‘non-compliance with a material condition or procedure prescribed by NEMA’, in terms of s 6(2)(b) of PAJA. [31] The MEC submitted that it was common cause that the scoping report referred to the documented health and air issues in the South Durban Basin, and for these reasons the need for noise, traffic, air impact and social impact assessments were identified and carried out. The results of these studies were that there would be no significant adverse impacts from the logistics park. In addition, the minutes of the appeal committee deliberations illustrated that the appeal panel was aware of these issues. [32] The MEC correctly pointed out that, as with the first ground of appeal, the Alliance had not specified precisely what facts were missing from the scoping and environmental impact report. In addition, there was no indication why such facts were material and would have resulted in the MEC reaching a different conclusion. In my view, in the absence of any evidence from the Alliance in this regard, the impact assessment reports, the record of decision and its conditions and the MEC’s decision, as well as the decision of the high court, cannot be faulted. The second ground of review therefore also falls to be dismissed. Third ground of appeal: Inadequate air quality impact report. [33] The Alliance submitted that the air quality impact study conducted by Occutech was inadequate, in that with respect to air quality and the impact on air quality, dust emissions ought to have been considered and that ‘traffic emission during peak conditions’ ought to have been considered. Capital in response submitted that the specialist study, demonstrated that there would be no significant decreases in air quality from the logistics park and that the ‘potential cumulative noise level increase and air quality decrease in the area have been rated as nominal and relatively insignificant’, during the operational phase of the logistics park. [34] The MEC considered these arguments and correctly concluded that the Alliance had not demonstrated any shortcomings in the Occutech air quality impact assessment. In addition, the MEC concluded that the potential impacts identified in this report and the noise impact assessment report, could: ‘. . . be managed and mitigated to ensure the community is not significantly affected. Not only will the [environmental management programme] . . . be an important tool in this regard but [Capital] will also be required to comply with the provisions of the National Environmental Management: Air Quality Act 2004.’ [35] The MEC also correctly concluded that the Alliance had ‘not demonstrated that there were any shortcomings in the assessment[s]’ relating to air quality and noise impacts and noted that all of the Alliance’s concerns on this issue, had been considered during the environmental authorisation process. In addition, the Alliance had not introduced ‘any new evidence to counter’ the air quality and noise assessments conducted by Capital. The third ground of review therefore also falls to be dismissed. Fourth ground of appeal: Failure to consider the principle of environmental justice. [36] Capital submitted that the MEC failed to consider and apply the principle contained in s 2(c) of NEMA, in terms of which environmental justice required environmental impacts to be distributed fairly and in a non-discriminatory way. This constituted a failure to consider a relevant aspect and was a reviewable irregularity in terms of s 6(2)(e)(iii) of PAJA. The MEC stated that he had considered the evidence before him concerning the social impact of the development, analysed the social impact assessment of Capital, as well as the arguments of the Alliance and concluded that: ‘While the interests of the residents of the South Durban Basin are important, of equal importance are the interests of the public, in general.’ [37] The MEC pointed out that the Alliance did not challenge his acceptance of the evidence tendered by Capital, that there was a clear need for a logistics park in that area, which also served the public interest. I agree with the submission by the MEC that he acknowledged the rights of the local residents, but had to and did, balance these rights with the competing need in the public interest for a development of this nature, in an area regarded as a ‘national economic hub’. [38] The MEC pointed out that the Alliance did not challenge the balancing of rights and interests by him which are polycentric matters of fact and policy, in respect of which the MEC was vested with decision-making power, and which called for judicial deference. The nature of the decision taken by the MEC is such that judicial deference is required to ensure that his functions in this regard are not usurped. The fourth ground of review therefore also falls to be dismissed. [39] A matter of considerable concern is the failure by the Alliance to seek an interdict at the outset, restraining Capital from proceeding with the construction of the logistics park, pending the finalisation of the challenges to the environmental authorisation, granted by the Department. As found by the high court, the Alliance, despite threatening to do so, never interdicted the implementation of the environmental authorisation. The steps taken by the Alliance to challenge the environmental authorisation, which was granted by the Department as long ago as 29 May 2015, were as follows: The Alliance filed an appeal to the MEC on 17 July 2015 against the Department’s decision and on 25 January 2016 the MEC dismissed the appeal. The review application before the high court was only launched on 22 July 2016, the high court finding that the Alliance had delayed unreasonably in doing so. The review was then only heard on 13 December 2017. Judgment was handed down a year later on 19 December 2018, in which the application was dismissed with costs. Leave to appeal to this Court was thereafter granted by the high court on 12 February 2019, with the appeal being heard by this Court on 6 March 2020. [40] Construction of the logistics park however commenced as early as October 2016, when Capital awarded contracts to six contractors totaling R475 million in value. Capital states that if it had been required at that stage to order these contractors to stop work, they would have been entitled to terminate the contracts and Capital would have incurred substantial termination penalties, in the order of R47 million. By October 2017, Capital was committed to various aspects of the development, including external roadworks to the approximate contract value of R117 million and had invested in a wetland rehabilitation site, where R10 million had already been spent, amongst other spending commitments and development activities. We were informed by counsel for Capital from the bar, without objection, that at present 24 990 m² of the development has been completed and leased, out of a total of 358 000 m², to be completed over a ten year construction programme. It is self-evident that since October 2016 a great deal of construction work has been completed. [41] The failure by the Alliance to interdict, at the outset, the construction of the logistics park and to allow it to proceed over all these years, is a relevant factor in the award of costs. When counsel for the Alliance was asked what steps could be taken, with regard to the substantial construction of the logistics park, if the review was successful, he submitted that the MEC could investigate what mitigation measures could be introduced to reduce any air pollution, caused by the logistics park. However, no details were forthcoming as to the nature of the mitigation measures that could be introduced at this late stage. As a result of the conduct of the Alliance, if the review of the decision of the Department and the MEC had been successful, this court would have been presented with a fait accompli in the form of the substantially completed portion of the logistics park. In addition, the failure by the Alliance to prevent the construction of the logistics park in the interim, was to the prejudice of the local residents, whose cause, the Alliance maintains that it champions. [42] We were informed by counsel for the MEC, that the MEC had abandoned the costs order granted in its favour in the high court and did not seek a costs order against the Alliance on appeal, in accordance with the principal in Biowatch Trust v Registrar, Genetic Resources 2009 (6) SA 232 (CC). Counsel for Capital submitted, however, that the Alliance had sought costs against Capital before the high court, and on appeal and there was no reason why a costs order should not follow the outcome of the appeal. Counsel for the Alliance, in reliance upon the provisions of s 32(2) of NEMA, submitted that a costs order should not be granted against the Alliance. The relevant portions of the section read as follows: ‘A court may decide not to award costs against a person who, or group of persons which, fails to secure the relief sought in respect of any breach or threatened breach of any provision of this Act . . . if the court is of the opinion that the person or group of persons acted reasonably out of a concern for the public interest or in the interest of protecting the environment and had made due efforts to use other means reasonably available for obtaining the relief sought.’ [43] The Alliance submitted that it had acted reasonably out of a concern for the public interest and this court should accordingly exercise its discretion in favour of the Alliance, and not make an award of costs in favour of Capital, against the Alliance. However, when due regard is had to the unreasonable conduct of the Alliance in failing to take any steps at the outset, in the interests of the local populace, to interdict the construction of the logistics park pending the resolution of these proceedings, I am not persuaded that the Alliance acted reasonably and should be absolved from paying the costs of Capital. In terms of the Biowatch principle, the MEC rightly abandoned the costs order granted in his favour by the high court and did not seek costs on appeal. That principle does not find application in respect of Capital. Both Capital and the Alliance are private litigants. What is more, in seeking costs against Capital, the Alliance forced it to come to court to defend its interests. Having failed against Capital, the Alliance can hardly escape a costs order, which should follow the result. [44] I have had the benefit of reading the judgments of my colleagues Nicholls JA and Makgoka JA (concurred in by Petse DP) in which it is concluded that an adverse costs order should not be made against the Alliance. In granting an adverse costs order against the Alliance in the court a quo, Vahed J referred to the judgment of Plasket J in Beweging vir Christelike-Volkseie Onderwys and others v Minister of Education and others [2012] 2 All SA 462 (SCA) paras 67-71, in which the exceptions to the Biowatch principle were said to be as follows; ‘[68] That principle is subject to exceptions. So, the Constitutional Court held, if “an application is frivolous or vexatious, or in any other way manifestly inappropriate, the applicant should not expect that the worthiness of its cause will immunize it against an adverse costs award.” Furthermore, the issues “must be genuine and substantive, and truly raise constitutional considerations relevant to the adjudication”. Whether proceedings are manifestly inappropriate is a question of fact to be determined in the light of all of the evidence. In my view, an application would be manifestly inappropriate if an applicant had delayed unreasonably before launching it and ought to have known that its prospects of having the delay condoned were slight.’ [45] It was on this basis, that the Court a quo justifiably ordered the Alliance to pay the costs of the MEC and Capital, having upheld the point in limine that the Alliance had unreasonably delayed, in launching the review application. In this regard the court a quo reasoned: ‘[74] The second respondent’s arguments are persuasive and, in my view, insurmountable. There was no real reason proffered for the delay between the date of the first respondent’s appeal decision and the commencement of these proceedings, and without an interdict in place, the additional delay between then and the date of argument places the prejudice beyond the pale. The [Alliance] fails on both scores; the reasons for delay, such as they are, are unacceptable, and too much water has flowed under the bridge to even begin to consider the much belated plea for condonation. . . .’ The reluctance of a court of appeal to interfere with the discretion exercised by a court of first instance is well known.1 We are not simply at large. In Naylor and Another v Jansen 2007 (1) SA 16 (SCA) para 14, Cloete JA put the position as follows: ‘Where the law has given a judge an unfettered discretion, it is not for this court to lay down rules which, whilst purporting to guide the judge, will only have the effect of fettering the discretion. If therefore there are factors which the trial court in the exercise of its discretion can and legitimately does decide to take into account so as to reach a different result, a court 1 Caxton Ltd and Others v Reeva Forman (Pty) Ltd and Another 1990 (3) SA 547 (A) at 578. on appeal is not entitled to interfere ─ even although it may or even probably would have given a different order. The reason is that the discretion exercised by the court giving the order is not a “broad” discretion (or a “discretion in the wide sense” or a “discretion loosely so called”) which obliges the court of first instance to have regard to a number of features in coming to its conclusion, and where a court of appeal is at liberty to decide the matter according to its own view of the merits and to substitute its decision for the decision of the court below, simply because it considers its conclusion more appropriate. The discretion is a discretion in the strict or narrow sense (also called a “strong” or a “true” discretion). In such a case the power to interfere on appeal is limited to cases in which it is found that the court vested with the discretion did not exercise the discretion judicially, which can be done by showing that the court of first instance exercised the power conferred on it capriciously or upon a wrong principle, or did not bring its unbiased judgment to bear on the question or did not act for substantial reasons. Put differently, an appeal court will only interfere with the exercise of such a discretion 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.”’ I am not persuaded that the test for interference has been satisfied in this case. My colleagues appear to suggest that the court a quo failed to apply the provisions of 32(2) of NEMA. But, nowhere in the Alliance’s founding affidavit is there even a passing reference to this section. In those circumstances the court a quo can hardly be faulted for failing to invoke those provisions. In any event, as I shall presently show, even had it done so, I am not persuaded that it ought to have arrived at any different conclusion. [46] The MEC felt obliged to abandon the costs order granted in his favour. Not so Capital. Having failed in the high court, the Alliance had an opportunity for further reflection but chose to persist with an appeal. Not just that, but in heads of argument filed with this court, it was stated on behalf of the Alliance: ‘With regard to costs, we submit that if the appeal is upheld, the respondents should be ordered to pay [the Alliance’s] costs . . . If, however, the appeal is dismissed no order of costs should be made against [the Alliance]’. No authority was relied upon in support of that submission. It has now failed in the appeal. In support of the contention that we should depart from the usual rule relating to costs, counsel for the Alliance invoked Biowatch. In the course of the debate, however, he was asked whether the Biowatch principle found application to a private litigant such as Capital. He was unable to point to any authority in support of the proposition that the principle found application in a situation such as this. I can conceive of no basis in principle for departing from the usual rule.2 After all, not only did the Alliance drag Capital to court, it sought a costs order against it. Capital was thus obliged to come to both the court below as well as this court, not only to defend the administrative decision that had been granted by the Department in its favour, but also to stave off a costs order. Undeterred by its failure in the high court and the costs order that had gone against it, the Alliance elected to prosecute an appeal. Throughout Capital was not just an unwilling litigant, but was obliged to go to court to protect its interests. In these circumstances, it must be asked if not the Alliance, then who should be liable for Capital’s costs? [47] In the face of the Alliance’s opposition, Capital had sought and obtained approval from the Department. That approval was never sought to be reviewed and set aside. That failure, as I earlier pointed out, may well, in and of itself, have been fatal to the Alliance’s application. Having failed in its appeal to the Minister, the Alliance then dressed up the very same grounds forming the subject of its appeal, as grounds of review to the high court. In that it failed before the high court, albeit on a preliminary point. During the course of the hearing of the appeal, the parties urged us to proceed to a consideration of the substantive merits of the matter. I thus pass over the point held to be decisive against the Alliance by the court a quo. That is not to suggest that the court a quo was wrong on that score. It was simply unnecessary to decide the point, because, even assuming in the Alliance’s favour on that score, it had to fail on the substantive merits. [48] This truncated history is particularly important to the view that I take on the question of costs. Before launching the application, the Alliance had already had two bites at the proverbial cherry. Both times it had come short. Importantly, the judgment of the court a quo did not end with the point in limine. It also proceeded to a 2 There are several instances where, despite the fact that the review involved environmental legislation, our courts have awarded costs against the unsuccessful litigant. (See for example MEC, Department of Agriculture, Conservation and Environment and Another v HTF Developers (Pty) Ltd 2008 (2) SA 319 (CC) para 56; Fuel Retailers of Southern Africa v Director-General Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and Others 2007 (6) SA 4 (CC) para 108; BP Southern Africa (Pty) Ltd v MEC for Agriculture, Conservation, Environment and Land Affairs 2004 (5) SA 124 (W) at 160H and MEC for Agriculture, Conservation, Environment and Land Affairs v Sasol Oil (Pty) Ltd 2006 (5) SA 483 (SCA) para 30. consideration of the merits of the matter, which is relevant to the issue of costs. In that regard, as pointed out above, the court held: ‘[92] In my view, a careful examination of the record and of the affidavits reveals that the [Alliance] has not put forward any evidence in support of its complaints and submissions with regard to air quality. (a) In its appeal, which served before the first respondent, it simply stated, without evidence, that the logistics park would generate “disproportionate” vehicular emissions. (b) In its founding affidavit it “contends”, without evidence, that the cumulative impacts arising from the environmental authorization will “. . . add to past and continuing adverse environmental impacts emanating from industrial activities in South Durban . . .” (c) Even in reply, when the applicant belatedly put up Professor Cairncross’ affidavit to bolster its case, he confined himself to generalised criticism of the method adopted by Mr Gaze, and did not express an opinion that the construction and operation of the logistics park was likely to have a significant effect on the environment from the point of view of air quality.’ . . . [94] The second respondent submits that the [Alliance] has not sought leave to cross- examine Mr Gaze, nor tendered Professor Cairncross for cross-examination. [95] In my view Mr Gaze’s evidence is acceptable because his reasons have been explained and I am able to properly assess them. He has not been contradicted on any point of substance. There is no evidence tending to establish that the logistics park is likely to have a significant effect on the environment from the point of view of air quality. [96] In the result I accept Mr Gaze’s conclusions and regard them as being correct. [97] Once it is accepted that the effect of the proposed logistics park, including its cumulative effect, is likely to be negligible, then all of the grounds of review fall away. There is no basis for me to find that a mandatory condition of the empowering legislation was not complied with, or that relevant factors were not taken into account by the first respondent in deciding to dismiss the appeal.’ [49] Thus, as the high court saw things there was little to be said for the Alliance’s application. By the time the application was launched, the Alliance ought to have had a fair idea as to the strength of its case. By then it ought to have been clear, on the strength of the expert evidence adduced on behalf of Capital, that the approved development would have a negligible impact on the environment. That was the view that had been taken by the Department, when it approved the development, as well as the MEC, when he dismissed the Alliance’s appeal. Thus, whatever the history of the basin or the effects of apartheid spatial planning, it was not as relevant as is sought to be made out. For, this approval had little, if any, further detrimental effect on the environmental and the community. This development would leave the state of health of the environment unchanged. All of this the Alliance well knew before it launched the review application. [50] There is a further dimension. In determining an appropriate costs order, one cannot view matters solely from the perspective of the Alliance. I do not believe that this is what s 32 of NEMA contemplates. One of necessity must also approach the enquiry from the perspective of Capital. Capital obtained the necessary approval from the relevant Department, successfully resisted an internal appeal before the MEC and a review before the high court. Both before the MEC and the court a quo it had to defend an approval that had been properly sought and granted. And yet, despite the fact that throughout it has conducted itself as a constitutionally compliant citizen, it is now being told that it must bear its own costs. Not because of any remissness on its part, but because, on some less than clearly discernible principle, it would be unfair to mulct a litigant such as the Alliance, who has plainly embarked on litigation that is unmeritorious, with those costs. [51] The general rule is that costs should follow the result. The Biowatch principle is an exception to that general rule. Whilst the rationale for the rule is clear enough insofar as state parties, such as the MEC, is concerned (see Biowatch para 23), it is less than clear to me what the rationale is insofar as private litigants, such as Capital, is concerned. However, even if the Biowatch principle can be extended to a private litigant in the position of Capital (a question I prefer to leave open for the present), that is hardly the end of the enquiry. It remains to consider all of the relevant considerations that obtain in the litigation and to weigh the conduct and the competing interests, of what after all are two private litigants, in the enquiry. Capital has had to jump through all of the necessary administrative hoops. Having obtained a decision in its favour from the Department, it is then dragged to court to defend, not that decision (which as I have said has never been assailed in these proceedings), but the decision of the MEC on appeal to him. The departmental approval signals that the development to be undertaken by Capital, will not have any deleterious effect on the environment. The stance of the Department has been vindicated by the MEC on appeal to him and two courts on review to it. In that regard whatever negative impact the Alliance perceived was more illusory than real. The historical negative impact that Nicholls JA alludes to can hardly be placed at the door of Capital. For that it is as blameless as the Alliance. Thus, whilst, as I have shown, there are several considerations that weigh against the Alliance, there are none that weigh against Capital. Capital’s conduct has been beyond reproach in this matter. And, yet it is being suggested that it should be denied its costs. I cannot subscribe to such an approach. When all of the relevant considerations are taken into account, as I believe they should be, and the conduct of the Alliance is weighed against that of Capital, then it seems to me that there can be no justification for deviating from the usual rule that the costs in this case should follow the result. That is so, in my view, even if the Biowatch principle is extended to a litigant in the position of Capital. My colleague Makgoka JA sees s 32(2) of NEMA as the bridge between the Biowatch principle and a private litigant such as Capital. Whether that is a bridge too far I prefer not to decide. For, even on his approach, namely that s 32(2) subjects the court’s discretion to further guiding principles; when all of the relevant considerations are taken into account, I can find no warrant for denying a litigant such as Capital, whose conduct has at all stages been beyond reproach, of its costs. [52] Regrettably, something must be said concerning the delay by the high court in delivering its judgment. The review application was heard on 13 December 2017 and judgment was only handed down a year later, on 19 December 2018. Vahed J in his judgment granting leave to appeal, was acutely aware of the inordinate delay and explained it in the following terms: ‘Those two dates, I concede, suggest an alarming gap between hearing argument in this case and delivery of the judgment which in part was due to the workload of this division but in part, and in major part I might add, to the complexities that faced me in having to decide this case.’ [53] Due and careful regard being had to the considerable pressure that the workload in the high court imposes upon Judges and the complexities of the case, the delay in furnishing the judgment, was nevertheless unreasonable. This Court disapproves of unreasonable delay by judicial officers in delivering judgments. In Pharmaceutical Society of South Africa and Others v Tshabalala-Msimang and Another NNO; New Clicks South Africa (Pty) Ltd v Minister of Health and Another 2005 (3) SA 238 (SCA) para 39, Harms JA stated the following: ‘The judicial cloak is not an impregnable shield providing immunity against criticism or reproach. Delays are frustrating and disillusioning and create the impression that Judges are imperious. Secondly, it is judicial delay rather than complaints about it that is a threat to judicial independence because delays destroy the public confidence in the judiciary. There rests an ethical duty on Judges to give judgment or any ruling in a case promptly and without undue delay and litigants are entitled to judgment as soon as reasonably possible. Otherwise the most quoted legal aphorism, namely that “justice delayed is justice denied”, will become a mere platitude.’ [54] I would accordingly grant the following order: 1 The appeal is dismissed. 2 The appellant is ordered to pay the costs of the second respondent. _________________________ K G B Swain Judge of Appeal Nicholls JA (Petse DP and Makgoka JA concurring) [55] I have read the judgment (main judgment) of my colleague, Swain JA. While I agree with the main judgment that the appeal ought to be dismissed, I do not share the view that the appellant should pay the second respondent’s costs. As the main judgment correctly points out, the appellant is an environmental justice non-governmental organisation, which seeks to promote and achieve environmental justice for residents and communities of the South Durban industrial basin area. The final scoping report identified the area as a prime industrial site which has had a history of environmental injustice and well-documented air quality issues. The social dynamics are complicated with a history of conflict between the community and industry. [56] There can be no dispute that the appellant did not pursue this litigation for its own self-interest or private commercial interests but in an attempt to achieve a cleaner environment for a marginalised community who has been the victim of apartheid spatial planning over a protracted period of years. By placing this community in the middle of the highly polluted industrial basin, they have suffered years of related health problems. While the appellant cannot be successful in its appeal for the reasons already set out in the main judgment, the question is whether they should be liable to pay the second respondent’s costs. As already indicated the main judgment answers this in the affirmative. [57] The Biowatch principle3 is now established law, any party who litigates in good faith against the State in an attempt to vindicate their constitutional rights is not liable to pay the legal costs of the State should they be unsuccessful. The challenge should be genuine and non-frivolous. There is no suggestion that the appellant was either frivolous or insincere by resorting to litigation to champion the rights of the effected community. Citing Biowatch, the first respondent abandoned the costs it was granted in the High Court and sought no costs in the appeal. [58] The Constitutional Court has acknowledged the invaluable role played by public interest groups in a democratic society and the chilling effect that an award of costs may have on litigants who wish to vindicate their constitutional rights. 4 The Constitutional Court in Biowatch pointed out, that constitutional issues will not often arise where the State is not a party to the litigation but they will arise from time to time.5 3 Biowatch Trust v Registrar, Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC). 4 Affordable Medicines Trust and Others v Minister of Health and Others [2005] ZACC 3; 2006 (3) SA 247 (CC) para 138; Biowatch para 21-23. 5 Biowatch para 27 This was precisely the case in Campus Law Clinic, University of Kwazulu-Natal v Standard Bank of South Africa.6 The Constitutional Court found it not to be in the interests of justice to grant leave to appeal and the application for direct access, but because it was a matter involving banks and mortgagees, no order as to costs was made. This was because Campus Law Clinic ‘sought to raise important constitutional issues in [the Constitutional] Court, albeit unsuccessfully’. 7 This is not the only instance where the Constitutional Court has seen fit not to award costs against an unsuccessful litigant in private litigation.8 [59] In terms of s 2(4)(c) of the National Environmental Management Act 107 of 1998 (NEMA) ‘[e]nvironmental justice must be pursued so that adverse environmental impacts shall not be distributed in such a manner as to unfairly discriminate against any person, particularly vulnerable and disadvantaged persons’. Section 32(1) of NEMA provides: ‘(1) Any person or group of persons may seek appropriate relief in respect of any breach or threatened breach of any provision of this Act, including a principle contained in Chapter 1, or of any provision of a specific environmental management Act, or of any other statutory provision concerned with the protection of the environment or the use of natural resources – (a) in that person’s or group of person’s own interest; (b) in the interest of, or on behalf of, a person who is, for practical reasons, unable to institute such proceedings; (c) in the interest of or on behalf of a group or class of persons whose interests are affected; (d) in the public interest; and (e) in the interest of protecting the environment.’ [60] The appellant argues that s 32(2)9 of NEMA is the codification of the Biowatch principle in the context of litigation implicating environmental rights. As NEMA pre- 6 Campus Law Clinic, University of Kwazulu-Natal v Standard Bank of South Africa [2006] ZACC 5; 2006 (6) SA 103 (CC). 7 Id para 28. 8 Giddey NO v J C Barnard and Partners [2006] ZACC 13; 2007 (5) SA 525 (CC) para 35; South African Commercial Catering and Allied Workers Union and Others v Irvin & Johnson Ltd (Seafoods Division Processing) 2000 (3) SA 705 (CC) para 52. 9 Section 32(2) of NEMA reads– ‘A court may decide not to award costs against a person who, or group of persons which, fails to secure the relief sought in respect of any breach or threatened breach of any provision of this Act, including a principle contained in Chapter 1, or of any provision of a specific environmental management Act, or of dates Biowatch this may be a misnomer. This section gives a court a discretion not to award costs against any party who failed to secure the relief sought in respect of a breach of any of the provisions of NEMA. Like Biowatch, this is dependent on whether the court is of the opinion that the party acted out of public interest, or in this particular instance, in the interests of protecting the environment. [61] It is common cause that the appellant was acting out of a genuine concern for the environment with the objectives as set out in s 32(1) above. In Magaliesberg Protection Association v MEC: Department of Agriculture, Conservation, Environment and Rural Development, North West Provincial Government and Others10, Navsa JA stated that ‘[w]e should all laud the efforts of conservationists . . . . they generally act to preserve and protect the environment for the benefit of present and future generations.’ In Magaliesberg Protection Association the appellant sought to set aside the decision of the MEC ex post facto to grant environmental authorisation to the third respondent, a private party, to build a hotel. An interim interdict to prevent the construction pending the final review was refused. This did not deter the appellant from proceeding. This Court found that the appellant failed to show at the most basic level that it was entitled to the relief sought. Nonetheless relying on s 32(2) of NEMA each party was ordered to pay its own costs. [62] The main judgment finds that the appellant acted unreasonably in failing to interdict the construction of the logistics park at the outset. While commending the State for abandoning its costs order in terms of the Biowatch principle, it finds that this principle does not apply to private parties particularly in the circumstances of this case. [63] Insofar as the High Court found that the appellant should be liable for the costs of the second respondent, this Court is entitled to interfere with the exercise of that any other statutory provision concerned with the protection of the environment or the use of natural resources, if the court is of the opinion that the person or group of persons acted reasonably out of a concern for the public interest or in the interest of protecting the environment and had made due efforts to use other means reasonably available for obtaining the relief sought.’ 10 Magaliesberg Protection Association v MEC: Department of Agriculture, Conservation, Environment and Rural Development, North West Provincial Government and Others [2013] ZASCA 80; [2013] 3 All SA 416 (SCA) para 61. discretion if it resulted in an ‘unjustifiable conclusion’11. The High court justified the costs order against the appellant on the basis that it had unreasonably delayed in launching its review application. For this reliance was placed on the judgment of this Court in Beweging vir Christelik-Volkseie Onderwys and Others v Minister of Education and Others, where it was held that the delay in bringing the application had rendered it manifestly inappropriate and therefore an exception to the Biowatch principle.12 In that matter the government notice which the appellants’ sought to review in terms of PAJA, was known to them in April 2005, if not years before. The application was launched in September 2007, 2 years and 5 months later. An application for the condonation of the late filing was itself beset by unreasonable delays with the replying affidavit being filed 18 months late. This can hardly be compared to the situation in the present matter where the application was issued within the 180 day period, albeit shortly before the expiry thereof. [64] Although a delay of more than 180 days is per se unreasonable, this does not mean that a delay within the 180 day period set out in s 7(1) of PAJA is necessarily reasonable13. However, as Plasket J stated in Joubert Galpin Searle and others v Road Accident Fund: ‘Notionally, therefore, it is possible that a delay in launching a review application of less than 180 days after the cause of action arises can be an unreasonable delay but I think it is fair to say that cases of this sort will be rare and have exceptional circumstances. I say this because in practice, prior to the PAJA coming into force, delays of anything between six and nine months were generally regarded as not being unreasonable and, since PAJA came into force, the 180-day limit has tended to be regarded as the dividing line between reasonable and unreasonable delay’.14 [65] In relying on the delay as the reason for the inapplicability of Biowatch, I am of the view that the High Court erred in the exercise of its discretion and reached an 11 Biowatch para 31 quoting Bookworks v Johannesburg Metropolitan Transitional Council 1999 (4) SA 799 (T) 807G-H and 808A-B. 12 Beweging vir Christelik-Volkseie Onderwys and Others v Minister of Education and Others [2012] ZASCA 45; [2012] 2 All SA 462 (SCA) para 67-71. 13 Opposition to Urban Tolling Alliance v South African National Roads Agency Limited [2013] ZASCA 148; [2013] 4 All SA 639 para 26. 14 Joubert Galpin Searle and Others v Road Accident Fund [2014] 2 All SA 604 (ECP) para 40. unjustifiable conclusion. It does not seem to me that the delay was in any way exceptional, it is common cause that the second respondent commenced construction just short of 3 months after the review application was launched. [66] Accordingly, I am not persuaded that a public interest litigant in the position of the appellant, where the application was brought within the 180 days, should be mulcted with costs. This is more so in instances, as in this case, where the Biowatch principle is buttressed by s 32(2) of NEMA which has direct application. This being so, an adverse costs order should not be made against the appellant who has acted only for the benefit of the community to assert its constitutional right, ‘to an environment that is not harmful to their health or well-being.’15 [67] I would therefore dismiss the appeal on its merits but uphold it as regards the costs and would make the following order: 1 The appeal against the order of the High Court succeeds only in respect of costs but is otherwise dismissed. 2 Each party is to pay its own costs. 3 The order of the High Court is set aside and is substituted with the following: ‘The application is dismissed. Each party is to pay its own costs.’ __________________ C H Nicholls Judge of Appeal 15 Section 24(a) of the Constitution. Makgoka JA (Petse DP and Nicholls JA concurring) [68] I have had an opportunity of reading the judgments of my colleagues, Swain and Nicholls JJA. I agree with Swain JA that the appeal should be dismissed for the reasons set out in his judgment. However, in relation to costs, I agree with Nicholls JA that it is not appropriate to mulct the appellant with costs, both in this court and the court a quo. I briefly state my reasons for agreeing with the judgment of Nicholls JA. [69] In terms of the preamble to NEMA, the State is the repository of the environment. As a result, environmental litigation would invariably mostly involve individuals or public-interest groups like the appellant, against the State. The Biowatch principle would ordinarily apply where a private entity is unsuccessful against the State. However, as between two private entities, such as the appellant and the second respondent, that principle, does, ordinarily not apply. But this does not mean its underlying reasoning is irrelevant. This is because of s 32(2) of NEMA. Two observations about the section. First, it embodies the Biowatch principle.1 Second, it subjects the court's ordinary discretion on costs to certain further guiding principles contained in NEMA. [70] It therefore admits of no debate that in environmental litigation, the essence of the Biowatch principle is applicable, and extends to litigation between private entities such as the appellant and the second respondent. In Biowatch the circumstances in which a private entity could be ordered to pay the State’s cost in the event of being unsuccessful, were explained. After referring to the general approach to costs in constitutional litigation, Sachs J explained (para 24): ‘At the same time, however, the general approach of this Court to costs in litigation between private parties and the state, is not unqualified. If an application is frivolous or vexatious, or in any other way manifestly inappropriate, the applicant should not expect that the worthiness of its cause will immunise it against an adverse costs award.’ (my emphasis.) [71] In the light of s 32(2) of NEMA, these considerations apply with equal force as between private entities in environmental litigation. [72] Turning to the present case, there is no suggestion that the appellant’s application was frivolous or vexatious. The first judgment mulcts the appellant with costs because it considers its case to have been inappropriate. This is because it failed to interdict the second respondent’s works at the outset. I do not consider this to be ‘manifestly inappropriate’ in the sense meant by Sachs J in Biowatch. Instead, I deem it a mere ‘inadvertent procedural or technical lapse’ (para 23 of Biowatch). In my view, something more in the conduct of a litigant is required to remove the Biowatch shield, and order such party to pay costs. Misconduct, dishonesty, recklessness and ulterior motive are immediate examples of such conduct. None of these can be attributed to the appellant. Furthermore, despite it being unsuccessful both in the court a quo and in this court, its case cannot be classified as being totally hopeless from the inception. [73] A typical example of conduct which is ‘manifestly inappropriate’ is that of a non-governmental organisation in Wildlife and Environmental Society of South Africa v MEC for Economic Affairs, Environment and Tourism, Eastern Cape, and Others 2005 (6) SA 123 (ECD). There, the application was unnecessary and unreasonable because the organisation’s very real concerns had already been met, and the application was doomed to failure from its inception. It was accordingly, and understandably, ordered to pay costs. That, with respect, cannot be said of the appellant’s conduct in this matter. [74] The chilling effect which a costs order in the circumstances of this case will have on environmental non-governmental organisations, is manifest. The failure by the appellant to interdict the works at the outset, could be attributable to a number of factors. Because this was never pertinently raised as a discrete issue in the papers, the appellant has never had an opportunity to meaningfully explain it. In Silvermine Valley Coalition v Sybrand van der Spuy Boerderye and Others 2002 (1) SA 478 (C) at 484G Davis J pointed to the difficulties which non-governmental organisations have to confront in order to litigate, particularly in that many of them possess limited means. [75] For these reasons, I do not agree that the appellant should be ordered to pay the costs of the second respondent. As between them, there should not be a costs order. Hence my concurrence with Nicholls JA. ____________________ T M Makgoka Judge of Appeal Appearances: For the Appellant: S Magardie (with G Solik) Instructed by: Legal Resources Centre, Cape Town Webbers, Bloemfontein For the First Respondent: A Gabriel SC (with M Moodley) Instructed by: The State Attorney, Durban The State Attorney, Bloemfontein For the Second Respondent: A J Lamplough Instructed by: Ensafrica, 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 17 April 2020 Status Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. South Durban Community Environmental Alliance v MEC for Economic Development, Tourism and Environmental Affairs: KwaZulu-Natal Provincial Government (Case no 231/19) [2020] ZASCA 39 (17 April 2020) MEDIA STATEMENT The SCA dismissed an appeal by the South Durban Community Environmental Alliance (the Alliance) against a decision by the KwaZulu-Natal Division of the High Court, Durban (the high court), in which an application for the review of a decision by the first respondent, the MEC for Economic Development, Tourism and Environmental Affairs: KwaZulu-Natal Provincial Government (the MEC), was refused. The second respondent, Capital Property Fund Limited, (Capital) wished to construct a logistics park in the South Durban Industrial Basin (the Basin) and applied for and received authorisation from the KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs (the Department) in terms of s 24 of the National Environmental Management Act 107 of 1998 (NEMA), to do so. The appellant, which had opposed the grant of the authorization, thereafter unsuccessfully pursued an internal appeal to the first respondent, in terms of s 43 of NEMA. Central to the appeal by the Alliance was the assertion that the logistics park would produce vehicular emissions of disproportionate scale and that the Basin and the communities residing within it, were at high risk for exposure to significant levels of ambient air pollution. Dissatisfied with the dismissal of the appeal, the Alliance then launched an application in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), before the high court for the judicial review and setting aside of the decision of the MEC, and for the remittal of the matter to the MEC for reconsideration. The four grounds advanced by the Alliance for the review of the MEC’s appellate decision, were identical to four of the grounds of appeal advanced by the Alliance in challenging the decision of the Department, in the appeal to the MEC. In other words, what were originally described as grounds of appeal, are now described as grounds of review. In dismissing the application on its merits, the high court concluded that the Alliance had not put forward any evidence in support of its complaints and assertions, with regard to air quality. The SCA pointed out that the conflation of grounds of review with grounds of appeal, gave rise to difficulties which were compounded by the inherent problems that may arise, in distinguishing between review and appeal proceedings. The SCA also pointed out this may well have been the kind of matter, where both the decision of the Department and the MEC, should have been challenged. The SCA pointed out that, this in and of itself, ought to have led to the failure of the Alliance’s application before the court below. The SCA however made no finding in this regard and proceeded to consider the merits of the four grounds advanced by the Alliance that the high court erred in refusing to review the appellate decision of the MEC. The SCA pointed out that because all four grounds were based upon alleged errors of fact on the part of the MEC, the Alliance in order to succeed had to demonstrate that the MEC had failed to consider uncontentious and objectively verifiable facts, which were material in nature and which would have resulted in a different decision, had they been taken into account by the MEC. The SCA then dismissed all four grounds of appeal but ordered that an adverse costs order should not be made against the Alliance, on the basis that it had acted only for the benefit of the community to assert its constitutional right, ‘to an environment that is not harmful to their health or well-being’.
2684	non-electoral	2014	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20334/2014 Reportable In the matter between: K L V C Appellant and S D I First Respondent OFFICE OF THE FAMILY ADVOCATE Second Respondent Neutral citation: KLVC v SDI (20334/2014) [2014] ZASCA 222 (12 December 2014) Coram: Maya, Leach, Theron, Mbha JJA & Schoeman AJA Heard: 28 November 2014 Delivered: 12 December 2014 Summary: Section 21(1)(b) of the Children’s Act 38 of 2005 – requirements that must be satisfied before an unmarried father can acquire full parental rights and responsibilities, as envisaged by s 18 of the said Act, in respect of his minor child met. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: the KwaZulu-Natal Local Division, Durban (Gabriel AJ sitting as a court of first instance): The appeal is dismissed with costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ Mbha JA: (Maya, Leach, Theron JJA and Schoeman AJA concurring): [1] The appellant and the first respondent are the biological parents of a minor child S, a boy born in Durban, South Africa on 30 July 2012. The parties were never married to each other, nor did they cohabit or live together in a permanent life partnership. The first respondent has however at all material times consented to being identified as the child’s father. On 28 November 2012, and whilst the first respondent was on a brief visit to the United States of America, the appellant removed the child from Durban and relocated to England without either informing or seeking permission from the first respondent to do so. At the time the child was four months old. [2] On 16 May 2013, the first respondent applied to the High Court of Justice, Family Division of the United Kingdom (the English court), in terms of the Hague Convention on the Civil Aspects of International Child Abduction, 1980 (the Hague Convention), for an order directing the appellant to return S to his habitual place of residence in Durban, South Africa. The basis of the application was that the appellant had removed S from South Africa to England in breach of the first respondent’s co-parental rights and responsibilities by not seeking the first respondent’s approval before doing so. [3] The appellant opposed the application on the grounds that, firstly, the first respondent was not exercising ‘rights of custody’ as defined in Articles 3 and 5 of the Hague Convention, and secondly that, in terms of Article 13(b) there was a grave risk that should the child be returned to South Africa, he would be exposed to physical or psychological harm or otherwise be placed in an intolerable situation. [4] The fundamental question for resolution before the English court was whether the appellant’s removal of the child from South Africa without the first respondent’s approval was wrongful. This, of necessity, entailed determining two aspects stipulated in Article 31 of the Hague Convention namely, firstly, in terms of Article 3(a), whether the removal of the child was wrongful because it was in breach of the rights of custody of the first respondent under the law of South Africa immediately before the removal of the child, and secondly, in terms of Article 3(b), whether the relevant rights of custody were actually being exercised at the time of the child’s removal. [5] The English court was unable to decide the question whether the appellant was lawfully entitled in November 2012 to change the place of residence of the child from South Africa to England without the prior permission or consent of the first respondent or an appropriate South African court. Consequently, on 21 August 2013 the English court made an order referring the following question to a South African court for determination: ‘In November 2012, was it lawful under South African law, having regard to the circumstances of this case, for the Respondent [appellant] to change the place of residence of the child from a place in South Africa to a place in England and Wales 1 Article 3 of the Hague Convention reads as follows: ‘The removal or the retention of a child is to be considered wrongful where – (a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention; and (b) at the time of removal or retention those rights were actually exercised, either jointly or alone, or would have been so exercised but for the removal or retention. The rights of custody mentioned in sub-paragraph a above, may arise in particular by operation of law or by reason of a judicial or administrative decision, or by reason of an agreement having legal effect under the law of that State.’ Article 3 must be read together with Article 5 which defines ‘rights of custody’ as including rights relating to the care of the child and in particular, the right to determine the child’s place of residence. without the prior permission or consent of the Applicant [first respondent] or other appropriate South African court?’ [6] On 8 October 2013 the first respondent, as applicant, issued application proceedings in the KwaZulu-Natal Local Division, Durban (the court a quo) for consideration of the question referred to it by the English court. The court a quo ruled in the first respondent’s favour and found that in November 2012 the first respondent had met all the requirements prescribed in s 21(1)(b)(i)-(iii) of the Children’s Act 38 of 2005 (the Act). Furthermore the court a quo held that he had acquired full parental rights and responsibilities in respect of the child as envisaged in s 18 of the Act. Accordingly, it was necessary for the appellant to have obtained the first respondent’s consent or permission, alternatively, a consent by an appropriate court, prior to applying for a passport for S’s removal from South Africa. This appeal, with leave of the court a quo, is against the judgment and order granted. [7] Before dealing with the merits of the appeal, it is necessary first to dispose of two preliminary issues raised by the appellant. The appellant sought to expand her grounds of appeal by the addition of a further ground, namely that her right to a fair public hearing in the court a quo, in terms of s 34 of the Constitution, had been violated. The basis of her complaint is that counsel who had prepared the heads of argument upon which the matter was argued on 24 February 2014 was not available for the hearing and as a result she had been represented by different counsel. This application was however abandoned, correctly in my view, as there was no specific complaint about the competency or otherwise of the counsel who represented the appellant in the court a quo, or about any prejudice allegedly suffered by her. In any event, the same papers are before this court and the appellant was represented on appeal by her initial counsel of choice, and to start afresh in the high court would be an exercise in futility. [8] The appellant also sought to lead on appeal further evidence about matters concerning the first respondent’s conduct and events regarding the child which arose after she had deposed to her answering affidavit on 20 January 2014, in the court a quo. This application was similarly misconceived. The question which the English court has referred to a South African court relates to a specific point in time, namely November 2012. It follows that the lawfulness or otherwise of the appellant’s conduct when she removed the child from South Africa must be determined with reference to this date. Accordingly, any evidence of events subsequent to November 2012 is irrelevant to the question referred to the court a quo and is therefore inadmissible. In the result, the application to adduce this further evidence must fail. [9] As the parties were not married or living together in a permanent life partnership, the real issue in this appeal is whether, in terms of s 21(1)(b) of the Act, the first respondent had acquired full parental rights and responsibilities in respect of the child as envisaged in s 18(2)(c),2 prior to his removal from the Republic in November 2012. If the answer to this question is in the affirmative, it follows that the first respondent had rights of guardianship in respect of the child, and that either the first respondent’s consent or permission or that of a competent court was required before the child could be removed from the Republic. [10] Section 21(1)(b) provides for the acquisition of full parental responsibilities and rights of an unmarried father regardless of whether he has lived or is living with the mother of the child if he─ ‘(i) consents to be identified or successfully applies in terms of section 26 to be identified as the child’s father or pays damages in terms of customary law; 2 Section 18 of the Act in relevant parts, reads as follows: ‘18(2) The parental responsibilities and rights that a person may have in respect of a child, include the responsibility and the right – . . . (c) to act as guardian of the child; . . . (3) . . . a parent . . . who acts as guardian of a child must – . . . (c) give or refuse any consent required by law in respect of the child, including – . . . (iii) consent to the child’s departure or removal from the Republic; (iv) consent to the child’s application for a passport; . . . (5) Unless a competent court orders otherwise, the consent of all the persons that have guardianship of a child is necessary in respect of matters set out in subsection (3)(c).’ (ii) contributes or has attempted in good faith to contribute to the child’s upbringing for a reasonable period, and; (iii) contributes or has attempted in good faith to contribute towards expenses in connection with the maintenance of the child for a reasonable period.’ [11] The decision of the court a quo was attacked on various grounds which can be summarized as follows: section 21(1)(b) of the Act explicitly sets out three requirements which must all be satisfied before an unmarried father in the position of the first respondent could acquire full parental rights and responsibilities; because the first respondent met one requirement only, namely that he consented to be identified as the child’s father, he never acquired any parental rights; the first respondent never contributed either adequately or at all or attempted in good faith to contribute to the child’s upbringing and expenses in connection with the maintenance of the child; and, even if he did have any parental rights in respect of the child, he was not exercising them at the time of the child’s removal as he was abroad at that time. [12] The appellant submitted that because the word ‘and’ is used to conjoin the subsections in s 21(1)(b), this means that the matters set out therein are conjunctive requirements all of which the first respondent had to meet before he could acquire parental responsibilities and rights in respect of the minor child. The appellant sought to rely on the judgment in RRS v DAL,3 where the court held that ‘[t]he applicant must meet all these requirements to qualify for automatic parental responsibilities in a minor’. On the contrary, the first respondent contended that the requirements in the subsections were simply categories of matters which a court had to consider before coming to a conclusion. [13] The court a quo found it unnecessary to make a determination on the correct interpretation to be placed on the section because it found ultimately that even if the matters referred to in s 21(1)(b)(i)-(iii) were self- standing and distinct requirements, the first respondent had met them all. In coming to this 3 RRS v DAL (22994/2010) [2010] ZAWCHC 618 (10 December 2010) at page 13 lines 2-4. conclusion, the court a quo reasoned as follows: a consideration of sections 21(1)(b)(ii) and (iii) required that a court consider the facts, exercise a value judgment and come to a conclusion; in doing so a court would have to consider a wide range of circumstances because the language used in those subsections was deliberately broad permitting of a range of considerations on which minds may differ and the exercise of a value judgment may determine a different outcome and, such as an exercise does not equate to a judicial discretion. [14] I am unable to fault the reasoning of the court a quo. Determining whether or not an unmarried father has met the requirements in s 21(1)(b) is, in my view, an entirely factual enquiry. It is a type of matter which can only be disposed of on a consideration of all the relevant factual circumstances of the case. An unmarried father either acquires parental rights or responsibilities or he does not. Clearly, judicial discretion has no role in such an enquiry. For all these reasons, I also deem it unnecessary to rule on whether the requirements set out in s 21(1)(b) ought to be determined conjunctively or whether these are simply categories of facts which a court must consider before concluding whether an unmarried father has acquired full parental responsibilities and rights in respect of a minor child or not. [15] I now turn to consider whether, on the facts and peculiar circumstances of this matter, the first respondent has satisfied the requirements in s 21(1)(b). [16] It is not in dispute that the first respondent consented to be identified as S’s father. Accordingly, the requirement in s 21(1)(b)(i) has been met. In contradistinction, a great deal of the debate before us related to whether the first respondent had contributed adequately or at all, or had attempted in good faith to contribute over a reasonable period, towards the upbringing or expenses in connection with the maintenance of S as contemplated in ss 21(1)(b)(ii) and (iii). [17] Consequently, it behoves of this court to consider the meaning that was intended by the legislature in including phrases or words such as ‘contribute(s)’ and ‘for a reasonable period’ in the section. In simple terms, what needs to be determined is the nature and extent of the contribution required for the child’s upbringing and for expenses in respect of the child in order for an unmarried father to acquire full parental responsibilities and rights. [18] A good starting point is a consideration of the purpose of the legislation. It will be recalled that at common law unmarried fathers had no rights in respect of their children if they were born out of wedlock. As a consequence of the judgment in Fraser v Children’s Court, Pretoria North,4 The Natural Fathers of Children Born out of Wedlock Act 86 of 1997 was promulgated which enabled unmarried fathers to obtain parental rights in respect of their children by way of an application to court. [19] Section 21 the Act was specifically intended to provide for the automatic acquisition of parental right by an unmarried father if he was able to meet certain requirements. Clearly, the intention was to accord an unmarried father similar rights and responsibilities in relation to his child to those of the father who was married to the child’s mother. To my mind, this was intended to promote both the equality guarantee in s 9 and, more importantly, the right of a child to parental care as envisaged by s 28 of the Constitution. [20] It bears mention that s 20 of the Act, which accords automatic full parental responsibilities and rights to married fathers, makes no stipulation whatsoever that such fathers should contribute towards the upbringing or expenses of their children. On the other hand, s 21(1)(b) requires an unmarried father to contribute or make an attempt in good faith to contribute towards the upbringing and the expenses in connection with the maintenance of the child for a reasonable period. It is clear that the legislature draws a distinction between married and unmarried fathers. However, it is important in my view for the court whilst interpreting this section, not to unfairly discriminate against the unmarried father by demanding what the appellant 4 Fraser v Children’s Court, Pretoria North 1997 (2) SA 261 (CC). refers to as ‘significant or reasonable contributions’. There is a real danger of finding that an unmarried father has not automatically acquired rights and responsibilities in respect of a child due to factors entirely unrelated to his ability and commitment as a father. [21] It is significant that the word ‘contribute(s)’ in ss 21(1)(b)(ii) and (iii) is not qualified in any way. Clearly, the legislature deliberately omitted to prescribe that the contributions must, for example, be reasonable, significant or material. It is also clear that the word ‘contribute(s)’ in the section is in the present continuous tense which conveys, in my view, that whatever the unmarried father contributes must be of an on-going nature. As the section stipulates that the contributions or attempts must endure for a reasonable period, what constitutes a reasonable period in the circumstances must be determined with reference to inter alia the age of the child and the circumstances of the parties at the time the determination is made. [22] In the light of what I have stated above, I align myself completely with the observation by the court a quo that the concept of a contribution or an attempt in good faith to contribute to the child’s upbringing for a reasonable period are ‘elastic concepts and permit a range of considerations culminating in a value judgment as to whether what was done could be said to be a contribution or a good faith attempt at contributing to the child’s upbringing over a period which, in the circumstances, is reasonable’.5 [23] In support of the contention that the first respondent never met the requirement in s 21(1)(b)(ii), the appellant contends inter alia, that: the first respondent was not present at the birth of S; he was not a willing father from the day he heard of the appellant’s pregnancy; S only visited first respondent’s parents’ home twice and that his parents only visited the appellant’s home on two occasions; although it was agreed that the first respondent would visit S for 40 minutes per visit twice a week, the first respondent’s visits to S were never more than 20 to 30 minutes in duration; 5 Para 35 of the judgment a quo. and that the first respondent abuses drugs and alcohol, is violent, aggressive and follows a hedonistic lifestyle and on one occasion came to visit S whilst in possession of a firearm. [24] In my view most of these assertions by the appellant, in particular those allegedly relating to the first respondent’s conduct, are irrelevant to the requirement in ss 21(1)(b)(ii). The first respondent has demonstrated that at all material times he was willing to be involved in S’s wellbeing and upbringing, and that all his efforts at fatherhood were actively frustrated by the appellant who had received legal advice during pregnancy that, firstly, she should not make it easy for the first respondent to have an influence over her and S’s life, and secondly, should depart for England within three months of the birth so that she could be ‘free’ and the first respondent could have no control over or legal claim to her and S’s lives. It is also clear that the appellant was deeply upset by the termination of her relationship with the first respondent. This was exacerbated by the fact that he had a new girlfriend. [25] It is not disputed that the first respondent accompanied the appellant to an early medical scan after learning of her pregnancy. However, after the first three months of the pregnancy, the appellant refused to allow the first respondent to attend any further scans and prevented him from attending her doctor’s visits. Significantly, the appellant refused to allow the first respondent to be present at S’s birth and insisted instead on having her sister present as her birthing partner. [26] Once the appellant and S were home, the appellant and the first respondent agreed that he would visit on a Tuesday and a Thursday for 40 minutes per visit. He thereafter visited the infant on a regular basis and the appellant allowed him to have contact with the child. From the evidence it is clear however that the first respondent wanted more contact with S than the appellant was prepared to allow. This is borne out, for example, in a sms message which the first respondent sent to the appellant shortly before his departure to the United States of America in November 2012, in which he stated he was even prepared to sit in the garden with S if the appellant was prepared to allow this, and that he wished to come visit him on the following Saturday at 10h00. The situation was also exacerbated by the fact that the appellant was of the view that she was doing the first respondent a favour by allowing him to visit his son. [27] The fact that the first respondent visited and interacted with S regularly, introduced him to his extended family and took out an endowment policy to cater for S’s future upbringing are in my view contributions which first respondent made towards S’s upbringing prior the child’s removal to England in November 2012. [28] I accordingly hold that the court a quo was correct in finding that the first respondent had indeed met what is required by section 21(1)(b)(ii). [29] With regard to the requirement in s 21(1)(b)(iii) concerning the contribution towards expenses related to the maintenance of the child for a reasonable period, this must be considered against the backdrop of two important factors, namely that s 21(2) of the Act makes it plain that this requirement does not affect the duty of a father to contribute towards the maintenance of the child; and secondly that the extent and nature of the contribution is again unqualified in the legislation. Thus the submission by the appellant that the contribution by the first respondent was insignificant and that it had to be viewed in the context of maintenance as envisaged in the Maintenance Act 99 of 1998 is clearly misconceived. [30] It is not in dispute that the first respondent purchased certain items for S including a heater, a pram, a car seat, clothing as well as nappies and other necessities. He also built a changing table for S with his own hands as he wanted him to have something special and personal from his father. The appellant’s response to all of this was either that the money used for the purchase was from the first respondent’s parents or that the handmade changing table was a mere cost-saving measure by the first respondent, and that the table was not as convenient as the one that could be purchased in a shop. [31] It is noteworthy that the first respondent offered to put the child on his medical aid, which offer was declined by the appellant. Similarly, the appellant failed to provide her banking account details to the first respondent when he asked for them so that he could deposit money into her account. [32] In any event, the appellant’s version is that the first respondent contributed approximately 11.5 per cent of S’s expenses which translated to approximately R14 000 up to the time he was removed from the Republic. As the court a quo found, correctly in my view, this can hardly be described as an insubstantial contribution to expenses in relation to the maintenance of S over a period of four months. [33] I am satisfied that the offers or attempts made by the first respondent to contribute towards the expenses of S were all made in good faith. As the appellant declined to accept these offers, she cannot now say that the first respondent made an insufficient contribution to try to bring himself within the ambit of section 21(1)(b)(iii). [34] Accordingly, I find that the court a quo was correct in concluding that the first respondent contributed to expenses in connection with the maintenance of the child, as envisaged in s 21(1)(b)(iii). [35] The contention by the appellant that the first respondent never exercised his rights of custody, if any, at the time of the child’s removal as the first respondent was abroad at the time, is so legally untenable that it must be rejected outright. The undisputed evidence is that the first respondent left the country temporarily. Furthermore, the appellant well knew that it was always his intention to return to the country. It does not, in my view, assist the appellant’s case that the first respondent only came back a few days after the scheduled return date. [36] The first respondent demonstrated sufficiently that he had acquired full parental responsibilities in respect of S by November 2012. As co-guardian of S, the first respondent’s consent was therefore required prior to the removal of S from the Republic by the appellant. [37] As it is common cause that the appellant had neither the first respondent’s consent nor the consent of a competent court to remove S from the Republic when she did, it follows ineluctably that the appellant acted in breach of the first respondent’s parental rights and responsibilities when she did so. [38] I am accordingly satisfied that the court a quo was correct in answering the question posed by the English court in the negative. [39] I now turn to the issue of costs. It is so that generally in cases involving children, for example those concerning rights of access, courts frequently make an order that parties must pay their own costs because they are considered to be acting in the best interests of the children as envisaged by s 28 of the Constitution. I have however taken into consideration the fact that in the present proceedings the application in the court a quo was brought at the behest of the English court and that the first respondent was put to the expense of bringing the proceedings in order to assist the English court in resolving a difficult issue relating to custody rights pertaining to the child. Essentially this case revolved around the best interests of S to have access to her biological father. The appellant adopted a deliberately difficult and obstructive approach throughout this litigation. In addition, she introduced scurrilous and vitriolic matters about the first respondent which were completely irrelevant to the issue for determination. Undeterred by the finding of the court a quo, she has persisted in the present appeal with her frivolous claims with the sole purpose of denying the appellant his parental rights to S. Undoubtedly her conduct deserves serious censure from this court as it borders on abuse of the court process. In the circumstances, it is appropriate that the appellant should pay the costs of appeal. [40] In the result, I make the following order: The appeal is dismissed with costs. _________________ B H MBHA JUDGE OF APPEAL APPEARANCES: For Appellant: J Julyan SC (with her S Clarence) Susan Abro Attorney c/o Webbers, Bloemfontein For First Respondent: A M Annandale SC Ness Harvey Attorneys c/o 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 12 December 2014 STATUS Immediate KLVC v SDI (20334/2014) [2014] ZASCA 222 (12 December 2014). Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) delivered a judgment dismissing an appeal against a judgment of the KwaZulu-Natal Local Division and confirming that an unmarried biological father has full parental rights and responsibilities to his minor child. The appellant (mother) and the first respondent (father) are the biological parents of a minor child S, a boy born in Durban, South Africa on 30 July 2012. The parties were never married to each other, nor did they cohabit or live together in a permanent life partnership. The father has however at all material times consented to being identified as the child’s father. On 28 November 2012, and whilst the father was on a brief visit to the United States of America, the mother removed the child from Durban and relocated to England without either informing or seeking permission from the father to do so. At the time the child was four months old. On 16 May 2013, the father applied to the High Court of Justice, Family Division of the United Kingdom (the English court), in terms of the Hague Convention on the Civil Aspects of International Child Abduction, 1980 (the Hague Convention), for an order directing the mother return S to his habitual place of residence in Durban, South Africa. The basis of the application was that the mother had removed S from South Africa to England in breach of the father’s joint parental rights and responsibilities by not seeking his approval before doing so. The mother opposed that application on the basis that, the father had not been exercising ‘rights of custody’ as defined in the Hague Convention, and that, there was a grave risk that should the child be returned to South Africa, he would be exposed to physical or psychological harm or otherwise be placed in an intolerable situation. The question which had to be determined by the English court was whether the mother’s removal of the child from South Africa without the father’s approval was wrongful. That determination entailed determinations whether the removal of the child was wrongful because it was in breach of the rights of custody of the father under the law of South Africa immediately before the removal of the child, and whether the relevant rights of custody were actually being exercised at the time of the child’s removal. The English court was unable to decide the question whether the mother was lawfully entitled in November 2012 to change the place of residence of the child from South Africa to England without the prior permission or consent of the father or an appropriate South African court. Consequently, on 21 August 2013 the English court made an order referring the following question to a South African court for determination: ‘In November 2012, was it lawful under South African law, having regard to the circumstances of this case, for the Respondent [mother] to change the place of residence of the child from a place in South Africa to a place in England and Wales without the prior permission or consent of the Applicant [father] or other appropriate South African court?’ On 8 October 2013 the father instituted application proceedings in the KwaZulu-Natal Local Division, Durban (the court a quo) for consideration of the question referred to it by the English court. The court a quo ruled in the father’s favour finding that in November 2012, the father had met all the requirements prescribed in s 21(1)(b)(i) to (iii) of the Children’s Act 38 of 2005 (the Act), and it held that he had acquired full parental rights and responsibilities in respect of the child as envisaged in the Act. Accordingly, it was necessary for the mother to have obtained the father’s consent or permission, alternatively, consent of an appropriate court, prior to applying for a passport for S’s removal from South Africa. With leave of the court a quo, the mother appealed against the judgment and order granted by the court a quo to the SCA. The question before the SCA was whether the father had acquired full parental rights and responsibilities in respect of the child prior to the child’s removal from the Republic in November 2012 by the mother. The SCA stated that if this question is answered in the affirmative, it follows that the father had rights of guardianship in respect of the child, and that either the father’s consent or permission or that of a competent court was required before the child could be removed from the Republic. On appeal, the mother contended that the father only met the requirement of consenting to be identified as the child’s father, but did not meet the other two requirements, namely, that the father never contributed either adequately or at all or attempted in good faith to contribute to the child’s upbringing and expenses in connection with the maintenance of the child; and that even if he did have was not exercising them at the time of the child’s removal as he was abroad in November 2012. The SCA rejected the mother’s contentions and the basis for her attack of the court a quo’s judgment: that the father had only met one of the three requirements which all had to be met before an unmarried natural father could acquire full parental rights and responsibilities over a minor child. The SCA held that a determination whether or not an unmarried father met the requirements in terms of the Act is entirely a factual enquiry which required a consideration of all the relevant factual circumstances in respect of which judicial discretion played no role. The SCA further held that s 21 the Act was specifically intended to provide for the automatic acquisition of parental rights by an unmarried father if he was able to meet certain requirements. Further, that the intention was to also accord an unmarried father with similar rights and responsibilities to the child as the mother, and to promote equality guaranteed in the Constitution, and more importantly, the right of a child to parental care as also envisaged in the Constitution. After reviewing the facts of the case and judgment of the court a quo, the SCA held that it was satisfied that the finding of the court a quo could not be faulted, that the father had demonstrated sufficiently that he had acquired full parental rights and responsibilities in respect of the child on November 2012, and that the father’s consent was therefore required prior to the removal of the child from the Republic. The SCA upheld the judgment of the KwaZulu-Natal Local Division and dismissed the appeal with costs, holding that it was satisfied that the court a quo was correct in answering the question posed by the English court. --- ends ---
137	non-electoral	2017	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 147/2015 In the matter between: LOCH LOGAN WATERFRONT (PTY) LIMITED FIRST APPELLANT THE TRUSTEES OF THE N GEORGIOU TRUST SECOND APPELLANT and BENTEL ASSOCIATES INTERNATIONAL (PTY) LIMITED RESPONDENT Neutral Citation: Loch Logan Waterfront v Bentel Associates International (147/2015) [2017] ZASCA 135 (29 September 2017) Coram: Lewis, Seriti and Petse JJA and Plasket and Schippers AJJA Heard: 11 September 2017 Delivered: 29 September 2017 Summary: Condonation: application for condonation for late filing of appeal record not granted. Delay excessive and inexplicable. Cross appeal: architect’s contract with employer not varied in absence of written consent to delegation of employer’s obligations; interest on amount awarded for fees and disbursements claimed is to be calculated in terms of the Prescribed Rate of Interest Act 55 of 1975; miscalculation of amount payable by trial court corrected. ___________________________________________________________________ ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Kruger J sitting as court of first instance). 1 The appellants’ application for condonation in respect of the late filing of the record and for the reinstatement of their appeal is dismissed with the costs of two counsel. 2 The cross appeal is upheld with the costs of two counsel. 3 The order of the court a quo is set aside and is replaced with: ‘(a) The N Georgiou Trust is ordered to pay the plaintiff the sum of R2 496 265.30 plus interest at the rate of 15.5% per annum from 19 May 2009 to date of payment. (b) The N Georgiou Trust is ordered to pay the plaintiff’s costs including those of two counsel.’ ___________________________________________________________________ JUDGMENT Lewis JA (Seriti and Petse JJA and Plasket and Schippers AJJA concurring) [1] The appellants in this matter are Loch Logan Waterfront (Pty) Ltd (the company) and the Trustees of the N Georgiou Trust, to which I shall refer for convenience as ‘the trust’. I shall refer to ‘the appellants’ collectively where appropriate. The respondent is Bentel Associates International (Pty) Ltd (Bentel), a firm of architects with a national practice, which has considerable experience in the design and construction of shopping centres. [2] Some time in 2003, a representative of the trust, Mr T Koupis, met Mr P R Bray of Bentel, to discuss the design and construction of a shopping centre in Bloemfontein, on land owned by the trust – Loch Logan Waterfront. The name conjures u visions of an attractive and alluring site. In fact, it is a small dam adjacent to which a number of restaurants and shops had been built some years previously. [3] Bentel was awarded the mandate to design extensions to the existing buildings by the trust in 2006, and the building was largely completed in 2007. The dispute between the parties arose when Bentel claimed from the trust payment of outstanding fees and disbursements in the sum of R5 847 819, together with mora interest. It issued summons against both the trust and the company, which now owns the land and the shopping centre. The trust and the company defended the action, disputing the fees payable. They counterclaimed for various breaches of contract by Bentel in the provision of professional services. [4] The trial proceeded before Kruger J in the Free State Division. In December 2014 he handed down judgment, finding in favour of Bentel and against the company only. But the learned trial judge awarded a very reduced amount as fees, as a result of a miscalculation – to which I shall return briefly as it is common cause that the learned judge erred in this regard; interest at the rate of only nine per cent per annum, and no costs in respect of its claims since Kruger J held that Bentel did not enjoy substantial success. The court granted absolution from the instance in respect of the counterclaim. The issues in the cross appeal are the award of the incorrect amount for fees and disbursements; the rate of interest payable; whether the company or the trust was bound by the contract (the locus standi issue); and the costs award. [5] In February 2015, Kruger J gave leave to appeal to this court against that order to the appellants, and leave to cross appeal to Bentel. The appeal has, however, lapsed. The cross appeal was pursued and was argued independently of the appeal, as will appear below. The application for condonation of late filing of the record, and for reinstatement of the appeal [6] Before considering the merits of the cross appeal, it is necessary to decide whether we should condone the failure by the company and the trust to pursue the appeal timeously and properly. And if so, whether to reinstate the appeal. The history of the proceedings between the noting of the appeal and cross-appeal and the date of the hearing of the cross appeal is significant. [7] The notice of appeal was filed some six weeks after the cross appeal was noted, on 26 March 2015. The rules of this court required the record to be filed on 4 June 2015. However, in May 2015 Mr J Gautschi SC, who has had the unenviable task of dealing with this matter as the appellants’ senior counsel, contacted Mr I Zidel SC, Bentel’s senior counsel, to discuss the fact that the record was at that stage still incomplete. They agreed to ask the registrar of this court for an extension of time. The attorney for the appellants, Mr A J Barnard, of EG Cooper Majiedt (Coopers), confirmed that he would ask for an extension of three months ending in September 2015. [8] Mr Barnard advised Mr S Perlman of Fluxman’s attorneys (Fluxmans), representing Bentel, on 2 June 2015 that the transcription of the court record was incomplete and that recordings made by a Mr Badenhorst of Coopers were being used to reconstruct portions of the record. Mr Barnard advised that the reconstruction would take time, and that Coopers’ ‘Appeals division’ would need a month in which to compile an index and do other work attendant on the preparation of the record. Mr Perlman responded on 30 March 2015, placing on record that Bentel had agreed to no more than a three-month extension. [9] On 31 August 2015, Coopers wrote to Fluxmans reporting on progress in the preparation of the record and requested a further extension of three months, in which time the firm would ‘in all likelihood be able to file the required record’. After consulting counsel, Fluxmans advised that Bentel agreed that the appellants would be given until 31 January 2016 to lodge a complete record. The transcript itself was required by the end of September 2015 and other documents by the end of October. [10] On 12 October 2015 Fluxmans advised Coopers that the transcript was inaccurate and incomplete. Witnesses’ names had been confused, and there were a number of other defects. By 2 November 2015, Coopers had not responded to this letter. Fluxmans reminded them of their failure and a response was sent by Coopers on 17 November 2015. In their reply, sent on 7 December, Fluxmans advised that the appellants’ ‘supine attitude’ to the compilation of the record made it impossible for them to assist with the record, and that Coopers should proceed itself to comply with the rules of this court. [11] In the same letter Fluxmans advised that, should Coopers fail to comply with the rules of court, the appeal would lapse, but that Bentel would continue with the cross appeal. It also suggested that Coopers make use of a professional record compiler instead of relying on its own staff. [12] On 21 January 2016, Fluxmans wrote to Coopers confirming that Mr Barnard and counsel had met Mr Perlman the previous day, and that Mr Perlman had provided Mr Barnard with comments on draft indices. Fluxmans also restated its position on the issues in the cross appeal. [13] A year after leave to appeal was granted, on 1 February 2016, the appellants filed a record of appeal. Bentel regarded the record as defective, and the appellants were constrained to agree. It was not annotated and contained numerous duplicated documents. It had little practical value. Considerable correspondence passed between Coopers and Fluxmans, various different timelines were agreed, and eventually it was agreed that a proper record would be filed by 30 September 2016. [14] Fluxmans reminded Coopers of the timeline on 11 August 2016. In the interim, Mr Gautschi had made valiant attempts to press Coopers into preparing the record properly. In his founding affidavit in an application for reinstatement of the appeal and condonation (filed only on 18 July 2017, as to which see below), Mr Oosthuizen of Coopers (who replaced Mr Barnard as the attorney involved with the appeal) referred to the many emails sent by Mr Gautschi chivying Coopers, explaining what was needed and suggesting ways in which Coopers should proceed. The September 2016 deadline was, nonetheless, not met. [15] Fluxmans’ correspondent attorneys in Bloemfontein, Matsepes, wrote to the registrar of this court on 11 October 2016 asking how to bring the matter to finality. The office of the registrar advised Coopers the following day that the appeal had lapsed. [16] Despite this, Coopers wrote to Fluxmans on 12 October 2016 recording an apology for the delay, and advising that Coopers had asked a Mr J Kumkaran to assist with the preparation of the appeal record. This was at the suggestion of Mr Gautschi. Coopers committed to filing the completed record by 9 November 2016 and asked for agreement on that date. Fluxmans responded that the appeal had lapsed and that it was not open to the parties to revive it by agreement. They repeated that Bentel was proceeding with the cross appeal. [17] It was only when the heads of argument for the appellants in the cross appeal were received on 16 February 2016 that Bentel was given any indication that the appellants intended to apply for condonation and reinstatement of the appeal. The registrar of this court was advised the following day by Mr Oosthuizen that the appellants so intended. Coopers advised the registrar that the appeal and cross appeal should be heard together. It is not clear whether Coopers ever copied this letter to Fluxmans or whether they were advised of it. Since no application was in fact forthcoming the cross appeal was set down for hearing on 11 September 2017. [18] When this court was seized with the record in the cross appeal, and the heads of argument of the parties, it made enquiries through the registrar on 4 July 2017 as to whether the appellants intended to pursue the appeal. The court asked that the appellants indicate their intention by no later than 18 July 2017. That request elicited an application for condonation and reinstatement, served at the last minute on 18 July, together with a new record of 18 volumes. [19] The court, in early August 2017, then indicated to the appellants that the appeal could not be heard on the date of set down for the cross appeal, but gave leave to argue the application for condonation and reinstatement at the outset of the hearing of the cross appeal. [20] In his founding affidavit to the application, Mr Oosthuizen said that after receiving the court’s letter of 4 July 2017, ‘final and very intensive work was done by Mr Kumkaran to finalise the appeal record’. He continued: ‘The appellants have at all times been resolute in pursuing this appeal and always believed (supported by the views of counsel acting for the Appellants) that they have good prospects of success in their appeal . . .’ . No fault, he said, could be attributed to the appellants for the delay in finalizing the appeal record. [21] It is trite that condonation is not there for the asking. A proper explanation for the delay must be furnished. The only explanation proffered by Coopers is that the transcribers let the appellants down and they had to hire Mr Kumkaran to assist in producing the record. This does not explain – least of all excuse – the failure on the part of Coopers to meet any deadline to which they had committed. Having failed to meet the September 2016 deadline, they appeared to go into hibernation. If there had been the slightest progress in the preparation of the record, then Coopers did not advise Fluxmans of this and did nothing to apply for condonation and reinstatement until asked by this court, in July 2017, to indicate the appellants’ position. Between February and July 2017 nothing was done to indicate what the further delay was. [22] Mr Kumkaran, who deposed to a supporting affidavit in the application, said no more than that it was a complex and time-consuming process and that he had spent 179 days working on it, but could not devote all his working time to the task as he is an attorney with other commitments. What is not explained is why Coopers asked a private practitioner to prepare the record, rather than an appeals record service. It is so that Mr Gautschi had suggested that Mr Kumkaran assist with the task, but that does not explain why the task was taken away from Coopers’ appeal division or why a professional service was not used as well. [23] Moreover, as Mr Perlman stated in his answering affidavit, the record that was eventually furnished on 18 July 2017 mirrored that which had been agreed to in September 2016. And it is significant too that Bentel was able to prepare the record in the cross appeal timeously. [24] Mr Gautschi was placed in the invidious position of arguing that condonation should be granted and the appeal reinstated. The only argument that he could advance was that the prospects of success in the appeal were good and that the extraordinary and inexplicable delay on the part of the appellants should be weighed against those good prospects. But that is not enough. Prospects of success are not the only factor that a court takes into account when considering a litigant’s request for an indulgence. They must be considered in the context of an excessive and unexplained delay. [25] The most recent judgment of this court dealing with the principles governing the grant of condonation is Mtshali & others v Buffalo Conservation 97 (Pty) Ltd (250/2017) [2017] ZASCA 127 (28September 2017) in which Plasket AJA discusses previous decisions of this court and the principles determined. These include Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd & others [2013] ZASCA 5; [2013] 2 All SA 251 (SCA) where Ponnan JA held that factors relevant to the discretion to grant or refuse condonation include ‘the degree of non-compliance, the explanation therefor, the importance of the case, a respondent’s interest in the finality of the judgment of the court below, the convenience of this court and the avoidance of unnecessary delay in the administration of justice’. [26] In Darries v Sheriff, Magistrate’s Court, Wynberg & another 1998 (3) SA 34 (SCA) at 40I-41E Plewman JA pointed out that condonation is not a mere formality and will not necessarily be granted even where the failure to comply with the rules of court is entirely attributable to a party’s attorney. He said: ‘An appellant should whenever he realises that he has not complied with a Rule of Court apply for condonation as soon as possible. Nor should it simply be assumed that, where non-compliance was due entirely to the neglect of the appellant’s attorney, condonation will be granted. In applications of this sort the appellant’s prospects of success are in general an important though not decisive consideration. When application is made for condonation it is advisable that the petition should set forth briefly and succinctly such essential information as may enable the Court to assess the appellant’s prospects of success. But appellant’s prospect of success is but one of the factors relevant to the exercise of the Court’s discretion, unless the cumulative effect of the other relevant factors in the case is such as to render the application for condonation obviously unworthy of consideration. Where non- observance of the Rules has been flagrant and gross an application for condonation should not be granted, whatever the prospects of success might be.’ [27] In Tshivhase Royal Council & another v Tshivhase & another; Tshivhase & another v Tshivhase & another 1992 (4) SA 852 (A) at 859E-F Nestadt JA pointed out that this court ‘has often said that in cases of flagrant breaches of the Rules, especially where there is no acceptable explanation therefor, the indulgence of condonation may be refused whatever the merits of the appeal are’ and that this applies ‘even where the blame lies solely with the attorney’. See also Saloojee & another NNO v Minister of Community Development 1965 (2) SA 135 (A) at 141B-H. [28] In my view, little more need be said. The failure on the part of the appellants to comply with the rules of this court has been flagrant and inexplicable. They did not bother to apply for condonation when they needed it. They sat back and allowed Bentel and this court to assume that they were not going to apply for condonation and that the appeal had lapsed. And the lack of any explanation for failing to comply with deadlines to which they had agreed is astonishing. Whatever prospects of success there might be fade into insignificance. Indeed, we might justifiably draw the inference from the silence between October 2016 and July 2017 that no one has much faith in the appeal that had been noted. No representative of the appellants has gone on oath to explain their determination to pursue the appeal and to explain why they have made no efforts to chase their attorneys. [29] In the circumstances the application for condonation for the late filing of the appeal record and for reinstatement of the appeal must be dismissed with the costs of two counsel. The cross appeal [30] It will be recalled that the first issue in the cross appeal is the miscalculation by the trial court of the fees and disbursements owed to Bentel. The second is the rate of interest which the unsuccessful party should pay on the amounts outstanding, and the date from which it was payable. The third issue is whether the company had locus standi in the matter – whether only the trust was party to the contract with Bentel or whether the company had been substituted for it – and which entity was liable to Bentel. The award of costs is also in contention. I consider that the third issue, the company’s locus standi, should be determined first. That entails a consideration of the documents constituting the contract between the parties. The contract between the trust and Bentel [31] On 23 June 2003, Mr P R Bray of Bentel wrote to Mr T Koupis representing the trust, thanking him for meeting to discuss the invitation to Bentel to undertake the architectural work for the proposed extension to Loch Logan. Mr Bray explained the nature of the contract that would be concluded, the fee that it would charge, and made various recommendations, including as to the appointment of a time management consultant. The letter was annexed to the particulars of claim as Annexure A. [32] Mr Bray wrote to Mr Koupis again in February 2004 thanking him for Bentel’s appointment as architects for the Loch Logan extension. He recorded that Bentel’s services would be in accordance with the Institute of South African Architects’ terms of appointment, subject to some variations. The standard terms (the architect’s contract) were annexed as Annexure BA 1 to the letter, which constituted Annexure B to the particulars. It anticipated five work stages. The fifth work stage, to be performed by a Bloemfontein architect, entailed the contract administration and inspection. It is common cause that a locally based architect was appointed for this purpose. [33] The terms of the agreement between the trust and Bentel were varied on 8 November 2005 and 19 April 2006, each variation by way of letter from Bentel to the trust, signed by the parties. The variations are annexed to the particulars as C and D. It is not disputed that the contract between Bentel and the trust was constituted by these letters, which incorporated the standard terms of the architect’s contract. [34] Significantly, clause 4.6 of the architect’s contract, headed ‘Change of status of the parties’, read: ‘Neither party shall assign, sublet or transfer its interest in this agreement without the written consent of the other, which consent shall not unreasonably be withheld.’ Clause 11.4, headed ‘Whole agreement’, read: ‘This agreement, including any annexures hereto, is the whole of the contract between the parties and no variation hereof shall have any effect unless reduced to writing and signed by both parties. . . .’ The sale of Loch Logan Waterfront by the trust to the company [35] Before the variation of the contract between the trust and Bentel on 19 April 2006 (Annexure D), on 20 October 2005, the trust sold to the first appellant, the company, the immovable property known as the Loch Logan Waterfront for the sum of R200m. The property was said to be sold as a ‘going concern’, which would be an ‘income earning activity’ and would remain operative as such until its transfer. The parties recorded that the company, as purchaser, should be enabled to ‘continue the rental enterprise’ from the property’. Kruger J held that the sale agreement, together with the conduct of the company and of Bentel had the effect of substituting the company for the trust in the architect’s contract. Bentel argues on appeal that there was no change in parties. Did the company, by virtue of the sale, become a party to the architect’s contract? [36] On 4 January 2006, a representative of the trust wrote to ‘suppliers’ advising that with effect from 1 December 2005, the Loch Logan Waterfront was transferred to a new company – the first appellant. Suppliers were requested to send all accounts to the company at a new address. This was followed by a letter from a Ms Georgiou of the company to a Mr L Vimercati, an employee of the project manager which was an agent of the trust, requesting that VAT invoices should be addressed in future to the company. Mr Vimercati forwarded the request to Mr R Leighton of Bentel, who in turn sent it to another employee of Bentel with a request to ‘resolve’. The request was further confirmed by Mr Vimercati on 30 March 2006. [37] From that time onwards, Bentel sent VAT invoices to the company. The significance of this, the company contends, is that by sending tax invoices to the company, Bentel agreed in writing to vary the architect’s contract by making the company, rather than the trust, a party to the contract. And indeed, as I have said, Kruger J found that by its conduct, Bentel had agreed to a variation of the parties to the contract. He did not explain how the submission of tax invoices amounted to a written variation, signed by the parties. [38] On appeal, Bentel argues that there are a number of indicia that there was no change in the agreement in writing, as required by its terms. I have already referred to one – the variation of the architect’s contract on 19 April 2006 (Annexure D) took place after the sale of Loch Logan Waterfront by the trust to the company. Yet the variation agreement was between the trust and Bentel. It was clearly envisaged that Bentel’s mandate continued to be with the trust. [39] At site meetings after the sale and transfer of the property to the company, the trust continued to be the entity to which Bentel and other agents were obliged to meet their obligations. For example, the minutes of a meeting dated 25 April 2006 reflect that ‘for contractual purposes the client is to remain the N Georgiou Trust’. [40] The appellants argue, on the other hand, that the fact that tax invoices were sent, after the sale, to the company rather than the trust, reflects an intention on the part of Bentel that it accepted the company as the other contracting party. That seems to me to be not only contrary to the provisions of the architect’s contract, which deals with the manner of variation, but also contrary to the other evidence. For the kind of variation for which the appellants contend to be effective, Bentel would have had to agree to the delegation of its obligations to the trust by the latter to the company. The mere invoicing of another entity does not amount to an agreement to delegate. It is, as Bentel argues, nothing more than a payment arrangement – Bentel agreeing to accept payment of its fees and disbursement by the company rather than the trust. [41] G B Bradfield Christie’s Law of Contract in South Africa 7 ed p 536, in dealing with delegation, points to a number of situations where a creditor requests a debtor to make payment to a third party, but which do not amount to a delegation. The mere rendering of an invoice to a third party cannot, in the absence of agreement on the part of a creditor, amount to a delegation. [42] As against this, the appellants argue that a letter of demand in terms of s 345 of the Companies Act 61 of 1973, threatening liquidation, was sent by Bentel to the company on 16 September 2008. This was not followed through. In May 2009, Bentel issued summons against both appellants claiming some R6m and Bentel proceeded to claim summary judgment against both. The appellants argue that the inability of a witness for Bentel to explain why summons was issued against both appellants, and why summary judgment was sought against both, shows that it regarded the company as a party to the architect’s contract. In my view, the evidence is irrelevant. It goes not to agreement on delegation of the trust’s obligations to Bentel, but to subsequent legal proceedings. [43] In argument before us, Bentel asserted that it had claimed against both the trust and the company ex abundante cautela. But in any event, it argues, the pleadings did not make any case against the company, and in the plea the appellants did not assert that the company, rather than the trust, was party to the architect’s contract. [44] Bentel’s particulars of claim relied on the contracts reflected in Annexures A to D. These all reflected the trust as the party to the architect’s contract. In its plea, the appellants did not dispute that these were the written contracts on which Bentel relied, but pleaded that the company ‘took over all the rights and obligations from’ the trust, including ‘the rights and obligations towards [Bentel]’. Bentel, in its request for further particulars for trial, asked when and how the ‘taking over’ had occurred and whether there was any written agreement in this regard. The response of the appellants was that ‘it was not in dispute between the parties that the relevant parties to the claim are the plaintiff and [the company]’. This is hardly a proper response: there is no allegation that the trust ceded its rights and delegated its obligations to the company, with Bentel’s consent, in writing. That was what was required in order to show that the trust’s obligations to Bentel had been delegated to the company. Invoices sent by Bentel to the company, at the request of the company, hardly amount to a written agreement that the trust could delegate its obligations to the company. [45] The pleadings thus do not bear out the contention of the appellants that the company had been substituted for the trust as the party to the architect’s contract with Bentel. The party alleging a delegation must prove it. (Van Achterberg v Walters 1950 (3) SA 734 (T) at 745.) But in any event, the appellants did not plead a proper delegation. [46] Kruger J in the trial court took into account the oral evidence of Mr Koupis, representing the appellants. He testified that it was common in developments of the kind embarked upon that the developer creates a separate entity to ‘ring-fence’ the risk. This was what had happened when the trust sold the property and business as ‘a going concern’. The sale of the property was expressly stated to be that of a ‘going concern’. The contract recorded that the property ‘will remain active and operating as such until its transfer’. It also recorded that the company would be enabled by the trust, as seller, ‘to continue the rental enterprise conducted from the property’. This, argued the appellants, meant that all the obligations of the trust were transferred to the company, and the company was not only entitled to receive rentals from tenants, but also obliged to pay professionals who had contracted with the trust, such as Bentel. [47] However, the sale also recorded that: ‘It is specifically agreed that, as far as it may be necessary, the Seller [the trust] shall enter into such Agreements as may be necessary to assign its rights and obligations (but does not warrant the other party will consent to the delegation) in terms of the contracts referred to above to the Purchaser [the company].’ Kruger J did not consider whether there had been any delegation by the trust of its obligations to Bentel, as envisaged in the sale, and to which Bentel had agreed. But he did take into account that there was no evidence that any representative of Bentel had ever objected to the ‘taking over’ by the company of the trust’s business. [48] Since there was no delegation pleaded, however, the evidence was inadmissible: Société Commerciale de Moteurs v Ackermann 1981 (3) SA 422 (A) at 435C-D. The difficulty was that Kruger J decided at the outset of the trial that he would allow all the evidence that the parties wished to lead, without objection, and would determine admissibility at a later stage. In the end, he made no rulings as to admissibility, and so took into account evidence that was irrelevant to the respective cases the parties had made out in their pleadings. As Bentel argued before this court, the practice of allowing all evidence that a party wishes to adduce and making a ruling as to admissibility later, is one that conduces to poor trial management. It prolongs the trial and results in irrelevant or hearsay evidence being taken into account. (See in this regard Price Waterhouse Coopers Inc & others v National Potato Co-operative & another [2015] ZASCA 2; 2015 (2) All SA 403 (SCA) paras 80 and 81.) [49] The final argument for Bentel that the company was not a party to the architect’s agreement, and which I regard as conclusive, is that the entire contractual matrix in respect of the construction of the Loch Logan Waterfront’s extensions would have failed if the trust were to have fallen away as a party. The principal contractor for the project was the construction firm, Murray and Roberts Construction (Pty) Ltd (M & R). The main contract was between the trust and M & R. The contracting ‘and other parties’ were the trust, D Nel as principal agent (the architect representing the Bloemfontein firm responsible for supervision and final work); Bentel as agent 1; the quantity surveyors appointed as agent 2; the structural engineers as agent 3; the consulting engineers as agent 4 and project consultants as agent 5. A project manager and fire consultant had yet to be appointed. [50] All these professionals, including Bentel, were thus agents for the employer – the trust. All continued to be responsible to the trust until the termination of the project. The trust’s contract with M & R remained unaffected by the sale of the property and the business of the shopping centre by the trust to the company. That was expressly agreed to be so. The appellants argue now that the M & R contract was exceptional. Various bank guarantees in favour of the trust would have had to be replaced if the company became the employer, and that would have been a costly exercise – so the trust remained in place as the employer in the principal contract. [51] As Bentel argues on appeal, it would make absolutely no sense for M & R to be contractually liable to the trust, but its agents liable to the company. It follows that the company had no locus standi to sue for damages for breach of contract. And that Bentel’s claims for fees and disbursements are against the trust only. Bentel’s claim for fees and disbursements [52] As I have said, it is common cause that Kruger J erred in calculating the amount that he found was due to Bentel. He failed to take VAT into account and thus awarded the sum of R578 580, instead of R2 496 265. The difference is substantial. Since the parties are agreed on the correct amount to be awarded, and as to the manner of its calculation, there is no need to deal with it and the cross appeal must succeed in this respect too. Mora interest [53] Bentel claimed interest a tempore morae at the prescribed rate of 15.5% per annum. Kruger J awarded interest only at the rate of nine per cent per annum, reasoning that the contract itself made no provision for mora interest, that it had been varied from time to time, and that the works had not yet been concluded. He thus also held that it was fair that interest be payable only from the date of judgment. [54] The appellants argue that the amount claimed by Bentel was not liquidated and thus interest at the prescribed rate was not claimable. The argument loses sight of the fact that Bentel was not claiming damages. It is true that there were disputes as to whether certain fees were owing, but that does not mean that the claim for fees and disbursements was illiquid. It was determinable by calculation and required no exercise of judgement as to what should be paid. It is plain that the trust was in mora in so far as payment of fees to the company was concerned. [55] The Prescribed Rate of Interest Act 55 of 1975 provides that interest shall run from the date on which payment is claimed by service on the debtor of a demand or summons. (See David Trust v Aegis Insurance Co Ltd & another 2000 (3) SA 289 (SCA) para 39.) The summons was served on the trust on 14 May 2009. Accordingly, the trust is liable to pay interest at the rate of 15.5% per annum on the sum of R2 496 265 from that date. Costs [56] Kruger J in the trial court considered that Bentel had not enjoyed substantial success in respect of its claim, and accordingly awarded it no costs. However, that was in large measure because he miscalculated the amount payable to Bentel and imposed interest at the wrong rate. It seems to me that Bentel was entitled to all its costs in respect of its claim, including those of two counsel. The trial court awarded Bentel only 50% of the costs in respect of the counterclaim on the basis that it had pursued the wrong defendant – the trust. As I have already concluded, the trust was correctly cited as a defendant. [57] In the result, the following orders are made: 1 The appellants’ application for condonation in respect of the late filing of the record and for the reinstatement of their appeal is dismissed with the costs of two counsel. 2 The cross appeal is upheld with the costs of two counsel. 3 The order of the court a quo is set aside and is replaced with: (a) The N Georgiou Trust is ordered to pay the plaintiff the sum of R2 496 265.30 plus interest at the rate of 15.5% per annum from 19 May 2009 to date of payment. (b) The N Georgiou Trust is ordered to pay the plaintiff’s costs including those of two counsel.’ _______________________ C H Lewis Judge of Appeal APPEARANCES For the First and Second Appellants: J Gautschi SC (Heads of Argument also prepared by A J R van Rhyn SC) Instructed by: E G Cooper Majiedt Inc, Bloemfontein For the Respondent: I J Zidel SC (with him D R van Zyl SC) Instructed by: Fluxmans Inc, Rosebank 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 29 September 2017 STATUS Immediate Loch Logan Waterfront v Bentel Associates International [2017] ZASCA 135 (29 September 2017) In December 2014 the Free State Division of the High Court of South Africa (the high court) upheld a claim by an architect’s firm for fees and disbursements incurred in the design of the Loch Logan Waterfront shopping centre in Bloemfontein. The high court granted absolution from the instance in respect of a counterclaim for damages brought by a company that had bought the shopping centre from its former owner, a trust. The high court found that the company was liable to pay the fees to the architect’s firm. The company and trust were granted leave to appeal against the refusal of its claim to the Supreme Court of Appeal, and the architects were granted leave to cross appeal on the grounds that the fees awarded had been miscalculated by the high court, that it had imposed the incorrect rate of interest payable, and that it was the trust that was liable to the architects and not the company. The cross appeal was pursued and heard by the SCA in September 2017. The appeal, although noted, was not properly pursued. The record was not filed until July 2017, shortly before the date of set down of the cross appeal. This was despite numerous undertakings by the appellants’ attorneys, given to the architect’s attorneys, over a period of two years to comply with agreed deadlines. At the last minute, and only when the SCA asked whether the appeal was being pursued, the trust and the company applied for condonation of the late filing of the record and for reinstatement of the appeal. The application was heard at the same time as the cross appeal. The SCA refused the application for condonation and reinstatement. It held that the delay in filing the record was inexplicable and extreme. The appellants had made no effort to comply with the rules of the court, and any argument that there were good prospects of success on appeal faded into insignificance when considering the extreme and inexcusable delay on the part of the appellants and their attorneys. The SCA upheld the cross appeal against the judgment of the high court, finding that it was the trust and not the company which had entered into the contract with the architects, and that the trust was accordingly liable for fees and disbursements; that the high court had miscalculated the amount to be awarded to the architects; and that the high court had wrongly held that the rate of interest payable was nine per cent when it should have been at the prescribed rate of interest – 15.5%. The SCA ordered the trust to pay to the architects some R2.4 million, interest at the rate of 15.5% per annum, and the costs of the trial in the high court. It also ordered the trust to pay the costs in the application for condonation and reinstatement of the appeal, plus the costs of the cross appeal.
2443	non-electoral	2013	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 408/2012 Reportable In the matter between: MEC FOR ENVIRONMENTAL AFFAIRS AND DEVELOPMENT PLANNING APPELLANT and CLAIRISON’S CC RESPONDENT Neutral citation: MEC for Environmental Affairs and Development Planning v Clairison’s CC (408/2012) [2013] ZASCA 82 (31 May 2013) Coram: Nugent, Ponnan and Tshiqi JJA and Willis and Swain AJJA Heard: 16 May 2013 Delivered: 31 May 2013 Summary: Administrative law – review – decision-maker required to take relevant considerations into account - weight to be attached to relevant consideration within discretion of decision-maker – perception of predisposition to a decision not in itself objectionable. ORDER On appeal from: Western Cape High Court, Cape Town (Cloete AJ 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 an order dismissing the application with costs. In both cases the costs are to include the costs of two counsel. JUDGMENT _______________________________________________________________ NUGENT JA AND SWAIN AJA (PONNAN AND TSHIQI JJA AND WILLIS AJA concurring): [1] The respondent, Clairison’s CC (Clairisons) a property developer, wishes to establish a retirement village consisting of 173 units, on a property described as portion 53 (a portion of portion 3) of the farm Ganse Vallei No 444 Plettenberg Bay (the property) situated within the jurisdictional area of the Bitou Municipality (the municipality) 4 km to the north east of the Plettenberg Bay central business district. [2] In order to do so the respondent was obliged to apply to the appellant, the MEC for Environmental Affairs and Development Planning (the MEC) for: 2.1 the amendment of the designation of the property in the Knysna- Wilderness-Plettenberg Bay regional structure plan (the structure plan) from ‘Agriculture and Forestry’ to ‘Township Development’ in terms of s 4(7) of the Land Use Planning Ordinance 15 of 1985 (Cape) (Lupo); and for 2.2 environmental authorisation in terms of ss 21, 22 and 26 of the Environmental Conservation Act 73 of 1989 (ECA), because the proposed development entailed a change of land use from agricultural use to another use. [3] The application in terms of Lupo for the amendment of the designation of the property was successful before the predecessor of the present incumbent of the office of MEC. The application was granted despite a recommendation by the head of the department that it be refused. [4] The recommendation by the head of the department was in accordance with the policy of the department that new, large residential developments not be allowed to the north of Plettenberg Bay. The present MEC maintains that it is a policy based on legitimate planning and environmental considerations, which in part is derived from the Western Cape Provincial Spatial Development Framework (WCPSDF). The aims of the WCPSDF, it is stated, include the restructuring of urban settlements to address apartheid spatial patterns and urban functional inefficiencies, and the protection of biodiversity and agricultural resources. The means by which the WCPSDF is said to achieve these aims includes restricting the outward growth of urban settlements until specified urban densities are achieved. [5] Acting in accordance with this policy, the director of the department refused the application by Clairisons for environmental authorisation in terms of ss 21, 22 and 26 of the ECA. Clairisons thereupon appealed to the MEC in terms of s 35(1) of the ECA against the director’s decision. The appeal was dismissed by the MEC. Clairisons then applied to the Western Cape High Court to review and set aside the decision by the MEC. The application succeeded before Cloete AJ and the MEC appeals with the leave of that court. [6] The application succeeded in the court below on two broad grounds. First, it was held that the MEC had taken into account irrelevant considerations, and left out of account relevant considerations, when making his decision, which is a ground for review under s 6(2)(e)(iii) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). And secondly, the court below found that Clairisons had reasonable grounds for apprehending that the MEC was biased, another ground for review, under s 6(2)(a)(iii). We deal with each ground in turn. The alleged failure to take account of relevant considerations. [7] Leaving aside one matter that we come to presently, Clairisons alleges that the MEC ought to have taken account of, but failed to do so, three factors that are all related. [8] First, it was alleged that he failed to take account of the fact that adjacent properties were already urban in character, which was in conformity with the development that was proposed. [9] Secondly, it was alleged that he failed to take into account that the municipality had determined the urban edge for urban development, and that the proposal fell within that urban edge and was thus permissible. [10] Thirdly, it alleged that the MEC failed to take account of the fact that his predecessor had allowed the proposed development when he approved the amendment to the structure plan. [11] The three factors we have referred to are inter-related in that, taken together, and in summary, they were said by Clairisons to demonstrate that urban development had already occurred, and further development had been approved, in the area in which the proposed development was to be situated, and that the MEC failed to take account of that when refusing the application. [12] To expand upon those factors, there is some factual controversy as to the nature of the development that existed on adjacent properties, but we have accepted for present purposes that it was essentially urban in nature. As to the second factor, an urban edge is a planning tool that serves as a guide in restricting the outward growth of urban settlements. There is a dispute as to whether the municipality had validly delineated its urban edge, and where the urban edge delineated by the municipality was situated, but that is of no moment for present purposes. It is sufficient to say that, when making his decision, the MEC regarded the urban edge to be the boundary to which urban development had spread, and not the edge that had allegedly been delineated by the municipality. On the third, the MEC’s predecessor had indeed approved an amendment to the structure plan that would allow for the proposed development, and other like amendments, but the MEC said that he disagreed with those approvals, and declined to follow them as a precedent. [13] The allegation by Clairisons that the MEC failed to take account of those factors found favour with the court below. The views the learned judge expressed in relation to each of them overlap to an extent, which is to be expected because they are related. [14] As to the first she said that: ‘[t]he development trend in the area has for some years been away from purely agricultural and recreational use. The general principle of planning in the area is thus to accommodate expansion in that area. The approval of [Clairisons’ application] would have been consistent with the pattern of development in recent years and would not have created a new node . . . . What [the MEC] did in effect was to disregard these adjacent approvals on the basis that in his view they should not have been granted. In so doing he misdirected himself by failing to take into account relevant considerations and by failing to apply his mind to the planning position in the area as reflected in the structure plan’. [15] Dealing with the second factor she said: ‘In my view it is . . . common cause that [Clairisons’] property falls within the Municipality’s delineated wide urban edge . . . irrespective of whether the [MEC] regards that delineation as having been rationally and lawfully determined . . . he should have taken into account that development on properties surrounding that of [Clairisons] had, over the previous 6 years, proceeded in accordance with the wide urban edge as determined by the Municipality.. . . It was not enough for the [MEC] to simply ignore it; the factual position which pertained as a result should also have been considered and fairly weighed against all other factors in light of the history of development in the area’. [16] With regard to the third she said that: ‘[the MEC] appears to have approached the matter on the basis that he would not have granted these approvals – an entirely irrelevant consideration in the context of the ECA authorisation sought by the applicant. The [MEC] was faced with the consequences of a clear set of structure plan amendments in the area which he ignored.’ And ‘[T]he [MEC’s] views as to whether the applications should or should not have been granted by his predecessors are irrelevant. . . [The MEC] was obliged to consider the factual consequences [of the amendment to the structure plan] as evidenced by the land usage surrounding the applicant’s property. He did not do so because he had already formed the view that the structure plan amendments should not have been granted in the first place and he would for that reason disregard their factual consequences. In doing so he failed to consider a relevant consideration and his decision thus falls to be reviewed.’ [17] The finding by the court below that the MEC failed to take account of those factors is incorrect on each count. On the contrary, if there is one thing that is clear from the evidence it is that the MEC pertinently took account of each of the factors – indeed, the application was refused precisely because he took them into account. The true complaint of Clairisons – endorsed by the court below – is instead that he attached no weight to one of the factors, and in the other cases he weighed them against granting the application, whereas Clairisons contends that they ought to have weighed in favour of granting it, which is something different. [18] We think it apparent from the extracts from her judgment we have recited, and the judgment read as a whole, that the learned judge blurred the distinction between an appeal and a review. It bears repeating that a review is not concerned with the correctness of a decision made by a functionary, but with whether he performed the function with which he was entrusted. When the law entrusts a functionary with a discretion it means just that: the law gives recognition to the evaluation made by the functionary to whom the discretion is entrusted, and it is not open to a court to second-guess his evaluation. The role of a court is no more than to ensure that the decision-maker has performed the function with which he was entrusted. Clearly the court below, echoing what was said by Clairisons, was of the view that the factors we have referred to ought to have counted in favour of the application, whereas the MEC weighed them against it, but that is to question the correctness of the MEC’s decision, and not whether he performed the function with which he was entrusted. [19] The power of review is sourced today in the Constitution, and not the common law, but sound principles are not detracted from because they were expressed in an earlier era. As was said in Pharmaceutical Manufacturers of South Africa: In re Ex parte President of the Republic of South Africa 1 ‘That is not to say that the principles of common law have ceased to be material to the development of public law. These well-established principles will continue to inform the content of administrative law and other aspects of public law, and will contribute to their future development’. [20] It has always been the law, and we see no reason to think that PAJA has altered the position that the weight or lack of it to be attached to the various considerations that go to making up a decision, is that of the decision-maker. As it was stated by Baxter:2 ‘The court will merely require the decision-maker to take the relevant considerations into account; it will not prescribe the weight that must be accorded to each consideration, for to do so could constitute a usurpation of the decision-maker’s discretion.’ [21] That was expressed by this court as follows in Durban Rent Board and Another v Edgemount Investments Ltd,3 in relation to the discretion of a rent board to determine a reasonable rent: ‘In determining what is a reasonable rent it is entitled and ought to take into consideration all matters which a reasonable man would take into consideration in order to arrive at a fair and just decision in all the circumstances of the case …. How much weight a rent board will attach to particular factors or how far it will allow any particular factor to affect its eventual determination of a reasonable rent is a matter for it to decide in the exercise of the discretion entrusted to it and, so long as it acts bona fide, a Court of law cannot interfere’. [22] What was said in Durban Rent Board is consistent with present constitutional principle and we find no need to re-formulate what was said pertinently on the issue that arises in this case. The law remains, as we see it, that when a functionary is entrusted with a discretion, the weight to be attached to particular factors, or how far a particular factor affects the eventual determination of the issue, is a matter for the functionary to decide, and as he 1 Pharmaceutical Manufacturers of South Africa: In re Ex parte President of the Republic of South Africa 2000 (2) SA 674 (CC) para 45. 2 Lawrence Baxter Administrative Law 1ed (1984) at 505. 3 Durban Rent Board and Another v Edgemount Investments Ltd 1946 AD 962 at 974, adopted in Johannesburg City Council v The Administrator, Transvaal and Mayofis 1971 (1) SA 87 (AD). acts in good faith (and reasonably and rationally) a court of law cannot interfere. That seems to us to be but one manifestation of the broader principles explained – in a context that does not arise in this case4 – in Bel Porto School Governing Body v Premier, Western Cape5 and Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs.6 [23] It is clear from the reasons given by the MEC that the factors on which he was taken to task were pertinently considered: they were the very justification he advanced for his decision. His and his department’s view, in broad terms, was that the proposed development would contribute to what is colloquially called ‘urban sprawl’ – to which he and his department were opposed – that had already manifested itself in the surrounding area, and that the approvals of his predecessor, and the urban edge proposed by the municipality, threatened to compound. The case advanced by Clairisons was that the existing development, and the approvals of the former MEC, had set a precedent for urban development that the MEC ought to have adopted. That is no more than a difference of opinion. There has been no suggestion that the avoidance of urban sprawl was not a legitimate environmental concern upon which the MEC was entitled to found his decision on. Whichever opinion might be thought to be the correct one, the law entrusts the decision to the MEC. Once having correctly identified the question for decision and applied his mind to deciding it – both of which he clearly did – then it is the view of the MEC that is required by law to prevail. [24] There is one further matter under this heading that we need to deal with. The MEC shared the opinion of his department that the proposed development was detrimental to the biodiversity of the area, and to an environmental corridor between two rivers. Expert opinion advanced by Clairisons challenged that opinion. On that controversy the court below said the following: ‘Much of the information relied upon by the [MEC] seems to amount to academic statements about, and definitions of, the nature of critical biodiversity areas and 4 Bel Porto was concerned with the rationality, and Bato Star with the reasonableness, of executive decisions. 5 2002 (3) SA 265 (CC) para 45. 6 2004 (4) 490 (CC) esp paras 44 and 45. corridors and very little is provided in the way of factual evidence under the guise of engaging with the critique provided by [Clairisons] specialist. As far as the functionality of the corridor between the rivers is concerned, it seems to me that this type of dispute cries out for independent specialist input (which it was open to the [MEC] to call for).. . . It is difficult to understand how the [MEC] could have made an informed decision merely by weighing up [Clairisons] input against the department’s input and without at least having given serious consideration to further specialist advice. The inference is that he failed to place due weight on the necessity of making a properly informed decision about the impact of the proposed development on the natural environment and as a result the grounds relied upon by him were insubstantial. This also constitutes a ground for review.’ [25] Once again, it is clear from the evidence that the MEC was pertinently aware of the competing opinions of his department and that of the specialist, and preferred to adopt the view of his department. We think it is also safe to assume that he was well aware that he was entitled to take independent advice if he considered it prudent to do so. The extract from the judgment we have referred to reflects only that the court below was of the view that he ought to have sought such independent advice, but that was not what the learned judge was called upon to decide. Clearly the MEC took account of the opinion of the specialist. What occurred is only that he gave greater weight to the opinion of his department, which it was within his discretion to do. [26] In our view there were no grounds for finding that the MEC failed to take account of relevant considerations when making his decision and the court below ought not to have set it aside on those grounds. The alleged perception of bias. [27] It was submitted that the MEC was perceived to be biased for various reasons. The first was that the department’s director was the same official responsible for the preparation and submission of the report which recommended that Clairisons proposed structure plan amendment be refused. Because that recommendation was not followed by the previous MEC who granted the approval, the same director, so the argument went, when considering Clairisons application for environmental authorisation, could not have approached it objectively and would have been influenced by his previous recommendation. [28] Secondly, it was submitted that the appeal process, as conducted by the MEC, did not result in an independent review of the director’s decision, because of the reliance by the MEC on the recommendations of officials in the department on the validity of the grounds of appeal. And thirdly, the MEC was perceived to be biased because he held the view that the structural plan should not have been granted by his predecessor. [29] In our view the complaint that the MEC was reasonably perceived to be biased is misconceived. Clearly an administrative official, when making a decision, must not be partial towards one party or another, but there is no suggestion that that occurred in this case, nor even that there was a perception that that had occurred. The complaint was only that the MEC was perceived to be partial to refusing the application, which is not the same thing. [30] Government functionaries are often called upon to make decisions in relation to matters that are the subject of pre-determined policies. As pointed out by Baxter:7 ‘[It] is inevitable that administrative officials would uphold the general policies of their department; in this broad sense it follows that they must be prejudiced against any individual who gets in their way. But this “departmental bias”, as it has been labelled, is unavoidable and even desirable for good administration. It does not necessarily prevent the official concerned from being fair and objective in deciding particular cases.’ [31] Nor can there be any objection to the political head of a department adopting recommendations made by the departmental officials, no matter that their recommendations are emphatic. It is precisely to formulate and ensure adherence to policy that departmental officials are there. It must be borne in mind that an appeal in the present context is not a quasi-judicial adjudication. It 7 Baxter, supra, at 567. is a reconsideration by the political head of a department of a decision made by his officials. Baxter observes that:8 ‘Since the primary function of a minister is a political one, this form of appeal is obviously only appropriate where it is considered that policy and administrative considerations are paramount and that disputes involving such considerations require his personal settlement. The minister can hardly be expected to adopt a detached posture, acting as an independent arbitrator. If this is expected of him then he should not be bothered with such appeals since a lower administrative tribunal could do the job instead, leaving him free to devote his time to more important matters of policy.’ [32] If the MEC was predisposed to refusing the application because it was contrary to the policy of his department that is not objectionable ‘bias’. A government functionary is perfectly entitled to refuse an application because it conflicts with pre-determined policy. No doubt when exercising a discretion on a matter that is governed by policy the functionary must bring an open mind to bear on the matter, but as this court said in Kemp NO v Van Wyk,9 that is not the same as a mind that is untrammelled by existing principles or policy. It said further that the functionary concerned ‘was entitled to evaluate the application in the light of the directorate’s existing policy and, provided that he was independently satisfied that the policy was appropriate to the particular case, and did not consider it to be a rule to which he was bound, I do not think it can be said that he failed to exercise his discretion’.10 [33] There was no basis for finding that the MEC, or the officials who guided him, exhibited bias. In our view the decision ought not to have been set aside on either ground. [34] Accordingly, the appeal is upheld with costs, including the costs of two counsel. The order of the court a quo is set aside and replaced with an order dismissing the application with costs. In both cases the costs are to include the costs of two counsel. 8 Baxter, supra, at 264. 9 2005 (6) SA 519 (SCA) para 1. 10 Para 10. R W NUGENT JUDGE OF APPEAL K G B SWAIN ACTING JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: A M BREITENBACH SC (WITH HIM F ESSOP) THE STATE ATTORNEY, CAPE TOWN THE STATE ATTORNEY, BLOEMFONTEIN FOR RESPONDENT: S P ROSENBERG SC (WITH HIM P S VAN ZYL) TRUTER ATTORNEYS, WITTEDRIF 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 31 May 2013 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. MEC for Environmental Affairs and Development Planning v Clairison’s CC (408/2012) [2013] ZASCA 82 (31 May 2013) Media Statement The MEC for environmental affairs and development planning (Cape) (appellant) had refused environmental authorisation for the establishment of a retirement village by Clairison’s CC (respondent) to the north of Plettenberg Bay. The Western Cape High Court reviewed and set aside the decision of the MEC on the grounds that the MEC had failed to take into account, that urban development had already occurred and further development had been approved in the area, where the development was to be situated. It was also held that there was a reasonable perception of bias on the part of the MEC. It was held on appeal by the SCA that the MEC had taken these factors into account, but in the exercise of his discretion weighed the existing development against the grant of the application and not in favour of it and disagreed with the approvals granted by his predecessor, which he was entitled to do. The MEC had accordingly decided the matter on its merits and had committed no reviewable irregularity. There was also no basis for any reasonable apprehension of bias on the part of the MEC. The appeal by the MEC was accordingly upheld. --- Ends ---
2514	non-electoral	2014	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 893/12 Reportable In the matter between: TSHAVHUNGWE MBENGENI MURABI APPELLANT and NALEDZANI CAROLINE MURABI FIRST RESPONDENT MINISTER OF HOME AFFAIRS SECOND RESPONDENT MASTER OF HIGH COURT THIRD RESPONDENT Neutral citation: Murabi v Murabi (893/12) [2014] ZASCA 49 (1 April 2014) Coram: Mthiyane DP, Petse, Saldulker JJA and Van Zyl and Legodi AJJA Heard: 20 March 2014 Delivered: 1 April 2014 Summary: Marriage ─ Validity ─ civil marriage contracted while the man is a partner in a subsisting customary union with third party void ─ falling foul of s 1 of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988. ORDER On appeal from: Limpopo High Court, Thohoyandou (Shaik AJ sitting as court of first instance): 1 The appeal is upheld with costs. 2 The order of the court below is set aside and in its place is substituted the following: ‘(a) The customary marriage between the applicant and the deceased contracted in 1979 is declared valid. (b) The civil marriage contracted between the first respondent and the deceased on 2 August 1995 is declared null and void. (c) The first respondent is ordered to pay the costs of the application.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Petse JA (Mthiyane DP, Saldulker JA and Van Zyl and Legodi AJJA concurring): [1] There are two issues for determination in this appeal. The first is whether the appellant, Ms Tshavhungwe Mbengeni Murabi, was lawfully married to the late Ranwedzi Ramathaga Godfrey Murabi (the deceased) who died on 7 April 2011. The second is whether the civil marriage of the first respondent, Ms Naledzani Caroline Murabi, to the deceased contracted on 2 August 1995 is valid. [2] These issues arise against the following backdrop. The appellant instituted proceedings in the Limpopo High Court, Thohoyandou in which she sought against the respondents an order: (a) that the ‘civil marriage’ contracted between the first respondent and the deceased on 2 August 1995 be declared null and void ab initio; and (b) that the customary marriage concluded between the appellant and the deceased on 1 November 1979 be declared valid. By way of consequential relief she also sought orders directing the second respondent, the Minister of Home Affairs, to register her marriage and concomitantly with that to expunge the civil marriage of the first respondent to the deceased from the marriage register. [3] The principal protagonists both in this court and the high court are the appellant and the first respondent. The Minister of Home Affairs and the Master of the High Court, Thohoyandou did not enter the legal fray and both filed, through the State Attorney, notices to abide the decision of the court. In addition the master filed a report, pursuant to Uniform rule 6(9), explaining how it came about that the first respondent was appointed as the executrix of the deceased’s estate. [4] In support of her application, the appellant inter alia stated that on 1 November 1970 she entered into a customary marriage with the deceased after lumalo1 in the sum of R600 was paid to her parents. In 1975 the deceased married the first respondent in accordance with Venda custom. Soon after this marriage her marriage relationship to the deceased became intolerable and insupportable for her, forcing her to return to her maiden home in 1979. [5] In 1983 she and the deceased resumed their marriage relationship when the deceased obtained a residential site for her. On 31 January 1991 her customary marriage to the deceased was registered with the magistrate in Thohoyandou and pursuant thereto she was issued with a certificate as evidence of the registration of the customary marriage. [6] Subsequent to the death of the deceased on 7 April 2011, the appellant attended at the offices of the third respondent, to report the death as contemplated in s 7(1)(a) of the Administration of Estates Act 66 of 1965. There she discovered that the death had already been reported by the first respondent and that the first respondent had been appointed as the executrix of the deceased’s estate. The appellant suspected that the first respondent had claimed to be the sole surviving 1 Lumalo is the Venda equivalent of lobola or ikhazi amongst the Nguni tribes. See also: Section 1 of the Recognition of Customary Marriages Act 120 of 1998 which defines ‘lobolo’ as: ‘the property in cash or in kind, whether known as lobolo, bogadi, bohali, xuma, lumalo, thaka, ikhazi, magadi, emabheka or any other name, which a prospective husband or the head of his family undertakes to give to the head of the prospective wife’s family in consideration of a customary marriage’. spouse and that she had married the deceased by civil rites in 1995. The appellant, on her part, asserted that she was the first wife by reason of her marriage having been concluded in 1970, whereas the first respondent’s marriage was concluded in 1979 with the consequence that the first respondent became the second wife in keeping with Venda customary law and tradition. [7] The allegations made by the appellant in her founding affidavit elicited the following response from the first respondent. She disputed that the deceased ever paid lumalo for the appellant and that the appellant ever married the deceased in 1970 or at all, contending that both the appellant and the deceased were at that stage still young. She alleged that when she married the deceased, the appellant was in fact married to one Frans Radzwabu of Tshirangadzi village. Moreover, the first respondent, whilst alluding to the possibility of an extra-marital relationship between the deceased and the appellant, alleged that since the deceased fell ill in 1994 until his death on 7 April 2011, the appellant never once visited him, nor did she attend the deceased’s funeral. [8] In a strange twist, the appellant admitted in her replying affidavit and supplementary replying affidavit that when the deceased married the first respondent she was still married to Frans Radzwabu. The appellant further admitted that she had an extra-marital liaison with the deceased whilst the latter was married to the first respondent and that the first respondent ‘was not happy with the relationship’. The appellant’s extra-marital relationship from which two children were born led, the appellant asserted, to the irretrievable breakdown of the appellant’s marriage to Frans Radzwabu. [9] On 29 June 2012 the parties concluded a settlement agreement in terms of which the issues in dispute were circumscribed. The parties agreed that the appellant concluded a customary marriage with the deceased in 1979, the validity of which remained in dispute. The matter eventually served before Shaik AJ who found that the appellant failed to establish the existence of the customary union asserted by her and dismissed her application with costs. The learned judge also declared the first respondent the only surviving spouse of the deceased. The appeal to this court is with the leave of the high court. [10] In the high court the contentions of the appellant were, in essence, that: (a) the registration of the appellant’s customary marriage with the deceased concluded in 1979 was at the very least and remained prima facie proof of the existence of such customary marriage as contemplated in s 2(1)2 of the Recognition of Customary Marriages Act 120 of 1998; (b) s 22(1)3 of the Black Administration Act 38 of 1927 which provided that a male person who is a partner in a subsisting customary union cannot contract a marriage without first making a declaration to a magistrate or commissioner of the matters dealt with in that section was unavailing to the first respondent; and (c) that the first respondent’s marriage to the deceased on 2 August 1995 is null and void ab initio because it was hit by the prohibition in s 14 of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988 as the deceased was on that date a partner in a subsisting customary union with the appellant. These contentions were summarily dismissed by the high court. [11] The reasons of the high court in rejecting these contentions were in essence the following. First, the high court, relying on Road Accident Fund v Mongalo; Nkabinde v Road Accident Fund 2003 (3) SA 119 (SCA) para 6, held that as the appellant initially asserted in her founding affidavit that her customary marriage was concluded on 1 November 1970, which turned out to be untrue, she could not rely on the registration certificate issued to her in 1991, for to allow her to do so would be assisting her to perpetrate a fraud. Second, that the appellant had approached the court ‘with dirty hands’ and withheld ‘material facts in her founding affidavit’. Third, 2 Section 2(1) provides that ‘a marriage which is a valid marriage at customary law and existing at the commencement of this Act is for all purposes recognised as a marriage’. The Act came into operation on 15 November 2000. 3 Section 22(1) provides: ‘No male [African] shall, during the subsistence of any customary union between him and any woman, contract a marriage with any other woman unless he has first declared upon oath, before the magistrate or native commissioner of the district in which he is domiciled, the name of every such first- mentioned woman; the name of every child of any such customary union; the nature and amount of the movable property (if any) allotted by him to each such woman or house under native custom; and such other information relating to any such union as the said official may require.’ Section 22(1) to (5) since repealed by the Recognition of Customary Marriages Act 120 of 1998. 4 Section 1 reads: ‘(a)(1) A man and a woman between whom a customary union subsists are competent to contract a marriage with each other if the man is not also a partner in a subsisting customary union with another woman. (b)(2) Subject to subsection (1), no person who is a partner in a customary union shall be competent to contract a marriage during the subsistence of that union.’ that having regard to the prescripts of s 22(1) of the Black Administration Act the [appellant] had in any event ‘failed to prove on a balance of probabilities that the deceased concluded a valid customary marriage’ with her. [12] Before turning to a consideration of counsel’s submissions it is convenient to make certain preliminary observations concerning aspects of the settlement agreement concluded by the parties on 29 June 2012 preceding the hearing of the matter in the high court. The settlement agreement obviated the hearing of oral evidence. Most significantly the first respondent admitted that the deceased concluded a customary marriage with the appellant in 1979. Following the agreement reached between the parties, only two issues remained for determination by the court below. The court below was called upon to decide whether: (a) the appellant’s customary marriage to the deceased was valid; and (b) the marriage between the deceased and the first respondent contracted on 2 August 1995 is valid. The answer to the first question hinged solely on the construction of the provisions of s 22(1) of the Black Administration Act. And the answer to the latter question hinged on the construction of the provisions of s 1 of the Marriage and Matrimonial Property Law Amendment Act and the status of the appellant’s customary marriage with the deceased. Thus, if the appellant’s customary marriage is valid then in that event the first respondent’s marriage would not survive.5 Counsel were in agreement that the customary marriage of the first respondent to the deceased concluded in 1975 was not in issue. [13] In this court, the argument advanced on behalf of the appellant was in essence the following. First, it was argued that the existence of the appellant’s customary marriage was borne out by the certificate of its registration issued to the appellant in 1991 which constitutes conclusive proof of such marriage. Accordingly, so it was contended, such conclusive proof can only be rendered invalid if there is countervailing evidence to show that it was obtained by fraud, whether by the holder or any other person. 5 See eg Thembisile & another v Thembisile & another 2002 (2) SA 209 (T) para 32. Thembisile was cited with approval in Netshituka v Netshituka & others 2011 (5) SA 453 (SCA) para 15. [14] The proposition advanced by counsel on behalf of the appellant is of course supported by decisions of this and other courts. In Road Accident Fund v Mongalo; Road Accident Fund v Nkabinde6 this court said (paras 6-7): ‘[6] The starting point in establishing the meaning of 'conclusive proof' must be principle. This Court stated the principle in question in African and European Investment Co Ltd v Warren and Others. A statute of the Transvaal Republic provided that a surveying diagram signed by the State President was to be “een wettig en onwederlegbaar document” (a lawful and unimpeachable document). De Villiers JA observed: “But there is no document in law which is wholly unimpeachable. Any document can be upset on the ground of fraud.” [7] Powerful policy reasons underlie this principle. Deliberate deceit in the procurement of a document must taint its entire subsequent existence, and the law cannot permit propagation of the fruits of dishonesty. The intrinsic meaning of “conclusive” does not impede this conclusion. “Conclusive” means “decisive, convincing” (The Concise Oxford Dictionary). It suggests that the condition or state it qualifies brings something to a conclusion. It does not mean that the conclusion in question must in all circumstances be unimpeachable or unassailable. In principle, therefore, a statutory provision that a document constitutes “conclusive proof” of a state of affairs cannot immunise the document from attack on the basis that it was procured fraudulently.’7 Counsel who appeared for the first respondent conceded that no such countervailing evidence was presented by the first respondent. Accordingly, the registration certificate issued to the appellant in 1991 constitutes, at the very least, prima facie proof of the existence of the appellant’s marriage.8 Thus, in the absence of countervailing evidence impugning its authenticity, it establishes the truth of the fact stated therein.9 [15] Furthermore, counsel representing the appellant sought to meet the submission advanced on behalf of the first respondent in relation to s 22(1) of the Black Administration Act by contending that the essence of that provision is that no 6 Road Accident Fund v Mongalo; Nkabinde v Road Accident Fund 2003 (3) SA 119 (SCA) paras 6-7. 7 See also Registrar of Asiatics v Salajee 1925 TPD 71 at 72 and 76. 8 See in this regard s 4(8) of the Recognition of Customary Marriages Act 120 of 1998 which reads: ‘A certificate of registration of a customary marriage issued under this section or any other law providing for the registration of customary marriages constitutes prima facie proof of the existence of the customary marriage and of the particulars contained in the certificate.’ (My emphasis.) 9 Ex Parte The Minister of Justice: In re R v Jacobson and Levy 1931 (AD) 472 at 474 in which this court said: ‘Prima facie proof, in the absence of rebuttal, therefore means clear proof leaving no doubt.’ See also Salmons v Jacoby 1939 (AD) 588 at 593 and the cases there cited. male who is a partner in a subsisting customary union with any woman may contract a civil marriage with another woman without first paying heed to the prescripts of that provision. In elaboration it was contended that there is no legal impediment to a man who is a partner in a subsisting customary union from concluding a second or subsequent customary union with another woman, and that s 22(1) does not purport to proscribe ─ subject to its requirements being satisfied ─ the conclusion of successive customary marriages in a polygamous customary marriage context. And what it sought to regulate was the proprietary consequences of a marriage by civil rights when the man is also a partner to a subsisting customary marriage. [16] Section 22 (1) does not itself contain an express provision to the effect that it applies to marriages other than polygamous customary marriages. But to my mind there is merit in the contention advanced on behalf of the appellant that if regard is had to the overall scheme of the Black Administration Act and one contrasts subsections (a) and (b) of s 910 there can be no room for any doubt that a material distinction is drawn between the two subsections. This has to be seen against the backdrop that according to the common law it has always been the case, as this court found in Nkambula,11 that ‘in respect of a man or woman bound by a civil marriage the law cannot recognise the bond of another “association of a man and a woman in a conjugal relationship”. . .’ To my mind Nkambula puts paid to the contention advanced on behalf of the first respondent that the word ‘marriage’ in s 22(1) must be construed to encompass a customary union. That this is not the case is put beyond doubt by the amendment introduced by s 9(a) and (b) of Act 9 of 1929.12 [17] I turn now to a consideration of the question whether, in the light of the conclusion that the appellant’s customary union is valid, the civil marriage of the first 10 Section 35 of the Black Administration Act which contained a definition of ‘customary union’ was amended in terms of s 9(a) and (b) of Act 9 of 1929 which substituted the following definitions: ‘(a) ''Customary union” means the association of a man and a woman in a conjugal relationship according to native law and custom, where neither the man nor the woman is a party to a subsisting marriage. (b) “Marriage” means the union of one man with one woman in accordance with any law for the time being in force in any Province governing marriages, but does not include any union contracted under native law and custom or any union recognised as a marriage in native law.’ 11 Nkambula v Linda 1951 (1) SA 377 (A) at 381A-D. 12 Fn 10 above. respondent contracted on 2 August 1995 can survive. The answer to this question lies squarely in s 1(1) and (2)13 of the Marriage and Matrimonial Property Law Amendment Act which came into operation on 2 December 1988. Dealing with the provisions of s 1(1) and (2), this court said the following in Netshituka (paras 14- 15):14 ‘[14] The next question is whether it was competent for the deceased to contract a civil marriage with the first respondent during the subsistence of the customary unions with Tshinakaho and Diana Netshituka. Section 22 of the Act [Black Administration Act] was amended by the Marriage and Matrimonial Property Law Amendment Act, which came into operation on 2 December 1988. After the amendment ss (1) and (2) provided: “(1) A man and a woman between whom a customary union subsists are competent to contract a marriage with each other if the man is not also a partner in a subsisting customary union with another woman. (2) Subject to subsection (1), no person who is a partner in a customary union shall be competent to contract a marriage during the subsistence of that union.” Subsection (3) barred a marriage officer from solemnising the marriage of an African “unless he has first taken from him a declaration to the effect that he is not a partner in a customary union with any woman other than the one he intends marrying”. And in terms of the amended ss (5) a man who made a false declaration with regard to the existence or otherwise of a customary union between him and any woman made himself guilty of an offence. A marriage officer could thus not solemnise a marriage where a man intended to marry a woman other than the one with whom he was a partner in an existing customary union. That, in my view, was the clear intention of the legislature when it amended s 22 of the Act. [15] Subsections (1) – (5) of s 22 of the Act, as amended, were in force as at the date on which the civil marriage between the deceased and the first respondent was contracted. (The subsections were repealed by the Recognition of Customary Marriages Act, which came into operation on 15 November 2000.) In Thembisile v Thembisile Bertelsmann J held that a civil marriage contracted while the man was a partner in an existing customary union with another woman was a nullity. It was not argued in this court that Thembisile was wrongly decided. It follows that the civil marriage between the deceased and the first respondent, having been contracted while the deceased was a partner in existing customary unions with Tshinakaho and Diana, was a nullity.’ (Citations omitted.) 13 Fn 3 above. 14 Fn 5 above. Accordingly, it goes without saying that the marriage of the first respondent to the deceased contracted on 2 August 1995 must ineluctably suffer the same fate. It follows that it was not legally competent for the deceased to contract a civil marriage with the first respondent during the subsistence of the customary marriage between the deceased and the appellant. The effect of this conclusion is that both the appellant and the first respondent are the deceased’s surviving spouses in terms of customary law. [18] Before concluding there is one other aspect that requires mention. In this case the record comprises documents that are illegible. These documents were annexed to the appellant’s founding papers and are critical to her case. All of the documents were intended to substantiate the appellant’s case that her customary marriage to the deceased preceded the conclusion of the first respondent’s civil marriage which she sought to impugn. In addition the appellant filed a document in support of her case that the deceased obtained a residential site on which he built a home for her and the children born of their customary marriage. Not only is this document barely legible it is also in manuscript. A typed version of this document could easily have been prepared. Unsurprisingly counsel for the appellant could offer no explanation for this shortcoming. It is evident that no consideration was given in the preparation of the record to the fact that the foresaid documents could not, in their condition, serve the purpose for which they were intended. [19] This court has on various occasions in the past expressed its utmost displeasure at the state of some of the records filed. In some cases it has warned that failure to file records that are satisfactory may lead to an adverse costs order whilst in others it has made punitive costs orders or deprive the party responsible for such infraction of part of its costs. Accordingly, it must be said without equivocation that this court views non-compliance with its rules in an extremely serious light. Thus it will not hesitate in more serious cases, if transgressions of this kind persist in the future, to mark its displeasure by making an appropriate costs order.15 15 Compare: Hushon SA (Pty) Ltd v Pictech (Pty) Ltd & others 1997 (4) SA 399 (SCA) at 415H-J; Minister of Health & another v Maliszewski & others 2000 (3) SA 1062 (SCA) paras 33-37. [20] In the result the following order is made: 1 The appeal is upheld with costs. 2 The order of the court below is set aside and in its place is substituted the following: ‘(a) The customary marriage between the applicant and the deceased contracted in 1979 is declared valid. (b) The civil marriage contracted between the first respondent and the deceased on 2 August 1995 is declared null and void. (c) The first respondent is ordered to pay the costs of the application.’ _________________ X M PETSE JUDGE OF APPEAL APPEARANCES: For the Appellant: A D Ramagalela Instructed by: Mathivha Attorneys, Thohoyandou Molefi Thoabalala Attorneys, Bloemfontein For the First Respondent: M S Sikhwari Instructed by: Wisani Baloyi Attorneys, Makhado Matsepes Incorporated, 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: 1 April 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. Murabi v Murabi The Supreme Court of Appeal (SCA) today upheld the appeal of the appellant against the dismissal of her application instituted in the Limpopo High Court, Thohoyandou in which she sought an order declaring her customary marriage to her deceased husband valid and also declaring the civil marriage of the first respondent to the deceased a nullity. The two issues before the SCA were whether: (a) the appellant’s customary marriage to the deceased was valid; and (b) whether the civil marriage of the first respondent to the deceased was also valid. It was common cause between the parties that the appellant married the deceased by customary rites in 1979 and that the first respondent, who had married the deceased by customary rites in 1975, also concluded a civil marriage with the deceased on 2 August 1995. The appellant contended that the first respondent’s civil marriage fell foul of the law in that at the time it was concluded it was not legally permissible for the deceased to contract a civil marriage whilst the appellant’s customary union with the deceased subsisted. The argument of the first respondent that the appellant’s customary marriage in 1979 was invalid because the deceased was already married to her by custom was rejected by the SCA. The SCA held that the Act that the first respondent relied upon only prohibited conclusion of a civil marriage if the man or woman was a partner in a subsisting customary union and not a customary marriage. Thus, the law did not prohibit the conclusion of more than one polygamous customary marriage whilst the first still subsisted. Consequently the SCA found that the appellant’s customary union was valid but not the first respondent’s civil marriage.
570	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1030/2015 In the matter between: FRESHVEST INVESTMENTS (PROPRIETARY) LIMITED APPELLANT and MARABENG (PROPRIETARY) LIMITED RESPONDENT Neutral citation: Freshvest Investments (Pty) Ltd v Marabeng (Pty) Ltd (1030/2015) [2016] ZASCA 168 (24 November 2016) Coram: Shongwe, Leach and Willis JJA and Fourie and Nicholls AJJA Heard: 15 November 2016 Delivered: 24 November 2016 Summary: Winding-up application: respondent disputing debt on bona fide and reasonable grounds: court a quo referring matter to oral evidence: winding-up proceedings not designed for the enforcement of disputed debts. ________________________________________________________________ ORDER _______________________________________________________________ On appeal from: Free State Division of the High Court of South Africa, Bloemfontein (Jordaan J sitting as court of first instance): The appeal is upheld and the order of the court a quo is set aside and substituted with the following: ‘The application for the winding-up of the respondent is postponed sine die, with costs to date to be costs in the cause.’ The costs of the appeal, including the costs of two counsel, where applicable, are to be costs in the cause in the winding-up application. Should the appellant be successful in the action that has been instituted (‘the pending action’) in establishing a claim of not less than R100 against the respondent, it may then set the winding-up application down for hearing on the same papers, duly amplified as needs be. Should the appellant fail to establish a claim of not less than R100 against the respondent in the pending action, or fail to prosecute the pending action to its final conclusion, then the winding-up application will be deemed to have been dismissed with costs, including the costs of two counsel, where applicable. _________________________________________________________________ JUDGMENT _________________________________________________________________ Fourie AJA (Shongwe, Leach and Willis JJA and Nicholls AJA concurring): [1] This is an appeal, with the leave of the court a quo, against the dismissal of an application for the winding-up of the respondent, Marabeng (Pty) Ltd. In essence, the matter serves as a stark reminder that winding-up proceedings are not designed for the enforcement of a debt that the debtor-company disputes on bona fide and reasonable grounds. This has become known as the ‘Badenhorst rule’ after Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 347-348. See also Kalil v Decotex (Pty) Ltd & another 1988 (1) SA 943 (A) at 980B- D, as well as the authorities referred to in Kalil at 980D-F. A collection of more recent authorities on the application of the Badenhorst rule is found in P M Meskin et al Henochsberg on the Companies Act 5 ed Vol 1 at 693-694. [2] The application for the winding-up of the respondent was brought at the instance of the appellant, Freshvest Investments (Pty) Ltd, a company which conducts business by, inter alia, providing finance facilities to entities active in the agricultural sector. It is common cause that the appellant, represented by Mr P Van As Le Roux (Le Roux) and the respondent, represented by Mr J H Naudé (Naudé Jnr), concluded three loan agreements during 2012, in terms of which it was recorded that the appellant lent and advanced various amounts to the respondent. It is further common cause that the respondent failed to repay the loans in terms of the agreements, with the result that as at 28 July 2014, an amount of R9 171 298,84 was due and owing to the appellant. On the strength of this indebtedness, the appellant approached the court a quo for the winding-up of the respondent. [3] The respondent filed an extensive affidavit in opposition to the application, in which it placed the validity of the appellant’s claim in issue. The main contentions raised by the respondent in disputing the appellant’s claim were the following: (a) Naudé Jnr had no authority to represent the respondent in concluding the three loan agreements with the appellant. In addition, the appellant’s representative, Le Roux, was aware of Naudé Jnr’s lack of authority. (b) Both Naudé Jnr and Le Roux were aware that the loans were not for the benefit of the respondent, but were advanced for the sole benefit of Naudé Jnr’s personal farming activities. The loan agreements were the product of the fraudulent and unlawful collusion between Le Roux, representing the appellant, and Naudé Jnr, to obtain the loans for the benefit of Naudé Jnr. (c) Although the three loan agreements recorded that the appellant and the respondent were the parties thereto, the true parties to the agreements were the appellant and Naudé Jnr. In fact, the loans were not utilised by the respondent, but by Naudé Jnr for his personal farming activities. (d) The three loan agreements were accordingly void ab initio and unenforceable against the respondent. [4] In its replying affidavit the appellant put these averments of the respondent in issue. In the event, the matter was heard by Lekale J, who, after hearing argument, delivered a written judgment. It appears from the judgment that Lekale J was alive to the implications of the Badenhorst rule, as well as the nature of the onus resting on a respondent who disputes its alleged indebtedness to an applicant in winding-up proceedings. In Kalil at 980C-D this onus was described as follows: ‘Consequently, where the respondent shows on a balance of probability that its indebtedness to the applicant is disputed on bona fide and reasonable grounds, the court will refuse a winding-up order. The onus on the respondent is not to show that it is not indebted to the applicant: it is merely to show that the indebtedness is disputed on bona fide and reasonable grounds.’ [5] The guidelines laid down in Kalil as to how factual disputes regarding the respondent’s indebtedness in an application such as the present should be approached, were stated thus by Brand J in Payslip Investment Holdings CC v Y2K Tec Limited 2001 (4) SA 781 (C) at 783H-I: ‘With reference to disputes regarding the respondent’s indebtedness, the test is whether it appeared on the papers that the applicant’s claim is disputed by respondent on reasonable and bona fide grounds. In this event it is not sufficient that the applicant has made out a case on the probabilities. The stated exception regarding disputes about an applicant’s claim thus cuts across the approach to factual disputes in general.’ [6] In Hülse-Reutter & another v HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO intervening) 1998 (2) SA 208 (C) at 219E-220A, Thring J commented as follows on the nature and the extent of this onus: ‘I think that it is important to bear in mind exactly what it is that the trustees have to establish in order to resist this application with success. Apart from the fact that they dispute the applicants’ claims, and do so bona fide, . . . what they must establish is no more and no less than that the grounds on which they do so are reasonable. They do not have to establish, even on the probabilities, that the company, under their direction, will, as a matter of fact, succeed in any action which might be brought against it by the applicants to enforce their disputed claims. They do not, . . . have to prove the company’s defence in any such proceedings. All that they have to satisfy me of is that the grounds which they advance for their and the company’s disputing these claims are not unreasonable . . . It seems to me to be sufficient for the trustees in the present application, as long as they do so bona fide, . . . to allege facts which, if proved at a trial, would constitute a good defence to the claims made against the company.’ [7] In applying these principles to the facts of the instant matter, Lekale J held as follows: ‘I am, therefore, persuaded by common cause facts in the present matter that the respondent disputes the debt on bona fide and reasonable grounds.’ In the light of the principles set out above, and bearing in mind the low threshold test that the respondent had to satisfy in order to discharge its onus, that should have been the end of the matter. Lekale J ought thereupon to have dismissed the application. However, he came to the following conclusion: ‘In the light of the need for speedy finalisation of a matter of the present nature, the nature and extent of the dispute involved as well as the fact that the dispute was not foreseeable on the part of the applicant [the appellant], I am convinced that the parties are correct, in their alternative submissions, that the correct course to follow is for the issue concerning the respondent’s liability to the applicant to be referred to oral evidence.’ [8] The consequences of this referral were unfortunate. As recorded earlier, there was no need in these proceedings for a finding whether or not the respondent is indebted to the appellant, as the respondent does not have to prove its defence. All that was required of the respondent, was to show that the appellant’s claims were disputed on bona fide and reasonable grounds. This Lekale J held it had done. [9] The application was then, in the temporary absence of Lekale J, referred to Jordaan J for the hearing of oral evidence. He heard the evidence of Mr FJ Rossouw (Rossouw), the deponent to the opposing affidavit of the respondent, as well as that of Le Roux. Upon conclusion of the evidence, Jordaan J delivered a judgment in which he dismissed the winding-up application with costs. [10] It is apparent from the judgment of Jordaan J, that he was rather surprised by the fact that, although Lekale J had held that the respondent disputed its indebtedness on bona fide and reasonable grounds, the matter had been referred to oral evidence on the issue of the respondent’s liability to the appellant. He put it as follows at para 10 of his judgment: ‘The irony of the matter is that my brother held that the debt was disputed on bona fide and reasonable grounds. However, I accept that this finding was obiter, otherwise there would have been no reason to refer the matter for oral evidence to have the same issue decided.’ (My translation of the learned judge’s Afrikaans.) [11] The finding of Lekale J was not obiter. As recorded above, he had expressly held that, on the common cause facts, the respondent disputed the debt on bona fide and reasonable grounds. In view thereof, Jordaan J ought to have held that it was unnecessary to hear oral evidence. See Wallach v Lew Geffen Estates CC 1993 (3) SA 258 (A) at 263H. The dismissal of the application ought then to have followed without incurring further costs and delay. [12] The irony is that, after hearing evidence for three days, Jordaan J came to exactly the same conclusion as Lekale J, namely that the respondent disputed the debt on bona fide and reasonable grounds. This conclusion was based on the relevant documentation as well as the evidence of Rossouw and Le Roux, and after making credibility findings, in particular, that the appellant’s witness, Le Roux, was an extremely poor witness. [13] This court is now faced with an appeal arising from proceedings before Jordaan J which were unwarranted and irrelevant. Lekale J had already held that the debt was disputed on bona fide and reasonable grounds. This finding was no doubt correct, as, on the papers (particularly the extensive answering affidavit), a defence was raised which was not unreasonable – on the contrary, the facts raised in opposition, if proved at a trial, would no doubt constitute a good defence. Further, a lack of bona fides cannot readily be inferred from the papers. Therefore, the matter ought to have ended with this finding of Lekale J and the appellant ought then to have instituted action to prove its disputed claim in the normal course. As recorded earlier, Lekale J compounded the confusion by referring the matter to oral evidence on the issue as to whether or not the debt was, in fact, due. Jordaan J then, contrary to the order of Lekale J, decided the issue as to whether or not the debt was disputed on bona fide and reasonable grounds. This issue had, however, not only already been decided, but was an issue that had to be decided on the papers and not with the aid of oral evidence. How does this court now unscramble the egg? [14] What is clear from the above, is that the winding-up application could not have succeeded. But, should the appeal against the order of Jordaan J now simply be dismissed? Although one may at first blush be inclined to follow this route, I believe that, for the reasons set out hereinafter, the appeal ought not to be dismissed. [15] The appellant’s counsel forcefully argued that should this court find that the respondent has in fact discharged its onus, the appeal should not be dismissed, but it should be ordered that the winding-up application be postponed sine die to enable the appellant in the meantime to proceed against the respondent with its action for payment of its claim. We have been informed that action proceedings have already been instituted by the appellant for the recovery of the full amount allegedly due to it by the respondent. [16] Counsel for the appellant further submitted that, in the hearing before Jordaan J, the respondent had changed its stance by contending that the relevant loan agreements were simulated transactions and not, as initially alleged in the answering affidavit, the result of fraudulent and unlawful collusion between the appellant and Naudé Jnr. Counsel contended that it was apparent from the evidence of Rossouw, the respondent’s witness, that an amount of at least R600 000 of the funds advanced by the appellant in terms of the agreements, was paid to the respondent’s creditor and not to Naudé Jnr. Therefore, counsel argued, there was a reasonable possibility that the appellant will have some success in its action against the respondent. [17] Whilst it is not necessary to delve into the evidence tendered before Jordaan J, I believe that there is merit in counsel’s submission that allowance should be made for the possibility that the appellant may in the main action obtain an order recovering some portion of the debt allegedly owing and on which the winding-up application is based. However, I hasten to add that I make no definite finding in this regard. Therefore it appears to be just and equitable at this stage not to finally dispose of the winding-up application, but rather to postpone it sine die, thereby awaiting the finalisation of the action proceedings. [18] In arriving at this conclusion, I have also taken account of the fact that both of the parties were instrumental in having the matter referred to oral evidence by Lekale J. As appears from his judgment, the parties put this forward as an alternative route to follow and then actively participated in the hearing before Jordaan J, notwithstanding the prior finding made by Lekale J that the respondent disputed the debt on bona fide and reasonable grounds. [19] In making this order, it has been helpful to refer to the order made by Griesel J in Investec Bank Limited v Lewis 2002 (2) SA 111 (C) at 121A-C. [20] It is ordered that: The appeal is upheld and the order of the court a quo is set aside and substituted with the following: ‘The application for the winding-up of the respondent is postponed sine die, with costs to date to be costs in the cause.’ The costs of the appeal, including the costs of two counsel, where applicable, are to be costs in the cause in the winding-up application. Should the appellant be successful in the action that has been instituted (‘the pending action’) in establishing a claim of not less than R100 against the respondent, it may then set the winding-up application down for hearing on the same papers, duly amplified as needs be. Should the appellant fail to establish a claim of not less than R100 against the respondent in the pending action, or fail to prosecute the pending action to its final conclusion, then the winding-up application will be deemed to have been dismissed with costs, including the costs of two counsel, where applicable. _____________________ P B Fourie Acting Judge of Appeal APPEARANCES: Counsel for Appellant: L M Buikman SC Instructed by: Cluver Markotter Inc., Stellenbosch McIntyre & van der Post, Bloemfontein Counsel for Respondent: P J Greyling (with him J J Potgieter) Instructed by: Karien Schutte Attorneys, Middelburg Schoeman Maree 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 24 November 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Freshvest Investments (Pty) Ltd v Marabeng (Pty) Ltd (1030/2015) [2016] ZASCA 168 (24 November 2016) The Supreme Court of Appeal (SCA) today delivered judgment in a liquidation application in which the respondent-company, on the papers filed in opposition, disputed the applicant’s claim against it on bona fide and reasonable grounds. The SCA reiterated that in such circumstances the application for liquidation should be refused as liquidation proceedings are not designed for the enforcement of disputed debts. The high court erred in referring the application to oral evidence after it had found that the debt was disputed on bona fide and reasonable grounds. The SCA reiterated that such procedure is not in accord with previous decisions of the courts.
1888	non-electoral	2011	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 638/2010 In the matters between: IMPERIAL MARINE COMPANY Appellant and THE MOTOR VESSEL PASQUALE DELLA GATTA First Respondent DEIULEMAR COMPANGNIA DI NAVIGAZIONE Spa Second Respondent and IMPERIAL MARINE COMPANY Appellant and THE MOTOR VESSEL FILIPPO LEMBO First Respondent DEIULEMAR COMPANGNIA DI NAVIGAZIONE Spa Second Respondent Neutral citation: Imperial Marine Company v Pasquale della Gatta; Imperial Marine Company v Filippo Lembo (638/10) [2011] ZASCA 131 (15 September 2011) Coram: NAVSA, BRAND, LEWIS, LEACH and WALLIS JJA Heard: 18 August 2011 Delivered: 15 September 2011 Summary: Arrest of vessels as security for claims being pursued in arbitration proceedings in London – requirement of a prima facie case – application of established principles to the drawing of inferences and the evidence of experts – allegations of breach by charterer – supply of bunkers not in accordance with specification –breach of safe port, safe berth warranty – alleged breach of implied warranty under NYPE charter party form – alleged failure to redeliver vessel in the same good order and condition, fair wear and tear excepted – claim for counter-security – charterer alleging a failure by owner to deliver and maintain vessel in an efficient state causing it loss – basis for assessing – reasonably arguable best case. ORDER On appeal from: Western Cape High Court, Cape Town (Baartman J sitting as court of first instance): [A] In the appeal against the judgment in the case of the arrest of the Pasquale della Gatta (Case No AC20/09 in the high court) the following order is made: (a) The appeal is dismissed with costs. (b) The cross-appeal is upheld with costs and the order of the high court is altered to read as follows: ‘(i) The order for the arrest of the Pasquale della Gatta granted ex parte on 20 March 2009 and the deemed arrest of the vessel pursuant to the provision of security to obtain its release from that arrest are set aside. (ii) The applicant is ordered to pay the costs of the application on the scale as between attorney and client.’ (c) The order for the provision of counter-security by the applicant, Imperial Marine Company, is set aside. [B] In the appeal against the judgment in the case of the arrest of the Filippo Lembo (Case No AC 8/09 in the high court) the following order is made: (a) The appeal succeeds to the extent that paragraphs 6 and 7 of the order of the high court are altered in the following respects: (i) by the deletion in paragraph 6(a) of the amount of US$17 477 128.40 and its replacement by US$7 047 177.50; (ii) by the deletion in paragraph 6(b) of the figure of US$3 408 040 and its replacement by US$1 374 199,61; (iii) by the deletion in paragraph 7(a)(i) of the words ‘claims1(a)-(f) US$20 485 587.17’ and their replacement by ‘claims 1(a), (b), (d) and (e) US$7 029 824.59; (iv) by the deletion of paragraphs 7(b) and (d); but is otherwise dismissed. (b) The cross-appeal succeeds and paragraph 2 of the order of the high court is altered in the following respects: (i) by the deletion of paragraphs 2(a)(iii) and (iv) thereof; (ii) by the deletion in paragraph 2(a)(v) of the figure of US$1 699 675.20 and its replacement by US$878 825.23; (iii) by the deletion in paragraph 2(a)(vii) of the figure of US$12 201 958.32 and its replacement by US$7 171 621.26. (c) Each party is ordered to pay half the costs of and attendant upon the preparation of the record in relation to this matter being volumes 1 to 9 and 16 of the record of appeal and is otherwise ordered to bear its own costs. JUDGMENT WALLIS JA (NAVSA, BRAND, LEWIS AND LEACH JJA CONCURRING) Introduction [1] On 3 July 2003 Imperial Marine Company (Imperial Marine) and the second respondent, Deiulemar Compangnia di Navigazione Spa (Deiulemar), concluded a long term time charterparty on the NYPE form in respect of the George T, a Capesize bulk carrier of some 170 00 dwt. A dispute arose in 2005 when the vessel suffered damage to its main engine and underwent repairs at Pylos, Greece. Deiulemar treated the vessel as off-hire whilst it was under repair. It thereafter commenced arbitration proceedings against Imperial Marine in London in terms of the charterparty, alleging various breaches of the charterparty and claiming damages flowing from this incident. Imperial Marine responded with both a defence and a counterclaim to recover the unpaid hire and the cost of repairs. In June 2007 a further dispute arose over the dry docking of the vessel and this caused Deiulemar to terminate the charterparty. Both parties are pursuing the arbitration, albeit that progress has been slow and many of the claims now being advanced have not yet featured in the formal points of claim and defence or counterclaim. Nonetheless all are treated as being claims in those proceedings and I shall do likewise. [2] Neither Deiulemar nor Imperial Marine held security for their claims, whether those already incorporated in pleadings or those they proposed to include by way of amendment. On 3 February 2009, and with a view to remedying this, Imperial Marine obtained an order for the arrest of the Filippo Lembo in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) to provide security for some of its claims. Deiulemar challenged this arrest in respect of two of those claims and counterclaimed for an order in terms of s 5(2)(c) of the Act that the arrest be subject to a condition that Imperial Marine provide security for Deiulemar’s own claims. Whilst this litigation was still underway Imperial Marine caused the Pasquale della Gatta to be arrested in respect of a further claim. Deiulemar responded by seeking to have that arrest set aside and counterclaimed conditionally for security for a claim under s 5(3) of the Act. Both arrested vessels were released against the provision of security in the form of P & I Club letters of undertaking. [3] The two applications were argued together before Baartman J in the high court and both parties enjoyed some success. Imperial Marine maintained its security for two of the claims advanced in support of the arrest of the Filippo Lembo and also maintained its security arising from the arrest of the Pasquale della Gatta, albeit in an amount less than it had claimed. Deiulemar obtained the counter-security it sought in both sets of proceedings and also obtained costs orders in its favour. With its leave both parties appeal against the decision of the high court insofar as it went against them and seek to maintain that decision insofar as it favoured them. The facts [4] The charter in respect of the George T was for a period of 35 to 37 months, with the charterers having an option to extend the period for 11 to 13 months. Hire was payable by Deiulemar at a daily rate of US$16 350 for the initial period and US$17 350 for the extension period. Deiulemar was obliged to provide and pay for fuel the specifications of which were stated in clauses 62 and 82. It was entitled to trade the vessel worldwide without limit subject to certain exclusions and subject also to the usual provision that it would only do so ‘via safe port(s), safe berth(s), safe anchorage(s) always afloat’. There was an unlimited entitlement to sub-charter the vessel although Deiulemar remained liable for the obligations under the charterparty. Imperial Marine was obliged to provide a vessel that was in a thoroughly efficient state and for the duration of the charter to ‘maintain her class and keep the vessel in a thoroughly efficient state in hull/holds, machinery and equipment’. On redelivery Deiulemar undertook that the vessel would be in the same good order and condition as on delivery, fair wear and tear excepted. None of this is in any way unusual. [5] On 6 July 2003 the George T was delivered to Deiulemar and for the first two years there appear to have been no significant problems. The present disputes originate with the provision by Deiulemar of a bunker stem at Yeo Su, Korea on 4 March 2005. The vessel then sailed for Dampier in Australia and started burning these bunkers. Whilst it was en route to Dampier a sub-charter was concluded between Deiulemar and Dabkomar Bulk Carriers Ltd (Dabkomar), also on NYPE terms, back to back with the head charter, for a period up to 3 September 2007, minus 60 days in Dabkomar’s option, at a hire rate of US$45 000 per day. In effect this was a sub-charter for the remaining period of the head charter inclusive of the extension period. The vessel completed its voyage to Dampier and loaded a cargo for Quingdao, China where it was delivered under the sub-charter. From there it returned to Yeo Su to take on a second stem of bunkers and then proceeded to Port Hedland in Australia. All this occurred between 16 March and the middle of May 2005, the precise date of each event being immaterial, save that delivery under the sub-charter is said to have occurred on 23 April 2005. [6] Whilst the vessel was en route to Port Hedland the chief engineer received a report that the bunkers delivered in the first bunker stem at Yeo Su were not in accordance with specification. This is accepted as correct, at least insofar as the Kineamatic viscosity of the bunkers is concerned. The engineer’s response was to stop burning those bunkers and to switch to others. The unwillingness to use the initial Yeo Su bunker stem meant that when the vessel left Port Hedland it had insufficient bunkers to reach its destination at Redcar in the United Kingdom and it accordingly diverted to Colombo in Sri Lanka to take on additional bunkers. Its onward route was via Suez where there was a brief stoppage because of engine problems. Shortly thereafter it became apparent that the main engine had suffered major damage and required repairs. For that reason it went to Pylos, Greece where the repairs were undertaken over a period of a little over 71 days. [7] Deiulemar claims that the reason for the breakdown in the main engine was a failure on the part of Imperial Marine to fulfil its obligations to provide a vessel with its machinery and equipment in a thoroughly efficient state and its further obligation to maintain it in such state. It accordingly contends that the detour to Colombo was an improper diversion and that the vessel was off-hire during that period as well as the periods of the breakdown at Suez and repairs at Pylos. It fixes its damages for this period as the difference between the hire it would have paid had the vessel been working and the hire it would have received from Dabkomar if the latter had not also contended that the vessel was off-hire during these periods. It invoked the arbitration clause providing for London arbitration and served points of claim embodying this claim. Furthermore, on 29 September 2005, before the points of claim were delivered, Dabkomar had cancelled the sub-charter. Flowing from this Deiulemar pleaded that, if the cancellation were held to be valid in an arbitration pending between Deiulemar and Dabkomar, there would be a further claim for damages represented by the difference between the hire it would be obliged to pay under the head charter and the hire it would have earned under the sub-charter. It did not attempt to quantify these damages. [8] Imperial Marine disputed these claims. It laid the blame for the damage to the main engine on the first Yeo Su bunker stem, which led to the vessel burning bunkers with excessive viscosity. It accordingly counterclaimed for the unpaid hire and the cost of the repairs to the main engine at Pylos. Over and above this it claimed an unspecified amount for the diminution in the value of the vessel arising from the manner in which the repairs to the engine’s cylinder blocks were undertaken. [9] The arbitration proceeded at a leisurely pace, in part because Deiulemar indicated that it intended to amend its points of claim to include new and revised claims and Imperial Marine was unwilling to agree to this. In the meantime the George T continued trading in terms of the charterparty. There was allegedly a deballasting problem at Richards Bay in February 2006 and between 23 June and 17 August 2006 it was taken out of service for its annual class survey and repairs at Zhoushan, China. It was then under sub-charter until 26 December 2006 after which it sailed for Richards Bay, where it arrived on 24 January 2007. Four days later it left with its cargo bound for Rotterdam. [10] On 6 March 2007, whilst the George T was at Rotterdam, Imperial Marine sent a message to Deiulemar that during the course of tank cleaning of No 8 Double Bottom Tank (DBT), prior to inspection, damage to the tank had been discovered. This was described as being: ‘… a large indentation over a distance spanning 8 web frames (about 28 metres), to a maximum depth of about 400 millimetres, and about 4.5 metres at the widest point.’ Surveyors were called in from Lloyds Register, with which the vessel was entered for class. They required repairs to be undertaken, some immediately and others at a later stage. For the purpose of the immediate repairs the vessel moved to Antwerp where substantial repairs, especially to the vessel’s steel plating, were undertaken between 8 March 2007 and 12 May 2007. It then resumed trading but on 13 June 2007 Lloyds Register refused to extend the date for its next dry docking survey, which accordingly had to take place before 25 August 2007. Imperial Marine advised Deiulemar that they would send the vessel to Zhoushan, China for that purpose. After an exchange of correspondence Deiulemar’s response was that this rendered further trading under the charter impossible. On 1 August 2007 they delivered a letter to Imperial Marine terminating the charter. Shortly prior to that the vessel had entered dry dock at Zhoushan and it remained there for the survey and repairs until 20 December 2007. These repairs also involved extensive work on and replacement of the vessel’s steel plating. [11] Two other facts should be mentioned before turning to consider the arrests of the two vessels in South Africa. The first is that, whilst the vessel was undergoing repairs at Antwerp, Imperial Marine sold it to Dalton Worldwide SA (Dalton) for a price representing the amount due under the outstanding mortgage over the vessel. Registration of the change of ownership occurred on 29 June 2007. The vessel thereafter continued trading but was scrapped in March 2010 shortly before the cases were argued in the high court. The claims [12] Imperial Marine advanced three claims in support of the arrest of the Filippo Lembo. The first can be described shortly. It alleged that Deiulemar breached the charterparty by supplying out of specification bunkers at Yeo Su and that the use of these bunkers occasioned damage to the vessel’s main engine. The unpaid charter hire in respect of the diversion to Colombo; the stoppage in Suez; and the period while the vessel was undergoing repairs at Pylos was claimed, as well as the cost of the repairs. Deiulemar accepted that a prima facie case had been made in respect of this claim and that Imperial Marine was entitled to security for it. The capital amount is US$4 506 796.03. Deiulemar also accepted that the security should cover interest at 6.5 percent on the amount claimed for three years, amounting to US$878 825.23, and the costs of the arbitration, which it agreed should be fixed in the sum of US$2 150 000. However, it contended that Imperial Marine already held security for costs in an amount of £250 000 and that the amount for costs should be reduced accordingly. The high court upheld this latter contention. [13] In the counterclaim in the arbitration the second claim was formulated in the following way: ‘Diminution in the value of the vessel as a direct result of the fact that, in order to avoid the need to wait for the manufacture and delivery of new blocks, the cracked cylinder blocks were repaired by way of Metalock stitching.’ In these proceedings this claim underwent a change. The affidavit in support of the arrest said it was a claim to recover the cost of replacing the repaired cylinder blocks with new blocks at a cost of US$700 000 apiece, totalling US$4.2 million, plus downtime for 120 days at US$25 000 per day, occasioning a loss of a further US$3 million. The claim was attacked on two grounds. They were first that new cylinder blocks were not required as the original repair was perfectly adequate, and second that the vessel was transferred to Dalton, without the cylinder blocks being replaced so that no damages were suffered. By the time of argument in the high court the vessel had been scrapped without replacing the cylinder blocks and this became a further reason for contending that no damages were suffered. Albeit that the repairs were never done, Imperial Marine contended that the cost of undertaking them is nonetheless, as a matter of English law, the proper measure of the diminution in value of the George T. The high court rejected this claim and reduced the amount of security accordingly. [14] The third claim, which had not been raised in the arbitration, was for the cost of repairing the shell plating of the vessel in way of No 8 DBT. It was alleged that Deiulemar, in breach of its obligations under the charterparty, directed the vessel to load a cargo at Richards Bay, which was not a safe port, or alternatively at a berth at Richards Bay, which was not a safe berth. In the further alternative the claim was advanced on the basis of an implied indemnity arising under clause 8 of the charterparty. Imperial Marine relied on circumstantial evidence and contended that the inference to be drawn from this evidence is that an underwater protrusion from the wall of the berth at Richards Bay caused the damage noted in Rotterdam. This constituted a hidden danger and rendered either the port or the berth unsafe. The claim was disputed on the facts in regard to the cause of the damage and on the law relating to what constitutes a safe port and a safe berth and the existence of any implied indemnity. The high court accepted that Imperial Marine established the claim on the requisite prima facie basis and upheld the arrest and the claim for security in respect thereof. [15] It is convenient at this stage to deal with the claim advanced by Imperial Marine in support of the arrest of the Pasquale della Gatta. It was a claim for the cost of the repairs to the steel work of the vessel undertaken in 2007 at Antwerp and Zhoushan, other than those relating to the hull in way of No 8 DBT. When the vessel was inspected during the repairs at Antwerp considerable corrosion was discovered in the internal shell plating and steel members of numbers 7, 8, 9 and 10 DBTs. In seeking the arrest Imperial Marine said that this was due to the action of Sulphate Reducing Bacteria (SRB) and on two grounds blamed Deiulemar for the incursion of these bacteria. The first was that in breach of its obligations as charterer it directed the vessel to ports where it was particularly vulnerable to corrosion in consequence of the activities of SRB. The second was that in any event Deiulemar was obliged to re- deliver the vessel at the end of the charter in the same order and condition as it was on delivery at the commencement of the charter, fair wear and tear excepted, and that re-delivery with extensive corrosion caused by SRB was a breach of this obligation. Again this claim, and the expert evidence delivered in support of it, was disputed on the facts. In addition the legal basis for the claim was disputed. The high court sustained the arrest although it reduced the amount of security to be furnished. [16] I turn to the claims that Deiulemar sought to have secured by way of the condition imposed on the arrest of the Filippo Lembo. It alleged that throughout the period of the charter Imperial Marine was in breach of its obligations to provide a vessel in a thoroughly efficient condition and to maintain it in that condition. It attributed any problems experienced with burning the first bunker stem at Yeo Su to this. It claimed on the basis of an inspection of the damaged engine that the problems it experienced were long-standing and flowed from lack of maintenance and the manner of the ship’s operation. It alleged that lack of maintenance was the reason for the corrosion of the ship’s steelwork and necessitated the vessel going off-hire to undergo repairs. In addition it said that the engine problems meant that it failed to perform in accordance with the provisions of the charterparty. Deiulemar claimed damages for loss of income under the Dabkomar sub-charter; the loss of that sub-charter; and losses it said it incurred, both by way of additional expenditure and by way of loss of potential income, from its trading with the vessel after the termination of the sub-charter. It obtained an order that the arrest of the Filippo Lembo be made subject to a condition that this claim be secured in full, subject to an allowance to avoid duplication. In relation to the arrest of the Pasquale della Gatta it failed in its efforts to have the arrest set aside but succeeded in a conditional counter- application for security for a claim under s 5(4) of the Act arising from delays in securing the release of the vessel from that arrest. It was awarded the costs of both applications, including in the latter case the costs on an attorney and client scale. The appeals [17] Imperial Marine is the party more aggrieved by the decision of the high court. It appeals against the following aspects of the judgment: (a) the reduction of its security for costs in the arbitration by £250 000, being the amount of security already provided by Deiulemar; (b) the rejection of the claim for security in relation to the replacement of the cylinder blocks; (c) the order attaching a condition to the arrest of the Filippo Lembo that it provide security to Deiulemar in the full amount of its claims arising from the cancellation of the sub-charter and the alleged lack of seaworthiness and maintenance of the George T; (d) the reduction of the amount of its security in respect of the corrosion claim; (e) the order that it bear the costs of the two applications including, in the case of the Pasquale della Gatta, costs on the scale as between attorney and client. [18] For its part Deiulemar seeks to sustain the orders of the high court insofar as they favour it and appeals against the following portions of those orders: (a) the maintenance of the arrest and security in relation to the alleged damage to the No 8 DBT of the George T at Richards Bay; (b) the dismissal of its application to set aside the arrest of the Pasquale della Gatta. The law [19] In Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris1 this court held that: ‘A claimant applying for an order for the arrest of a ship in terms of s 5(3)(a) for the purpose of obtaining security in respect of a claim which is the subject of contemplated proceedings to be instituted in a foreign forum is required to satisfy the Court (a) that he has a claim enforceable by an action in rem against the ship in question or against a ship of which the ship in question is an associated ship; (b) that he has a prima facie case in respect of such a claim, which is prima facie enforceable 1 Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A) at 832J-833A. in the nominated forum or forums of his choice, in the sense explained above; and (c) that he has a genuine and reasonable need for security in respect of the claim.’ The focus in the present case falls on whether the parties have established the requisite prima facie case in relation to their respective claims. Whether there is a prima facie case may depend upon issues of both fact and law, as with Imperial Marine’s claim for damage to the vessel allegedly suffered at Richards Bay and the claim arising from alleged SRB-induced corrosion. The starting point is the facts upon which any legal contentions are based. [20] Scott JA addressed the topic of the evidence necessary to establish a prima facie case in Hülse-Reutter & others v Gödde2 in the following terms: ‘[12] The requirement of a prima facie case in relation to attachments to found or confirm jurisdiction has over the years been said to be satisfied if an applicant shows that there is evidence which, if accepted, will establish a cause of action and that the mere fact that such evidence is contradicted will not disentitle the applicant to relief – not even if the probabilities are against him; it is only where it is quite clear that the applicant has no action, or cannot succeed, that an attachment should be refused. This formulation of the test … has been applied both by this Court and the Provincial Divisions … One of the considerations justifying what has been described as generally speaking a low-level test … is that the primary object of an attachment is to establish jurisdiction; once that is done the cause of action will in due course have to be established in accordance with the ordinary standard of proof in subsequent proceedings. …No doubt for this reason Nestadt JA, in the Weissglass case … warned that a court “must be careful not to enter into the merits of the case or at this stage to attempt to adjudicate on credibility, probabilities or the prospects of success”. [13] Nonetheless, the remedy is of an exceptional nature and may have far-reaching consequences for the owner of the property attached. It has accordingly been stressed that the remedy is one that should be applied with care and caution … More recently, 2 Hülse-Reutter & others v Gödde 2001 (4) SA 1336 (SCA) paras 12 - 14. in Dabelstein and Others v Lane and Fey NNO 2001 (1) SA 1222 (SCA) at 1227H - 1228A, it was suggested that the time may come to reconsider the approach adopted in the past and to have regard also, in the assessment of the evidence, to the allegations in the respondent's answering affidavit which the applicant cannot contradict. In the present case, however, the affidavits filed on behalf of the appellants are such that the issue does not arise and it is unnecessary to consider whether the test should be refined in the manner suggested. [14] What is clear is that the “evidence” on which an applicant relies, save in exceptional cases, must consist of allegations of fact as opposed to mere assertions. It is only when the assertion amounts to an inference which may reasonably be drawn from the facts alleged that it can have any relevance. In other words, although some latitude may be allowed, the ordinary principles involved in reasoning by inference cannot simply be ignored. The inquiry in civil cases is, of course, whether the inference sought to be drawn from the facts proved is one which by balancing probabilities is the one which seems to be the more natural or acceptable from several conceivable ones … While there need not be rigid compliance with this standard, the inference sought to be drawn, as I have said, must at least be one which may reasonably be drawn from the facts alleged. If the position were otherwise the requirement of a prima facie case would be rendered all but nugatory …’ (Most authorities omitted.) [21] These appeals pertinently raise the issue whether Hefer ACJ was correct in suggesting in Dabelstein’s case that facts in the opposing affidavits that an applicant is unable to contradict should also be taken into account in weighing up whether the applicant has discharged the onus of establishing a prima facie case. The issue arises at various points in the consideration of the evidence presented by the parties in the present case. By way of example, in relation to the claim for the damage to the shell plating of No 8 DBT, a diagram of the berth at Richards Bay and an explanation of the mode of its construction is put up and not challenged by Imperial Marine. In regard to the SRB corrosion claim there are unchallenged affidavits by Dr Bailey and Dr Stott put in by Deiulemar that undermine certain key statements by Imperial Marine’s expert witness, Dr Cleland. Should this evidence nonetheless be ignored in considering these claims, or should it be taken into account in considering whether Imperial Marine has placed evidence before the court that, if accepted by the arbitrators, could reasonably lead to the conclusion that the claims will succeed? [22] When this question was put to him counsel for Imperial Marine fairly accepted that the court should have regard to such evidence. That resolves the need to decide finally whether to adopt the approach of Hefer ACJ although, as the Constitutional Court has recently pointed out, deciding matters on the basis of concessions by counsel is not always satisfactory.3 For that latter reason I indicate briefly why there is much to be said, in deciding whether the applicant has established a prima facie case, for taking into account the facts in the opposing affidavits that an applicant does not contradict, at least where there is no reason to believe that in future proceedings, with the advantages of discovery, those facts are capable of being challenged. The primary reason is that in principle to do otherwise is to shut one’s eyes to relevant factual material that may fatally undermine the arresting party’s claim and courts do not ordinarily disregard relevant and admissible evidence when reaching their decisions. Disregarding such evidence seems inconsistent with the constitutional requirement that both parties are entitled to a fair hearing and confers an unjustifiable advantage on the arresting party. In the present context, our courts have repeatedly stressed that the arrest of a ship is a matter with serious consequences.4 That being so, it seems incongruous for a court 3 Premier: Limpopo Province v Speaker of the Limpopo Provincial Government and others [2011] ZACC 25, para 31. 4 Starting with a statement by Didcott J in Katagum Wholesale Commodities Co Ltd v The MV Paz 1984 (3) SA 261 (N) at 269H, quoted with approval by Corbett CJ in Bocimar NV v Kotor Overseas faced with a decision whether to order or sustain such an arrest to ignore materially relevant and undisputed evidence. [23] The consideration of such evidence does not offend against any basic principle underpinning the traditional approach to proof of a prima facie case. Whilst the fact that the merits will be considered at a later stage is said to provide the justification for adopting this low-level test in cases of attachments to found jurisdiction, it is not relevant to the consideration of an application for a security arrest in terms of s 5(3) of the Act. A security arrest is not directed at establishing the court’s jurisdiction in future proceedings but at obtaining final relief in the form of an order that security be provided for the outcome of proceedings in another forum, usually in another jurisdiction.5 This is a special jurisdiction vested in our courts under the Act6 and in determining whether to order an arrest it is inappropriate for the court to shut its eyes to admissible and relevant evidence that is not and cannot be disputed. This is particularly so because obtaining security may play a crucial role in decisions concerning the future conduct of the foreign proceedings and can even lead to their being abandoned or settled. [24] Leaving that aside two other points fall to be made about the approach to proof of a prima facie case. They are first that where the applicant asks the court to draw factual inferences from the evidence they Shipping Ltd 1994 (2) SA 563 (A) at 581G-H and by Scott JA in MV Snow Crystal: Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal 2008 (4) SA 111 (SCA) para 36. 5 Ecker v Dean 1937 SWA 3 at 4 cited in Shepstone and Wylie & others v Geyser NO 1998 (3) SA 1036 (SCA) at 1042C-D. Whilst there remains a deemed arrest of the vessel in terms of s 3(10)(a) of the ACT, even after it has been released from arrest against the provision of security, (see MV ‘Alam Tenggiri: Golden Seabird Maritime Inc v Alam Tenggiri SDN BHD 2001 (4) SA 1329 (SCA) paras 12 to 15) in the ordinary course if a challenge to a security arrest is unsuccessful the South African courts play no further role in the proceedings in relation to which such security has been furnished. 6 When introduced it was unique internationally and even in jurisdictions where similar relief is now obtainable it is neither as straightforward nor as direct as in South Africa must be inferences that can reasonably be drawn from it, even if they need not be the only possible inferences from that evidence. If they are tenuous or far-fetched the onus is not discharged. Second the drawing of inferences from the facts must be based on proven facts and not matters of speculation. As Lord Wright said in his speech in Caswell v Powell Duffryn Associated Collieries Ltd: ‘Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish … But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture.’7 [25] Lastly on the aspect of proof of a prima facie case, the parties relied on expert evidence in regard to certain claims, namely those based on the existence of SRB-induced corrosion and the damage allegedly suffered at Richards Bay, as well as the legal position in terms of English law, which governs the charterparty. In a trial action it is fundamental that the opinion of an expert must be based on facts that are established by the evidence and the court assesses the opinions of experts on the basis of ‘whether and to what extent their views are founded on logical reasoning’.8 It is for the court and not the witness to determine whether the judicial standard of proof has been met. How, if at all, are these principles to be applied in the context of an application where the applicant is required to show only that it has a prima facie case? There does not appear to be any authority dealing with this problem. 7 [1939] 3 All ER 722 (HL) at 733E-F, cited in Motor Vehicle Assurance Fund v Dubuzane 1984 (1) SA 700 (A) at 706B-D. See also Great River Shipping Inc v Sunnyface Marine Limited 1994 (1) SA 65 (C) at 75I-76C and particularly the statement that ‘evidence does not include contention, submission or conjecture.’ 8 Michael & another v Linksfield Park Clinic (Pty) Limited & another 2001 (3) SA 1188 (SCA) para 36 and generally paras 34 – 40. [26] In my view the court must first consider whether the underlying facts relied on by the witness have been established on a prima facie basis. If not then the expert’s opinion is worthless because it is purely hypothetical, based on facts that cannot be demonstrated even on a prima facie basis. It can be disregarded. If the relevant facts are established on a prima facie basis then the court must consider whether the expert’s view is one that can reasonably be held on the basis of those facts. In other words, it examines the reasoning of the expert and determines whether it is logical in the light of those facts and any others that are undisputed or cannot be disputed. If it concludes that the opinion is one that can reasonably be held on the basis of the facts and the chain of reasoning of the expert the threshold will be satisfied. This is so even though that is not the only opinion that can reasonably be expressed on the basis of those facts. However, if the opinion is far-fetched and based on unproven hypotheses then the onus is not discharged. [27] Foreign law is treated as a fact requiring to be proved by tendering the evidence of a witness who can speak to the contents of that law. However, such evidence is unnecessary where the law in question can be ascertained readily and with sufficient certainty without recourse to the evidence of an expert, because the court is then entitled to take judicial notice of such law.9 In many maritime cases our courts deal with English admiralty or maritime law. They are accustomed to considering questions arising out of bills of lading and charterparties and the operation of vessels. Since at least 1797 in the case of the Cape Colony10 and 1856 in 9 Section 1(1) of the Law of Evidence Amendment Act 45 of 1988. Kwikspace Modular Buildings Ltd v Sabodala Mining Co SARL and another 2010 (6) SA 477 (SCA) para 7. 10 According to Eric Walker, A History of Southern Africa, 3 ed (1968) at 126, 141 and 163 a vice- admiralty court was established in 1797; was revived when the Cape reverted to British control during the Napoleonic wars and was firmly established by the Charters of Justice of 1828 and 1832. See also the case of the Colony of Natal11 our courts have in relation to a wide variety of maritime matters been required in admiralty cases to apply English admiralty and maritime law. That law is readily accessible in law reports and textbooks that are part of the standard libraries of the courts and practitioners in this field. In those circumstances it should generally speaking be unnecessary for it to be presented through affidavits from practitioners, who all too frequently (as in this case with Deiulemar’s expert), are representatives of the parties. The undesirability of expert evidence from such a source has been the subject of previous comment from our courts.12 [28] I turn then to consider the various claims advanced in the present cases to assess whether, in the light of these principles, the parties have made out a prima facie case in relation to the claims on which each relies. Imperial Marine’s claims Costs of the arbitration [29] Imperial Marine sought security for the costs of the arbitration in an amount of US$2 150 000. Deiulemar accepted that this is a reasonable amount in respect of those costs. However, it contended that this amount should be reduced by £250 000,13 being the amount of security already held by Imperial Marine in terms of a P & I Club letter of undertaking Reinhard Zimmermann and Daniel Visser, Southern Cross: Civil Law and Common Law in South Africa, at 446, fn 59. 11 Natal acquired a vice-admiralty court after it became a crown colony by royal charter in 1856. These courts functioned in terms of the Vice-Admiralty Courts Act 1832 (2&3 Will IV c51) and thereafter, in terms of the Vice-Admiralty Courts Act 1863 (26 & 27 Vict. c24). Under Law 8 of 1879 (Cape); The Colonial Courts of Admiralty Act 1890 (53 & 54 Vict. C27) and s 6(1)(a) of the Act, our courts have consistently been required to apply English admiralty and maritime law to disputes including disputes such as those in the present case. 12 Stock v Stock 1981 (3) SA 1280 (A) 1296F; Atlantic Harvesters of Namibia (Pty) Ltd v Unterweser Reederei GMBH of Bremen 1986 (4) SA 865 (C) 874F-J. For what is required of an expert witness, see National Justice Compania Naviera SA v Prudential Assurance Co Ltd (“The Ikarian Reefer”) [1993] 2 Lloyds Rep 68 [QB (Com Ct)] at 81-2. 13 When converted to dollars the resulting balance is US$1 786 000. dated 28 November 2006, but furnished in February 2007, expressed in material part in the following terms: ‘IN CONSIDERATION of your refraining …from applying to the Tribunal or taking any other steps to obtain security for your costs of defending the Claims in the proceedings before the Tribunal we … undertake to pay you … such sums as may be agreed in writing between you and Charterers (with our consent) to be due to you from Charterers in respect of your recoverable costs of defending the Claims before the Tribunal or as may be awarded in your favour against the Charterers by Final award of the Tribunal …in respect of your said recoverable legal costs … It is understood that this security for costs is intended for no particular stage of the aforesaid proceedings and that there is liberty generally to apply for further security for costs at any time.’ (Emphasis added.) [30] When that security was furnished Imperial Marine had delivered its points of defence and counterclaim and the parties were exchanging further information in preparation for the arbitration. The issues raised by the claim and counterclaim were intertwined and there was no question of the costs for defending the one and pursuing the other being incurred separately. It is plain that the security was given for the costs to be incurred by Imperial Marine in the further conduct of the arbitration generally. Accordingly, as held by the high court, the £250 000 must be taken into account in determining what security for costs should be given arising out of the arrest of the Filippo Lembo. Those costs must therefore be limited to US$1 786 000 and the appeal against this portion of the order of the high court must fail. Replacement of the cylinder blocks [31] This claim had two elements. The first was a claim for the cost of replacing the cylinder blocks amounting to US$ 4.2 million. The second was a claim for US$ 3 million being the anticipated loss of revenue due to the vessel being out of service while the replacement was to be undertaken. The latter claim is plainly without merit in view of the fact that the vessel was never withdrawn from service for the purpose of replacing the cylinder blocks. Accordingly no loss of revenue was suffered or will be suffered in the future. [32] The evidence on the need to replace the cylinder blocks, notwithstanding the temporary repairs effected in Pylos, is sparse. In the founding affidavit it was said that the claim was for the cost of replacement of the cylinder blocks and related downtime without any explanation of why this was necessary, or why the claim had been formulated in the counterclaim in the arbitration as one for the diminution in value of the vessel due to the blocks having been repaired by way of Metalock stitching. When this deficiency was pointed out Imperial Marine’s Cape Town attorney deposed to an affidavit in which he said that at the time the counterclaim was delivered the cylinder blocks had been temporarily repaired with Metalock stitching ‘so as to satisfy the requirements of the vessel’s classification society, which are subject to periodic review’. He added that it was intended to amend the counterclaim. [33] No certificate was annexed showing that Lloyd’s Register, the vessels’ classification society, had imposed any such requirement or qualification on the initial repair. Mr Luukas, a chartered engineer and experienced surveyor retained by Deiulemar, said that: ‘Metalock repair of cast components is a recognised ‘permanent’ repair which is approved by Classification Societies albeit often subject to periodic review by way of memorandum on the ship’s machinery certificate. Typically, if the repair remains successful, the requirement for review is deleted by Class.’ This was not challenged in the period of some eight months that elapsed between this affidavit being delivered and the hearing. As a matter of fact the cylinder blocks were not replaced in the nearly five years that elapsed between the repairs undertaken in Pylos and the scrapping of the vessel. [34] I do not consider that Imperial Marine established a prima facie case that the repair to the cylinder blocks was inadequate or temporary or that they needed to be replaced. However the claim must in any event founder on the law. Counsel for Imperial Marine submitted that in English law, which governs the charterparty, the measure of damages in a case such as this is the cost of repairs of the vessel. He relied upon the judgment of Greer LJ in The London Corporation [1935] 51 Ll L Rep 67 (CA),14 which, he submitted, established the principle that in cases of damage to vessels the cost of repairs is the prima facie measure of the damages suffered by the owner. In that case a vessel had been damaged in a collision whilst laid up and the cost of repairing it had been agreed between the parties. Thereafter, and before the vessel was repaired, it was sold to be broken up. The question was whether the cost of repairs was nonetheless recoverable as damages. The court held that it was. [35] Counsel relied on the following passage in the judgment: ‘Prima facie the damage occasioned to a vessel is the cost of repairs, the cost which it is correctly estimated will be required to put the vessel into the same condition as it was in before the collision and to restore it in the hands of the owners to the same value as it would have had if the damage had never been occasioned. Prima facie the value of a damaged vessel is less by the cost of the repairs than the value would have been if undamaged. It is quite true that it may be established that the estimate is a 14 As followed and construed in The ‘Argonaftis’ [1989] 2 Lloyd’s Rep 487 [QB (Adm Ct)]. wrong estimate and that the value of the vessel undamaged is exactly the same as her value after she had been damaged.’(Emphasis added.)15 However, a reading of the judgment reveals that the only evidence tendered by the appellant was the fact of the sale to shipbreakers and, both in the high court16 and in the Court of Appeal, that was held to be insufficient to rebut the prima facie proof provided by the agreement between the parties on the cost of repairs. [36] I do not understand the judgment to alter the basic principle that the measure of the owner’s loss is the diminution in value of the vessel.17 All that it says is that the cost of repairs will prima facie be the measure of that loss18 although that prima facie case may be displaced by evidence showing otherwise. However, it is unnecessary to explore the niceties of English law in this regard because this is not a claim falling within that principle. The cost of the repairs to the George T at Pylos, including the Metalock stitching of the cylinder blocks, was the subject of a separate claim and Imperial Marine’s entitlement to security for that claim was not challenged. The claim in respect of the cylinder blocks was based on the contention that those repairs were temporary in nature and replacement of the repaired items was required. It arose after the repairs had been undertaken and was based on their inadequacy. In consequence of that inadequacy it was contended that the value of the vessel was diminished and that the measure of that diminution was the cost of replacing the 15 At 69. The principle that Greer LJ articulated is still accepted in England. Halsbury’s Laws of England (5 ed, 2008), Vol 94, para 829. 16 The ‘London Corporation’ [1934] 50 Ll L Rep 14 [Adm]. 17 Harvey McGregor QC, McGregor on Damages 18 ed (2009) para 2-043 states the rule in these terms: ‘Where the claimant’s goods have been damaged, the basic pecuniary loss is the diminution in their value which is normally measured by the reasonable cost of repair.’ This is more consistent with the maritime cases in which the principle has chiefly been stated and the leading case of Darbishire v Warran [1963] 3 All ER 310 (CA) than the unqualified statement in Halsbury’s Laws of England 4 ed, Vol 12(1), para 862 that: ‘The basic rule is that the measure of damages in the case of damage to a chattel is the cost of repair.’ 18 In that respect there seems to be little difference in substance from the approach taken in our law to the proof of damages arising from damage to movable property: Erasmus v Davis 1969 (2) SA 1 (A). cylinder blocks. This claim cannot be conflated with the original claim to have the damaged engine repaired. [37] The evidence shows that the vessel continued to operate under the charterparty after the repairs had been undertaken at Pylos. No complaint was made of any malfunctioning of the engine or under-performance arising from its operating with repaired cylinder blocks. Although it underwent three sets of major repairs after leaving Pylos the cylinder blocks were not replaced. It was sold at a price represented by the outstanding balance on the mortgage over the vessel and the new owners did not replace the cylinder blocks or require Imperial Marine to do so. The vessel was scrapped five years later with the repaired cylinder blocks still in situ. The question then is whether the replacement of the old cylinder blocks by new ones would have altered its value either as a working vessel or as scrap. Prima facie the answer is in the negative. As a working vessel Imperial Marine and its new owner operated it without identifying any problem with the cylinder blocks. As scrap the value would be unaffected because a shipbreaker is largely concerned with the quantity of metal that can be extracted in breaking the ship and there is no reason to expect a material difference between the quantities of steel in old as opposed to new cylinder blocks. [38] In those circumstances the high court was correct to disallow the claim for security in respect of the replacement cost of the cylinder blocks and the associated downtime claim. The appeal against this part of its order must fail. Damage at Richards Bay [39] The damage discovered at Rotterdam gave rise to a claim that first emerged in the founding affidavit in the application for the arrest of the Filippo Lembo. It was expressed in these terms: ‘Further, whilst the vessel was at Rotterdam in March 2007 water ingress was observed into No. 8 Double Bottom Tank through a breach on the shell plating which, on closer scrutiny, appeared to be the result of impact damage which Imperial Marine believes was sustained during the vessel’s call at Richards Bay in January 2007 but in any event during the lifetime of the charterparty to [Deiulemar]. The damage was repaired at Rotterdam and Antwerp in April/May 2007. ’ The legal basis for the claim was said to be that the charterer, in breach of its obligations, had ordered the vessel to an unsafe port. [40] Deiulemar attacked this claim on the basis that it was wholly speculative and refuted by the evidence of Mr Luukas and Mr Merckx, the latter a marine surveyor, both of whom had inspected the vessel while it was in Antwerp, before repairs were undertaken. They were adamant that the vessel displayed no sign of collision damage and that the breach in the shell plating in way of No 8 DBT was due to corrosion and failure of the underlying internal framework supporting the shell plating. In the case of Mr Luukas his views were set out in two detailed reports supported by photographs showing the damage and the corrosion of the internal framework of the vessel. [41] In a further affidavit Imperial Marine’s attorney said: ‘The owner is unable to pinpoint precisely when the damage to the shell plating occurred. Its belief that it occurred at Richards Bay is a matter of inference, based on inspections previously carried out on the vessel and when and how the damage was first detected. Inspections (including, on occasion, inspections by divers) were regularly carried out on the vessel and the impact damage was not noticed before 5 March 2007 when, during a survey at Antwerp, a crack was found in the ship’s side plating in way of web frame 125. The ingress of water was detected during the vessel’s voyage from Richards Bay to Antwerp.19 Shortly prior to this, while the vessel was discharging cargo, the crew had noticed water entering the No. 8 Double Bottom Tank and the vessel had called at Richards Bay approximately a month before the water ingress became apparent. Given the regularity of the inspections of the vessel and the fact that the water ingress had not been noticed previously, it is likely that the damage had occurred recently. The damage to the shell plating was on the vessel’s port side, where the plating had been bodily set in. The George T was berthed at Richards Bay with her port side against the berth. The vessel did not suffer any impacts from tugs. There were no reported collisions with other vessels or containers. There is also no evidence in the damaged area of movement ahead or astern, which therefore eliminated navigational error. The most probable cause of the damage to the shell plating was impact with some protrusion from the berth at Richards Bay. This would make the berth in question unsafe.’(Emphasis added.) [42] Annexed to the affidavit was a report from Mr Armstrong, a surveyor, who had inspected the damaged shell plating in Antwerp after it had been cut out of the vessel. He noted that some of the structure of the plating ‘could have been initially deformed some time ago – some parts certainly appear to be old damage’. He therefore advanced as a ‘possibility’ that the ship ‘may have suffered a second impact/contact in an area which was already weakened’. Scratches that were noted on the external shell plating were discounted. His view was that the nature of the damage to certain frames was suggestive of an impact and the application of an external force. His conclusions were: ‘Such distortion requires a substantial amount of energy consistent with the ship stopping against a firm object, and is not compatible with structural collapse. Secondly it appears from the corrosion on torn edges of fractures that the vessel may 19 Presumably he meant Rotterdam. have suffered a significant impact some time ago which, together with the rate of wastage since that time could have weakened the structure sufficiently for a more recent moderate contact to have caused further damage.’ [43] In addition Mr Armstrong noted that on the starboard side of the vessel there was an indentation corresponding to the indentation of the outer shell of the vessel on the port side, although slightly further forward. According to Mr Luukas these indentations were smooth and lacked any sharp creases or indentation. That was not challenged by Imperial Marine. The significance of this observation is that Mr Armstrong annexed to his report a photograph of the type of fenders used to separate rafted vessels at Cosco’s Zhoushan Shipyard, where the vessel had undergone a survey and major repairs were effected between June and August 2006. In relation to these he expressed the view that ‘these do not appear to be very resilient, and it is possible that the shape could match the port and starboard indentations. Noting the apparent age of some of the damage to the web frames, it would be worth investigating when the vessel could have been in contact with these or similar fenders and whether the position of the indentations above the keel accords with the drafts at the time.’ There is no indication that this advice was followed. [44] These views, tentatively expressed as they were, are inconsistent with the inferences that Imperial Marine seeks to draw as to the cause of these indentations. Whilst they lend support to the view that the vessel had come into contact with something they postulate two separate impacts, not one, and the earlier one is described as significant. In addition they highlight the distinct possibility, given the configuration of the indentations and the fact that there were corresponding indentations on both port and starboard plating, that the damage originated with the fenders in Zhoushan. [45] Imperial Marine’s attorney made it clear that its case is dependent on inferences that it claims should be drawn from the underlying facts. However these are limited or lacking in relevant detail. In regard to inspections, including underwater inspections, there is no detail as to date or place. Also no attempt was made to relate these inspections in point of time to the survey and repairs in Zhoushan. That is relevant because Imperial Marine wrote to Deiulemar on 16 March 2007 in regard to this damage saying that the last clean underwater inspection had taken place in Singapore, but the evidence did not indicate that the vessel had called at Singapore between leaving Zhoushan and arriving at Richards Bay.20 There was no factual basis for the contention that: ‘Given the regularity of the inspections of the vessel and the fact that the water ingress had not been noticed previously, it is likely that the damage had occurred recently.’ [46] Nor is it logical to say that the absence of any report of a collision elsewhere involving a tug or some other vessel or object justified the inference of a collision with a protrusion from the berth in Richards Bay. This ignores the glaring absence of any report of an impact being sustained when the vessel was berthing in Richards Bay. It is hard to believe that an impact causing an indentation 28 metres long, 4.6 metres high at its maximum and set in by up to 400 mm, could have occurred whilst the vessel was engaged in the careful manoeuvring that entering a 20 On leaving Zhoushan on 17 August 2006 the vessel was under sub-charter to TMT for a voyage from Zhoushan to Saldanha where a cargo of iron ore was loaded for Rizao, China. From Rizao the vessel proceeded to Richards Bay. Unless it called at Singapore for bunkers – which would not ordinarily be an appropriate time to undertake a ‘clean underwater’ inspection – the message from owners must refer to an inspection at Singapore prior to the survey and repairs in Zhoushan. It is at the least inconsistent with the claim that there were regular underwater inspections by divers. berth entails, without the pilot, any member of the crew or the crew of the assisting tugs noticing. Such an incident would ordinarily have been the subject of a note of protest by the Master and should have been reported to the port authorities and the vessel’s P & I Club representative in Richards Bay, Captain Wood, but no such protest or report was made. The reports made to Lloyd’s Register, with which the vessel was entered for class, were contradictory and referred both to a hull contact of which there were no details and heavy weather as the cause of the damage. [47] What is finally decisive in assessing the evidence is the unchallenged evidence of Captain Wood. He testified that there has never been an incident of the type suggested involving a vessel berthing at Richards Bay, which is one of the busiest harbours in the world, largely dedicated to the loading of raw materials into bulk carriers. The existence of the suggested protrusion is inconsistent with the mode of construction of the berths at Richards Bay, as illustrated in a plan provided by the port authorities. It would require an object protruding more than two metres from the wall of the berth. Such a protrusion could hardly have gone unnoticed in a port as busy as Richards Bay and no attempt was made by Imperial Marine to call for an investigation of the berth to substantiate its claims. Bearing in mind the statement in the attorney’s affidavit that: ‘There is also no evidence in the damaged area of movement ahead or astern, which therefore eliminated navigational error’ the protrusion would have needed to be some 28 metres long and protruding more than two metres from the wall of the berth. It is inconceivable that such a protrusion would have gone unnoticed. [48] The inference that Imperial Marine wants the court to draw is not a proper inference from the few facts that it placed before the court. In the light of all the unchallenged evidence the claim that the George T was damaged as a result of coming into contact with an underwater protrusion from the berth at Richards Bay is nothing more than speculation. Imperial Marine did not therefore satisfy the requirements for a prima facie case in respect of this claim. Accordingly, the high court should have disallowed it, and to that extent the cross-appeal by Deiulemar must succeed. The corrosion claim [49] This claim founded the arrest of the Pasquale della Gatta. It was originally expressed in this way: ‘Imperial Marine has determined that the corrosion damage occurred as a result of the ballasting of the vessel with seawater containing Sulphate Reducing Bacteria (‘SRB’). SRB are bacteria which reduce sulphate ions from seawater to form hydrogen sulphide, which react with ferrous ions from the plating and hull to form iron sulphides, which in turn cause accelerated corrosion damage. Imperial Marine contends that the bacteria entered the ballast tanks of the George T during the course of the charterparty as a result of following charterers’ orders to areas to where she was more prone to pick up SRB from seawater loaded into her ballast tanks in those areas as part of the operation of the vessel.’ In that form the claim did not survive the affidavit in support of the application to set aside the arrest, which pointed out, on the basis of expert evidence, that SRB are found worldwide and are not even confined to seawater, so that their introduction into ballast tanks in the ordinary operation of a vessel is practically unavoidable. [50] The claim was then reformulated on the basis of an expert report provided by Dr James Cleland. He based his report on calculations of the rate of corrosion he found in the vessel’s tanks between the time of the survey and repairs to the vessel in Zhoushan in August 2006 and April 2007. From these calculations he concluded that the corrosion in the vessel’s tanks was attributable to the actions of SRB. He accepted that SRB are omnipresent and said that what would have triggered their activity in this case was what he referred to as ‘the impact’ with reference to the indentation of the port side plating of the vessel in way of No 8 DBT. His conclusions were that: ‘9.1.1 The excessive corrosion found at Antwerp in March 2007 in the No. 8 DBT of the George T was due to microbially-influenced corrosion due to a heavy infestation by sulphate-reducing bacteria compounded and exacerbated by the mechanical and chemical effects of the impact; and 9.1.2 The excessive corrosion found at Zhoushan in August/September 2007 in the 10 Top Side Tanks, the Fore Peak, the 10 Double Bottom Tanks and the After Peak of the renamed SEA CORAL was also due to microbially-influenced corrosion due to a heavy infestation by sulphate-reducing bacteria compounded by the presence of sulphur-oxidizing bacteria.’ (Emphasis added.) [51] Imperial Marine’s attorney explained that the ‘impact which the George T experienced in Richards Bay’ was the trigger for the infestation by SRB and consequent corrosion damage. That claim was problematic in view of the absence of evidence that there had been such an impact in Richards Bay, but it was dealt a devastating blow by the response, which pointed out that the corrosion claim did not relate to corrosion damage in relation to No 8 DBT but to the damage to the other tanks of the vessel where that ‘trigger’ mechanism for the development of microbially induced corrosion was absent. [52] The day before the application to set aside the arrest was due to be argued an affidavit from Dr Cleland was filed attaching a further report in which the theory of SRB infestation being triggered by an impact in Richards Bay was abandoned and a fresh theory advanced. Dr Cleland now expressed the view that, because the attack of SRB-induced corrosion was much greater than anticipated in all DBTs, it was clear that the infestation of SRB had occurred prior to the summer of 2006 (when the vessel was in Zhoushan and the measurements of steel thickness on which he relied had been taken). Accordingly ‘a re-assessment of the date of infestation’ was necessary. He then identified from the vessel’s ballast log ‘two ports as candidates’ and from the two (Quingdao and Xingang) he selected Xingang on the basis that there are two chemical factories and one plastic factory upriver of the port. The importance of this was not explained. [53] The production of this new case prompted a postponement of the application and the delivery of affidavits by Drs Bailey and Stott, whose expertise in relation to microbially induced corrosion and SRB is unchallenged. They pointed out that the theory that every tank was infested with SRB at the same time in the same port is untenable. As to the choice of Xingang as the culprit port, on the basis of the presence of two chemical factories and one plastic factory, they said that Quingdao has more than three factories causing pollution of its waters, including chemical and plastic factories. In addition they said that the relevant nutrients for SRB bacteria would come from food processing plants and oil refineries rather than chemical and plastic plants. No attempt was made to rebut this evidence. [54] Counsel for Imperial Marine properly accepted that his case stood or fell by the court accepting the final view of Dr Cleland as being sufficient to establish a prima facie case. It is not. First the facts on which he relied for his opinion are not established even on a prima facie basis. A glaring problem is that, once he fixed the commencement date as being January 2006, when the vessel called at Xingang, this necessarily impacted upon his calculations, which started from the steel thickness measurements in August 2006 at Zhoushan. This is not dealt with. His explanation for choosing Xingang instead of Quingdao is lacking in any reasoned foundation. In any event the notion of an infestation in all tanks occurring at one port and remaining in place thereafter in all tanks despite the vessel’s undergoing a survey and repairs in Zhoushan, where in the ordinary course the vessel would have been deballasted to some extent, if not entirely, stretches credulity. The opinion expressed on this factual foundation is not within the reasonable range of expert opinion but is far- fetched and based on unproven hypotheses. It is accordingly insufficient to discharge the onus of proof resting on Imperial Marine to establish a prima facie claim. [55] It follows that the arrest of the Pasquale della Gatta was not justified and the high court should have granted the application by Deiulemar to have it set aside. The cross appeal directed at this result must therefore succeed. This renders it unnecessary to canvass the claim for counter-security for a possible claim in terms of s 5(4) of the Act, as that was expressly conditional on the application to set aside the arrest being unsuccessful. The order made in that regard must be discharged but without any penalty so far as costs are concerned. There was a challenge by Imperial Marine to the decision by the high court to award those costs on an attorney and client scale. However that was a matter in the court’s discretion. Whilst some of the grounds on which it was exercised may not be applicable in the light of this judgment, the fact remains that the application was brought on a basis that proved spurious; the attempt to rescue that was also shown to be spurious; and the final version on which the claim was advanced lacked any merit. In those circumstances I can see no reason to interfere with the judge’s discretion. Deiulemar’s claim for counter-security [56] The parties approached the application for counter-security on the basis that an applicant for such security must satisfy the same requirements as an applicant for an arrest, namely a prima facie case in respect of the claim to be secured; that the tribunal before which the claim is to be debated has jurisdiction for that purpose; and that the applicant for counter-security must show a genuine and reasonable need for such security. This is in accordance with what was said by this court in MV Wisdom C: United Enterprises Corporation v STX Pan Ocean Co Ltd 2008 (3) SA 585 (SCA) para 26.21 [57] However proof of these matters, whilst essential, is not necessarily decisive of the question whether counter-security should be ordered. As Comrie J pointed out in The Heavy Metal,22 ss 5(2)(b) and (c) of the Act vest a court with a discretion and that should not be constrained by a formulaic approach to the exercise of that discretion. He said, and I agree, that the proper approach is that: ‘In the first place, it is evident that s 5(2)(a) - (c) of the statute vests the court with a wide power, in its discretion, to order that security or counter-security be furnished for claims and counterclaims. Secondly, confining myself to counterclaims, clearly the Court must have jurisdiction, which is invariably present in the circumstances. Thirdly, it seems to me that an applicant must show at least a prima facie case in respect of its counterclaim(s). I say “at least” because less would not warrant security, while in my view more may be required in an appropriate case. Fourthly, I think an applicant must show a genuine and reasonable need for security. … Finally, the Court has a discretion which in my opinion should not be unduly circumscribed. All sorts of factors can arise in different cases which may affect the exercise of the discretion, such as whether the arrest was in terms of s 5(3); the location of the forum; whether 21 Approving what was said in the high court: MV Wisdom C: United Enterprises Corp v STX Pan Ocean Co Ltd 2008 (1) SA 665 (C) paras 36 and 38. 22 MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime Sdn Bhd 2000 (1) SA 286 (C) at 298E – I. the arresting party is a peregrinus of this Court; the nature of the counterclaims; and the effect that a “forfeiture” order may have on the arrestor's position … The list is not exhaustive. The Court may find itself weighing and balancing competing interests. The strength of the counterclaimant's case on the merits may then become a factor to be weighed in the balance. It follows from all this that I do not necessarily find myself in the “sparing” school of thought, but that I do recognise a substantial need for caution.’ [58] In determining the quantum of any counter-security the court may also have to exercise a discretion. A litigant is entitled to security in an amount determined on the basis of its reasonably arguable best case.23 That requires the existence of the claim to be established on a prima facie basis and the quantum of security to be determined on the basis of the amount representing the reasonably arguable best case in respect of that claim.24 The need for security in the amounts claimed must be established on a balance of probabilities.25 However, the computation of those amounts may not always be straightforward and may require the court to exercise a discretion in determining the quantum of the counter-security to which the litigant is entitled. [59] The exercise of such a discretion is pertinent in this case for two reasons. First Deiulemar advances its claims on alternative and inconsistent grounds and there is an admitted risk of duplication resulting in excessive security being granted. It attempted to accommodate the risk of duplication by deducting from the total of the claims advanced in the proposed amendment to its points of claim in the arbitration (US$23 213 371.73) the amount of one claim (US$5 721 243.33), 23 Zygos Corporation v Salen Rederierna AB 1984 (4) SA 444 (C) at 457C-D as qualified by Bocimar NV v Kotor Overseas Shipping Ltd 1994 (2) SA 563 (A) at 582F-J. 24 According to Gys Hofmeyr SC, Admiralty Jurisdiction Law and PrActice in South Africa, at 84, fn 218, this is the basis upon which Scott J approached the matter in the high court in Bocimar. 25 Bocimar NV v Kotor Overseas Shipping Ltd, supra. arriving at an amount of US$17 477 128.40, which is the sum ordered by the high court by way of counter-security.26 The papers are not clear in showing how the overlap was determined and it emerged in the course of argument that there are problems with the calculation by which it was determined. Some of these can be resolved only by the exercise of a broad discretion. [60] The second reason is that the claims advanced by Deiulemar are claims for loss of profits. These are set out in the amended points of claim on the most optimistic possible basis with no allowance for contingencies.27 However, in assessing the proper amount of security the court cannot be bound by the litigant’s assessment of the value of its claim. Where that assessment includes items that should not be included, and makes no allowance for obvious contingencies, the court determining the security to which it is entitled must make an appropriate adjustment to accommodate these shortcomings. In doing so it will ordinarily be unable to make a precise calculation and will have to make a broad assessment of what is appropriate and fair on general grounds. Where a prima facie case and the need for security have been established the litigant should not be deprived of security by reason of an inability to make an exact assessment of its quantum. Nor should it be given security for claims that are over-optimistic. The Dabkomar claims [61] In the ordinary course of events, had there been no difficulties in operating the vessel, Deiulemar would have earned the difference 26 There was an arithmetic error in Deiulemar’s calculation but in the light of what follows that is immaterial. 27 The sub-charter cancellation claim is calculated with the inclusion of the sub-charter period prior to its cancellation. between the hire under the head charter and the considerably larger amount by way of hire that Dabkomar agreed to pay under the sub- charter, throughout the relevant period of the charter. However, Dabkomar cancelled the sub-charter and Deiulemar now accepts that it was entitled to do so, irrespective of whether the cause of the breakdown was Imperial Marine’s failure properly to maintain the vessel or its own fault in providing the out of specification stem of bunkers. I proceed on the same footing. [62] One claim flowing from the sub-charter can be dealt with before reaching the consequences of its cancellation. It will be recalled that when the vessel went to Colombo for bunkers and thereafter was briefly delayed in Suez before proceeding to Pylos for repairs, Deiulemar treated it as being off-hire and declined to pay hire for the relevant periods. Dabkomar adopted the same approach under the sub-charter. In the result Deiulemar lost the difference between the hire it would have paid and the hire it would have received during this period. The amount is US$2 197 773.59. This was the original claim in the arbitration and Deiulemar claimed counter-security for this amount. It presented evidence that, if in thoroughly efficient condition and properly maintained, the vessel should not have experienced problems with the out of specification bunker stem at Yeo Su. Furthermore the evidence was that an examination of the damaged engine in Pylos indicated that it had been operating for some time in a deficient condition. Although this was challenged in the heads of argument it is plain that if this evidence is believed in the arbitration it will warrant a finding in favour of Deiulemar. Accordingly a prima facie case was made out in respect of this claim and counter-security for it was properly ordered. [63] The next claim was based on essentially the same cause of action. It was that the breaches of the charterparty in relation to the condition of the vessel and the failure to maintain it provided proper grounds for Dabkomar’s cancellation of the sub-charter. As a result it was alleged that Deiulemar lost the benefit of a profitable sub-charter for the balance of the head charter period. For the reasons given in the previous paragraph it established a prima facie case in relation to this claim. However, the calculation of the claim presented some problems. The basis of calculation was an arithmetic exercise. The number of days remaining before the sub-charter could reasonably have been expected to expire if it had run its ordinary course were taken and multiplied by the difference between the two hire rates. The difficulty relates to the number of days to be included in the calculation and its effect on the total amount of the claim. [64] The claim has three components, two relating to the loss of hire under the sub-charter and the third giving credit for trading profits earned by Deiulemar after the cancellation. The first loss of hire calculation dealt with the initial period of he charter up to 6 August 2006. For that period the hire payable under the head charter was US$16 350 per day. The calculation arrived at a figure of US$9 988 324.94. An immediate problem is that it took as the starting point of the calculation the delivery date under the sub-charter of 23 April 2005 and then deducted certain periods when the vessel was off-hire. However, that has the effect of including days when the vessel was operating under the sub-charter and the hire should have been paid. There is nothing to indicate that it was not. The proper place to start is the date of Dabkomar’s cancellation, namely 29 September 2005. There are 310 days28 from then until 6 August 2006 and the hire differential was US$28 650 per day. [65] In the affidavit in support of the application for counter-security it was said that the vessel ‘was taken out of service for the purpose of the carrying out of repairs (primarily steel renewals) at Zhoushan, China, during the period 23 June to 17 August 2006’. In a witness statement by Deiulemar’s London solicitor annexed to that affidavit it emerged that Deiulemar was informed on 21 June 2006 that it would be taken out of service for the purpose of undergoing its annual survey. Their complaint was that this took a long time and that a superficial survey revealed that various steel renewals were being carried out in addition to class requirements. The answering witness statement on behalf of Imperial Marine, dated 21 March 2007, pointed out that Deiulemar ‘do not now and never have asserted that they have any claim arising out of’ the period of time that the vessel was off-hire in Zhoushan. It also rebutted suggestions that the charterers were not kept apprised of progress with the survey. None of this was refuted in a replying witness statement. The claim only emerged when the amended points of claim were delivered in the arbitration. It proceeded on the footing that no part of the time taken at Zhoushan was permissible. Clearly that is incorrect once it is accepted that the vessel had to undergo an annual survey. The affidavit in opposition to the claim for counter-security made the point that the repairs to the vessel’s shellplating were undertaken in accordance with class requirements. This was not rebutted save for a complaint that the 28 Working in full days. It is impractical for present purposes to use the calculation based on the precise hour during a day when events occurred as is usually done in charterparty hire statements. That information is not available to us and in exercising our discretion we are not concerned to engage in ‘a meticulous readjustment of economic interests between the parties’ in the felicitous phrase of Van den Heever J in Pucjlowski v Johnstone's Executors 1946 WLD 1 at 8. reports and recommendations of the classification society were not provided. [66] In my view Deiulemar did not make out a prima facie case in respect of this portion of its claim, but in any event it is so speculative and lacking in an adequate factual foundation that it would be inappropriate in the exercise of the court’s discretion to order security for this period. That requires a period of 44 days to be deducted from the 310 days with which the calculation commences, leaving a balance of 266 days. On the basis of a hire differential of US$28 650 per day that results in a figure of US$7 620 900 in respect of this component of the claim. [67] Turning to the period between 6 August 2006 and 3 September 2007, when the sub-charter would have terminated if it had run its course, I assume in favour of Deiulemar that Dabkomar would not have exercised its option to terminate up to 60 days earlier. In round figures that gives 394 days. However, account needs to be taken of the fact that it is unlikely that re-delivery would have occurred precisely on the stipulated date. In the calculations in the papers periods amounting cumulatively to a little over 86 days were omitted in calculating the remaining period of the sub-charter. Ten of these related to the survey period at Zhoushan. Two small deductions were unexplained. The remainder related to the repairs at Rotterdam and Antwerp. If the evidence for Deiulemar is accepted in the arbitration this will result in a finding that this last period was caused by a breach by Imperial Marine of its obligations in regard to the condition of the vessel and its maintenance. That being so these days should not have been excluded in calculating this element of the claim. The Zhoushan days should be deducted and an allowance made for possible re-delivery before 3 September 2007 and for the accepted need to satisfy a class requirement that there be an inspection before 25 August 2007. Working on a round figure of 360 days is in my view fair and allows for contingencies. This component of the calculation is then US$9 954 000. [68] That gives a total loss of income on the sub-charter of US$17 574 900. From that the profits earned from trading after the cancellation of US$12 742 849 must be deducted. This leaves a figure of US$4 832 051. Deiulemar has established its entitlement to counter- security in this amount but that entitlement needs to be assessed in the light of the potentially overlapping claims. The potentially overlapping claims [69] Counsel for Deiulemar correctly accepted that claims, amounting in total to US$12 566 570.25, arose from the trading activities of the vessel after the cancellation of the sub-charter and could not be advanced in addition to the claim based on the loss of the sub-charter. That is because Deiulemar would not have traded the vessel for its own account or concluded other sub-charters if the sub-charter had not been cancelled, but would simply have collected the hire under the sub-charter each month. It accordingly advanced these claims in the alternative to its claim based on the cancellation of the sub-charter. [70] By far the largest component of this amount was a claim for US$8 341 650. The claim arose because on 13 June 2007 Imperial Marine gave notice that following the discharge of the vessel’s then current cargo it would be taken out of service and sent to a shipyard in China to undergo a dry docking required by class. Deiulemar contended that this was a routine bottom survey that should have taken only a day to complete and that the vessel’s intermediate survey was not due until December after the expiry of the charter. It accordingly treated the owner’s conduct as repudiatory of the charter, accepted the repudiation and claimed for the loss of profits it alleged it had suffered as a result. [71] It is accepted by both parties that Imperial Marine were obliged to undertake a dry docking survey as required by class and had to do so before 25 August 2007. Imperial Marine had asked the classification society to extend the date so as to coincide with the vessel’s intermediate survey in December 2007, but this request was refused. In correspondence between the London solicitors for the parties it was asserted on behalf of Deiulemar that the required survey could have been done relatively quickly while the vessel was undergoing repairs to No 8 DBT at Antwerp, but that assertion was roundly rejected by the solicitors acting for owners. Reliance was placed on this correspondence in support of the claim, but I fail to see on what basis the conflicting assertions by the parties’ solicitors amounts to any evidence of the correctness of the propositions they are asserting, especially when those assertions relate to technical matters of ship maintenance falling outside their area of expertise. [72] Imperial Marine made arrangements for the dry docking to take place at Zhoushan in China after the vessel completed its then current voyage to Al Jubail. On 30 June 2007 Deiulemar placed the vessel off- hire on the grounds that they had been unable to find business for the ship after completing discharge at Al Jubail, which occurred on 2 July 2007, and would not be able to do so before the dry docking window closed. The vessel sailed to Zhoushan from Al Jubail. On 1 August 2007 Deiulemar cancelled the charterparty on the basis that there was no likelihood that the vessel would be redelivered for trading purposes after the dry docking in sufficient time for it to make commercial use of it. They attributed this to the failure to undertake the survey in Antwerp. As I have said there is no evidence to back up that claim. [73] In those circumstances Deiulemar did not establish a prima facie case in respect of this claim. If it is excluded, then the claim arising from the cancellation of the Dabkomar sub-charter exceeds the amount of any claims arising from Deiulemar’s trading of the George T after that cancellation. There are three of these, one relating to the period of repairs at Zhoushan in 2006 and the other two relating to the work and repairs in Rotterdam and Antwerp. The Zhoushan claim must be excluded for the reasons given in not allowing this time period in the calculation of the sub-charter cancellation claim. The Rotterdam and Antwerp claims are prima facie established and the security should cover these claims. Additional claims [74] The other claims advanced by Deiulmar amounted in all to US$2 727 784.56. One of these claims, in an amount of US$ 1 429 992.44, was disallowed by the high court. Leave to appeal against its disallowance was neither sought nor granted. Accordingly this amount must be deducted in determining the amount of counter-security. Its deduction reduces the amount of these claims to US$1 297 792.12. [75] The remaining claims included a claim for US$15 000 in respect of which Deiulemar’s attorney said that a claim for security was not being pursued. He should be taken at his word. There was a claim for the balance of the provisional final hire statement of US$515 717.65. In support of this reliance was placed on the copy of the statement annexed to the founding affidavit. It was said that Deiulemar was not aware of any dispute in regard to this amount. That was not, however, the response of Imperial Marine’s attorney who said that his client found the calculation incomprehensible. That is hardly surprising as an examination of the statement reveals that it includes amounts calculated on the basis of Deiulemar being successful in relation to some of the very issues that are in dispute between the parties in the arbitration. No prima facie claim was made out under this head. [76] Next there was a claim for US$17 352.91 in respect of the short- loading of the vessel at Richards Bay in February 2006. It appears that such a claim was made by the vessel’s then sub-charterer and was accepted by Deiulemar on the grounds that there had been a failure to make the entire reach of the vessel available to the sub-charterer due to the presence of ballast that could not be stripped from the vessel before loading. A marine surveyor’s report was put up in support of this claim and it seems clear that there were deballasting problems. The claim was challenged on the basis that there was no evidence of any maintenance problem but I agree with Deiulemar’s attorney that an inability to pump ballast of itself points to such a problem. In any event there was prima facie a breach of the obligation to make the entire reach of the vessel’s holds available to the charterer. The order for counter-security in respect of this claim was accordingly justified. [77] Lastly there were a number of performance claims based on allegations that the vessel was at various times and on various voyages not able to steam in accordance with the speed and consumption figures given in clause 62 of the charterparty. The first problem with these claims is that these figures were given subject to certain weather and sea conditions and without guarantee. They are advanced in the draft amended points of claim on the basis of an allegation that ‘the vessel failed to achieve the performance warranted under clause 62 of the charterparty’. However there was no guarantee. Most of the claims were not included in the charterer’s provisional final hire statement. They were based on what was said to be a standard system of measurement of the performance of vessels but no basis was laid for its application to this charterparty and these voyages. In addition the vessel appears to have been under sub-charter during the voyages in question and there is no evidence that the sub-charterers advanced such claims, nor any response to the statement by Imperial Marine’s attorney that the sub-charters contained the same performance figures on a back to back basis. In my view no prima facie case was established in respect of these claims and counter-security should not have been ordered in respect of them. Summary of Deiulemar’s claims [78] Deiulemar has established prima facie that it has the following claims: (a) A loss of hire claim of US$ 2 197 773.59 under the Dabkomar sub- charter for the deviation to Colombo and the period of repairs in Pylos; (b) A loss of hire claim of US$4 832 051 arising from the cancellation of the Dabkomar sub-charter; (c) A short-loading claim of US$17 352.91. The total amount of these claims is US$7 047 177.50. In addition it seems to me that a prima facie case has been established in respect of the ‘overlapping’ damages claims arising from the unavailability of the vessel while it was detained at Rotterdam and Antwerp for repairs from 4 March 2007 to 12 May 2007. These claims are only valid if the loss of hire claim arising from the cancellation of the Dabkomar sub-charter is bad so no additional security should be ordered in respect of them. However the counter-security should cover them in order to allow for the possibility of the sub-charter cancellation claim failing. They amount to US$3 052 029.62. [79] In the result the counter-security ordered by the high court should be reduced from US$17 477 128.40 to US$7 047 177.50 and the interest component falls to be adjusted accordingly. To that extent Imperial Marine’s appeal against the order of the high court must succeed. Disposal of the appeals and costs [80] In the application arising from the arrest of the Pasquale della Gatta the cross-appeal by Deiulemar against the dismissal of its application to set aside the arrest of the vessel must succeed with costs. The order for counter-security made by the high court pursuant to the conditional counter-application must be set aside. Therefore Imperial Marine’s appeal against the order for counter-security falls away. Its appeal against the quantum of security granted to it and against the order for costs in the high court falls to be dismissed. [81] In the application arising from the arrest of the Filippo Lembo Imperial Marine’s appeal against the order that it provide counter-security fails but its appeal against the quantum of that security succeeds and the amount for which it was ordered to provide security must be reduced to US$7 047 177.50 and the interest component is reduced to US$1 374 199,61. Its appeal against the orders reducing the amount of its security by US$7.2 million in respect of the claim for the replacement of the main engine cylinder blocks and its security in respect of costs by £250 000 fails as does its appeal against the costs order by the high court. Deiulemar’s cross-appeal against the order that it provide security for Imperial Marine’s claims in an amount of US$2 935 843.27 in respect of the claim for repairs to the shell plating at Antwerp succeeds. Both parties have achieved significant success in this court. A fair reflection of that would be to order each party to bear one half of the costs of and attendant upon the preparation of the record relating to this arrest29 and otherwise that each party bear its own costs of the appeal and cross-appeal. Order [82] In the appeal against the judgment in the case of the arrest of the Pasquale della Gatta (Case No AC20/09 in the high court) the following order is made: (a) The appeal is dismissed with costs. (b) The cross-appeal is upheld with costs and the order of the high court is altered to read as follows: ‘(i) The order for the arrest of the Pasquale della Gatta granted ex parte on 20 March 2009 and the deemed arrest of the vessel pursuant to the provision of security to obtain its release from that arrest are set aside. (ii) The applicant is ordered to pay the costs of the application on the scale as between attorney and client.’ (c) The order for the provision of counter-security by Imperial Marine is set aside. [83] In the appeal against the judgment in the case of the arrest of the Filippo Lembo (Case No AC 8/09 in the high court) the following order is made: 29 Volumes 1 – 9 of the record. (a) The appeal succeeds to the extent that paragraphs 6 and 7 of the order of the high court are altered in the following respects: (i) by the deletion in paragraph 6(a) of the amount of US$17 477 128.40 and its replacement by US$7 047 177.50; (ii) by the deletion in paragraph 6(b) of the figure of US$3 408 040 and its replacement by US$1 374 199,61; (iii) by the deletion in paragraph 7(a)(i) of ‘claims 1(a)-(f) US$20 485 587.17’ and its replacement by ‘claims 1(a), (b), (d) and (e) US$7 029 824.59’; (iv) by the deletion of paragraphs 7(b) and (d); but is otherwise dismissed. (b) The cross-appeal succeeds and paragraph 2 of the order of the high court is altered in the following respects: (i) by the deletion of paragraphs 2(a)(iii) and (iv) thereof; (ii) by the deletion in paragraph 2(a)(v) of the figure of US$1 699 675.20 and its replacement by US$878 825.23; (iii) by the deletion in paragraph 2(a)(vii) of the figure of US$12 201 958.32 and its replacement by US$7 171 621.26. (c) Each party is ordered to pay half the costs of and attendant upon the preparation of the record in relation to this matter being volumes 1 to 9 and 16 of the record of appeal and is otherwise ordered to bear its own costs. M J D WALLIS JUDGE OF APPEAL Appearances For appellant: M J Fitzgerald SC (with him D Melunsky) Instructed by Bowman Gilfillan Inc, Cape Town Lovius-Block, Bloemfontein For respondent: S Mullins SC Instructed by Shepstone & Wylie, Cape Town 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: 15 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. IMPERIAL MARINE COMPANY V PASQUALE DELLA GATTA; IMPERIAL MARINE COMPANY V FILIPPO LEMBO These appeals arose from the arrest of the Pasquale della Gatta and the Filippo Lembo to obtain security for London arbitration proceedings. The disputes between the parties in those proceedings arise from a charterparty between Imperial Marine, a Greek concern, and Deiulemar, an Italian charterer. The disputes have been referred to arbitration. The parties to the arbitration make reciprocal allegations of breaches of the charterparty giving rise to substantial claims for damages. The Supreme Court of Appeal dealt with the proper approach to arrests of ships as security under the Admiralty Jurisdiction Regulation Act, the giving of counter-security by the arresting party and the determination of the amount of such security. In the result the arrest of the Pasquale della Gatta was set aside. The arrest of the Filippo Lembo was upheld but the court reduced both the security to be provided to Imperial Marine and the counter-security to be provided to Deiulemar.
2729	non-electoral	2012	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 336/11 Not Reportable In the matter between: HENDRIK JOHANNES PITZER Appellant and ESKOM Respondent Neutral citation: Hendrik Johannes Pitzer v Eskom (336/11) [2012] ZASCA 44 (29/03/ 2012). Coram: NUGENT, CACHALIA and BOSIELO JJA and PETSE and BORUCHOWITZ AJJA Heard: 28 February 2012 Delivered: 29 March 2012 Summary: Negligence – failure to take reasonable precautions against foreseeable risk – action for damages against undertaker, as defined in Electricity Act 41 of 1987 – qualified electrician injured in a live chamber of an electrical substation – undertaker failing to rebut presumption of negligence. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: South Gauteng High Court, Johannesburg, (Moshidi J) sitting as court of first instance): The following order is accordingly made: 1. The appeal succeeds with costs. 2. The order of the court a quo is set aside and the following order substituted: ‘It is declared that the defendant is liable for fifty per cent of the plaintiff’s proven or agreed damages.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ BORUCHOWITZ AJA (NUGENT, CACHALIA and BOSIELO JJA and PETSE AJA concurring): [1] On 14 July 2006 the appellant was injured by an electric shock sustained inside a live chamber of an electrical substation operated by the respondent (Eskom) at a complex in Vanderbijlpark. Arising from this incident he sued Eskom for damages in the South Gauteng High Court, Johannesburg, alleging that it had been negligent in various respects. Eskom denied liability. The trial proceeded on the issue of liability only. At its conclusion, Moshidi J, dismissed the claim, holding that the appellant’s injury was caused solely by his own negligence and that there had been a voluntary assumption of risk. With the leave of the court a quo the appellant appeals against this judgment. [2] A live chamber is an enclosed room or area in which a high voltage electrical apparatus is housed. The live chamber in which the appellant was electrocuted is located inside a high voltage yard. In terms of regulations issued by Eskom access to such a yard is strictly controlled, and the door to every live chamber is required to be closed at all times and the key thereto kept under the control of a designated official. The appellant, who is a qualified electrician, was aware of these requirements as he had completed a course presented by Eskom relating to the regulations. [3] During the week ending 14 July 2006, the appellant was employed by a private electrical contracting company to carry out electrical work in a control room which is located outside the high voltage yard. He was being assisted by Mr Msibi. At that time certain structures were being painted within the yard under the auspices of an independent contractor. The painting contractor was given access to the high voltage yard through a gate closest to the control room, and was permitted to use a private lock in order to open and close this gate. [4] At the time the high voltage yard was under the control and supervision of Mr Fourie, a principal technical official employed by Eskom. His duty was to ensure that the requirements of the regulations were complied with and that the electrical substation was properly secured at all times. [5] The appellant testified that at about 11h00 on 14 July 2006 he was approached by Mr Fourie who informed him that he was going fishing. Fourie then left the substation in his Eskom vehicle. When the appellant later emerged from the control room he noticed that the main gate to the high voltage yard was open. The appellant knew, by virtue of his training, that the gate should have been closed and locked, unless work was being performed under supervision inside. He therefore decided to close the gate, but before doing so he wanted to satisfy himself that all the painters had vacated the yard. [6] Upon entering the yard the appellant observed that the door to the live chamber on the first floor of the southern blockhouse was open. In order to satisfy himself that no one was in the blockhouse, he went up the stairs and approached the live chamber. He then entered the live chamber where he noticed certain electrical equipment lying on the floor in a partially dismantled state. It was at that stage that the appellant sustained an electric shock and was rendered unconscious. He was taken to the hospital by his assistant, Mr Msibi. [7] The appellant explained that he entered the live chamber because he believed that it was either dead or decommissioned. His belief was reinforced by the following factors: the door to the live chamber was open when it should have been closed, the bottom doors to the blockhouse were open and painters were seen using the cubicles, one of the rooms in the southern blockhouse was burned down and equipment used to generate electricity lay in a dismantled state on the floor of the live chamber. [8] Mr Fourie conceded that he left the premises at about 11h00, but there is a conflict in the evidence as to the means by which he did so. He said that he left the yard through the gate being used by the painters, who were at that time preparing to leave, and that he assumed that they would lock the gate. At the time he left, so he said, the other gates to the yard were locked. Fourie’s evidence in this regard is neither credible nor probable. Pitzer’s testimony that he entered the high voltage yard is corroborated by Mr Msibi. Their versions were also not challenged in cross-examination and nor, as one would have expected, was it put to them that Mr Fourie had left the high voltage yard through the gate that was used by the painting contractor. [9] Mr Barry Leslie, a protection specialist employed by Eskom, gave expert evidence. He examined the live chamber immediately after the incident and identified flash marks on a meter panel approximately three meters from the door. He also found burnt paint and the residue of clothing on a horizontal bar. He concluded from this that the appellant would have been some three meters into the live chamber and in close proximity to the live equipment when he was electrocuted. [10] The aforegoing is, in broad terms, a summary of the relevant evidence. The appellant’s version was corroborated in material respects by the testimony of his assistant, Mr Msibi. No countervailing evidence was adduced by Eskom as to the circumstances giving rise to the appellant’s injury. [11] There is a presumption of negligence that operates in favour of the appellant. Section 26 of the Electricity Act 41 of 1987 (the Act) provides: ‘In any civil proceedings against an undertaker arising out of damage or injury caused by induction or electrolysis or in any other manner by means of electricity generated or transmitted by or leaking from the plant or machinery of any undertaker, such damage or injury shall be presumed to have been caused by the negligence of the undertaker, unless the contrary is proved.’ [12] Eskom is an ‘undertaker’ as defined in section 1 of the Act. It is common cause that the appellant’s injuries were caused by electricity transmitted by Eskom’s apparatus in the live chamber. The effect of the section is to cast upon Eskom the onus of proving on a balance of probabilities that it was not negligent or, if it was, that there was no causal link between that negligence and the injury sustained by the appellant. (See Eskom Holdings Ltd v Hendricks 2005 (5) SA 503 (SCA) para 8). [13] Counsel for Eskom, rightly, conceded that the trial court’s finding that there had been a voluntary assumption of risk by the appellant was unsustainable. It was submitted, however, that Eskom had discharged the evidential onus of establishing an absence of negligence on its part. [14] Two general propositions were advanced on Eskom’s behalf. Firstly, that a diligens paterfamilias in the same position would not have foreseen the possibility that a trained electrician, such as the appellant, would enter a live chamber and injure himself by coming into contact with live equipment. Secondly, on the assumption that such harm was reasonably foreseeable, that Eskom had taken all reasonable steps to guard against such occurrence. In this regard, Eskom had ensured that the live chamber was specifically housed in a separate blockhouse structure located on the first floor away from other activities at ground level, the keys thereto were subject to strict control and access to the chamber was only permitted if authorised by a permit. [15] It was also argued that the appellant’s injury was caused entirely by his own negligence. He was only required to perform work in the control room outside the high voltage yard and had no instruction or authority to enter the yard. He knew the dangers of electricity and particularly the dangers associated with live chambers, but despite such knowledge entered the live chamber and touched or placed himself in close proximity to the high voltage equipment. It was submitted that a reasonable person in the position of the appellant would not have entered the live chamber before first ascertaining whether it was in fact decommissioned. Moreover, the appellant’s stated reason for entering the yard and the live chamber was contradictory, illogical and suspicious. If he really believed that the chamber was not active there would have been no reason for him to conclude that he had a duty to enter the yard and close or lock the door of the live chamber. He also had no key with which to lock the chamber. [16] Finally, it was submitted that even if the gate to the high voltage yard and the exit door to the live chamber were open, this was not the cause of the appellant’s injury. The direct cause was his own negligence in entering the live chamber. [17] Of the three requirements that are necessary for liability under the Aquilian action, only fault (culpa) and causation are in issue. Wrongfulness is not in contention. The parties accept that as the operator of a high voltage system, Eskom was under a legal duty to take reasonable measures to prevent injury to persons entering the high voltage yard and that a failure to do so would be actionable.1 [18] The test for determining negligence is that formulated by Holmes JA in Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-F: ‘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.’ 1 See, for example, Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) paras 11‐13 and cases cited. [19] I think there can be no question that Mr Fourie must have foreseen, or at least ought reasonably to have foreseen, that some person, albeit that he or she may have been a trespasser, might enter the yard and be exposed to the danger of electrocution if the gate to the yard was left open while it was not under supervision. The very purpose for which there was a gate, and for which Mr Fourie’s instructions were to keep it locked, was to prevent that from occurring. It was submitted on behalf of Eskom, however, that even if it was foreseeable that some person might be exposed to the risk of electrocution, it was not foreseeable that harm might come to a person in the position of Mr Pitzer, a trained electrician. [20] Whether foreseeability of harm to someone suffices for negligence, or whether it requires foreseeability of harm to a person in the position of the appellant, is a matter that has evoked considerable debate over the years. It is not necessary to enter that debate in this case. I will assume that the reasonable foreseeability of harm to a person in the position of the appellant namely, a person qualified and experienced in the risks associated with electricity, is required for Mr Fourie (and hence Eskom) to be held liable. [21] In my view, Mr Fourie should reasonably have foreseen that even a qualified electrician might come to harm if the entrances to the premises were left open. Indeed, I think that one might expect that such a person particularly will appreciate the risks of leaving the premises open and will take steps to prevent that happening, if necessary by entering the premises to close and secure open doors. Nor do I think that his or her qualification, in itself, is any guarantee that he or she will not come to harm. He or she will not necessarily have intimate knowledge of the apparatus on the premises; he or she will not be aware of dangers that might have been left in existence by incomplete work; he or she will not necessarily be aware of the layout of the apparatus and where the danger points are. The fact alone that the appellant found himself being electrocuted seems to me to demonstrate amply that even qualified electricians are subject to risk. [22] We were referred by counsel for Eskom to the decision of this court in Kruger v Carlton Paper of South Africa (Pty) Ltd 2002 (2) SA 335 (SCA). In that case a maintenance electrician came into contact with a live terminal connected to a transformer. The court identified the issue before it as follows: ‘During argument before us it became clear that the question for decision had narrowed to whether the defendant ought reasonably to have foreseen the possibility of the plaintiff, a qualified and trained electrician of experience, who was well aware of the dangers of electricity, coming into contact with the NEC terminal in the enclosure and injuring himself, and whether the defendant ought reasonably to have taken steps to insulate the terminal.’2 [23] It went on to make the following findings: ‘The salient facts which were available to the defendant as a reasonable person at the relevant time to enable it to decide whether there was any real danger of the plaintiff coming into contact with the terminal, were the following: (a) The plaintiff was a qualified and trained electrician. (b) He was aware of the danger of coming into contact with the live terminal and how he had to conduct himself in the enclosure. He knew that it was dangerous to get close to the terminal and that it was not required of him to get close to it. (c) At the commencement of his employment with the defendant in 1988 he had been inducted while working under the supervision of a senior electrician and would have been told of the dangers inherent in working in proximity to an electrically live apparatus, in this case, the NEC. (d) From 1988 to 1994 when the accident occurred, he had worked without incident and had not complained that working in the NEC enclosure constituted any danger to himself.’3 And it concluded as follows: ‘Having regard to all the above factors I consider that a reasonable person in the position of the defendant would not have foreseen that the plaintiff would either squeeze between the 2 Kruger v Carlton Paper of South Africa (Pty) Ltd para 9. 3 Kruger v Carlton Paper of South Africa (Pty) Ltd para 13. terminal and the wall or get so close to the terminal as to cause him to come into contact with it.’4 [24] What is or is not reasonably foreseeable in any particular case is a fact bound enquiry. I think it is clear from the abovementioned excerpts alone that it was by no means only because the plaintiff in that case was an electrician that the court concluded that harm to a person in his position was not foreseeable. The facts that founded that decision were more complex than that. Where questions that fall to be answered are fact bound there is seldom any assistance to be had from other cases that do not share all the same facts. That seems particularly apposite in this case, in which the facts are materially distinguishable. [25] In my view, it was indeed reasonably foreseeable to Mr Fourie that if the premises were left open the appellant might enter and accidentally be electrocuted. It needs to be borne in mind that the precise or exact manner in which the harm occurs need not be foreseeable: only the general manner of its occurrence. (Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock Cold Storage (Pty) Ltd & another 2000 (1) SA 827 (SCA) para 22). That being so, he was obliged to take reasonable steps to avoid it occurring. What 4 Kruger v Carlton Paper of South Africa (Pty) Ltd para 19. was called for in that regard was no more than to lock the gate as his duties required. His failure to do so was in my view negligent. [26] Turning to the question of causation, the test is ‘whether but for the negligent act or omission of the defendant the event giving rise to the harm in question would have occurred’ (Minister of Police v Skosana 1977 (1) SA 31 (A) at 35C-D. See too Siman & Co (Pty) Ltd v Barclays National Bank Ltd 1984 (2) SA 888 (A) at 915B-H; International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700F-H). [27] That the gate to the high voltage yard and the exit door to the live chamber were open at the relevant time can admit no doubt regarding causation. Logic dictates that had they been closed the appellant would not have had access to the substation and the incident would not have occurred. It is indeed so that the appellant’s explanation for entering the live chamber is suspicious, but nothing material turns on that aspect. It was Eskom’s duty to ensure that only authorised persons had access to the yard and that the substation was properly secured as required under the regulations. Eskom’s designated official, Mr Fourie, was required to see to it that all doors and gates to the substation and, especially to the live chamber were closed and locked. Clearly, he did not comply with his obligations. The reason as to why the door to the live chamber was left open remains unexplained. There was thus a causal link between Eskom’s conduct in failing to properly secure the yard and the live chamber and the appellant’s injury. But whether Eskom’s conduct was the sole cause of the appellant’s injury is another matter. [28] What remains is whether the appellant was contributorily negligent. Objectively viewed the appellant would have had no valid reason to assume that it was safe to enter the live chamber. The factors upon which the appellant relied were at best superficial. The appellant never knew for a fact whether the blockhouse and live chamber had been decommissioned. A reasonable person in the position of the appellant ought to have made such enquiries before entering the live chamber. He was undoubtedly negligent in either touching or standing in close proximity to the high voltage equipment which injured him. [29] On an overview of the proven facts, I find that both parties were equally at fault in relation to the damage caused and that the appellant’s damages should be reduced by fifty per cent. [30] The following order is accordingly made: 1. The appeal succeeds with costs. 2. The order of the court a quo is set aside and substituted with the following: ‘It is declared that the defendant is liable for fifty per cent of the plaintiff’s proven or agreed damages.’ _____________________ P BORUCHOWITZ ACTING JUDGE OF APPEAL Appearances: Appellants: J J WESSELS SC Instructed by Malcolm Lyons & Brivik, Cape Town Matsepes Inc, Bloemfontein Respondent: M DU P VAN DER NEST SC Instructed by Webber Wentzel, Johannesburg McIntyre & Van Der Post, Bloemfontein	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Hendrik Johannes Pitzer v Eskom (336/2011) [2012] ZASCA 44 (29 March 2012) The Supreme Court of Appeal (SCA) upheld an appeal against an order made by the South Gauteng High Court, Johannesburg. The appellant, Hendrik Johannes Pitzer, was injured by an electric shock sustained inside a live chamber of an electrical substation operated by the respondent, Eskom. As a result the appellant instituted action for damages in the court a quo. Moshidi J dismissed the claim holding that the appellant’s injuries were caused solely as a result of his own negligence and that there had been a voluntary assumption of risk. The appellant claimed that the entrance to the live chamber should have been closed and that the respondent was, as a result, negligent and therefore liable. The SCA held that it was reasonably foreseeable to the respondent that if the premises were left open the appellant might enter and accidently be electrocuted. The Court found that the person acting on behalf of the respondent was negligent in not performing his duties in this regard. The SCA further held that a causal link exists between Eskom’s conduct in failing to properly secure the dangerous premises and the appellant’s injuries. However, the SCA found the appellant to be contributorily negligent as some of his actions did not accord with those of a reasonable person. For the reasons above the SCA made the following order: 1. The appeal succeeds with costs. 2. The order of the court a quo is set aside and the following order substituted: ‘It is declared that the defendant is liable for fifty per cent of the plaintiff’s proven or agreed damages.’
501	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 429/2015 In the matter between: THE MINISTER OF HUMAN SETTLEMENTS, WESTERN CAPE PROVINCIAL GOVERNMENT APPELLANT and THE PENHILL RESIDENTS SMALL FARMERS CO-OPERATIVE LTD FIRST RESPONDENT GRAHAM ADA SECOND RESPONDENT IVAN CLOETE THIRD RESPONDENT Neutral Citation: Minister of Human Settlements, Western Cape v Penhill Residents Small Farmers Co-operative (429/2015) [2016] ZASCA 99 (3 June 2016) Coram: Lewis, Cachalia, Saldulker and Mathopo JJA and Tsoka AJA Heard: 24 May 2016 Delivered: 3 June 2016 Summary: Land: unlawful occupation of land owned by provincial government: occupiers of farm land interdicted from taking further occupation of additional land and erecting new structures: did not have consent of owner to settle on additional land and were not deprived of any right unlawfully. ___________________________________________________________________ ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Saldanha J, Cloete J and Nyman AJ concurring, sitting as full court of appeal) 1 The appeal is upheld with the costs of two counsel where so employed. 2 The order of the full court is set aside and replaced with the following: „(a) The first respondent is interdicted and restrained from- (i) Settling on any of the portions of the properties listed in annexure A to the notice of motion and which are demarcated in red on the plan attached hereto (the unoccupied areas); (ii) Erecting structures on any portion of the unoccupied areas; (iii) Claiming rights over any portion of the unoccupied areas by cordoning off such portion; (iv) Inciting or encouraging other persons to settle on any portion of the unoccupied areas, or to erect structures on such portions. (b)The first respondent is directed to pay the costs of the application.‟ ___________________________________________________________________ JUDGMENT Lewis JA (Cachalia, Saldulker and Mathopo JJA and Tsoka AJA concurring) [1] The Western Cape Provincial Government owns a tract of land close to Stellenbosch known as the Penhill Farms. The land consists of several registered farms and is very close to the N2 highway running between Cape Town and Somerset West. It is thus land of considerable value. I shall refer to it either as Penhill Farms or the property. Until 1994 it was not occupied and not farmed. In that year indigent small scale farmers started to occupy Penhill Farms and to establish farming operations – mostly pig and livestock farming. [2] The number of people occupying the land and the extent of Penhill Farms used for farming increased significantly over time. The Provincial Government was aware of the occupation, and indeed over many years gave assistance to the farmers and tried to regularize their occupation through proposed leases at a nominal rental. In 2000 the farmers began to organize as a group and eventually formed the Penhill Residents Small Farmers Co-Operative Ltd, which is the first respondent in this appeal. I shall refer to it as the Penhill Farmers. [3] However, in early 2011 the Provincial Government wished to settle another group of farmers – the Ithemba farmers – for whom it was obliged to find land for occupation in terms of a settlement made an order of court, on the unoccupied portions of Penhill Farms. The Penhill Farmers were advised before then that the unoccupied land was needed for other people. Nonetheless, the Penhill Farmers and others continued to take occupation of portions of the property previously unoccupied and to erect structures without consent. In February 2011 they were given notice by the Department of Human Settlements that they should demolish the structures illegally erected. The notice was ignored and people continued to erect structures and to fence off previously unoccupied portions of Penhill Farms. [4] The Minister of Human Settlements, Western Cape Provincial Government (actually the Member of the Executive Council (MEC) of the Provincial Council, but referred to in the application as a Minister, and I will refer to him as such accordingly) accordingly brought an urgent application in May 2011, which was heard on 14 June 2011, for an interdict preventing further settlement and the erection of new structures on Penhill Farms. The respondents cited were, in addition to Penhill Farmers, two members, Mr G Ada and Mr I Cloete. Mr Ada has subsequently died and Mr Cloete no longer occupies a portion of Penhill Farms: the only respondent now is Penhill Farmers. The Minister also sought orders prohibiting the incitement of others to occupy and to erect structures on unoccupied portions of Penhill Farms. These were identified in an annexure to the notice of motion. [5] The Provincial Government did not attempt to interfere with the occupation of the property by existing occupiers: it did not seek to evict any of the Penhill Farmers or other occupiers. It sought to prevent future unlawful occupation. Its ownership of the property was not disputed by the respondents. The court of first instance (Allie J in the Western Cape High Court) dismissed the application some six months after it was heard, despite the urgency. It refused an application for leave to appeal in February 2012. This court gave leave to appeal against Allie J‟s order to the full court of the Western Cape High Court. [6] The full court (per Saldanha J, Cloete J and Nyman AJ concurring) heard the appeal in July 2013, and refused it in November of the following year. This court gave special leave to appeal against the order of the full court. It directed the Provincial Government to file, together with the record of appeal, a plan depicting precisely the portion of the properties in respect of which it claimed an interdict, together with a description of the area. This court also requested the parties to make good faith efforts to agree on the current number of occupiers, the portions of Penhill Farms occupied, and the extent not occupied. [7] No agreement was reached. The Provincial Government attempted to get clarity, and on its own inspection concluded that 52.2473 hectares (26.1 per cent) of the property were occupied, whereas Penhill Farms was 200.0844 hectares in extent. Thus 73.9 per cent was not occupied. It also established that there were 269 people occupying Penhill Farms. The areas not occupied were described as empty farm land. The State Attorney advised the court of this on 26 March 2015. [8] In August 2015 professional land surveyors provided a comprehensive survey at the request of the Provincial Government. The statistics were somewhat different. The surveyors advised that 69.8154 hectares (36.4 per cent of the Penhill Farms) were actively occupied; 86.4374 hectares (45.08 per cent) have been fenced off for grazing; and 35.4937 hectares (18.51 per cent) were unoccupied. One of the inferences to be drawn from the difference is that there had been further settlement between March and August of 2015. Indeed, the surveyor observed in his report that „The situation on the ground is dynamic and changing frequently. New settlement/occupation and “subletting” are happening continuously.‟ [9] It is possible, however, that the first inspection following the court‟s request was less accurate than the surveyor‟s observations. Whatever the reason for the discrepancy, there are at least 35.4937 hectares of land unoccupied and on which the Provincial Government wishes to develop housing and settle the Ithemba farmers. [10] What is more startling is the significant difference between the occupation alleged when the application was first moved and the position established by the land surveyor some four years after the interdict was sought. In June 2011 only some 90 hectares were occupied, including fields used for grazing. About 110 hectares was thus available for settlement of the Ithemba farmers and for other developments proposed by the Provincial Government. [11] The interdict sought would have protected the clear right of ownership that vests in the Provincial Government. But Allie J refused it, finding that the Penhill Farmers had a „legitimate expectation‟ to use the entire property, exceeding 200 hectares, and had thus to have been given „lawful notice‟ before seeking the interdict. She also held that the Provincial Government had given „actual authority‟ to occupy and use the entire land for farming purposes. The full court confirmed that finding. [12] Before traversing the development of the settlement and the history of negotiations between the parties, I should observe that these findings are mutually destructive. If the Penhill Farmers had actual consent, then the question of legitimate expectation would not have arisen. The question is one of fact, and mutually exclusive facts cannot be pleaded in the alternative, as the courts below failed to appreciate. The Penhill Farmers could not rely on consent, and then, if that was not established, rely in the alternative on the right to a hearing before they are prevented from unlawfully occupying land that they had not occupied before. In any event, a legitimate expectation to a hearing arises only where there is a decision taken by an administrative body: the launch of proceedings to protect a right can hardly be said to be administrative or executive action. The history of occupation and of negotiations between the Provincial Government and the Penhill Farmers [13] I have indicated already that the first farmer settled on Penhill Farms in 1994, and that further settlement occurred thereafter. The entire farm was never occupied, which Mr Ada and Mr Cloete confirmed in their answering affidavits in the application. Mr Ada said: „The portion of the farm occupied by [the Penhill Farmers] and currently used for farming purposes is only a small portion of the total size of the farm and will not adversely affect any housing project implemented on the farm.‟ They also did not deny that the vacant land was designated for imminent use by the Provincial Government. [14] In response to the allegations that they were responsible for new structures being erected, the Penhill Farmers pointed out that the property was very large and was occupied by „a substantial number of persons who are not members of the [Penhill Farmers]. Any one of these persons could have erected the structure.‟ Penhill Farmers do not thus claim that they occupy all of the property, and they deny that they are responsible for settlement by other people. [15] The question that then arises is whether the Provincial Government ever gave them consent to occupy the entire property, as the courts below found. Such consent is essentially argued to have arisen from negotiations between the parties over the years. There were a number of meetings held from 2004 onwards to regularize their existing use of portions of Penhill Farms. Minutes of these meetings, and draft documents put up by the Penhill Farmers, show various attempts to structure their arrangements formally. On 9 December 2004, a meeting was held between the Penhill Farmers, the Provincial Government and the City of Cape Town. They agreed to „give attention to the zoning of the land for agricultural purposes, the provision of services to the small scale farmers on the land and the conclusion of a formal lease agreement with [the Penhill Farmers] to regularize its members occupation of the land‟. Members of Penhill Farmers then drew up an action plan to deal with services. [16] In May 2005 the Provincial Minister of Agriculture (also in fact an MEC) wrote to the Provincial Minister of Human Settlements requesting him to submit a project plan and information about the nature of the farming to be conducted so that a lease agreement could be drafted for each farmer. In October 2005 the former recorded in a letter to Mr Cloete that a meeting had been held at which it was agreed that the conclusion of lease agreements between the individual farmers and the Department of Human Settlements was a priority. [17] In August 2006, a firm of consultants engaged by the Provincial Department of Agriculture provided it with a „project plan‟ for the development of the small-scale farming on Penhill Farms. The Department of Agriculture confirmed in a letter to Mr Cloete on 6 September 2006 that the Penhill Farmers could use the project plan as a basis for concluding lawful lease agreements with the individual farmers. [18] On 23 November 2006, the Provincial Government advised the Penhill Farmers that property would be made available to individual farmers for leases for a period of nine years and 11 months. The Department of Transport and Public Works (Public Works) would take over all risk, and profit and loss, but should any of the properties not be used for farming they would have to be handed back to the Department of Local Government and Housing. Public Works would manage the leases while Agriculture would facilitate farming and mentor the farmers. However, no leases were actually concluded, and it was clearly the understanding of the Provincial Government that the leases would be with the individual farmers in respect of each portion of Penhill Farms farmed by them. [19] On 27 February 2007, the Chief Director of Planning and Development in the Provincial Department of Local Government and Housing wrote to Mr Cloete advising that, while the department was committed to making land available for the farming project on Penhill Farms, there was increasing pressure to provide housing in the area and some of the land might be required for housing. This was followed by a meeting on 19 July 2007 between City of Cape Town representatives, the Provincial Department of Agriculture and the Penhill Farmers where the proposed development was discussed. The following year, on 9 April 2008, another meeting was held with the same representatives where the City advised all present that it proposed a holistic development of the Blue Downs area, into which Penhill Farms fell, with the financial assistance of the Development Bank. The minutes recorded that: „It was agreed that a User Agreement will be entered into with two parties. The definition of User Agreement and Lease Agreement in legal terms is the same thing. The proposed ten (10) year period cannot be acceded to due the greater Bluedowns development plan and the proposed plan has now been submitted to the City of Cape Town for comments. The agreed term for the User Agreement will be for three (3) years with a condition for renewal for a longer period subject to the finalization of a study for greater Bluedowns development and a rental will be at market related (sic).‟ [20] A draft lease agreement was prepared by the Provincial Government (Local Government and Housing). The Penhill Farmers were said to be the lessee. A plan was attached. It is not clear whether the plan was in respect of the entire property or only portions. The Penhill Farmers maintain that it was in respect of the entire property but it is not apparent from the plan. They attach significance to this. Indeed it is the high watermark of their case based on actual consent to occupy the entire property. [21] At a meeting on 30 April 2008, the Penhill Farmers were advised that the draft lease had been prepared and had been sent to the legal services department for input. They presented their own draft lease to the chairman. The Provincial Government engaged a property valuator to prepare a property valuation in order to determine a market related rental for possible letting to „small farmers‟. The date of the valuation was 2 June 2008. The valuation related to Penhill Farms but also to other properties – some 248 hectares in all. [22] The next meeting was on 9 October 2008. There was a discussion of the term of the draft lease that prohibited the erection of any permanent structure: the Penhill Farmers pointed out that there were already permanent structures on the property. There was also disagreement over the rental to be paid. The valuator had recommended that it be five per cent of the value, which was set at R1 000 per hectare. The Penhill Farmers proposed one per cent of value. [23] The parties met again on 19 November 2008. The same issues were discussed. Several other meetings were held over the course of the following two years but no agreement was reached. On 14 January 2011 another meeting was held where the same issues were raised again. The Provincial Government‟s representative confirmed again that it was willing to assist the Penhill Farmers but that the property was situated along a major transport route and was needed for urban development. The Penhill Farmers registered dissatisfaction at not being included in the discussions about the relocation of the Ithemba farmers but stated that „they are not against the Ithemba farmers also farming at Penhill, but that they need to be part of future discussions‟. The notice to demolish structures was issued shortly after this and the urgent application followed in May 2011. Consent [24] The courts below found that there was actual consent for the Penhill Farmers to occupy the entire property, and that is what the Penhill Farmers argue again on appeal. It can be seen, however, from the minutes of meetings and the content of correspondence that there were negotiations over the occupation of the portions already farmed. But there was nothing either express or implicit in any of the discussions that approved the Penhill Farmers‟ taking occupation of the entire property. [25] As I have said, they place store on the plan attached to the draft lease prepared by the Provincial Government and on the valuation done in respect of Penhill Farms as well as on the negotiations to regularize their position over the years. But does any of this indicate unequivocal conduct that justifies an inference that there was consensus regarding the term of the contract they allege? In Standard Bank of South Africa Ltd & another v Ocean Commodities Inc & others 1983 (1) SA 276 (A) this court said (at 292B-C): „In order to establish a tacit contract it is necessary to show, by a preponderance of probabilities, unequivocal conduct which is capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged.‟ [26] In Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd 1984 (3) SA 155 (A) Corbett JA, after citing the test in Ocean Commodities, referred to a different and less stringent formulation (at 165B-C): „a court may hold that a tacit contract has been established where, by a process of inference, it concludes that the most plausible probable conclusion from all the relevant proved facts and circumstances is that a contract came into existence‟. He did not determine which test was preferable as it was unnecessary for the determination of the case. The requirement that unequivocal conduct is required before a contract will be held to have come into existence was also confirmed in McDonald v Young [2011] ZASCA 31; 2012 (3) SA 1 (SCA) para 19. [27] Residents of Joe Slovo Community, Western Cape v Thubelisha Homes & others (Centre on Housing Rights and Evictions & another, Amici Curiae) [2009] ZACC 16; 2010 (3) SA 454 (CC) dealt with consent of an owner to occupy property in determining whether there had been compliance with the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998. The issue there was whether eviction had been effected lawfully. There are five different judgments in the matter but the result was agreed. The only relevance of Residents of Joe Slovo to this matter is that the court made it clear that by „consent‟ is meant not simply acquiescence, but voluntary agreement. Consent cannot be conferred unless it is asked for and given (para 55). The court endorsed the test mooted by Corbett JA (above at 165B-C) as to drawing an inference that all parties agreed on occupation: consent must be the „most plausible probable conclusion from all the proved facts and circumstances‟ (para 58). [28] Where is the unequivocal conduct of both the Provincial Government and the Penhill Farmers, showing that the Provincial Government had consented to the occupation by the farmers of the entire property, to be found in any of their meetings or other interaction? During the course of argument before us, counsel for the Penhill Farmers accepted that the Provincial Government had not acted consistently or unequivocally over the course of the discussions that took place over the years. All the discussions related to regularizing the existing occupation by the Penhill Farmers – not future conduct. There is no evidence of unequivocal conduct that establishes, as the most plausible probable inference, that the Provincial Government had consented to the Penhill Farmers occupying the entire property. There was thus no consent and the full court erred in finding that there was. Legitimate expectation [29] The full court held also that the decision by the Provincial Government to use a portion of the property for the Ithemba farmers and for a housing development constituted administrative action – „it had a direct effect on the rights and legitimate expectations of the‟ Penhill Farmers. The consequence of the „decision‟ was that there was less land available to be used when, throughout the negotiation period, they „were brought under the impression that the entire property was available for their beneficial occupation‟. Nothing in the factual matrix bears this out. (See Minister of Environmental Affairs and Tourism & others v Phambili Fisheries (Pty) Ltd [2003] ZASCA 46; 2003 (6) SA 407 (SCA) paras 64-69.) And a decision by an owner of property to use it can hardly amount to administrative action that impacts adversely on a person who has no right to use or occupy it. [30] The finding that the Penhill Farmers had a right to be consulted about the future use of property to which they had no right is quite astonishing. And equally astonishing are the following two conclusions, which are at odds with each other: „In the result I am satisfied that the respondents had authority to occupy the entire 200ha of the property and that they enjoyed a legitimate expectation to proper notice and consultation with regard to any restriction of such occupation, whether by way of a substantial housing development on the property or the relocation of the Ithemba Farmers onto the property.‟ In Vanger v Thomson & Meyer 1915 CPD 752, Juta JP (Kotzé J concurring) said, where inconsistent and mutually exclusive facts had been pleaded by a defendant: „I do not think that a defendant can say, “I did not buy,” and “I paid.” Mr Upington has cited cases in our Courts and in the High Court at Kimberley to the effect that it is nothing unusual for a defendant to plead that he did not enter into a contract and that the contract was cancelled, but he has cited no case which says that a defendant may plead that he did not buy and that he paid. It would be very difficult to conceive of a defendant going into the box and bona fide denying the purchase – especially in the present case in view of the account showing that a large sum has been paid off – and also saying that he had paid. Having eliminated the possibility of all special pleas, as I already said, I cannot believe that this is a bona fide plea. The magistrate was therefore quite right in not allowing these two pleas to stand.‟ [31] If there was actual consent, the Provincial Government would not have been entitled to an interdict. How then can the Penhill Farmers honestly allege in the alternative that promises had been made and expectations arisen which gave rise to a right to notice and consultation? The full court thus erred in finding both that there was both consent and a legitimate expectation that the Penhill Farmers be heard. [32] The effect of the full court‟s decision would be that when government, provincial or local, attempts to negotiate with unlawful occupiers in order to regularize their occupation, it will be precluded from asserting its right to use unoccupied land. The consequences could be dire. [33] The Provincial Government is entitled to the interdict that it seeks. It, and people in the Western Cape, have been severely prejudiced by the delay in the court system. It is also entitled to the costs in the courts below and on appeal. Although the Penhill Farmers argued that they were asserting constitutional rights, that is not in fact the case. They had no right at all to the whole property, and they are commercial farmers. They were seeking to enhance their commercial positions and they did so very successfully in the period between the launch of the application and the set down of this appeal. [34] Accordingly: 1 The appeal is upheld with the costs of two counsel where so employed. 2 The order of the full court is set aside and replaced with the following: „(a) The first respondent is interdicted and restrained from- (i) Settling on any of the portions of the properties listed in annexure A to the notice of motion and which are demarcated in red on the plan attached hereto (the unoccupied areas); (ii) Erecting structures on any portion of the unoccupied areas; (iii) Claiming rights over any portion of the unoccupied areas by cordoning off such portion; (iv) Inciting or encouraging other persons to settle on any portion of the unoccupied areas, or to erect structures on such portions. (b)The first respondent is directed to pay the costs of the application.‟ _______________________ C H Lewis Judge of Appeal APPEARANCES For the Appellant: P B J Farlam (with him K Pillay and T Mayosi) Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For the First Respondent: S Magardie (with him R Matsala) Instructed by: Legal Resources Centre, Cape Town Webbers, 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 June 2016 STATUS Immediate Minister of Human Settlements, Western Cape v Penhill Residents Small Farmers Co-operative (429/2015) [2016] ZASCA 99 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 the Western Cape Division of the High Court, sitting as a full court on appeal to it, which refused an interdict to prevent further unlawful occupation of property owned by the Western Cape Provincial Government. The property, known as the Penhill Farms, was until 1994 unoccupied and not farmed. It is a huge tract of land, just over 200 hectares, near Stellenbosch, close to the N2 highway running between Cape Town and Somerset West. In 1994 a small-scale farmer took occupation of a portion of the property and started farming pigs on it. Other farmers followed suit. The farmers formed a co-operative in 2000, the Penhill Residents Small Farmers Co-Operative Ltd (the Penhill Farmers). The Provincial Government actively assisted them with farming activities, and representatives of the Penhill Farmers, the Provincial Government and the City of Cape Town met many times to discuss regularizing the occupation by the Penhill Farmers. Draft leases were discussed, but none was ever concluded. As early as 2007, the Provincial Government advised the Penhill Farmers that the unoccupied portions of the property were required for other farmers (the Ithemba farmers) and for urban development. By June 2011 some 90 hectares were being actively farmed. When this appeal was set down for hearing, early in 2015, only 35 hectares were unoccupied and available for other use. In early 2011, the Provincial Government advised the Penhill Farmers to stop taking further occupation of the property and sent notices requiring them to demolish new structures. However, further occupation continued apace. It accordingly brought an urgent application to restrain the Penhill Farmers from taking occupation of additional land and erecting further structures. They resisted the relief, claiming that they had consent to use the entire property, or a legitimate expectation, as a result of promises made, to be consulted before their rights were affected. Six months after the application was heard the high court refused to grant an interdict on the basis that the Penhill Farmers had both consent and a legitimate expectation to be heard. It failed to take into account the principle that parties cannot rely on alternative facts. They could not rely on consent or a promise as to future conduct. Despite this, the full court on appeal refused the appeal, also finding that there was actual consent to occupy the entire property and a legitimate expectation that they would be heard before the Provincial Government used the unoccupied property for other purposes. The full court’s judgment was handed down some 18 months after the appeal was heard. Part of the delay was caused by the parties negotiating settlement. On a further appeal, with the SCA’s special leave, the decision of the full court was reversed. The SCA found that an examination of the discussions at meetings and of correspondence between the Provincial Government and the Penhill Farmers showed that the Provincial Government had never agreed that the Penhill Farmers could occupy and farm the entire property. On the contrary, whatever had been discussed was in relation to each portion of the property actually farmed; and the Penhill Farmers had been advised several years before the interdict was sought that the unoccupied property was needed for other purposes. The SCA thus set aside the decision of the full court and replaced its order with one restraining the Penhill Farmers from settling on or erecting structures on demarcated portions of Penhill Farms.
165	non-electoral	2017	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 512/2016 In the matter between THE MINISTER OF RURAL DEVELOPMENT AND LAND REFORM APPELLANT and NORMANDIEN FARMS (PTY) LTD FIRST RESPONDENT MANDLA NKOSI JOSEPH MATHIMBANE SECOND RESPONDENT BONGINKOSI DAVID MATHIMBANE THIRD RESPONDENT PHUMELELO FLORENCE MATHIMBANE FOURTH RESPONDENT MLAMULI OBED MATHIMBANE FIFTH RESPONDENT SIPHO MATHIMBANE SIXTH RESPONDENT MIRIAM JELE SEVENTH RESPONDENT BERNARD JELE EIGHTH RESPONDENT MARTHA JELE NINTH RESPONDENT ALBERT JELE TENTH RESPONDENT APOSTOL JELE ELEVENTH RESPONDENT SWEET BETTER JELE TWELFTH RESPONDENT JOHANNES JELE THIRTEENTH RESPONDENT THE MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES FOURTEENTH RESPONDENT And in the matter between Case No: 370/2017 MANDLA NKOSI JOSEPH MATHIMBANE FIRST APPELLANT BONGINKOSI DAVID MATHIMBANE SECOND APPELLANT PHUMELELO FLORENCE MATHIMBANE THIRD APPELLANT MLAMULI OBED MATHIMBANE FOURTH APPELLANT SIPHO MATHIMBANE FIFTH APPELLANT MIRIAM JELE SIXTH APPELLANT BERNARD JELE SEVENTH APPELLANT MARTHA JELE EIGHTH APPELLANT ALBERT JELE NINTH APPELLANT APOSTOL JELE TENTH APPELLANT SWEET BETTER JELE ELEVENTHAPPELLANT JOHANNES JELE TWELFTH APPELLANT and NORMANDIEN FARMS (PTY) LTD FIRST RESPONDENT THE MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES SECOND RESPONDENT THE MINISTER OF RURAL DEVELOPMENT AND LAND REFORM THIRD RESPONDENT DIRECTOR-GENERAL, DEDPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM FOURTH RESPONDENT REGIONAL LAND CLAIMS COMMISSIONER KWAZULU-NATAL FIFTH RESPONDENT Neutral citation: Minister of Rural Development and Land Reform v Normandien Farms & others; Mathimbane & others v Normandien Farms Cases 512/2016 & 370/2017 [2017] ZASCA 163 (29 November 2017) Coram: Leach, Saldulker & Swain JJA and Lamont & Rogers AJJA Heard: 7 November 2017 Delivered: 29 November 2017 Summary: Civil procedure – application for condonation and reinstatement by appellants in Case 370/2017 (‘occupants’) granted in interests of justice despite egregious non-compliance with rules relating to heads of argument. Contempt of court – occupants failed to establish beyond reasonable doubt that respondent (‘Normandien’) in contempt of appellate process – contempt application, including related postponement application, dismissed. Land reform – whether Minister has power under Land Reform: Provision of Land and Assistance Act 126 of 1993 to make land available solely for purposes of grazing – court a quo erred in compelling Minister to exercise permissive powers in favour of occupants – Minister’s appeal succeeds. Environmental law – Normandien had standing to seek removal of occupants’ livestock on land overgrazed in violation of Conservation of Agricultural Resources Act 43 of 1983 (CARA) – labour tenants not exempt from CARA – removal of animals in terms of CARA not an eviction for purposes of Land Reform (Labour Tenants) Act 3 of 1996 – occupants’ appeal dismissed. Costs – Biowatch principle applicable to costs in court a quo and on appeal as between Minister and Normandien, ie parties to bear their own costs. Costs – no grounds for interfering in court a quo order that occupants pay Normandien’s costs on punitive scale. Costs – occupants’ application for condonation and reinstatement necessitated by joint failings by attorneys and counsel – contempt and postponement application an abuse having no substantive merit – attorneys ordered personally to pay Normandien’s costs of opposing said applications on attorney/client scale – attorneys and counsel precluded from recovering fees from occupants in respect of these applications. Appeals – practice – papers in opposed interlocutory applications to be indexed and paginated. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: The Land Claims Court, Durban (Meer J sitting as court of first instance). (a) In Case 512/2016 (the appeal by the Minister of Rural Development and Land Reform): (i) The appeal succeeds. (ii) The order of the court a quo is amended by deleting para 3 and by altering para 5 so that it commences thus: ‘The First to Thirteenth Respondents, jointly and severally…’. (iii) The parties shall bear their own costs of the appeal. (b) In Case 370/2017 (the appeal by Mandla Nkosi Joseph Mathimbane and eleven others): (i) The appellants’ applications for condonation and for the reinstatement of the appeal are granted. (ii) The appellants’ Durban attorneys, MC Ntshalintshali Attorneys, shall personally pay the respondent’s costs of opposing the said applications on the attorney and client scale, including the costs of two counsel. (iii) The appellants’ contempt and postponement application dated 11 October 2017 is dismissed. (iv) The appellants’ Durban attorneys, MC Ntshalintshali Attorneys, shall personally pay the respondent’s costs of opposing the said contempt and postponement application on the attorney and client scale, including the costs of two counsel. (v) The appellants’ counsel and Durban attorneys, MC Ntshalintshali Attorneys, shall not be entitled to recover any fees from the occupants in respect of the applications mentioned above. (vi) The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT ___________________________________________________________________ Rogers AJA (Leach, Saldulker and Swain JJA and Lamont AJA concurring) Introduction [1] There are two matters before us, arising from proceedings instituted in the Land Claims Court (LCC) by the present first respondent, Normandien Farms (Pty) Ltd (Normandien), for the removal of livestock from its farm Albany in KwaZulu- Natal. The first matter is an appeal by the Minister of Rural Development and Land Reform (Land Minister). He was the 14th respondent in the LCC. The second matter is an application for condonation and reinstatement where the would-be appellants are twelve members of the Mathimbane and Jele families. They were the 1st to 12th respondents in the LCC (the occupants). The 13th respondent was the Minister of Agriculture, Forestry and Fisheries (Agriculture Minister). The 14th respondent was the Regional Land Claims Commissioner, KwaZulu-Natal (Regional Commissioner). [2] In the LCC Meer AJP found in favour of Normandien and dismissed a counter-application by the occupants. She refused applications for leave to appeal by the Land Minister and the occupants. This court on petition granted the Land Minister and the occupants leave to appeal to this court. Background [3] The farm forms part of a larger estate on which Normandien conducts forestry and timber-processing operations. The occupants have lived on the farm for many years. Members of their families are buried there. They graze livestock on the farm. When Normandien instituted proceedings in December 2013 the occupants had 285 head of cattle, 133 goats and ten horses. The number of cattle had increased to 360 by February 2015. [4] In March 2013 the occupants instituted an action in the LCC alleging that they were labour tenants as defined in the Land Reform (Labour Tenants) Act 3 of 1996 (LTA) and that they had duly submitted applications to the Director-General of the Department of Rural Development and Land Reform (Land Department) for the acquisition of land as contemplated in s 16 of the LTA. As against Normandien they sought orders declaring in terms of s 33(2A) that they were labour tenants and awarding a part of the farm to them. As against the Director-General they sought an order that moneys be made available to compensate Normandien for the part of the farm to be awarded to them. [5] In December 2013, while the action was pending, Normandien launched the application giving rise to the present appeals (the removal application). Normandien sought orders that the livestock be removed from the farm and that the Land and Agriculture Ministers and/or the Regional Commissioner facilitate their removal to alternative land. This relief was claimed on the basis that the farm had been severely overgrazed and that the continued presence of the livestock on the farm contravened the Conservation of Agricultural Resources Act 43 of 1983 (CARA). [6] The occupants’ action served before Sardiwalla AJ on 14 March 2014. Normandien’s version as to what transpired has not materially been placed in issue. In the days preceding 14 March 2014 the attorneys agreed that the matter was not ready for trial. This was communicated to the judge in chambers. He was not willing to postpone the case. The occupant’s counsel indicated that he would then have to withdraw but eventually the parties embarked upon settlement discussions. [7] According to Normandien, the essence of the settlement reached was that Normandien would concede that the occupants were labour tenants if they would agree to accept alternative land or compensation in lieu of a claim to part of Albany. The essence of the agreement was communicated to the judge in open court. On this basis, he made an ex tempore order, the transcribed version of which reads: ‘I grant an order in terms of para 1 declaring in terms of s 33(2A) of the Act that the plaintiffs are labour tenants. I further order that the second defendant [the Director-General] will commence forthwith with negotiations between the community and property owners and canvas the possibility of alternate properties for accommodation and the process shall continue and be completed within 12 months from the date of this order. The second defendant shall provide a report – a comprehensive report – on the following aspects within six months of this order:  Firstly, the election that the plaintiffs have made in so far as their acquisition of land and/or compensation;  Two, the progress in acquiring such land and the status of such acquisition;  Three, the anticipated timeframes for the completion of the process of resettlement and allocation of land to the plaintiffs. The costs of the application reserved. The matter is postponed sine die.’ [8] On 14 March 2014 the registrar of the LCC issued a written order purporting to give effect to the ex tempore order. The written order mistakenly referred to a non-existent s 23(2)(a) instead of s 33(2A). This was corrected, uncontroversially, on 2 April 2014. The first and third bullet points became paras 4(a) and (c) of the written order, reading thus: ‘4. That the 2nd Defendant shall provide a comprehensive report on the following aspects within 6 months of the date of this order: (a) The election that the Plaintiffs have made in so far as their acquisition of alternative land and/or compensation. . . . (c) The anticipated time frames for the completion of the process of allocation of land and resettlement of the Plaintiffs.’ [9] On 24 March 2014 the occupants’ attorneys wrote to the registrar, with copies to Normandien’s attorneys and the State Attorney, asking that ‘some material typographical errors’ in the written order be corrected. The one was the incorrect section reference. The other was para 4(a), which – so it was said – should read: ‘The election that the Plaintiffs have made in so far as their acquisition of land and/or alternative land’. This was a substantial change and was in conflict with the settlement, because it foreshadowed the possibility that the occupants might elect to acquire a part of Albany. Normandien’s attorney says that he accepted in good faith that the letter merely sought to correct typographical errors and overlooked the substantial change proposed to para 4(a). [10] On 2 April 2014 the registrar issued an amended order. Apart from correcting the statutory reference, paras 4(a) and (c) were amended to read as follows (I have underlined the changes): ‘(a) The election that the Plaintiffs have made in so far as their acquisition of the land or alternative land or compensation. . . . (c) The anticipated time frames for the completion of the process of allocation of land and/or resettlement of the Plaintiffs.’ There is a dispute in the present appeal as to whether the amended order is binding. [11] In the removal application, the Ministers and the Regional Commissioner filed their answering papers in February 2014 but there was silence from the occupants. In October 2014 Normandien requested a pre-trial conference to move things along. This conference, presided over by Sardiwalla AJ, took place on 2 December 2014. The occupants’ counsel said that his clients had elected to acquire a part of Albany. Normandien’s counsel disputed their right to do so. The State Attorney made reference to a report by the Director-General which had not been seen by anyone else. The judge gave directions for the circulation of the report and said that there should be compliance with para 4 of his order. [12] The Director-General’s report of September 2014, if it existed, is not in the appeal record. In a report filed a year later by a legal adviser in the Land Department, it was stated that the occupants had elected to remain on Albany; that the Department had offered to buy Albany for R8,53 million; that this offer was rejected and a counter-offer made to sell Albany for R400 million; and that this counter-offer had subsequently being withdrawn. (The counter-offer in fact related to the larger estate of which Albany forms part.) [13] The parties held a further conference during January 2015 but remained at odds about the terms of the order in the action and regarding the further conduct of the removal application. Normandien delivered a supplementary affidavit on 16 February 2015, alleging that the situation on the land had deteriorated and that the number of cattle had increased. Normandien said that there were four farms in close proximity which the Land Department had acquired and which would be suitable for the temporary relocation of the occupants’ livestock. [14] On 26 February 2015 the occupants filed their ‘preliminary’ answering papers. They said that they could not meaningfully address the allegations of over- grazing without funds to engage their own expert. They were awaiting a response to their funding request. At a further pre-trial conference on 14 April 2015, by which time the funding request had been granted, Sardiwalla AJ gave directions for the filing of the occupants’ expert report and a meeting of experts. [15] The experts engaged by Normandien and the occupants met on 1 June 2015 and reached agreement on a number of matters, including that there had been serious degradation of vegetation and soil erosion as a result of uncontrolled overgrazing and that it was imperative for all livestock to be removed with immediate effect. On 22 June 2015 a further meeting took place between these experts and two in-house experts of the KZN Department of Agriculture and Rural Development where it was agreed (i) that overgrazing and overstocking were the cause of the degradation; (ii) that the occupants had failed to act responsibly by reducing animal numbers; (iii) that all livestock should be removed before 31 August 2015 and should be excluded for a five-year period; (iv) and that a strict resource management plan should be drafted by October 2015 and thereafter implemented with annual audits. [16] On 23 June 2015, and in accordance with a request by the parties, the Land Department issued a report regarding alternative land. This report identified the beneficiaries to whom the farms put forward by Normandien had been allocated. Two of the farms had been allocated to the Twala family who had 25 head of cattle, 21 pigs, three goats and three horses. The other two farms were allocated to Ms NJ Mazibuko who had five head of cattle. It was noted that large parts of these farms comprised mountainous land not suitable for grazing. [17] On 12 September 2015 the occupants delivered a counter-application in the removal application by which they sought the following substantive relief: ‘1. That the Court issue a further order to its order of 2 April 2014 under case No LCC31/2013, including an order: 1.1 declaring that [the occupants] have made their election in terms of paragraph 2 and 4(a) of the Court order to acquire the property held by [Normandien] and occupied by [the occupants], known as…; 1.2 that the affected land and/or right in the affected land held by [Normandien] be awarded to [the occupants]; 1.3 that [Normandien] be paid just and equitable compensation for the affected land, as prescribed by the Constitution of the Republic of South Africa…for the acquisition by [the occupants] of the land; 1.4 that the amount of compensation payable to [Normandien] be determined by the Court; 1.5 that the said amount of compensation be paid by the [Land Minister and Director- General of the Land Department] on behalf of [the occupants], in such manner and within such period as the Court may determine as being just and equitable. 2. Declaring that the application by [Normandien] under case number 196/2013 [ie the removal application] is subversive of the Court order of 2 April 2014 and [the occupants’] rights or entitlement emanating from such Court order.’ [18] Answering and replying papers in the counter-application were delivered. In its answering papers Normandien accused the occupants’ attorneys of having acted improperly in seeking amendments to the order and said that the amended order was a fraud. The occupants delivered an application to strike out these accusations. [19] A further pre-trial conference was held on 17 September 2015, with Meer AJP presiding. (It appears that at some stage the occupants successfully applied for the recusal of Sardiwalla AJ.) Meer AJP directed the parties to hold a conference on 7 October 2015 to resolve various issues, including whether – in view of the shared opinion of all the experts – there was any obstacle to the parties’ agreeing to the relief sought in para 1 of the notice of motion (ie the removal of the livestock) and whether the Land Department was able to be of assistance in providing alternative land. [20] At the conference on 7 October 2015 the parties’ representatives agreed that para 1 of Normandien’s notice of motion was ‘in order’ and that the joint minute by the experts was accepted, but the occupants’ and Land Minister’s agreement to this effect was expressed to be ‘subject to the outcome of the counter-application’. The Land Department maintained that it did not have alternative land because the farms in question had been allocated to other beneficiaries. The Land Department contended that it did not have a mandate to look for alternative grazing land and did not have programmes or policies for providing alternative land for grazing use. The occupants asserted that, by virtue of the amended order of 2 April 2014, the LCC did not have jurisdiction to entertain the removal application. [21] A final pre-trial conference before Meer AJP was held on 15 October 2015. One of the questions raised with reference to the order in the action was whether the occupants had applied for an award of land prior to 31 March 2001 in accordance with ss 16 and 17 of the LTA. Meer AJP directed the Director-General to file a report as to whether the occupants had done so and to annex documentary proof. The report was delivered on 20 October 2015. In the report Ms Pillay, a legal advisor, said that she had been told by the Department’s Newcastle office that the ‘original Section 16 Notice cannot be located’ and that ‘the Section 16 have been misplaced over the years’. The Department was ‘undergoing a process’ of locating the notices which had started in August 2015 and was ‘ongoing’. She reported that the occupants’ names were on a database created at the time from the original s 16 notices. [22] The removal application and counter-application were heard by Meer AJP over the period 20-23 October 2015. No oral evidence was adduced. She delivered judgment on 5 November 2015 and made the following order: ‘1. The [occupants] are ordered to remove all their livestock (including, inter alia, all their cattle, goats, horses and donkeys) presently in their possession or under their control from the farm Albany, more fully described as… by 15 January 2016. 2. The [occupants] are interdicted and restrained from returning any of their livestock as contemplated in paragraph 1 above, or any other livestock on to the farm for a period of 5 years from the date of removal contemplated in paragraph 1 above. 3. The [Land Minister] is ordered and directed to make alternative land in close proximity to the farm and preferably [the four farms identified by Normandien] available to [the occupants] for the livestock to be relocated to, by 15 January 2016. The [Land Minister] shall further take all steps necessary to comply with this order and to make available all resources to do so. 4. In the event of the Respondents failing to comply with the orders contemplated in paragraphs 1, 2 and 3 above, and in the event of the [Land Minister] failing to make available such alternative land for the grazing of the livestock aforementioned by 15 January 2016, then, in that event an order is hereby issued that the Sheriff of Newcastle with the assistance of the South African Police Service, alternatively any other registered private security company that the Sheriff is granted leave to appoint at [Normandien’s] expense, shall remove all such livestock contemplated in prayer 1 above, which [the occupants] have failed to remove from the farm, and to take such livestock to such other place indicated or made available by the [Land Minister]. In the absence of the aforesaid Respondents indicating such other place or location, the Sheriff is ordered to remove such livestock to the pound in Dundee, Utrecht, Ladysmith, or Newcastle or such other pound in Northern Natal able to accommodate the livestock, for the pound master to deal with in terms of the applicable legislation dealing with pounds. 5. The [occupants, the Agriculture Minister and the Land Minister], jointly and severally, the one paying the other to be absolved, are ordered to pay [Normandien’s] costs of this application taxed on the scale as between attorney and client, such costs to include, inter alia, the amounts referred to in subparagraphs 5.1 to 5.9 below …’ [23] The Land Minister and occupants applied for leave to appeal which the LCC refused on 16 February 2016. On 13 May 2016 and 15 June 2016 this court granted the Land Minister and the occupants respectively leave to appeal. The occupants’ notice of appeal was not duly filed, as a result of which they delivered an application for condonation and reinstatement on 6 September 2016. This was not opposed. On 11 October 2016 this court directed that the appeals in the present matter be heard simultaneously with the appeal in a similar matter, Adendorffs Boerderye (Pty) Ltd v Shabalala & others Case 997/2015 (Adendorffs), and that the Land Minister file the appeal record in the present case within one month. The appellants were directed to deliver their heads of argument within one month of the filing of the record and the respondent one month later. In Adendorffs, where the judgment of the LCC had been delivered by Sardiwalla AJ, the Shabalalas were represented on appeal by the same attorneys and senior counsel as the occupants in the present case. [24] The record was duly delivered on 8 November 2016. The Land Minister’s heads of argument were filed on 7 December 2016 and Normandien’s on 22 December 2016. The occupants failed to file their heads of argument. The present case and Adendorffs were enrolled for hearing on 28 February 2017. On 16 February 2017 the registrar notified the parties that the occupants’ appeal had lapsed in terms of rule 10(2A)(a) because of their failure to file heads. In Adendorffs the Shabalalas’ heads were filed on 26 February 2017, two days before the hearing. The Adendorffs appeal went ahead but the appeals in the present case were postponed to afford the occupants an opportunity to seek condonation and reinstatement. On 30 March 2017 the occupants delivered their application for condonation and reinstatement. Their heads were delivered during the first half of April 2017. [25] This court delivered judgment in Adendorffs on 29 March 2017.1 The land owner was successful. An application by the Shabalalas for leave to appeal was dismissed by the Constitutional Court on 6 September 2017. In the meanwhile, the present appeals and the reinstatement application were enrolled for hearing on 12 September 2017 but could not proceed on that date because the occupants objected to the participation of three of the five judges on the basis that they had sat in Adendorffs. Eventually the appeals and reinstatement application were heard on 7 November 2017. The contempt application [26] On 12 October 2017 the occupants’ attorneys served on Normandien’s attorneys an application for orders that Normandien, through its representative Mr Hoatson, show cause why it should not be declared in contempt; that Mr Hoatson be committed to prison for contempt, alternatively that a fine be imposed on Normandien; barring Normandien from participating in the appeal and in the occupants’ application for condonation and reinstatement; and that such appeal and application be postponed sine die pending the outcome of certain petition proceedings in the Constitutional Court. This application was only served on the 1 Adendorffs Boerderye (Pty) Ltd v Shabalala & others (997/15) [2017] ZASCA 37. State Attorney (ie the Land Minister’s attorneys) and filed at this court on 31 October 2017. On 30 October 2017 Normandien and Mr Hoatson delivered opposing papers. [27] The contempt application has its origins in events which occurred in early March 2017. On 3 March 2017 Normandien caused the occupants’ livestock to be removed to an animal pound in accordance with para 4 of the court a quo’s order. Mr Hoatson says that Normandien did so in the belief that, with the lapsing of the occupants’ appeal, Normandien was entitled to implement para 1 of the court a quo’s order. In response to the removal, the occupants obtained an urgent ex parte interdict from the LCC (per Ncube AJ). Despite opposition, the LCC (again per Ncube AJ) confirmed the urgent order on 24 March 2017. On 18 April 2017 the LCC dismissed Normandien’s application for leave to appeal. A petition to this court was dismissed on 20 June 2017. On 11 July 2017 Normandien applied to the Constitutional Court for leave to appeal. That application, which is still pending, is the petition referred to in the relief claimed in the contempt application. [28] On 31 July 2017 the occupants delivered an application in the LCC for leave to execute the order of 24 March 2017 pending the final determination of Normandien’s proposed appeal. Normandien opposed the application which was heard on 30 October 2017. We were informed from the bar that the occupants’ livestock remain under the control of the pound master on grazing land he has leased for the purpose and that they are in good condition. There may be a dispute as to who must bear the costs of the pound master. Subsequent to the hearing of the appeal, we were notified that the LCC, by a judgment dated 20 November 2017, granted the occupants leave to execute. [29] For several reasons the contempt application must fail and is an abuse of this court’s process. The allegation of contempt is that Normandien’s conduct in causing the cattle to be removed on 3 March 2017 showed disrespect to the pending appeal process against the LCC’s judgment of 5 November 2015. If that allegation were well founded, the occupants should have delivered their contempt application shortly after 3 March 2017. There was no justification for holding back until 12 October 2017. The relief claimed in the contempt application would affect not only Normandien but also the Land Minister, because a postponement of the appeal was requested. As I have mentioned, the contempt application was only served on the State Attorney on 31 October 2017. The late delivery of the contempt application also inconvenienced the court. [30] The assertion of contempt is in any event hopeless. The occupants need to establish Normandien’s contempt beyond reasonable doubt, including the element of wilfulness, since the contempt relief they seek is punitive.2 Normandien’s evidence is that it caused the livestock to be removed in the genuine belief that the lapsing of the occupants’ appeal entitled it to give effect to para 1 of the LCC’s order of 5 November 2015 through the mechanism contained in para 4. It is necessary to emphasise that the Land Minister’s appeal is confined to paras 3, 4 and 5 of the LCC’s order, so his pending appeal did not suspend the operation of para 1. [31] In regard to para 4, the Land Minister’s appeal would at most have suspended para 4 insofar as it concerned the Land Minister. I agree with the submission made by Normandien’s counsel that para 4 of the court a quo’s order contemplated a factual state of affairs: if the animals were not removed by 15 January 2016 and if the Land Minister did not make land available to the occupants by 15 January 2016, Normandien could require the Sheriff of Newcastle to remove the animals in accordance with para 4. The fact that the Land Minister had not made alternative land available because he was pursuing an appeal did not alter the simple fact that the animals were still on the farm on 15 January 2016. Given the dire situation on the land as agreed by all the experts, the court a quo could not have envisaged that the removal of the animals would be kept in abeyance for many months just because the Land Minister, for whatever reason, did not make alternative land available. [32] Normandien’s view of the legal position which prevailed as at 3 March 2017 may well thus have been correct but it is unnecessary to express a definite opinion; it suffices that Normandien’s view cannot be said to have been one which no reasonable person could genuinely have entertained. For the rest, Normandien’s 2 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) para 42; Pheko v Ekurhuleni Metropolitan Municipality (No 2) [2015] ZACC 10; 2015 (5) SA 600 (CC) paras 34-37; Matjhabeng Local Municipality v Eskom Holdings Ltd & others [2017] ZACC 35 para 67. conduct in relation to the LCC’s order of 3 March 2017 as confirmed on 24 March 2017 consists of the exercise of its legal right to invoke the appellate processes of the law. It may well be that Normandien was somewhat heavy-handed in the way it acted on 3 March 2017. However, we cannot lose sight of the fact that Normandien must have been intensely frustrated by the delays which had beset the case, largely because of the occupants’ conduct. By March 2017, 16 months had elapsed since the court a quo made its order, in circumstances where all the experts agreed that the animals could not be allowed to remain on the farm. [33] The occupants’ counsel repeatedly contended that this court’s order of 20 June 2017, dismissing Normandien’s application for leave to appeal against Ncube AJ’s decision, established that paras 1 - 4 of the court a quo’s orders were inextricably connected and that the suspension brought about by the Land Minister’s appeal effectively suspended paras 1 - 4 in their entirety. That is a misguided contention which places unwarranted weight on the order of 20 June 2017. The order, as is usual in such cases, was made without reasons. One does not know whether the judges in question thought that Ncube AJ was right on the merits or whether they thought his order was not appealable because it was interim in nature. The order has no authority as precedent. [34] There is no basis for the occupants’ claim that the present appeals should be postponed sine die pending the determination of Normandien’s petition to the Constitutional Court. The decision of the Constitutional Court on the petition, and any decision which might follow if Normandien were granted leave to appeal, will have no bearing on the determination of the appeals before us. On the contrary, it is a determination of the present appeals which may render moot Normandien’s petition to the Constitutional Court and the occupants’ application in the LCC for leave to execute. The occupants’ counsel advanced the startling contention that the proper course was for the parties to agree, in terms of rule 37(6)(c) of the Uniform Rules of Court, to refer the applications and appeals in the present matter to the Constitutional Court for adjudication together with the pending petition. Apart from the fact that Normandien’s counsel said that his client would not agree to such a course, there is no way in which litigants by agreement can compel the Constitutional Court to hear a case, far less a case where one of the issues is whether an appeal in this court has lapsed and should be reinstated. Towards the end of his submissions, the occupants’ lead counsel accepted that the sensible course was for the court to hear submissions on all the matters before the court and to deal with all such matters in its judgment. [35] When regard is had to the occupants’ other conduct and to the merits of the case, as discussed more fully below, one is driven to conclude that the contempt application was a stratagem to delay the finalisation of the appeal so as to buy time. The application must be dismissed. I shall deal later with the costs occasioned by the application. [36] Finally, on this aspect, I should mention that it emerged, towards the end of the occupants’ lead counsel’s submissions in support of the contempt application, that he was unaware of the answering papers which Normandien had delivered on 30 October 2017 and of the supplementary heads of argument which Normandien filed on 31 October 27 in connection with the contempt application. These documents were duly served on the occupants’ Bloemfontein attorneys. It is remarkable that the occupants’ legal representatives took no steps to ascertain whether Normandien was opposing the contempt application; they could hardly have thought that Normandien would allow it to go by default. We also received no explanation as to how it was that the documents did not come to counsel’s attention. Be that as it may, the occupants’ counsel did not seek time to consider Normandien’s answering papers. And they would have had opportunity, before replying later in the day, to read these papers and make further submissions. Condonation and reinstatement [37] The occupants heads of argument should have been filed within one month of 8 November 2016, ie by 8 December 2016, whereas they were only served on Normandien’s Bloemfontein attorneys on 6 April 2017. The occupants advanced an ingenious argument in an attempt to reduce this period of delay. They claimed that the record was only served on their Durban attorneys on 16 November 2016 and that this is when time began to run. Time had not finished running when the so- called dies non (16 December 2016 to 15 January 2017) took effect.3 This conclusion was reached via a contention that the period of a month should be computed with reference to court days. By this circuitous reasoning they arrived at the remarkable conclusion that their heads of argument only needed to be filed by 6 February 2017. Even if that were true, the occupants’ heads were not filed by that date nor with a filed before the scheduled date for the appeal on 28 February 2017. [38] In any event, the occupants’ argument is spurious. The period of one month began to run from the date on which the complete record was served on the occupants’ Bloemfontein attorneys, 8 November 2016. The meaning of the word ‘month’ is unambiguous. One cannot say that a ‘month’ means 30 or 31 court days and therefore, say, 40 calendar days. The one-month period, reckoned from 8 November 2016, expired at the latest on 8 December 2016, so it is unnecessary to consider whether the dies non would have applied to the one-month direction. [39] The occupants’ legal representatives, who also acted for the Shabalalas in Adendorffs, knew that the appeals were meant to be heard together on 28 February 2016 and that the late filing of their heads would cause inconvenience. In the event they only filed their heads in Adendorffs two days before the hearing and failed altogether to file heads in the present matter, the result being that the present matter was postponed despite Normandien’s stance that the situation on the land needed to be addressed urgently. [40] In its judgment in Adendorffs, this court deplored the conduct of the Shabalalas’ legal representatives. Counsel were briefed late and then decided to take an early Christmas break on 9 December 2016 and only resume work on 23 January 2017. This conduct was said to be ‘unreasonable’, ‘slack’ and demonstrating ‘discourteous conduct to the court and their opponents’. The attorney had been guilty of ‘wanton disregard’ of the rules. Although this court granted condonation in the interests of justice, the attorney was ordered personally to pay the costs of the postponement and condonation application. 3 In terms of rule 1(2)(b) of this court's rules, the period between 16 December and 15 January (both dates inclusive) shall not be taken into account in the calculation of any period 'in terms of these rules'. [41] The lackadaisical conduct of the occupants’ legal representatives in the present case is worse. In Adendorffs new counsel were engaged for the appeal and were only briefed during November 2016. By contrast, the occupants’ present senior counsel came on brief for the occupants during October 2015. The occupants have throughout been represented by the same attorneys. The occupants’ legal representatives had all the papers and could have started preparing heads of argument even before the appeal record was delivered on 8 November 2016. For all practical purposes the appeal record was complete by 9 September 2016 – all that was missing at that stage was the occupants’ notice of appeal. [42] As in Adendorffs, we have decided to grant condonation and reinstatement in the interests of justice. In doing so, we have taken into account that the Land Minister’s appeal was properly before us and required us in any event to deal with some of the issues raised by the occupants; that the prospects of success were fully debated in the context of condonation; and that the occupants are indigent people and that it is undesirable that they should not have this court’s decision on the merits. But for these circumstances, the case may well have been one where the non-compliance was, in the context in which it occurred, sufficiently egregious to warrant refusal of condonation even if there were good prospects on the merits. I shall, however, return to the conduct of the occupants’ legal representatives when discussing costs. Locus standi [43] The Land Minister and the occupants submitted that Normandien lacked standing to seek relief for non-compliance with CARA, contending that the power to do so vested solely in the Agriculture Minister. A similar argument was advanced and rejected in Adendorffs, also an overgrazing case. An application for leave to appeal to the Constitutional Court failed. In the present case the court a quo rejected the attack on Normandien’s standing on substantially the same grounds as were endorsed by this court in Adendorffs. It follows that the attack on Normandien’s standing must fail. The counter-application [44] It is convenient to deal, next, with the occupants’ appeal against the dismissal of their counter-application. The counter-application focused on the amended order of 2 April 2014. In essence, the occupants contended that in terms of that order they had the right to elect to be awarded the affected part of Albany; that they had elected to do so; and that the granting of the removal application was incompatible with their rights flowing from their election. [45] The relief sought in para 1 of the counter-application is directed at affirming that the occupants have the right to elect to acquire the affected part of Albany in terms of Sardiwalla AJ’s order of 2 April 2014 and that they have so elected. Para 2 builds on para 1 by contending that the removal application is ‘subversive of’ the right the occupants acquired pursuant to Sardiwalla AJ’s order of 2 April 2014. [46] Even if the occupants were entitled to the relief sought in para 1 of the counter-application, the relief sought in para 2 is a non sequitur. The fact that the occupants might have the right to acquire the affected part of Albany does not mean that they are exempt from the provisions of CARA. Normandien, which was and still is the registered owner of Albany, has standing to enforce its provisions. [47] However, para 1 constitutes self-standing relief and it is thus necessary to consider whether the occupants have the rights which that paragraph asserts. In dismissing the counter-application, the court a quo reasoned thus. There was no proof that the occupants lodged a timeous s 16(1) application for the award of the affected land. The LCC only has the power to make an award of land in terms of s 22 of the LTA if the labour tenant has timeously lodged a s 16 application. Section 33 does not confer an independent power to award land. The order of 14 March 2014 and the amended order of 2 April 2014 could not clothe the LCC with jurisdiction to make an award of land or determine equitable compensation. [48] Sardiwalla AJ’s order declaring the occupants to be labour tenants was a permissible order in terms of s 33(2A) of the LTA. Such a declaration may be made whether or not the labour tenant has lodged an application in terms of s 16. For the rest, the original and amended orders purportedly granted by Sardiwalla AJ are most unsatisfactory. In terms of s 22 of the LTA, the LCC may order that ‘affected land’ or other land be awarded to the labour tenant. The ‘affected land’ is land which the labour tenant is entitled to occupy and in respect of which he has made a timeous s 16 application. The other land is land held by another person (including the State) who is willing to have such land or right therein awarded to the tenant. An award of other land may be made in addition to, or instead of, an award of the affected land. I agree with the court a quo that a timeous s 16 application is a jurisdictional pre-requisite for the awarding of affected or other land to a labour tenant and that s 33 is not an independent source of power to award land. [49] There is nothing to show that Sardiwalla AJ took any steps to satisfy himself that the occupants had lodged timeous s 16 applications. In its plea Normandien denied that they had done so and denied that the Director-General had issued and served on Normandien the notice contemplated in s 17(2)(a) and (b) of the LTA. Normandien says that it was willing, for purposes of settlement, to accept an order which presupposed compliance with s 16. Even so, Sardiwalla AJ should have insisted on proof of compliance. An award of land or compensation typically gives rise to a financial burden for the State by virtue of the labour tenant’s right to apply for an advance or subsidy in terms of ss 26 and 27 of the LTA. [50] Apart from this difficulty, the form of the order does not accord with the LTA. An order in terms of s 22 of the LTA must identify the land awarded to the tenant. If the land is the affected land, the LCC’s order would need to delineate its extent. (The affected land is not the whole of Albany.) If the land is other land, the LCC’s order would need to identify such other land. And the LCC could not make an award of such other land unless the relevant owner were willing to have it awarded to the tenant. In the present case, Sardiwalla AJ’s order envisaged a process of negotiation between the Director-General, the occupants and unidentified landowners, the making of an election by the occupants, and the furnishing of a report in due course by the Director-General. This does not accord with any procedure laid down in the LTA. At any rate, Sardiwalla AJ did not make an award of land – at most he gave directions which might in the future have resulted in an award of land. [51] I thus do not think that Sardiwalla AJ’s order (in any of its forms) constituted a final determination of the occupants’ entitlement to an award of land or compensation. If it emerged that the occupants failed to lodge a timeous s 16 application, Sardiwalla AJ would have been bound to refrain from making an award. His order did not render res judicata the question whether there had been compliance with s 16. Normandien, which was a respondent in the counter- application, disputed that there had been compliance. The Director-General was unable to provide documentary proof that there had been compliance. If there had been due compliance, one might have expected the application to have been referred to the LCC by the Director-General in terms of s 17(6) of the LTA years before the occupants eventually instituted their action in March 2013. Given the appalling state of the Land Department’s Newcastle administration, as reflected in the report of 20 October 2015, I do not think the presence of the occupants’ names on a database carries much weight. Applying the well-known rules relating to disputes of fact in opposed motion proceedings, the occupants failed to establish their entitlement to an award of land. [52] In any event, the occupants could only succeed in the relief sought in para 1 if they established that the amended order of 2 April 2014 was valid and binding. Although the court a quo left this question open, I think it should be decided adversely to the occupants. First, after pronouncing his order of 14 March 2014 Sardiwalla J AJ was functus officio, save to the extent that his order contemplated further decisions by the court. In terms of rule 64(1) of the rules regulating LCC proceedings, the LCC may vary an order ‘which contains an ambiguity or a patent error or omission’ in order to ‘clarify the ambiguity or to rectify the patent error or omission’. This may be done by the LCC of its own accord or upon application by a party.4 In the present case, Sardiwalla AJ did not act of his own accord and there was no application by the occupants. There was an informal request by letter. 4 Section 35(11) of the Restitution of Land Rights Act 22 of 1994 (Restitution Act) sets out the grounds on which the LCC may rescind or vary orders made in terms of that Act. However, s 35 of the Restitution Act is not among the provisions made applicable to the LCC when functioning in terms of the LTA (see s 30(1) of the LTA which sets out the provisions of the Restitution Act which apply to the performance of the LCC's functions in terms of the LTA. [53] The second of the two variations sought by the occupants’ attorneys was an alteration of substance. It did not clarify an ambiguity or correct a patent error or omission. The alteration was one which purported to confer on the occupants a right to elect an award of the affected part of Albany. On Normandien’s version, this was directly at odds with the settlement. Rule 64(1) did not empower Sardiwalla AJ to make the alterations in question. Because he was functus officio, he lacked jurisdiction. The amended order of 2 April 2013, insofar as it changed the wording of para 4, was thus a nullity.5 It thus fell within that relatively narrow class of case where a purported order can be disregarded without taking steps to have it formally set aside. It would have been preferable for Normandien to have this clarified by way of a timeous application, as was indeed contemplated at one stage during the pre-trial conferences, but this cannot affect the legal conclusion that the amended order was a nullity. [54] The occupants’ counsel submitted that Normandien agreed to the amendment. That is incorrect. There is no evidence that Normandien communicated to the LCC that it was content for the amendments to be made. The high watermark of the evidence is that, having been copied on a letter addressed to the registrar, Normandien’s attorneys did not react, the reason being that they failed to appreciate that the occupants were seeking an alteration of substance. [55] The other reason why the occupants’ reliance on the order of 2 April 2014 cannot succeed is that it is inconsistent with the settlement reached on 14 March 2014. Even if, technically, the order of 2 April 2014 stands until set aside, it by no means follows that the occupants are entitled to rely on it in a manner inconsistent with the agreement reached on 14 March 2014. [56] I thus conclude that the court a quo was correct to dismiss the counter- application. 5 Tödt v Ipser 1993 (3) SA 577 (A) at 589C-D; Vidavsky v Body Corporate of Sunhill Villas 2005 (5) SA 200 (SCA) para 14; The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO & others [2011] ZASCA 238; 2012 (3) SA 325 (SCA) para 14. Was the removal application an eviction? [57] The dismissal of the occupants’ counter-application should be the end of the case insofar as the removal of the livestock is concerned, since at the pre-trial conference on 7 October 2015 the legal representatives for the occupants and Land Minister accepted that para 1 of Normandien’s notice of motion should be granted, subject only to the counter-application. In this court, however, counsel for the Land Minister and for the occupants argued, in their written submissions, that the removal application should have been refused because it amounted to an ‘eviction’.6 The LTA defines ‘eviction’ as including ‘the deprivation of a right of occupation or use of land’. This would include use for grazing. [58] By way of the order of 14 March 2014 the occupants were declared to be labour tenants. They were thus entitled to the protection against eviction contained in the LTA. This means that they could only be evicted if it was just and equitable and if one or other of the circumstances specified in s 7(2) was present, namely if the occupants had refused or failed to provide labour to Normandien contrary to any agreement between them or if they had committed such a material breach of the relationship between themselves and Normandien that it was not practically possible to remedy it in a way which could reasonably restore the relationship. [59] In my view Normandien was not seeking to ‘evict’ the occupants within the meaning of the LTA. The term ‘eviction’ in the LTA connotes a deprivation of the right of occupation or use of land as a result of the purported termination or repudiation of that right by the person in control of the land, whether the owner or lessee. This is apparent from the circumstances which must be present in order to justify an eviction, as specified in s 7(2), and from the fact that, in terms of s 6, proceedings for eviction can only be instituted by the owner or by someone else (eg the lessee) with the owner’s sworn support. [60] In the present case Normandien did not purport to terminate or repudiate the relationship between itself and the occupants as labour tenants. Normandien did not 6 This argument had no place in the Land Minister’s heads of argument because it did not relate to the orders against which the Land Minister had leave to appeal. In fairness to the Land Minister’s counsel, I should add that they did not make oral submissions on this part of the case. contend that the occupants no longer had the right to reside on the farm. Normandien did not contend that the occupants’ right, as between themselves and Normandien, to graze their livestock on the farm as an incident of their occupation was at an end. Normandien asserted that the continued presence of the livestock on the farm contravened CARA and that this was damaging Normandien’s land and causing Normandien to be in violation of its obligations under CARA. If the Agriculture Minister had brought proceedings to enforce CARA through the removal of the livestock, it could hardly have been contended that he was applying for the occupants’ ‘eviction’ for purposes of the LTA. Such a contention would imply that the Agriculture Minister would be powerless to act without the owner’s sworn support, which would be untenable. The position is no different where a private party with locus standi seeks to enforce CARA. [61] The court a quo was criticised for having supposedly failed to take into account the rights enjoyed by the occupants as labour tenants and the cultural importance to them of keeping livestock. I do not think this criticism has merit. The LTA does not exempt labour tenants from other laws which limit the way in which land can be used. The only exception is s 40 which provides that if land or a right in land has been awarded to a labour tenant, the land in question shall not be subject to any law regulating the subdivision of land. Labour tenants, like everyone else, are subject to CARA. I understood the occupants’ counsel to concede this. [62] It is convenient here to mention a contention which the occupants’ counsel made in their written heads and which they pressed in oral argument. They argued that in its founding affidavit Normandien had said that it ‘defer[red] to the guidance of the KwaZulu-Natal Department of Agricultural and Environmental Affairs (KZN Department) and the expertise of their scientists referred to in correspondence dealt with hereunder’. The occupants’ counsel said that the said ‘guidance’ was contained in a report by the said department dated 11 September 2012 which was annexed to the founding affidavit. [63] The contention is misconceived. First, Normandien did not say that it deferred exclusively to the guidance of the scientists of the KZN Department; the passage from the founding affidavit which I have quoted continued ‘and the experts appointed by [Normandien] at substantial costs’, ie Normandien also ‘deferred to’, ie relied on, the view of its own experts. The evidence of Normandien’s experts, as contained in the founding affidavit, was that the livestock should be removed from the farm for five years. Their report was issued in December 2013, just before Normandien issued its application. The report by the KZN Department, issued 15 months earlier, constituted additional evidence broadly in support of Normandien’s contention – the report stated that the area was heavily overstocked as a result of which both the pasturage and the animals were in poor condition. The KZN Department thought that the grazing lands could carry 45 head of cattle, well short of the 285 head of cattle then on the land. The KZN Department’s assessment may have been right at the time it was made but Normandien also relied on the more current information contained in the report of its own experts. [64] In any event, the information available as at December 2013 was superseded by the more current information which emerged when all the experts, including the expert engaged for the occupants, met during 2015 in accordance with the pre-trial directions of the court a quo. That was the information on which the court a quo was required to act. The relief granted against Land Minister [65] The court a quo ordered the Land Minister to make alternative land available for the relocation of the occupants’ livestock. The Land Minister argues that this was impermissible as he neither has the power nor the duty to make alternative land available to labour tenants for grazing use. [66] The court a quo did not base its decision directly on the LTA. The LCC has yet to determine whether the occupants, as labour tenants, are entitled to an award of land and if so what land and for what compensation. The occupants are thus not in a position to apply to the Land Minister for an advance or subsidy in terms of s 27 of the LTA. [67] The court a quo relied, instead, on the Land Minister’s duties in terms of the Land Reform: Provision of Land and Assistance Act 126 of 1993 (Reform Act). Section 1A of the Reform Act states that its objects are inter alia to give effect to the land and related reform obligations of the State in terms of s 25 of the Constitution and to promote economic growth and the empowerment of historically disadvantaged persons. Section 25(5) of the Constitution requires the State to take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis. Section 25(6) provides that a person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to tenure which is legally secure or to comparable redress. [68] Section 10(1) of the Reform Act empowers the Land Minister, from money appropriated by Parliament, to acquire property and, inter alia, to make State land available which he or she considers suitable for the achievement of the objects of the Reform Act, whether in general or in specific cases. The court a quo found that s 10, when read together with the objects of the Reform Act and the provisions of s 25 of the Constitution, imposed on the Land Minister a duty in the present case to make alternative grazing land available to the occupants. [69] I can understand why the court a quo was anxious to reach a finding that the Land Minister was obliged to do so. If the Land Minister is not obliged to make alternative land available, the occupants will not be relieved of the obligation to remove their livestock from Albany. Unless they could find alternative land by their own endeavours, they would have to sell their livestock. Nevertheless, I consider that the court a quo erred in making the orders it did against the Land Minister. [70] In the first place, in order for land to be made available in terms of the Reform Act, it must be designated by the Land Minister in terms of s 2 of the Act. In terms of that section, the designation must be ‘for the purposes of settlement’. The word ‘settlement’ is defined in s 1 as meaning ‘the settlement of persons on designated land…’. Section 10 of the Act, on which the court a quo relied, appears to me to be the mechanism by which land is brought within the purview of the Act. Land may be acquired by the Land Minister, or existing State land may be made available by the Land Minister, if he or she considers the land suitable for the achievement of the objects of the Act, in general or in specific cases. Once land has been made available for purposes of the Act in accordance with s 10, it must still be designated in terms of s 2 and the further procedures set out in ss 3-9 must still be followed. [71] It follows that it would not be within the power of the Land Minister to make grazing land available to the occupants unless the designation of land for that purpose would be a designation ‘for the purposes of settlement’. Since ‘settlement’ means the ‘settlement of persons’, a conclusion adverse to the Land Minister would require us to find that people may be settled on land even though their occupation of the land in question does not include residence and is confined to being on the land for purposes of looking after their livestock. That appears to me to be a somewhat strained interpretation. [72] However, and even if the Reform Act were capable of an interpretation adverse to the Land Minister (a question on which I prefer not to express a final conclusion), it by no means follows that he was obliged to exercise his powers under the Reform Act to make grazing land available to the occupants for five years. His powers under the Act are permissive and it is for him, not the court, to determine whether those powers should be exercised in a given instance. The court’s role is confined to testing the lawfulness of his decisions. [73] The procedure followed in the present case was not a review in terms of rule 53. If the review procedure had been followed, it is probable that fuller information would have been placed before the court concerning the other farms and the beneficiaries who have been settled there. Even in successful review proceedings, the court would ordinarily remit the matter to the decision-maker. Only in exceptional circumstances can the court give a substituted decision. I do not consider that the court a quo was entitled in the present case to order the Land Minister to exercise his supposed powers under the Reform Act to make grazing land available to the occupants. If he misconceived his powers by giving a wrong interpretation to the Reform Act, the correct relief would have been to require him to reconsider the matter. [74] In the present case, however, it is unnecessary to remit anything to the Land Minister. We have not decided that the Land Minister has the power to make grazing land available to the occupants in terms of the Reform Act. Normandien’s interests are sufficiently met by the orders granted against the occupants. If the occupants consider that the Land Minister has a statutory duty to assist them, they will be free to approach the Land Department. I should add that the occupants’ counsel did not advance any submissions against the Land Minister’s appeal. [75] We asked the Land Minister’s counsel whether there was any other way in which her client could come to the occupants’ assistance for the period during which their livestock must be removed from Albany. She said that the Land Department could assist the occupants if they were willing to accept alternative land as contemplated in Sardiwalla AJ’s order and forego their claim to Albany, because then they, together with their livestock, could be settled on alternative land. This was permissible in terms of the Reform Act. However, and for as long as the occupants insist on asserting a claim to the affected portion of Albany, the Land Department cannot assist them with alternative land solely for purposes of grazing. Costs and conclusion [76] The court a quo ordered the Ministers and occupants, jointly and severally, to pay Normandien’s costs on the attorney and client scale. In view of our decision to uphold the Land Minister’s appeal, the costs order against him must be reconsidered. In the court a quo the Land Minister resisted all the relief claimed by Normandien. On the other hand, it is unlikely that the Land Minister would have entered the lists if no relief had been sought against him. In claiming relief against the Land Minister, Normandien was seeking to ameliorate the hardship which the occupants would inevitably suffer pursuant to the granting of paras 1 and 2 of the order. The case against the Land Minister had a strong constitutional dimension. The occupants are a previously disadvantaged community. The LTA, under which the occupants have been declared to be labour tenants, is a statute giving effect to s 25 of the Constitution. In order to safeguard the occupants’ labour tenancy in the face of CARA, they needed alternative grazing land unless they were to sell their livestock. There was an argument to be made that the Reform Act, which is another statute giving effect to s 25 of the Constitution, could be invoked. [77] Normandien argued, in my view correctly, that in these circumstances the Biowatch principle7 should be followed in regard to costs. The Land Minister’s counsel did not resist this contention though she did not have formal instructions to concede it. Recent decisions of the Constitutional Court have been critical of lower courts’ failure to embrace Biowatch and have admonished all courts to apply Biowatch in constitutional litigation between private parties and the State unless the proceedings are vexatious or frivolous or characterised by conduct worthy of censure.8 Accordingly, Normandien and the Land Minister should bear their own costs in relation to the relief sought in the court a quo against the Land Minister. [78] In this court, these parties should likewise bear their own costs in respect of the Land Minister’s appeal. The Land Minister’s success on appeal will require us to set aside para 3 of the court a quo’s order and to exclude the Land Minister from the ambit of the costs order contained in para 5. The Land Minister did not appeal against the separate cost order made in para 7 (this related to a postponement application). Although para 4 of the court a quo’s order mentions the Land Minister, it does not impose any obligation on him. As a fact, the Land Minister did not make alternative land available by 15 January 2016. It is unnecessary in the circumstances to alter para 4. [79] Biowatch does not apply as between Normandien and the occupants since both sides are private litigants. In ordering costs against the occupants on a punitive scale, the court a quo regarded as apt Normandien’s characterisation of the counter- application as frivolous and vexatious, particularly in the light of the unanimous opinion of the experts that serious overgrazing had occurred and that livestock should be removed from the land for five years. The court a quo also took into account that the occupants had been guilty of unacceptable dilatoriness in the conduct of the proceedings. We can only interfere if the court a quo acted on a wrong principle or materially misdirected itself. I am unable so to find. 7 Biowatch Trust v Registrar, Genetic Resources, & others [2009] ZACC 14; 2009 (6) SA 232 (CC). 8 See Hotz & others v University of Cape Town [2017] ZACC 10; 2017 (7) BCLR 815 (CC) paras 34- 37; Harrielall v University of KwaZulu-Natal (CCT100/17) [2017] ZACC 38 para 11; Ferguson & others v Rhodes University (CCT187/17) [2017] ZACC 39 paras 24-26. [80] In respect of the occupants’ unsuccessful appeal in this court, the occupants must pay Normandien’s costs, including the costs of two counsel. Normandien did not ask for a punitive costs order in respect of the appeal. [81] The condonation and contempt applications stand on a different footing. Normandien seeks punitive costs orders against the occupants’ attorneys personally. For similar reasons to those given in Adendorffs, such an order is plainly warranted insofar as the condonation and reinstatement application is concerned. A similar order is justified in relation to the contempt application. It was a stratagem, without substantive merit, to delay the hearing of the present appeal. The fact that it was brought cannot be attributed to the occupants. Their chief deponent described himself as having no formal education. Their attorneys needed to explain the papers to him. The conclusion is irresistible that the contempt application was a strategy devised by the occupiers’ legal representatives. [82] The occupants’ counsel submitted that in contempt proceedings the applicant is simply an informant who places information before the court which then determines whether the respondent should be punished. There should thus be no costs order against an informant if the contempt application fails. In support of the submission he cited some very old authorities and the slightly less ancient case of Naude en ŉ ander v Searle 1970 (1) SA 388 (O). The latter decision holds that if an applicant seeks no more than the respondent’s punishment for contempt, he is an informant and cannot claim costs if the court punishes the respondent. Even if this decision is good law, it is distinguishable because the occupants’ contempt application has failed and because the occupants did not merely seek Normandien’s punishment – they sought orders that Normandien be precluded from participating in the condonation application and the appeal and that all of these matters be postponed sine die. I should add, though, that the occupants’ submission does not accord with modern practice, where costs are usually awarded against parties who unsuccessfully seek contempt orders, as recent decisions of this court show.9 9 For cases where unsuccessful applicants for contempt were ordered to pay costs, see, eg, Jeebhai & others v Minister of Home Affairs & another [2009] ZASCA 35; 2009 (5) SA 54 (SCA) paras 55 and 67; Cathay Pacific Airways Ltd & another v Lin & another [2017] ZASCA 35; [2017] 2 All SA 722 (SCA) paras 47-48; Mashamaite & others v Mogalakwena Local Municipality & others; Member of the Executive Council for Coghsta, Limpopo & another v Kekana & others (523/2016; 548/2016) [2017] [83] I do not think it is right that only the occupants’ attorneys should feel the consequences of what were joint failings by the legal team. As a mark of disapproval, I consider that the occupants’ attorneys and counsel should be precluded from recovering any fees from the occupants in respect of the condonation and contempt applications. [84] Finally, it is necessary to say something about the interlocutory papers in the present matters. There were two condonation applications and the contempt application. Over the period March 2017 to early November 2017, affidavits in the main condonation application and in the contempt application were filed with no attempt at indexing and paginating the papers. This made the court’s preparation for the hearing difficult and would have made argument impossible but for the fact that, shortly before the hearing, the presiding judge directed that the papers be indexed and paginated. I am authorised by the presiding judge, who has discussed the matter with the President of this court, to say that in future practitioners should ensure that opposed interlocutory in this court are paginated and indexed. The founding papers in an interlocutory application should, when served, already be paginated and be accompanied by a preliminary index; further affidavits in the application should continue the pagination and should already be so paginated when served, and should be accompanied by an updated index. In so far as needs be, the attorneys for the litigants should liaise with each other to ensure that the system of pagination and updated indexing is implemented without confusion. [85] I accordingly make the following order: (a) In Case 512/2016 (the appeal by the Minister of Rural Development and Land Reform): (i) The appeal succeeds. ZASCA 43; [2017] ZASCA 43; [2017] 2 All SA 740 (SCA) para 54; Lourens v Premier of the Free State Province & another (566/2016) [2017] ZASCA 60 paras 10-16. (ii) The order of the court a quo is amended by deleting para 3 and by altering para 5 so that it commences thus: ‘The First to Thirteenth Respondents, jointly and severally…’. (iii) The parties shall bear their own costs of the appeal. (b) In Case 370/2017 (the appeal by Mandla Nkosi Joseph Mathimbane and eleven others): (i) The appellants’ applications for condonation and for the reinstatement of the appeal are granted. (ii) The appellants’ Durban attorneys, MC Ntshalintshali Attorneys, shall personally pay the respondent’s costs of opposing the said applications on the attorney and client scale, including the costs of two counsel. (iii) The appellants’ contempt and postponement application dated 11 October 2017 is dismissed. (iv) The appellants’ Durban attorneys, MC Ntshalintshali Attorneys, shall personally pay the respondent’s costs of opposing the said contempt and postponement application on the attorney and client scale, including the costs of two counsel. (v) The appellants’ counsel and Durban attorneys, MC Ntshalintshali Attorneys, shall not be entitled to recover any fees from the occupants in respect of the applications mentioned above. (vi) The appeal is dismissed with costs, including the costs of two counsel. ______________________ OL Rogers Acting Judge of Appeal APPEARANCES For Appellant in Case 512 and for 3rd Respondent in Case 370/2017 TV Norman SC (with her ZP Mhlongo Instructed by State Attorney, Durban c/o State Attorney, Bloemfontein For 1st Respondent in Cases 512/2016 and 370/2017 MG Roberts SC (with him C Hattingh) Instructed by Vinnicombe & Associates, Thornville c/o Symington & De Kok, Bloemfontein For Appellants in Case 370/2017 and for 2nd to 13th Respondents in Case 512/2016 G Shakoane SC (with him MC Ntshangase) Instructed by MC Ntshalintshali Attorneys, Durban c/o Molefi Thoabala Inc, Bloemfontein	SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 November 2017 STATUS Immediate Minister of Rural Development and Land Reform v Normandien Farms; Mathimbane & Others v Normandien Farms Cases 512/2016 & 370/2017 [2017] ZASCA 163 (29 November 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 (SCA) today gave judgment in two related appeals against orders granted by the Land Claims Court (LCC) in favour of Normandien Farms (‘Normandien’). The first appeal was by the Minister of Rural Development and Land Reform and the second appeal was by a group of labour tenants occupying a part of Normandien’s farm. The SCA upheld the Minister’s appeal against an order requiring him to make alternative grazing land available to the labour tenants. The LCC had found that the Minister was under an obligation to do so by virtue of the Land Reform Provision of Land and Assistance Act 126 of 1993. The SCA was doubtful whether the said Act empowered the Minister to provide grazing land unaccompanied by human settlement. However, even if such a power existed, a case had not been made out to compel the Minister to exercise it in the circumstances of the present case. In regard to costs as between the Minister and Normandien, the SCA found that because of the constitutional nature of the litigation between those parties the Biowatch principle applied. Accordingly, the parties were ordered to bear their own costs in the LCC and the SCA. In regard to the appeal by the labour tenants, the SCA, in the interests of justice, condoned the labour tenants’ failure to file their heads of argument timeously, despite the non-compliance being egregious and the explanation inadequate. However the SCA dismissed a preliminary application by the labour tenants that Normandien be held in contempt and that the appeal be postponed sine die. The contempt/postponement application was found to be without merit and to constitute an abuse of process. As to the appeal itself, which was against an order requiring the labour tenants to remove their livestock from Normandien’s farm for a period of five years to enable the grazing veld to recover, the SCA held that Normandien had standing to seek this relief in terms of the Conservation of Agricultural Resources Act 43 of 1983 (‘CARA’). The experts for all the parties, including for the labour tenants, had agreed that such removal was necessary and that the continued presence of the livestock on the farm contravened CARA. The SCA rejected an argument that the order amounted to an ‘eviction’ as contemplated in the Land Reform (Labour Tenants) Act 3 of 1996. Normandien had not repudiated the labour tenancy relationship between itself and the labour tenants but was simply enforcing the provisions of CARA. The SCA also found that the LCC had correctly dismissed a counter- application by the labour tenants for a declaration that the relief sought by Normandien was subversive of rights acquired by the labour tenants in terms of an order given in other litigation between the same parties. The purported order on which the labour tenants relied, being a purported amendment of an earlier order, was a nullity because the judge had been functus officio. In any event such order did not exempt the labour tenants from compliance with CARA. In regard to costs as between Normandien and the labour tenants, the SCA found that the Biowatch principle did not apply because both sides were private parties. The LCC had ordered the labour tenants to pay Normandien’s costs on punitive scale because it regarded the counter-application as frivolous and vexatious. The SCA held that there were no grounds for interfering with this order since the LCC had not been guilty of a material misdirection. Normandien did not ask for a punitive costs order in the SCA, and the labour tenants were thus ordered to pay Normandien’s costs on the ordinary scale. However, the labour tenants’ Durban attorneys were ordered personally to pay Normandien’s costs in the condonation and contempt/postponement applications on the attorney and client scale; and it was further ordered that the said attorneys and counsel were not entitled to recover fees from the labour tenants in respect of the condonation and contempt/postponement applications. ~~ ends~~
3030	non-electoral	2015	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20192/14 In the matter between Reportable THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE FIRST APPELLANT and STEPNEY INVESTMENTS (PTY) LIMITED RESPONDENT Neutral citation: Commissioner for the South African Revenue Service v Stepney Investments (20192/14) [2015] ZASCA 138 (30 September 2015) Coram: Navsa, Shongwe, Majiedt and Mbha JJA and Van der Merwe AJA Heard: 8 SEPTEMBER 2015 Delivered: 30 SEPTEMBER 2015 Summary: Tax – determination of base cost of shares in terms of Eighth Schedule to the Income Tax Act 58 of 1962 for capital gains tax purposes – 4.37% of shares in company disposed of – market value of shares on valuation date to be determined – whether discount cash flow valuation method appropriately applied by taxpayer. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Tax Court of South Africa, Cape Town (Yekiso J sitting as President of the Tax Court): 1. The appeal is upheld with costs, including those of two counsel. 2. The order of the Tax Court is substituted with the following: ‘(a) The appeal is upheld. (b) The additional assessments in respect of the 2002 and 2003 tax years of assessments are hereby set aside. (c) The matter is remitted to the Commissioner for the South African Revenue Service for further investigation and assessment. (d) The Commissioner is ordered to pay the costs, including those of two counsel where so employed’. ______________________________________________________________ JUDGMENT ______________________________________________________________ MAJIEDT JA (Navsa, Shongwe and Mbha JJA and Van der Merwe AJA concurring): [1] Capital gains tax was introduced on 1 October 2001 through the insertion of s 26A and the addition of the Eighth Schedule (the Schedule) to the Income Tax Act 58 of 1962 (the Act). Where a capital gain accrues on the disposal of assets in the seller’s possession on, or acquired after, 1 October 2001, capital gains tax is payable. The tax payable is determined by a calculation of the difference between the proceeds of the sale and the base cost of the asset disposed of. At issue in this appeal is whether the Tax Court of South Africa, Cape Town, (Yekiso J sitting as President of the Tax Court), was correct in setting aside the additional assessments raised by the appellant, the Commissioner for the South African Revenue Service (the Commissioner) against the respondent, Stepney Investments (Pty) Ltd (Stepney), in respect of the 2002 and 2003 years of assessment for capital gains tax. This requires a determination whether Stepney had proved the base cost of the asset disposed of during those years of assessment, namely 4.37% of the shares it had held in Emanzini Leisure Resorts (Pty) Ltd (ELR). This appeal is with the leave of the Tax Court in terms of s 86A(2) of the Act. The legislative context [2] The shares disposed of were a pre-valuation date asset as defined in paragraph 1 of the Schedule, ie an asset acquired prior to 1 October 2001 and not sold prior to that date. Paragraph 25 of the Schedule provides that ‘[t]he base cost of a pre-valuation date asset . . . is the sum of the valuation date value of that asset, as determined in terms of paragraph 26, 27 or 28 and [certain other expenditure]’ Stepney elected in terms of paragraph 26(1)(a) to utilise ‘the market value of the asset on the valuation date, as contemplated in paragraph 29, of the Schedule’ as the method of determining the value of the shares as at 1 October 20011. Paragraph 29(1)(c) provides that the market value on the valuation date of the shares would be ‘the market value determined in terms of paragraph 31 on valuation date’ (the paragraph 29 market value). Such market value would, in terms of paragraph 31(1)(g), be ‘the price which could have been obtained upon a sale of the asset between a willing buyer and a willing seller dealing at arm’s length in an open market’. [3] The contention advanced by Stepney was that it had sustained a loss in respect of the disposal of the shares because the aggregate base cost of the shares had exceeded the amount of the disposal proceeds. It placed a value of R8 686 162 on the aggregate base cost, calculated as 4.37% of the 1 Paragraph 26(1) of the Schedule provides that a taxpayer may elect one of three methods to determine the valuation date value of the asset, the first of which is the market value (para 26(1)(a)). paragraph 29 market value of the total ELR shares, namely R198 768 000. This valuation of the total ELR shares emanated from a valuation conducted by Bridge Capital Services (Pty) Ltd in respect of all the ELR shares (the Bridge valuation), undertaken for all companies in the Tusk group (which included ELR) in order to determine the base cost of the various assets of the group as at 1 October 2001 for capital gains tax purposes. Purportedly acting in terms of paragraph 29(7)(b) of the Schedule2, the Commissioner adjusted this valuation to nil. In additional assessments raised on 10 April 2007 as a consequence of this adjustment, Stepney was assessed for a capital gain of R2 million in its 2002 year of assessment and for a capital gain of R2.2 million in its 2003 year of assessment in respect of its disposal of the shares during those years. The Commissioner disallowed Stepney’s objection to these additional assessments, but the Tax Court set aside this disallowance3. The factual context [4] Stepney originally held 23.73% of the shares in ELR. The latter was mainly engaged in developing, owning and operating casinos, hotels and related leisure activities. The Kwazulu Natal Gambling Board (the Gambling Board) awarded a casino licence to ELR on 21 August 2000 for a period of 15 years in respect of a defined area, namely Richards Bay. Complications arose subsequently when members of a religious grouping, known as the Richards Bay Ministers’ Fraternal, litigated against ELR in respect of the site where the casino was to be erected. The awarding of the casino licence itself was, however, not in issue. The litigation, which ultimately reached this court and in which the Richards Bay Ministers’ Fraternal was unsuccessful, caused considerable delays in the establishment of the casino at Richards Bay. Consequently, ELR acquired an alternative site at Empangeni under a temporary licence issued by the Gambling Board on 4 October 2001. At the 2 Paragraph 29(7)(b) reads: ‘(7) The Commissioner may, notwithstanding any proof of valuation submitted by a person to the Commissioner . . . (a) . . . (b) where the Commissioner is not satisfied with any value at which an asset has been valued, the Commissioner may adjust the value accordingly’. 3 In terms of s 3(4)(g) of the Act. time of the valuation for capital gains tax purposes, ELR was in possession of a permanent casino licence which it was unable to utilise and was in the process of acquiring a temporary licence. [5] The Bridge valuation lies at the heart of the dispute whether the value placed on ELR (and a fortiori the determination of the aggregate base cost of the shares disposed of) was reasonable. In this regard Stepney bore the onus of proving that its valuation of the shares disposed of is correct4. In the Tax Court it called a number of witnesses to discharge this onus, the main one being an expert, Mr Pieter Veldtman of Bridge Capital Services, a chartered accountant and an accredited sponsor and designated advisor in respect of JSE matters and listed companies. One of his specialities is the valuation of unlisted shares. The Commissioner, in turn, adduced the evidence of several witnesses to meet this case, the most important of whom were Professor Harvey Wainer and Mr David Costa who, like Mr Veldtman, are chartered accountants. Prof Wainer is also an expert valuer of companies and businesses, having lectured on the subject for more than 20 years and having done several hundred such valuations. Mr Costa is a SARS employee based in Port Elizabeth, responsible for large and complex audits. The evidence [6] Before setting out the evidence adduced by the various witnesses, it is necessary to mention certain significant features of the case as it unfolded in the Tax Court. These were emphasized by Stepney’s counsel during argument. Firstly, the Bridge valuation was done by utilising the discount cash flow (DCF) valuation method. This was contended to be the most appropriate method in respect of the valuation of an asset such as shares. It entails valuing the business of an entity on its future forecast free cash flows, discounted back to present value through the application of a discount factor. The Commissioner, on the other hand, in adjusting the base cost valuation to nil, utilised the net asset value (NAV) valuation method. It was implicitly 4 Section 102(1)(e) of the Tax Administration Act 28 of 2011. conceded in the court below that this valuation method was inappropriate and that the DCF method should have been used. The concession was properly made. It has the consequence that Mr Costa’s evidence on behalf of the Commissioner became largely irrelevant, as is the case with that of Mr Christiaan Vorster for Stepney, which evidence was led solely for the purpose of justifying the adoption of the DCF, as opposed to the NAV, methodology. And it has a direct bearing on the second striking feature of the case, namely the nature of the evidence of Prof Wainer. [7] Not only did the Commissioner concede that the wrong methodology was utilised by his official, Mr Costa, but Prof Wainer’s mandate was also narrowly circumscribed, namely to analyse the Bridge valuation and to subject it to criticism. No separate independent valuation was done by Prof Wainer or anyone else on behalf of the Commissioner. Prof Wainer compiled his report in 2013, some nine years after the Bridge valuation. He listed numerous shortcomings in the Bridge valuation, an aspect to which I shall revert presently. But ultimately the Tax Court had before it only the Bridge valuation, which was subjected to extensive criticism by Prof Wainer. [8] The evidence of the lay witnesses on behalf of Stepney was largely common cause. The narrative advanced by Mr Thabo Mokoena, a former executive director in the Tusk group of companies, Mr David Hirschowitz, Stepney’s general manager and Mr Jeremy Franklin, the former chief executive of the Tusk group, which was later taken over by Peermont Global, can be summarized as follows. With the advent of democracy and following the abolition of the former homelands, Sun International, a major international leisure group, had to dispose of some of its casino businesses, in line with the new casino licences regime. Mr Franklin and some of his fellow Sun international employees at that time established the Tusk group to explore new casino opportunities flowing from Sun International’s disposal of some of its casinos. The Tusk group became one of the major shareholders in ELR, together with Stepney and an empowerment consortium. One of the entities in the Tusk group, Tusk Casino Hotel Management, was contracted by ELR to manage the Richards Bay casino. As stated, ELR had acquired a casino licence for Richards Bay for a period of 15 years, which it was unable to utilise until the litigation with the Ministers’ Fraternal was concluded. In the interim it acquired a temporary licence on 4 October 2001 and operated a temporary casino at Empangeni. A valuation of the assets of all the corporate entities in the Tusk group (including ELR) was undertaken by Bridge Capital on 25 August 2004 for capital gains tax purposes. This valuation was done utilising the DCF method and having regard to financial projections prepared by Deloitte Consulting Group (Deloittes) and information provided by Tusk management for ELR’s submission to the Kwazulu Natal Gambling Board for a temporary casino licence at Empangeni. That application was dated 10 July 2001. Ancillary information was given to Bridge Capital by Messrs Mokoena and Franklin and the rest of the Tusk group’s management to compile the valuation report. The Bridge valuation [9] Mr Veldtman, who was responsible for the Bridge valuation, testified about it. He confirmed having used the DCF methodology and that he had relied on information from Tusk management, including the financial projections prepared by Deloittes. The market value of the assets of all the entities in the Tusk group, including ELR, was determined in accordance with the relevant provisions of the Schedule for capital gains tax purposes. These assets were unlisted shares. He explained and motivated his determination of the future forecast cash flows and the discount factor that he had applied. On behalf of the Commissioner Mr Costa issued a letter of audit findings to explain why the Bridge valuation was not accepted. He advanced two main reasons for the rejection of the Bridge valuation and for the raising of additional assessments. The first was that the DCF valuation method was wrongly utilised for the determination of the market value of the shares and, second, that the forecasts used by Mr Veldtman for purposes of the valuation were not reliable. The Tax Court found that the Commissioner did not advance the unreliability of the financial projections and assumptions made in the Bridge valuation as one of the factors that had been taken into account in raising the additional assessments. The Commissioner’s primary contention before us was that Stepney had failed to discharge its onus to establish the validity or reliability of the projected revenue utilised by Mr Veldtman in compiling his valuation. Stepney also contended that the Commissioner impermissibly sought to change the grounds of assessment which it sought to have upheld in this court. [10] Mr Costa’s criticism of the Bridge valuation was along the following broad grounds: (a) the financial projections were made in perpetuity, and not for the limited 15 year period of the casino licence; (b) the estimates were not based on a trading history as ELR was a ‘greenfields operation’ at the valuation date, 1 October 2001; (c) the estimates utilised by Bridge Capital was made in 2000 before the temporary casino was erected; and (d) it failed to factor in the effects of the September 11 terrorist attacks in the USA. [11] Prof Wainer’s main criticisms of the Bridge valuation were as follows: (a) in valuing the shares Mr Veldtman failed to apply a discount based on the fact that they were ‘minority’ shares; (b) the validity or reliability of the information collated in the valuation spreadsheet containing the financial projections was fundamentally flawed in several respects, namely the projected tax, projected revenue, projected working capital and the terminal value; and (c) an incorrect date was used. Before I discuss these criticisms, a brief consideration of the applicable legal principles is apposite. First, I consider two legal principles which Stepney vigorously advanced as preliminary aspects and, second, consideration will be given to the nature of expert evidence. The law [12] Stepney submitted that on appeal against a decision of the Tax Court this court has limited, narrowly circumscribed powers. It placed reliance on the following dictum in Commissioner of Inland Revenue v Da Costa 5: ‘[I]f a decision of a Special Court is based on the exercise of a discretion, this Court will interfere only if the Special Court did not bring an unbiased judgment to bear on the question, or did not act for substantial reasons, or exercised its discretion capriciously or upon a wrong principle: Ex parte Neethling and others 1951 (4) SA 331 (A) at 335’. The submission is misconceived and the passage from Da Costa is quoted out of context. [13] In Da Costa, Van Heerden JA in fact held that there is ‘a full right of appeal against any decision of a Special Court on issues of fact or law’.6 In this regard the learned Judge referred to s 86A of the Act, as inserted by Act 103 of 1976, where this full right of appeal had been enacted. Reference was also made to Hicklin v Secretary for Inland Revenue7 where Trollip JA held that under s 86A: ‘The appeal is . . . a re-hearing of the case in the ordinary, well-known way in which this Court, while paying due regard to the findings of the Special Court on the facts and credibility of witnesses, is not necessarily bound by them.’ The excerpt from Da Costa and the reference to Ex parte Neethling8 must be understood in the proper factual context. Neethling concerned the sale of immovable property which was subject to a fideicommissum in favour of certain minor children. As upper guardian the Provincial Division was called upon to consider, in the exercise of its discretion, whether the proposed deed of sale was in the interests of the minor children. It is in this context that this court considered whether the Provincial Division had exercised its discretion 5 Per Van Heerden JA in Commissioner of Inland Revenue v Da Costa 1985 (3) SA 768 (A) at 775 F-G; (14/1984) [1985] ZASCA 32; [1985] 2 All SA 335 (A). 6 At 775C. 7 Hicklin v Secretary for Inland Revenue 1980 (1) SA 481 (A) at 485F; [1980] 1 All SA 301 (A). 8 Ex parte Neethling & others 1951 (4) SA 331 (A); [1951] 4 All SA 231 (A). capriciously or upon a wrong principle, or whether it has not brought its unbiased judgment to bear on the question or had not acted for substantial reasons. And it is in this context that the passage from Da Costa above, relied upon by Stepney, must be understood. Stepney incorrectly categorized the matter before us as a ‘review’. It is not, as outlined above it is a full appeal. [14] The second preliminary aspect concerns Stepney’s contention that the Commissioner impermissibly sought to change the grounds of assessment. In this regard reliance was placed on Commissioner, South African Revenue Service v Brummeria Renaissance (Pty) Ltd & others.9 Stepney’s argument proceeded along these lines that the original grounds of assessment was limited to those enumerated in SARS’ statement of the grounds of assessment in terms of Tax Court Rule 10(3). SARS could not subsequently alter those grounds by, for instance, conceding that the DCF method was the correct valuation method and in then seeking to assail this method on various grounds. The contention cannot be upheld. Rule 12 of the Tax Court Rules provides that the issues before the Tax Court are those adumbrated in SARS’ statement of grounds of assessment under Rule 10, together with those outlined in the taxpayer’s statement of grounds of appeal in terms of Rule 11. In paragraphs 4, 9, 20 and 23, in particular, of the statement of grounds of assessment SARS pertinently raised the issue that Stepney’s market value of the relevant ELR shares had been ‘overstated/inflated’ for purposes of determining the base cost of the shares. SARS set out a summary of the reasons why it took this view. It had therefore not merely confined itself to the methodology utilised, DCF versus NAV, but it had pertinently challenged the premise underlying Stepney’s valuation in several respects. Brummeria is entirely distinguishable on the facts. There the Commissioner had issued original assessments in March 2000 and revised assessments in March 2002. Consequent to an objection in April 2002 by the taxpayer (Brummeria) to the revised assessments, the Commissioner issued further revised assessments in July 2004. Like the first revised assessment, the further revised assessment had an entirely different basis than the original assessment. 9 Commissioner, South African Revenue Service v Brummeria Renaissance (Pty) Ltd & others 2007 (6) SA 601 (SCA); (391/06) [2007] ZASCA 99; [2007] 4All SA 1338 (SCA). Brummeria’s contentions that the further revised assessments were out of time (s 79(1)(c)(i) of the Income Tax Act 58 of 1962, as it read at that time, precluded the Commissioner from raising a further assessment after the expiration of three years from the date of the first assessment (unless he was satisfied that there was fraud, misrepresentation or non-disclosure of material facts) were upheld on appeal. Cloete JA said that: ‘. . . once the Commissioner changed the entire basis of the assessment in the further revised assessments, he allowed Brummeria’s objection to the revised assessments in full as contemplated in s 81(5) and, as no fraud, misrepresentation or non-disclosure is relied upon, that is the end of the matter. I therefore consider that the Commissioner was precluded by the provisions of s 79(1) read with s 81(5) of the Act from raising the assessments against Brummeria . . . .’ The reliance on Brummeria is therefore misplaced. [15] In April 2006 the Commissioner challenged the Bridge valuation. By letter dated 5 July 2007 Stepney lodged detailed objections to the letter of assessment of 10 April 2007. It pointedly addressed various aspects raised in the letter of assessment, namely the unresolved litigation against the Ministers’ Fraternal and the delay in trading operations as at 1 October 2001. Stepney also motivated fully why the Bridge valuation is correct. The dispute was thus clearly understood by all concerned to go beyond the mere valuation methodology. And on 30 April 2013 the Commissioner amended the statement of grounds of appeal as follows: ‘Even if the Net Asset Value method were to be considered less appropriate or not appropriate at all, and the Discounted Cash Flow Model considered more appropriate, the valuation of the shares remains overstated / inflated for the reasons mentioned in paragraphs 20 and 23 [of the statement of grounds of assessment].’ All the issues were in any event fully ventilated in the Tax Court. There was no objection from Stepney in the Tax Court that the Commissioner had changed the grounds of assessment. Stepney cannot now, on appeal, complain about the widening of the issues, assuming in its favour that there had been any.10 In the premises Stepney’s contention that the Commissioner 10 Shill v Milner 1973 AD 101 at 105. impermissibly sought to change the grounds of assessment cannot be sustained. The next aspect for consideration is the nature of expert evidence. [16] The nature of expert evidence and a court’s approach to it is well established. In Coopers (SA) (Pty) Ltd v Deutsche Gesellschaft Für Schädlingsbekämfung MBH11, Wessels JA described it thus: ‘As I see it, an expert’s opinion represents his reasoned conclusion based on certain facts [or] on data, which are either common cause, or established by his own evidence or that of some other competent witness. Except possibly where it is not controverted, an expert’s bald statement of his 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’12. More importantly, as Addleson J said in Menday v Protea Assurance Co Ltd:13 ‘It is not the mere opinion of the witness which is decisive but his ability to satisfy the Court that, because of his special skill, training or experience, the reasons for the opinion which he expresses are acceptable . . . the Court, while exercising due caution, must be guided by the views of an expert when it is satisfied of his qualification to speak with authority and with the reasons given for his opinion’ (My emphasis). It was contended on behalf of the Commissioner that Mr Veldtman’s evidence did not meet the criteria laid down in Coopers and in Menday. It was submitted that he failed to give reasons for some of his conclusions and that much of the data upon which he based his conclusions was shown to be fatally flawed. Further that he gave a bald statement of his opinions without providing the underlying reasoning. It was contended that the information on which Mr Veldtman based the valuation was not sound. I discuss those aspects next. The future forecast free cash flows 11 Coopers (SA) (Pty) Ltd v Deutsche Gesellschaft Für Schädlingsbekämfung MBH 1976 (3) SA 352 (A). 12 At 371 F-H. 13 Menday v Protea Assurance Co Ltd 1976 (1) SA 565 (E) at 569B-E; [1976] 1 All SA 535 (E). [17] As stated, Mr Veldtman testified that he received information from Tusk management, upon which he relied to compile his valuation report. But at the time of the valuation there was other information available which would have had a material effect on the figures. The DCF calculation in the Bridge valuation was not based on the management accounts of 2004, but on the forecast amounts calculated by Deloittes in 2001 as part of the figures submitted to the Gambling Board in respect of the application for a temporary licence. Stepney sought to justify the use of the 2001 Deloittes figures on the basis of them being closer to the time of the valuation date, 1 October 2001. But this approach is fatally flawed inasmuch as the actual figures which were available in 2004 (when the Bridge valuation was done) showed that the figures forecasted by Deloittes in 2001 were unreasonable. As Prof Wainer illustrated in his expert report and in oral evidence, the forecast for 2003 was R49 million, whereas the actual figure was a R61 million negative, ie a variance of R110 million. The actual figures for 2004 constituted only 10% of the 2005 projected figures and only 20% of the projections for 2006 and 2007. [18] Mr Veldtman also consciously disregarded ELR’s letter to the Gambling Board dated 20 March 2003. In the letter, signed by Mr Mokoena on behalf of ELR, the challenges and travails facing the temporary casino at Empangeni was tabulated. Revenue during the nine months of trade was a mere 43% to 46% of budget and this, together with the ongoing litigation by the Ministers’ Fraternal, was said to have ‘precipated a major crisis for Emanzini’ (ELR). As a result ELR submitted a revised project proposal to the Gambling Board in respect of the permanent casino at Richards Bay in order to ‘obviate disastrous consequences’. The letter undoubtedly casts a long shadow over ELR’s optimistic forecasts of 2001, and yet no regard was given to it. [19] Counsel for Stepney argued strenuously that the factors outlined above could not have been taken into account, since to do so would amount to applying hindsight. Taking into account the actual figures which were available in 2004 and having regard to the letter above, would have been eminently reasonable in the circumstances. In doing so Mr Veldtman would have tested the reasonableness and correctness of the projections provided by management. A valuer cannot just blindly accept at face value figures presented to him or her – there is a duty to assess their reasonableness and correctness. The necessity of assessing the reasonableness of the forecasts was acknowledged in the Bridge valuation. The information available at the time of the Bridge valuation pointed clearly to a significant overstatement of revenue projected in 2001. But, as stated, no regard was given to it. The information was available at the time that the valuation was conducted and the proper perspective is that the valuer was duty bound to have regard to it to interrogate the soundness of management’s projections. It was wrong not to take the later information into account. And it resulted in a gross overstatement of the projected revenue forecast which in turn led to a material inflation of value in the Bridge valuation. [20] The next aspect to be considered is the fact that the wrong date was utilised in the valuation. As this had become common cause in the Tax Court, it can be disposed of briefly. Instead of utilising the valuation date set out in the Schedule (1 October 2001), the relevant figures were calculated in the Bridge valuation with reference to 31 March 2002. The experts (Mr Veldtman and Prof Wainer) had agreed in their joint minute that this mistake had a 10% adverse impact on the valuation, ie approximately R19.8 million on ELR’s total valuation and about R860 000 on the valuation of the relevant ELR shares. Whilst relatively small, the adverse impact on the aggregate base cost is self- evident. [21] In respect of the tax calculations, it is uncontroverted that an understatement of the tax amount would have led to an overstatement of value in the Bridge valuation. The tax calculations emanated from ELR management and was, on his own version, not verified for reasonableness by Mr Veldtman, because he ‘felt comfortable’ that a ‘detailed and rigorous calculation’ had been done by management. There was no evidence of this, save for vague assertions by Mr Mokoena that the calculation had been done as ‘part of the budgetary process’ and ‘by applying the norms in terms of tax factors’. The problem is that the tax calculation does not accord with an application of the relevant statutory rates. The matter is exacerbated further by the fact that the tax calculations in the Bridge valuation, which according to Mr Franklin were made by Deloittes as part of the submission to the Gambling Board, differ from the tax amounts submitted to the Gambling Board as a schedule to ELR’s letter of 10 July 2001. Thus, while the Bridge valuation utilised the revenue figures contained in this letter, it strangely and inexplicably did not use the tax amounts it contained. The Bridge valuation thus falls short in respect of the tax calculations as well insofar as there has been an understatement of the tax. [22] There are material shortcomings in the reliability of the projected capital expenditure as well. The amounts of projected capital expenditure underlying the Bridge valuation were strikingly low – R5 0000 for 2003 and 2006 and nil for 2002 and 2004. The only substantial amount is the approximately R181 million forecast for 2005. This amount was, according to Mr Veldtman, provided for in respect of the permanent casino. No additional capital expenditure for the construction of the temporary casino was taken into account in the Bridge valuation. That amount would have been R71 million according to ELR’s letter of 10 July 2001 to the Gambling Board. Mr Veldtman testified that the expectation was for little or no capital expenditure to have been invested in the temporary site. Not only was this in direct conflict with the aforementioned letter, but it was also out of kilter with the facts available at the time of the Bridge valuation. The temporary casino was to be housed in a building previously owned and operated by Clover Dairies as a distributing warehouse. It is self-evident, and in any event plain from Mr Mokoena’s testimony, that substantial construction had to be undertaken to convert this site into a temporary casino which was planned to operate for a period of three years. Apart from the failure to include the sum of R71 million for the temporary casino in the capital expenditure forecasts, the Bridge valuation also did not include any substantial amounts for ongoing capital expenditure for the maintenance of buildings, furniture and fittings. [23] Stepney’s counsel conceded during argument that there were flaws in the capital expenditure forecasts in the Bridge valuation, but contended that these aspects had not been put to Mr Veldtman during cross-examination. This contention loses sight of the fact that the ELR letter of 10 July 2001 to the Gambling Board and the accompanying schedules reflecting the figures came to the fore only when Mr Franklin testified, ie after Mr Veldtman’s testimony. It appeared from Mr Franklin’s evidence that he had found these documents in a storeroom at his house long after discovery of documents had been made by Stepney. The criticism is therefore unfounded. In conclusion on this aspect, the understatement of the amounts for capital expenditure impacted materially on the Bridge valuation. [24] A further aspect for consideration in respect of the future forecast free cash flows is the reliability of the terminal value of R527 218 000 which was used in the Bridge valuation. That figure is based on revenue flows into perpetuity. It fails to take cognisance of the term of the casino licence, 15 years. The terminal value was in effect calculated on the basis that there was no risk of the licence not being renewed upon expiry of the 15 year period. This calculation was sought to be justified by Messrs Mokoena and Franklin on the basis that renewal of the licence after 15 years was a mere formality and that only the exclusivity period would expire. The only circumstances imaginable under which the licence would not be extended, Mr Franklin said, would be non-compliance with the licence conditions. This approach is far- fetched and out of touch with reality. There was undeniably some measure of risk attached, for example, changes in attitudes to gambling and in policy and legislation. Prof Wainer is correct, in my view, that allowance should have been made for the risk of non-renewal or, at the very least, the costs associated with a renewal application. In essence, the loss of exclusivity after 15 years should have been taken into account. This fact would of necessity also have an impact on the Bridge valuation. The discount factor [25] As stated, an appropriate discount rate must be applied to the projected cash flows for a proper application of the DCF method. The discount factor represents the required return on investment but also the risk inherent in the business. A discount rate of 20.86% had been applied in the Bridge valuation. This discount factor, also known as the weighted average cost of capital, comprises the cost of equity and the cost of debt. The cost of equity made up 19.92% and the cost of debt 0.95% of the discount factor of 20.86%, ie a cost of equity: cost of debt proportionality of 90:10. Mr Veldtman failed to furnish adequate reasons for applying a risk premium of 15%; he merely gave vague assertions in this regard. [26] A serious shortcoming is the fact that the same discount rate was applied to all the entities in the Tusk group. The group owned and operated casinos in Mmabatho, Venda, Klerksdorp, Taung and the one in Richards Bay/Empangeni. Self-evidently, the risks in respect of these entities must vary, particularly having regard to the fact that the others were established casinos, whereas the one in the present instance was a start-up or greenfields operation. There were many uncertainties in respect of this new casino – whether it would attract sufficient clientele, the actual cost, when it would start trading and so forth. Mr Veldtman conceded the point that there were varying risks for the various entities and sought justification in the ‘swings and roundabouts’ principle. He however failed to demonstrate how this principle operated in practice in respect of the different casinos. The ELR correspondence addressed to the Gambling Board, referred to above, clearly showed that the temporary casino at Empangeni faced significant challenges, amongst others the low revenues and ongoing litigation. On behalf of Stepney much was made of the fact that Richards Bay was at the time of the valuation one of the fastest growing metropolitan areas in the country. That may be so, but the fact remains that the casino had been established at Empangeni and, in terms of the concentric model of calculating population density and potential clientele, the location of the casino would in the present instance have resulted in the dilution of this consideration. The ‘one size fits all’ approach of Mr Veldtman was clearly inappropriate. The failure to assess the ELR casino separately and with due regard to its own particular risk factors had an adverse impact on the discount factor that was applied. [27] A further problem is that certain obvious risk factors had been disregarded. These were the unresolved litigation (which by its very nature is steeped in uncertainty) and the risk of increased construction costs to erect a temporary casino. Whatever legal advice might have been received concerning the strength of Stepney’s case in respect of the litigation, a purchaser of the shares would have considered it as an additional risk factor and a valuer would be required to take that into account in applying a discount factor. Conclusion [28] It is clear that the Bridge valuation is fatally flawed in the various respects outlined above. A court is entitled to reject a valuation if it is not satisfied with the investigations underpinning it: ‘For instance, if the expert added up his figures wrongly, or took something into account which he ought not to have taken into account, or conversely, or interpreted the agreement wrongly, or proceeded on some erroneous principle – in all these cases, the court will interfere’14. The Tax Court was wrong in upholding that valuation. As a consequence, Stepney has failed to discharge its onus of proving the paragraph 29 market value and thus also the aggregate base costs of the relevant shares. But counsel for the Commissioner very properly conceded that the value of the shares cannot be nil. There was clearly considerable value attached to ELR’s sole asset, the casino licence. It was not seriously disputed that a casino licence which grants the holder exclusive rights in respect of the specified area for a period of 15 years has considerable value and it is in the interests of justice that a proper valuation be calculated. The Tax Court should have remitted the matter to the Commissioner for further investigation and assessment in terms of s 83(13)(a)(iii) of the Act. The grounds of assessment were unreasonable in two respects, namely the incorrect utilisation of the Net Asset Value (NAV) methodology and the Commissioner’s valuation of the shares as nil. The former was implicitly conceded in the Tax Court and the latter was conceded at the outset before us. 14 Per Denning LJ in Dean v Prince 1954 (1) All ER 749 at 758. Stepney is therefore entitled to its costs in the Tax Court in terms of s 130(1)(a) of the Tax Administration Act 28 of 2011.15 [29] The following order is issued: 1. The appeal is upheld with costs, including those of two counsel. 2. The order of the Tax Court is substituted with the following: ‘(a) The appeal is upheld. (b) The additional assessments in respect of the 2002 and 2003 tax years of assessments are hereby set aside. (c) The matter is remitted to the Commissioner for the South African Revenue Service for further investigation and assessment. (d) The Commissioner is ordered to pay the costs, including those of two counsel where so employed’. ________________________ S A MAJIEDT JUDGE OF APPEAL 15 Section 130(1)(a) reads as follows: ‘The tax court may, in dealing with an appeal under this Chapter and on application by an aggrieved party, grant an order for costs in favour of the party, if – (a) the SARS grounds of assessment or ‘decision’ are held to be unreasonable . . . ;’ APPEARANCES For Appellant: P A Solomon SC and J Boltar Instructed by: Klagsbruin Edelstein Bosman De Vries Inc, Pretoria Symington De Kok Attorneys, Bloemfontein For Respondent: S F du Toit SC and D Watson Instructed by: Faber Goertz Ellis Austin Inc, Bryanston McIntyre & Van Der Post Attorneys, 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 30 September 2015 STATUS: Immediate THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE v STEPNEY INVESTMENTS (PTY) LIMITED (20192/14) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (the SCA) today upheld an appeal against a decision of the Tax Court in Cape Town which had set aside the assessments by the Commissioner for the South African Revenue Service against Stepney Investments (Pty) Ltd for the 2002 and 2003 years of assessment for capital gains tax. The commissioner had valued Stepney’s 4.37% shares which it had held in Emanzini Leisure Resorts (Pty) Ltd and which it had disposed of during the years of assessment at nil. Emanzini Leisure Resorts had acquired a casino licence for the Richards Bay area for a period of 15 years. The Commissioner consequently assessed Stepney for a capital gain of R2 million in its 2002 year of assessment and for a capital gain of R2.2 million in its 2003 year of assessment. Stepney relied on a valuation done by Bridge Capital Services undertaken for all companies in the Tusk group (which included Emanzini Leisure Resorts) in order to determine the base cost of the group’s various assets as at 1 October 2001 for capital gains tax purposes. The discount cash flow valuation method was used to conduct the valuation. Stepney utilised the market value of the shares as at the valuation date (1 October 2001) as the method of determining the value of the shares on that date. Stepney contended that, in terms of that valuation, it had sustained a loss in respect of the disposal of the shares because the aggregate base cost of the shares had exceeded the amount of the disposal proceeds. The Commissioner had disallowed Stepney’s objection to the additional assessments, but on appeal to it the Tax Court set aside the disallowance in terms of section 3(4)(g) of the Income Tax Act 58 of 1962. In upholding the appeal the Tax Court accepted the Bridge Capital Services’ valuation. The SCA held that the Tax Court had erred in doing so, finding that the valuation was fatally flawed in the following material respects: (a) The projected figures for the future free cash flows were unreasonable when compared to the actual figures which were available in 2004 when the valuation was conducted. The failure to have regard to the actual figures was wrong; (b) the wrong date was utilised in the valuation; (c) the projected tax calculations did not accord with the statutory rates and was understated; (d) the projected capital expenditure was also unreliable and unrealistic since it failed to take into account at all the costs of erecting a temporary casino while the litigation in respect of the location of the premises of the permanent casino was being finalised; (e) the terminal value was wrongly calculated on the basis that revenue would have flowed into perpetuity, whereas the casino licence would have expired after 15 years. The loss of exclusivity after 15 years was not taken into account; (f) lastly, the discount rate was not properly applied as the same rate was used for all the entities in the Tusk group – the other entities were established casinos, whereas the one in the present instance at Richards Bay was a greenfields operation. Certain obvious risk factors such as the unresolved litigation and the increased cost of construction of a temporary casino had also been disregarded. The SCA thus upheld the appeal with costs. It substituted the Tax Court’s order with one in terms whereof Stephney’s appeal was upheld and the matter remitted to the Commissioner in terms of section 83(13)(a)(iii) of the Income Tax Act for further investigation and assessment. The SCA held that Stepney was entitled to its costs in the Tax Court in terms of section 130(1)(a) of the Tax Administration Act 28 of 2011. It held that the grounds of assessment was unreasonable in two respects, namely the Commissioner’s incorrect utilisation of the net asset value method and the Commissioner’s valuation of the shares as nil. -- ends --
4020	non-electoral	2023	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 69/2022 In the matter between: THE DIRECTOR OF PUBLIC PROSECUTIONS GAUTENG DIVISION (PRETORIA) APPELLANT and D M S FIRST RESPONDENT A O L SECOND RESONDENT Neutral Citation: Director of Public Prosecutions, Gauteng Division, Pretoria v D M S and A O L (69/2022) [2023] ZASCA 65 (12 May 2023) Coram: SALDULKER, MOLEMELA, MEYER and MOLEFE JJA, and MALI AJJA Heard: 24 February 2023 Delivered: 12 May 2023 Summary: Appeal against sentences in terms of s 316B of the Criminal Procedure Act 51 of 1977 – whether sentences imposed by the trial court were too lenient and induced a sense of shock – sentences imposed by the trial court set aside – sentences considered afresh. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: The Gauteng Division of the High Court, Pretoria (Tlhapi J sitting as court of first instance): The appeal is upheld. The sentences of the trial court are set aside and replaced with the following: ‘2.1 Accused 1 is sentenced as follows: Count 1: Life imprisonment in terms of the provisions of section 51(1) of the Criminal Law Amendment Act 105 of 1997; Count 2: 5 years imprisonment; and Count 3: Life imprisonment in terms of the provisions of section 51(1) of the Criminal Law Amendment Act 105 of 1997. 2.2. Accused 2 is sentenced as follows: Count 1: 23 years imprisonment; Count 2: 5 years imprisonment; Count 3: 23 years imprisonment. The sentences imposed in respect of count 2 and 3 are to run concurrently with the sentence in respect of count 1. 2.3. In terms of section 50(1) of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, the names of both accused persons are to be entered into the Sexual Offenders register.’ It is directed that a copy of the pre-sentencing report compiled by Lieut Col Hayden Knibbs, dated 24 June 2016 and handed in as exhibit S1 during the trial, must be handed over to the heads of all correctional facilities in which the second respondent may be incarcerated while serving his imprisonment sentence. The sentences mentioned in paragraph 2.1 and 2.2. above are antedated to 2 September 2016. ______________________________________________________________ JUDGMENT ______________________________________________________________ Molemela JA (Saldulker, Meyer and Molefe JJA and Mali AJA concurring): [1] It is often said that sentencing is the most difficult phase of a criminal trial, and rightly so. This case brings into sharp focus the dilemma that is often faced by the trial court when sentencing a minor for violent crimes.1 In this instance, a psychologist’s report described the minor in question as displaying traits of a serial killer, which evidence was not contested. [2] The two respondents were arraigned in the Gauteng Division of the High Court before Tlhapi J (the trial court), on three charges, namely (i) murder, (ii) defeating the ends of justice, and (iii) contravention of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (rape). Both respondents pleaded not guilty on all charges. In her plea explanation, the first respondent denied having committed the offences she was charged with, while the second respondent submitted a plea explanation as contemplated in s 115 of the Criminal Procedure Act 51 of 1977 (CPA), in 1 This dilemma is evident from the divergent views expressed in the majority and minority judgments in Centre for Child Law v Minister of Justice and Constitutional Development and Others [2009] ZACC 18; 2009 (2) SACR 477 (CC); 2009 (6) SA 632 (CC). terms of which he admitted having committed the offences but asserted that he had committed them under duress, as the first respondent had threatened to kill him if he did not rape and kill the deceased. He also explained that the first respondent was present during the rape and murder of the deceased. [3] Several admissions were made in terms of s 220 of the CPA. Included among these admissions was the post-mortem report pertaining to an autopsy that was performed on the deceased, as well as a concession that the second respondent’s DNA was found in the vestibule swab sample collected from the deceased’s genitals. The first respondent made an admission to a Magistrate, in terms of which she acknowledged being present during the killing of the deceased but implicated the second respondent as the person who murdered the deceased. [4] In a confession made to a Magistrate, the second respondent admitted to having killed the deceased but alleged that he had been coerced to do so by the first respondent, who had also played a role in the commission of the offences. The second respondent also made a pointing out. The first respondent tried to disavow the admissions she made to the Magistrate, but these were, following a trial-within-a-trial, admitted into evidence. The trial court rejected the second respondent’s defence of necessity (based on the averment that the first respondent had coerced him to commit the offences) and convicted both respondents on all the charges. [5] On 2 September 2016, the trial court imposed the following sentences on the respondents: the first respondent was sentenced to 15 years imprisonment in respect of count one (murder), 5 years imprisonment in respect of count two (defeating the ends of justice) and 15 years in respect of count three (rape). The sentences in respect of count 2 and 3 were ordered to run concurrently with the sentence in respect of murder. Thus, the first respondent’s effective sentence was a period of 15 years imprisonment. The second respondent was sentenced as follows: 12 years imprisonment in respect of count one (murder), 5 years imprisonment in respect of count two (defeating the ends of justice) and 10 years imprisonment in respect of count three (rape). The sentences in count 2 and 3 were ordered to run concurrently with that in respect of count 1. Thus, the effective sentence in respect of the second respondent was 12 years imprisonment. [6] The matter came to this Court as an appeal brought by the Director of Public Prosecutions, Pretoria, (DPP) in terms of s 316B of the CPA against the sentences imposed on the respondents. In the grounds of appeal, the DPP submitted that the sentences imposed were too lenient and induced a sense of shock and therefore ought to be set aside. The appeal is with the leave of the trial court. There is no explanation regarding why the application for leave to appeal was only heard five years after the filing of that application. [7] In a nutshell, the testimony adduced before the trial court was that during the night of 7 December 2013 to the early morning hours of 8 December 2013, twelve-year-old Ms Dimakatso Phahlane, whom I shall hereafter refer to as the deceased, became a victim of a brutal rape and gruesome murder perpetrated on her by her cousins, a female aged 21 years and eight months, (the first respondent), and a male aged 17 years and five months, (the second respondent), (together referred to as the respondents). The respondents and the deceased were first cousins, as their mothers were sisters. [8] The evidence revealed that the respondents and their uncles, Mr Ephraim Leso and Daniel Leso, respectively, and the second respondent’s sister called Mankoko Leso lived in the same premises at Moloto in Kwa- Mhlanga. The second respondent had also accommodated his girlfriend, Ms Pretty Ngobeni as his live-in lover. The uncles occupied the main house, a four roomed house which was referred to as ‘the RDP house’ during the proceedings, while the respondents and Ms Ngobeni occupied a five roomed corrugated iron shack situated a few metres from the RDP house. The second respondent used a separate shack as his bedroom, which he shared with Ms Ngobeni. The RDP house used to belong to the respondents’ and the deceased’s grandparents. Following the death of the respondents’ grandparents, the house was occupied by the respondents’ parents, the two uncles, the respondents and the second respondent’s sister. The RDP house and the shack were located in the same yard. It is common cause that both the first respondent and Ms Ngobeni were pregnant at the time of the incident. The deceased lived with her parents in their own home but used to visit her cousins during weekends. The deceased happened to be visiting her cousins on 7 December 2013. [9] On the evening of 7 December 2013, Mr Ephraim Leso informed the family that he was going to attend a traditional feast in the village, where he intended to spend the night. Since he was not going to sleep at his house, the arrangement was that the deceased and the second respondent’s twelve- year-old sister, Ms Mankoko Leso (Mankoko), would sleep in his bedroom. At the time of Mr Leso’s departure, the deceased and Mankoko were playing in the RDP house. The two respondents and the second respondent’s girlfriend, Ms Ngobeni, also happened to be in the RDP house at that stage, and everything seemed normal. [10] According to Mankoko, the deceased went to bed earlier than her. When she eventually decided to go to bed, she found the second respondent in the bedroom, sitting on a chair next to the bed in which the deceased was sleeping. She joined the deceased in the bed and slept. That was the last time she saw the deceased alive. [11] Mr Ephraim Leso’s brother, Mr David Leso testified that he arrived at the house at 21h00. By then, Mr Ephraim Leso had already left. He noted that the first respondent and Ms Ngobeni were already in the shack but did not see the second respondent. He went to bed in the RDP house. At about 2am he heard what sounded like a muffled scream. However, he decided not to investigate the source of the scream, as he feared that he could be harmed, and subsequently fell asleep. [12] It is common cause that in the morning, Mankoko discovered that the deceased was not in bed, went to the shack to ask the first respondent and Ms Ngobeni about the deceased’s whereabouts and was told that they did not know where she was. It is also common cause that blood traces were spotted at the door of the RDP house. [13] Mr Ephraim Leso’s evidence was that he returned to his home the next morning and was immediately informed that the deceased was missing. He was also advised about the traces of blood that had been observed near the entrance of the house. He followed the blood-trail, and it led him to the neighbour’s toilet, where the deceased’s bloodied clothes and a spade were found. Upon further enquiries, he learnt that the second respondent was observed shovelling in the yard and laying grass on loose soil earlier that morning. He summoned the police. [14] Upon arrival, the police observed loose soil in the yard, became suspicious and inspected the area. This led to a grisly discovery of the deceased’s naked body in a shallow grave in the backyard. The body bore several deep gashes in the head and neck area. Once the body had been discovered, the second respondent made a report to Mr Leso, which led to the arrest of both the first and second respondents. [15] Ms Ngobeni testified that during the night of the incident, the first respondent called the second respondent, after which they both left the shack. At some point during the night, the second respondent knocked at the door of the shack. When she let him in, she noted that he was not wearing the jersey that he had on earlier that night, and that he was not wearing any shoes. She demanded an explanation from the second respondent but did not get any. Shortly thereafter, the first respondent knocked at the door of the shack. When she let her in, she asked her where the two of them were coming from at that time of the night. The first respondent told her that it was none of her business. [16] Ms Ngobeni testified that once she was in the bedroom with the second respondent, he confessed to having killed the deceased. He claimed that he did so at the instance of the first respondent and mentioned that she had threatened to kill him if he did not follow her instructions. She asserted that the second respondent, however, refused to disclose the whereabouts of the deceased’s body. She stated that the second respondent woke up very early the next morning. She saw him shovelling in the yard. Thereafter, Mankoko came to the shack to enquire about the deceased’s whereabouts. She noticed the presence of blood stains at the door of the RDP house. She confirmed that after the arrival of the police, the deceased’s naked body was found in a shallow grave. [17] It is common cause that after the police had been called, the second respondent made an admission which led to him pointing out specific areas of the crime scene to the police. It is also common cause that the second respondent later made a statement to a Magistrate in Kwa-Mhlanga court, admitting that he had raped and killed the deceased and concealed her body in a shallow grave after a failed attempt to throw her body into a neighbour’s pit toilet. He however asserted that he committed the offences under duress, as the first respondent had threatened to kill him should he not commit the offences in question. Subsequent to his arrest, he pointed out various areas of the house and identified them as areas where serious injuries were inflicted on the deceased with a spade before her head was crushed with a rock. [18] The essence of the appellant’s grounds of appeal was that the sentencing discretion of the trial court was not properly exercised. It was also averred that the trial court had over-emphasized the personal circumstances advanced on behalf of both respondents and failed to take proper account of the seriousness of the offences they had committed and the interests of the community. It was also alleged that the trial court had paid insufficient regard to the absence of contrition on the part of both respondents. [19] In respect of the first respondent, the crisp issue is whether the trial court should have found that substantial and compelling circumstances existed, justifying a departure from the mandatory minimum sentence of life imprisonment. This is a factual enquiry. In respect of the second respondent, the trial court was precluded from imposing the applicable minimum sentence of life imprisonment on account of him being a minor at the time of commission of the offence. Thus, the question central to the appeal is whether the sentences imposed on him are too lenient, as contended for by the DPP, or whether they are too harsh, as contended for by the respondents. [20] It was submitted on behalf of the appellant that the trial court had failed to attach sufficient weight to the interests of the community and the nature and seriousness of the offence but had instead over-emphasised the respondents’ personal circumstances. In respect of the first respondent, the appellant submitted that the trial court had misdirected itself by finding that there were substantial and compelling circumstances warranting a deviation from the minimum sentences of life imprisonment as set out in s 51(1) of the Criminal Law Amendment Act 105 of 1997 (CLAA) in respect of counts 1 and 3. The appellant submitted that even if it were to be accepted that there were substantial and compelling circumstances that warranted deviation from imposing life imprisonment on the first respondent, the sentence ultimately imposed by the trial court was too lenient, all things considered. [21] In respect of the second respondent, the appellant conceded that s 51 of the CLAA was not applicable to him, given the fact that he was below the age of 18 years at the time of the commission of the offences. The appellant however persisted with the argument that the trial court ought to have imposed life imprisonment sentence on the second respondent on the basis of the general penal jurisdiction set out in s 276(1) of the CPA. It was contended that the sentences imposed on the two respondents induced a sense of shock, were disturbingly inappropriate and in any event were not proportionate to the offences committed, even if it were to be found that there were substantial and compelling circumstances justifying a departure from the applicable minimum sentences. Counsel for the respondents submitted that there was no justification for tampering with the sentences imposed by the trial court, as it had properly exercised its sentencing discretion and had not committed any misdirection. [22] It is well-established that punishment is pre-eminently a matter for the trial court’s discretion. Thus, a court of appeal should be careful not to erode that discretion. Interference is only warranted if it is shown that discretion has not been judicially and properly exercised. The test is whether the sentence is vitiated by an irregularity, a material misdirection or is disturbingly inappropriate. This principle was echoed in S v Van Wyk and Another,2 where this Court held that a court of appeal would interfere with sentences imposed by a trial court ‘only where the degree of disparity between the sentence imposed by the trial court and the sentence the appeal court would have imposed was such that interference was competent and required.’ The crucial question in the enquiry is ‘whether there was a proper and reasonable exercise of the sentencing discretion bestowed on the court imposing sentence.’3 [23] In determining whether the sentencing discretion was properly exercised by the trial court, this Court must consider the applicable sentencing principles, taking into account the specific circumstances of this case. A consideration of the well-known triad of sentence consisting of the crime, the offender and the interests of the offender, is necessary. However, before I do so, it is appropriate to consider principles laid down by this Court as regards 2 Van Wyk v S, Galela v S [2014] ZASCA 152; 2015 (1) SACR 584 (SCA) at para 31-32. 3 S v Kgosimore [1999] ZASCA 63; (2) SACR 238 para 10. the consideration of appropriate sentences. This Court, in S v Malgas4 (Malgas), cautioned that specified minimum sentences were not to be departed from lightly and for flimsy reasons which could not withstand scrutiny. It further pointed out that speculative hypotheses favourable to the offender, maudlin sympathy, aversion to imprisoning first offenders, among others, were not intended to qualify as substantial and compelling circumstances. [24] In S v Matyityi,5 this court emphasised that courts are duty-bound to implement the minimum sentences prescribed in terms of the CLAA and cautioned that ‘ill-defined concepts such as “relative youthfulness” or other equally vague and ill-founded hypotheses that appear to fit the particular sentencing officer’s personal notion of fairness’ ought to be eschewed. [25] In Centre for Child Law v Minister of Justice and Constitutional Development and Others (Centre for Child Law),6 the Constitutional Court ordered that s 51(6) of the CLAA be read as if it provides that ‘this section does not apply in respect of an accused person who was under the age of 18 years at the time of the commission of the offence contemplated in subsection (1) or (2).’7 That being the case, it follows that even though in respect of count 1 (murder) and count 3 (contravention of s 3 of Act 32 of 2007 (rape)), the prescribed minimum sentence in respect of those offences is life imprisonment as set out in Schedule 2, Part I of s 51(1) of the CLAA, this 4 S v Malgas 2001 (2) SA 1222 (SCA). 5 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA) para 22-23. 6 Centre for Child Law v Minister of Justice and Constitutional Development and Others [2009] ZACC 18; 2009 (2) SACR 477 (CC); 2009 (6) SA 632 (CC). 7 Ibid para 77. sentence was not applicable to the second respondent on account of his age. Thus, a consideration of substantial and compelling circumstances does not arise in relation to the second respondent. [26] As regards the first respondent, it is common cause that the indictment mentioned that count 1 (murder) and count 3 (contravention of s 3 of Act 32 of 2007 (rape)), fell within the purview of the provisions of Schedule 2 Part I of s 51(1) of the CLAA, in respect of which life imprisonment was the applicable minimum sentence. It is trite that an offender’s personal circumstances, cumulatively considered, may constitute substantial and compelling circumstances that justify deviation from the applicable minimum sentences. With that in mind, I turn now to consider the first respondent’s personal circumstances. [27] The first respondent did not testify in mitigation of sentence. Her personal circumstances were, however, placed on record by the defence counsel. As already mentioned, the first respondent was 21 years and eight months old at the time of the commission of the offence and 24 years old at the time of sentencing. She was a first offender. She had a difficult upbringing. Her mother passed away when she was 11 years old. The conception of her first child was as a result of a rape that was committed on her when she was 15 years old, as a result of which she dropped out of school. The second child was born before conclusion of the trial. It cannot be disputed that these are strong mitigating factors. That said, these mitigating factors cannot be considered in isolation. The seriousness of the offences committed, and the interests of society are equally compelling considerations. It is to these aspects that I now turn. [28] Regarding the seriousness of the offences committed, the medico-legal reports submitted as exhibits with the consent of the respondents’ counsel paint a horrifying picture of a rape and murder that were accompanied by extreme brutality. The viciousness of the attack perpetrated against the deceased is evident from the serious injuries she sustained, which were, according to the second respondent, inflicted by both respondents with a garden spade and a large rock that was used by the first respondent to crush the deceased’s head. The injuries sustained by the deceased included multiple bruises in the face, neck and chest area; extensive bruises on the wrists, a deep abrasion in the chin area, a 9 cm deep laceration on the right side of the neck, a 7 cm cut behind her ear, a 4 cm cut on the left cheek area, a deep 8 cm scalp laceration with gaping edges on the left parietal skull, a 7.5 cm irregular shaped cut on the right occipital scalp, a c-shaped deep and irregular cut on the occipital area of the skull. It was noted that ‘all cuts have severe underlying fractures on them’. [29] An additional medico-legal report recorded that deep abrasions were seen on the vaginal wall and deep bleeding cuts on the sides of the vagina. The chief post-mortem findings were recorded as follows: ‘The body is that of a young black female child. Multiple bruises to the face, wrists, chest, abdomen. Deep lacerations to the scalp area. Skull fracture with bleeding brain tissue. Signs of strangulation with deep neck muscles involved. Genital or vaginal injury’. [30] A disturbing feature of this case is that the rape and senseless murder were committed by the respondents who were both much older than the deceased. Being above the age of 21 years old at the time of commission of these offences, there was no suggestion that the first respondent committed the offences as a result of her immaturity. Her age was therefore a neutral factor.8 That both respondents deemed it appropriate to perpetrate such dastardly deeds on their own cousin is beyond shocking. The first respondent, being a woman who was once a victim of rape, is someone who would ordinarily have been expected to be protective of the deceased. Instead, she fetched a child from the bedroom in which she was sleeping, took her outside and orchestrated a vicious attack against her. [31] The deceased’s muffled screams did not discourage the first respondent from harming her. Even though the first respondent had already seen the second respondent inflicting the most horrendous injuries on the deceased with the use of a garden spade, the first respondent showed her no mercy and used the same spade to hit her in the chest and abdomen. Furthermore, based on the evidence accepted by the trial court, it was at her suggestion that the deceased was brutally raped, as a result of which she sustained deep lacerations inside her vagina. 8 Compare footnote 6 above para 14, where this Court said: ‘In my view a person of 20 years or more must show by acceptable evidence that he was immature to such an extent that his immaturity can operate as a mitigating factor.’ [32] As a pregnant woman carrying life, the first respondent did not think twice about snuffing life out of the deceased. Once that had been achieved, she was ready to dispose of the deceased’s body in a neighbour’s pit toilet. When that proved impossible, she suggested that the second respondent dig a hole in which the deceased would be buried. [33] While a failure to show remorse is not in and of itself an aggravating factor, it would have redounded to the first respondent’s favour if she had at least shown some appreciation of the devastation of her actions.9 At no stage did she show any contrition. Her flippant attitude about the brutal rape and murder of the deceased is laid bare by her reaction to Ms Ngobeni, when, in response to her question about what was going on, the first respondent nonchalantly told her that it was none of her business and then went to sleep. The prevalence of rape and murder in this country is an aspect that has enraged the community and rightly so. It behoves this Court to take all these serious aggravating factors into account. [34] This Court is alive to the fact that the first respondent has two minor children. It appears that the first child was being raised by the first respondent’s aunt at the time of the commission of the offence. Soon after her arrest, the first respondent was released on her own recognisance. At the time of the birth of her second child, she was residing with her aunt, Ms Martha. Although the first respondent was receiving child support grant from the State in respect of her two children, her aunt also contributed to the 9 Hewitt v S [2016] ZASCA 100; 2017 (1) SACR 309 (SCA) para 16. welfare of both children. These children will in all probability suffer psychological harm as a result of the first respondent’s incarceration. However, this aspect should not be considered in isolation; all the circumstances of this case must be taken into account. [35] As aptly mentioned in S v M,10 when a caregiver is imprisoned, the children of the caregiver ‘lose the daily care of a supportive and loving parent and suffer a deleterious change in their lifestyle’. In that matter, the Constitutional Court cautioned that even though sentencing officers cannot always protect the affected children from these consequences, they ought to pay appropriate attention to their interests and take steps to minimise the damage. The court acknowledged that the difficulty is how, on a case-by-case basis, to balance the triad of sentencing without disregarding the peremptory provisions of section 28 of the Constitution. All the interlinked factors in the sentencing process must be considered, paying careful consideration to the ‘intricate inter-relationship between sections 28(1)(b) and 28(2) of the Constitution, on the one hand, and section 276(1) of the CPA on the other’. [36] In considering the plight of the first respondent’s children, due consideration must be paid to the fact that the life taken by the first respondent is that of an innocent child. Based on the familial relationship, the deceased would undoubtedly have felt safe in the presence of the first respondent, as she was the only adult in the house after Mr Ephraim Leso’s departure. Thus, the deceased would have had no reason to fear that the first 10 S v M [2007] ZACC 18; 2008 (3) SA 232 (CC); 2007 (12) BCLR 1312 (CC) para 40-42. respondent would harm or violate her. It was the first respondent who fetched the deceased from the safety of her bed, interrupted her blissful sleep and placed her in the yard. It was she who orchestrated the rape and murder of the deceased and thereafter proposed the concealment of her body. She hit the deceased with the spade and crushed her head with a rock after the deceased had already sustained serious injuries. She played a leading role in the commission of what can truly be described as barbaric and despicable deeds.11 [37] The fact that the first respondent murdered a child left in her care is a serious aggravating factor in the consideration of this matter. In my view, a custodial sentence is inevitable for the first respondent – a view which was also expressed by the probation officer who prepared her pre-sentence report. The first respondent indicated that her aunt had been assisting her with the care of her children. She also indicated that she still had a good relationship with her father and younger sibling. The relevant State departments will have to step in to ensure that the best interests of these children are catered for. Attempts should be made to ensure that these children are placed in the foster care of those who had been assisting the first respondent with their care, and that child support grants are paid to the caregivers. [38] Despite the presence of mitigating factors mentioned above, I am of the view that the aggravating factors in this matter far outweigh the first respondent’s personal circumstances. As pointed out in Malgas, a court is not expected to shy away from imposing minimum sentences on account of 11 Centre for Child Law note 7 above para 125. maudlin sympathy. In S v Vilakazi,12 this Court said that ‘[i]n cases of serious crime the personal circumstances of the offender, by themselves, will necessarily recede into the background.’ [39] In S v RO and Another,13 this Court said ‘[t]o elevate the appellants’ personal circumstances above that of society in general and these two child victims in particular would not serve the well-established aims of sentencing, including deterrence and retribution.’ In my opinion, there are no substantial and compelling circumstances that warrant a deviation from the applicable minimum sentences of life imprisonment in respect of count 1 and 3. Insofar as the trial court found that such circumstances were present, it misdirected itself when assessing the appropriate sentence. This material misdirection warrants the setting aside of the sentences imposed by the trial court. This court is therefore at large to consider the first respondent’s sentences afresh. Having considered all the circumstances of the case, I am of the view that the applicable minimum sentence of life imprisonment is proportionate to the serious offences committed in counts 1 and 3. It follows that the sentences imposed by the trial court in respect of these two offences must be set aside. [40] It is now convenient to consider whether the sentences imposed on the second respondent were too lenient, as submitted by the appellant. Like the first respondent, the second respondent did not testify in mitigation of sentence and his personal circumstances were placed on record by the defence counsel. 12 S v Vilakazi [2008] ZASCA 87; [2008] 4 All SA 396; 2009 (1) SACR 552 (SCA) para 58. 13 S v RO and Another 2010 (2) SACR 248 (SCA) para 20. [41] The second respondent was a first offender. He was only 17 years and 5 months old at the time of the commission of the offences, and 20 years old at the time of sentencing. His mother died when he was 11 years old and his father when he was 13 years old. Following the death of his parents, he stayed with his uncles. He went to school as far as grade 8 and dropped out at age 15 after failing a grade and also due to financial constraints. He was employed as a gardener at the time of the commission of these offences. At the time of his arrest, he had a live-in lover who was expecting his child. His first child was therefore born while he was in custody. The probation report mentioned that he had a difficult upbringing, and as a result, he became a delinquent who ‘associated with the wrong people’ and smoked dagga. [42] According to the pre-sentencing report filed on behalf of the second respondent, he informed the probation officer that he was a member of the Black Devils gang. He indicated that he joined that gang because ‘they were the strongest and biggest gang in his area and he enjoyed fighting’ because he harboured a lot of anger. [43] It is trite that in the sentencing of a child, every court must take into account the provisions of s 28 of the Constitution. Section 28(2) of the Constitution provides that the best interests of the child are paramount in every matter concerning them. It is on account of this constitutional right that a custodial sentence can be imposed on a child only as a matter of last resort and for the shortest appropriate period of time. [44] It was contended on behalf of the second respondent that his age was a strong mitigating factor. It was submitted that the fact that he had not denied his participation in the offence ought to be accepted as a sign of remorse. In the same breath, it was also submitted that the fact that he admitted to committing the offences he was charged with displayed his level of immaturity and lack of reasoning capacity. It was contended that even though he was already staying with a pregnant woman, this did not detract from the fact that he was still a youthful offender when these offences were committed. [45] I have already alluded to the gravity of the offences committed by the respondents. As a result of the rape committed by the second respondent, the deceased sustained deep bleeding cuts in the vagina. The infliction of this bodily harm attests to the brutality of the rape. Furthermore, in the second respondents’ own words, he used a garden spade to ‘chop’ various parts of the deceased’s head. According to the post-mortem report, the gashes on the deceased’s head were accompanied by underlying skull fractures. It is clear that the second respondent carried out heinous crimes which involved high levels of violence. That the deceased was his own cousin of the same age as his own sister did not matter to the second respondent. [46] Significantly, the Chief Clinical Psychologist, Lieut Col Knibbs, compiled a pre-sentence report which served before the trial court. In that report, he opined that the second respondent was unlikely to be rehabilitated and that there was a high risk that he will re-offend. He also stated that the second respondent posed a risk to society and fell under the classification of a serial murderer despite his second victim having survived the 20 stab wounds inflicted on her after being raped. He explained that this was because the second respondent had, after raping and stabbing his victim, left her for dead, and as such, there was a ‘completed attempt’ of the offence of murder. [47] Col Knibbs further opined that the ‘presence of Paedophilic traits in the [second respondent] can be seen as a risk increasing factor and should be factored into any parole consideration.’ This Court accepts that the rape and attempted offences that the second respondent committed after his release on warning cannot be viewed as previous convictions in relation to the matter under consideration, as they were committed after his arraignment in respect of the offences committed against the deceased in this matter. The commission of these offences, however, is a factor to be taken into consideration when assessing the feasibility of the second respondent’s capability for rehabilitation. Notably, the conclusions and findings made in Lieut Col Knibbs’ pre-sentencing report, in terms of which he found that the second respondent was not a good candidate for rehabilitation, were repeated in his testimony in court. His evidence was largely uncontested, and his recommendations were not challenged during his cross-examination. [48] It is noteworthy that the probation officer who prepared a pre-sentence report on behalf of the second respondent, Ms Shabangu, opined that there is a high risk of the second respondent ‘committing another sexual offence against a child or a person who is mentally disabled, looking at his victims’. In the face of such findings, it is not open to this Court to ignore the opinion of professionals in favour of merely hoping that the second respondent will be rehabilitated once he starts participating in counselling programs available for offenders in prison, as was submitted by the second respondent’s counsel. [49] The expert opinion expressed by the Chief Clinical Psychologist and the probation officer is a weighty aspect that bears consideration when the period of incarceration is determined. Moreover, at no stage did the second respondent express any remorse for his actions. This failure to take accountability for his actions is another aspect that gainsays prospects of rehabilitation. [50] In S v Swart,14 this Court pointed out that each of the elements for the purpose of punishment need not be given the same weight, but rather that proper weight must be accorded to each according to the circumstances of the case. It held that ‘serious crimes will usually require that retribution and deterrence should come to the fore and that the rehabilitation of the offender will consequently play a relatively smaller role.’ Mindful of the fact that imprisonment of an offender who was a minor must be imposed as a last resort, I am of the view that there are substantial aggravating factors that call for the imposition of a lengthy custodial sentence for the second respondent. I have already alluded to the fact that he was about seven months shy of the age of 18 years when he committed the offences he has been convicted of. 14 S v Swart 2004 (2) SACR 370 (SCA) para 12. [51] On the authority of Centre for Child Law, I am not persuaded by the appellant’s contention that even though life imprisonment cannot, on the strength of the provisions of s 51(6), be imposed on an offender below the age of 18 years, the same sentence (life imprisonment) can be imposed on the strength of a discretion envisaged in s 276(1) of the CPA. An approach of that nature is impermissible, in my view, as it amounts to circumventing the provisions of s 51(6) of the CLAA. [52] Although the second respondent was not diverted to a Child Justice Court within the contemplation of the Child Justice Act 75 of 2008, the provisions of s 77 of that Act are useful in determining an appropriate custodial sentence for him. In terms of s 77(3)(a) and (4) of that Act, a child who is 14 years or older at the time of sentencing and who has committed offences listed in Schedule 1 of that Act (these include murder and rape) may not be sentenced to an imprisonment term exceeding 25 years. [53] As regards what constitutes an appropriate sentence for the second respondent, I am unable to agree with the submission made on behalf of the appellant, insofar as it was opined that the provisions of s 77(4) of the Child Justice Act do not apply to the second respondent because he was 20 years old when the trial court sentenced him. The appellant contended that the sentencing regime set out in the Child Justice Act only applies if the offender was below the age of 18 years at the time of sentencing. The fact that an offender who was below the age of 18 years at the time of the commission of the offence is older than 18 years at the time of his sentencing does not, in my view, place him beyond the ambit of the provisions of that Act. The trigger remains the date of commission of the offence.15 Although the second respondent was above the age of 18 years at the time of sentencing, this does not detract from the fact that he was still a minor at the time of commission of the offences. This court must accept that on account of his age, the second respondent had a level of immaturity16 at the time of commission of the offence, even though he already had a live-in lover and was working as a gardener. [54] Given the provisions of s 77(4) of the Child Justice Act, I accept that the maximum custodial sentence that can be imposed on the second respondent is 25 years’ imprisonment. That said, it must be borne in mind that s77(5) of that Act stipulates that a child justice court imposing sentence on such an offender ‘must antedate the term of imprisonment by the number of days that the child has spent in prison or child and youth care centre prior to the sentence being imposed’. The second respondent was detained at a youth centre until he reached the age of 18 years, after which he was kept at a correctional facility until he was sentenced. He thus spent two years in custody while awaiting trial. [55] In considering an appropriate sentence for the two respondents, sight must not be lost of the gravity of each of the offences they have committed. These offences were committed in a brutal fashion, which exposed the 15 Compare Mpofu v Minister of Justice and Constitutional Development and Others (Centre for Child Law as amicus curiae) [2013] ZACC 15; 2013 (9) BCLR 1072 (CC); 2013 (2) SACR 407 (CC). 16 In S v Matyityi, fn 6 above, this Court remarked that someone under the age of 18 years may be regarded as ‘naturally immature’. deceased to an amount of suffering before her death. Considering the prevalence of violent crimes perpetrated on women and children, it is unsurprising that society demands the imposition of harsh sentences upon those who commit these monstrous offences as a form of retribution in the hope of deterring would-be offenders. In respect of this matter, the second respondent was on two occasions rescued by the police from community members who were angered by his deeds and wanted to take the law into their own hands. [56] Having considered all the circumstances of this matter, including the fact that the victims of the second respondent’s offences were children, I am of the opinion that the sentences imposed on the second respondent in respect of counts 1 and 3 induce a sense of shock, are in the circumstances shockingly inappropriate and fall to be set aside. All things considered, a lengthy custodial sentence is inevitable. It must be a sentence that removes him from society for long enough to provide him with ample opportunity to take stock of the seriousness of his offences and to take responsibility for them. In my view, an effective sentence of 23 years’ imprisonment would be appropriate. Like the trial court, I am of the view that Lieut Col Knibbs’ pre- sentence report dated 24 June 2016 and handed in as exhibit S1 must be handed over to the heads of all correctional facilities in which the second respondent may be incarcerated while serving his imprisonment sentence. [57] In the result, the following order is granted: The appeal is upheld. The sentences of the trial court are set aside and replaced with the following: ‘2.1 Accused 1 is sentenced as follows: Count 1: Life imprisonment in terms of the provisions of section 51(1) of the Criminal Law Amendment Act 105 of 1997; Count 2: 5 years imprisonment; and Count 3: Life imprisonment in terms of the provisions of section 51(1) of the Criminal Law Amendment Act 105 of 1997. 2.2 Accused 2 is sentenced as follows: Count 1: 23 years imprisonment; Count 2: 5 years imprisonment; Count 3: 23 years imprisonment. The sentences imposed in respect of count 2 and 3 are to run concurrently with the sentence in respect of count 1. 2.3 In terms of section 50(1) of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, the names of both accused persons are to be entered into the Sexual Offenders register.’ It is directed that a copy of the pre-sentencing report compiled by Lieut Col Hayden Knibbs, dated 24 June 2016 and handed in as exhibit S1 during the trial, must be handed over to the heads of all correctional facilities in which the second respondent may be incarcerated while serving his imprisonment sentence. The sentences mentioned in paragraph 2.1 and 2.2. above are antedated to 2 September 2016. _______________ M B Molemela Judge of Appeal Appearances: For appellant: P.W. Coetzer Instructed by: Director of Public Prosecutions, Bloemfontein Director of Public Prosecutions, Pretoria For respondent: K. J. Mogale (2nd respondent) Instructed by: Legal Aid, Bloemfontein Legal Aid, Pretoria	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 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 Director of Public Prosecutions, Gauteng Division, Pretoria v D M S and A O L (69/2022) [2023] ZASCA 65 (12 May 2023) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the High Court, Pretoria (high court) and replaced the order of the trial court with an order sentencing the first accused to life imprisonment and the second accused to 23 years’ imprisonment. The appeal revolved around the sentencing of the first and second respondents for the exceptionally brutal rape and murder of their minor cousin. On 7 December 2013, the respondents raped and murdered their 12-years old cousin and, after having mutilated her body, buried her body nearby in a shallow grave. In consideration of the sentences on appeal, this Court was required to examine whether the trial court overemphasised the personal circumstances of the respondents and failed to properly take into account the seriousness of the offences, especially in light of the interests of the community. Therefore, the central question before this Court was whether the sentences imposed were too lenient or too harsh. This Court found that a number of personal circumstances were favourable in mitigation of the first respondent’s sentence. However, the brutal nature of the crime, coupled with other aggravating factors far outweighed any mitigating factors. This Court considered a custodial sentence inevitable, especially in light of the pre-sentence report filed by the probation officer. Similarly, the circumstances of the second respondent were considered. Even though he was 17 years old at the time of the offence, he was on the verge of becoming a father, a delinquent and expressed that his anger was adequately vented though violent gang activity. The Court held that the nature of the offences, as well as the unlikely nature of the second respondent being rehabilitated and the likelihood of committing similar offences, were factors that strongly militated against mitigation of the sentence. The second respondent, however, was still a minor and an appropriate, yet lengthy, sentence had to reflect the provisions of s 77(4) of the Child Justice Act 38 of 2005. In the result, the SCA upheld the appeal and replaced the order of the trial court with a sentence of life imprisonment with respect to the first respondent and 23 years’ imprisonment in respect of the second respondent. ~~~~ends~~~~
445	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 20729/2014 In the matter between: GARY ITZIKOWITZ APPELLANT and ABSA BANK LIMITED RESPONDENT Neutral citation: Itzikowitz v Absa Bank Ltd (20729/2014) [2016] ZASCA 43 (31 March 2016) Bench: Ponnan, Cachalia, Willis and Saldulker JJA and Fourie AJA Heard: 15 March 2016 Delivered: 31 March 2016 Summary: Delict – pure economic loss – shareholder suing for diminution in the value of his shareholding – wrong committed against company, not shareholder – shareholder not entitled to recover loss. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Local Division High of the Court, Johannesburg (Swartz AJ sitting as court of first instance): Save for affording the appellant 15 days to deliver a notice to amend counterclaim A, if so advised, the appeal is dismissed and the cross-appeal is struck from the roll in each instance with costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Ponnan JA (Cachalia, Willis and Saldulker JJA and Fourie AJA): [1] This appeal and cross-appeal arise from exceptions taken by the respondent, Absa Bank Limited (Absa) to two counterclaims by the appellant, Mr Gary Itzikowitz. The appellant is the sole shareholder of Compass Projects (Pty) Ltd (Compass). Compass, in turn, holds 17.29 per cent of the shares in a public company, Quantum Properties Group Limited (QPG). QPG held 100 per cent of the shares in A Million UP (Pty) Ltd (AMU), a property development company. Compass has a loan account in AMU from which it is owed R5 292 442. Absa was the banker to AMU and QPG and had extended loan facilities to AMU. After June 2010, Absa increased the loan facilities to AMU from R390 million to over R500 million. According to Absa, as at 31 August 2011, it was owed a total of R569 318 000 by AMU. [2] On 4 June 2012 the board of directors of AMU resolved that it voluntarily commence business rescue. On 18 June 2012, and at the instance of Absa, the Western Cape High Court, Cape Town (the WCHC) issued an order setting aside the resolution of the board of AMU. On 29 June 2012 Absa applied to the WCHC for an order that AMU be placed under provisional winding-up. It alleged that AMU was hopelessly insolvent and unable to pay its debts. The provisional order was confirmed and made final by the WCHC on 14 August 2012. [3] On 30 August 2012 Absa caused a summons to be issued out of the South Gauteng High Court, Johannesburg (the SGHC) against the appellant for payment of the sum of R20 million together with interest and costs on the attorney and own client scale. Absa relied for its cause of action on a suretyship signed by the appellant on 9 January 2008 in terms of which he bound himself „as a surety and co-principal debtor jointly and severally together with‟ AMU in favour of Absa. The suretyship was „Limited to a maximum of R20 million together with such further amounts in respect of interest and costs as have already accrued or which will accrue until date of payment of the amount‟. In response, the appellant filed a plea and two counterclaims – the subject of this appeal. [4] In support of his counterclaims the appellant alleged that AMU‟s demise was a result of intentional, reckless or negligent conduct by Absa in: (a) advancing funds to AMU when there was no reasonable prospect of the monies being repaid; (b) colluding with directors of QPG and AMU, and the auditors of AMU, to ensure that they advanced Absa‟s wishes to the detriment of AMU; (c) colluding with AMU‟s joint venture partner, Protea Hotels, in order to secure benefits for it at the expense of AMU; (d) ignoring the appellant‟s written request in September 2011 to cease advancing funds to AMU; and (e) setting aside the attempted business rescue and then applying for AMU‟s winding- up. As a result of AMU being wound up, so the allegation goes: (a) the value of QPG‟s shareholding in AMU had reduced to nil; (b) trading in QPG shares was suspended by the Johannesburg Stock Exchange; (c) the value of Compass‟ shareholding in QPG was reduced to nil; and (d) Compass‟ loan amount in AMU amounting to R5 292 442 was rendered irrecoverable. By way of his counterclaims the appellant seeks to recover from Absa the amount of the reduction in value of his shareholding in Compass, alleged to be R50 002 338. [5] The appellant‟s counterclaim A is founded in delict. The key allegations on which he relies are that: (a) Absa knew that he was a surety, who had a financial interest as an indirect shareholder in QPG and AMU; and (b) Absa knew (or more accurately foresaw) that a winding-up of AMU would materially impact upon the value of the QPG shares in AMU, the value of Compass shares in QPG and, correspondingly, the value of his shares in Compass. The „legal duty‟ for his asserted delictual claim is framed thus: „In the premises the plaintiff [Absa] owed the defendant [Mr Itzikowitz] a legal duty to conduct itself towards AMU as a reasonable banker and not to take any decisions or to engage in any business conduct which could adversely affect the value of shares in AMU or the value of any loan account in AMU in material respects. The said legal duty arose directly as a result of the banker-customer relationship between the plaintiff and QPG and between the plaintiff and AMU.‟ [6] In counterclaim B, which was pleaded in the alternative, the appellant relies on the same allegations of misconduct by Absa as in counterclaim A. However, here he relies on the provisions of s 218(2)1 read with s 22(1)2 of the Companies Act 71 of 2008. He alleges that the devaluation of his shares in Compass qualifies as „any loss or damage‟ contemplated by s 218(2) and that Absa‟s conduct constitutes a breach of s 22(1). This, so the allegation goes, permits him to recover the devaluation directly from Absa. [7] The SGHC (per Swart AJ) held: „I am satisfied that claim A does not disclose a cause of action against the plaintiff and is bad in law as the legal duty relied upon is non-existent. The defendant‟s claim A in reconvention is struck out. Claim B in reconvention falls within the ambit of s 218(2) read with s 22(1) of the 1 Section 218(2) reads: „Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention.‟ 2 Section 22(1) reads: „A company must not carry on its business recklessly, with gross negligence, with intend to defraud any person or for any fraudulent purpose.‟ Companies Act and is valid. Claim B in reconvention is allowed to proceed to trial in order for the averments made in the claim to be proved.‟ It accordingly issued the following order: „1. The exception on claim A is upheld. 2. Claim B in reconvention is allowed to proceed to trial. 3. Each party is ordered to pay its own costs.‟ The appellant appeals against the order upholding Absa‟s exception, whilst Absa cross- appeals the dismissal of its exception in relation to the appellant‟s counterclaim B. [8] Counterclaim A is a delictual claim for pure economic loss. It is well-established that in contrast to cases of physical harm, conduct causing pure economic loss is not prima facie wrongful.3 As it was recently put by the Constitutional Court in Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1) SA 1 (CC) para 23: „So our law is generally reluctant to recognise pure economic loss claims, especially where it would constitute an extension of the law of delict. Wrongfulness must be positively established. It has thus far been established in limited categories of cases, like intentional interferences in contractual relations or negligent misstatements, where the plaintiff can show a right or legally recognised interest that the defendant infringed.‟ (Footnotes omitted.) Indeed, as the Constitutional Court pertinently pointed out in Country Cloud (para 43): „Until we are satisfied the department wronged Country Cloud, its claim does not get off the ground‟.4 [9] Absa‟s primary contention is, in principle, very simple: It is that damage, if suffered at all, had been suffered by AMU and that the appellant, being no more than in the position of a shareholder thrice removed from that company, could not sue to recover its (AMU‟s) loss or in the language of Country Cloud, that the appellant had not been „wronged‟ by Absa. In approaching this enquiry it is important to keep certain fundamental principles of company law in mind.5 The notion of a company as a distinct 3 Steenkamp NO v Provincial Tender Board, Eastern Cape [2005] ZASCA 120; 2006 (3) SA 151 (SCA) para 1. 4 See also Minister for Safety and Security v Scott & another [2014] ZASCA 84; 2014 (6) SA 1 (SCA). 5 These principles are usefully discussed in 4(1) Lawsa 2 ed (2012) paras 65-70 and 76. legal personality is no mere technicality – a company is an entity separate and distinct from its members and property vested in a company is not and cannot be, regarded as vested in all or any of its members.6 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.7 A company‟s property belongs to the company and not its shareholders. A shareholder‟s general right of participation in the assets of the company is deferred until winding-up, and then only subject to the claims of creditors.8 In Gohlke and Schneider v Westies Minerale (Edms) Bpk 1970 (2) SA 685 (A) at 692E-G, Trollip JA observed: „The company and its members are bound only to the same extent as if the articles had been signed by each member, that is, as if they have contracted in terms of the articles. The articles, therefore, merely have the same force as a contract between the company and each and every member as such to observe their provisions . . .‟ [10] Of particular relevance to the present enquiry is the following statement in Lawsa: „Since the shareholder‟s shares are merely the right to participate in the company on the terms of the memorandum of incorporation, which right remains unaffected by a wrong done to the company, a personal claim by a shareholder against the wrongdoer to recover a sum equal to the diminution in the market value of his or her shares, or equal to the likely diminution in dividend, is misconceived.‟9 (Footnote omitted.) In support of that proposition, reference is made to Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 All ER 354 (CA) at 366-367, in which it was pointed out that: „Such a “loss” is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only “loss” is through the company, in the diminution in the value of the nett assets of the company . . . The plaintiff‟s shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, 6 Dadoo Ltd & others v Krugersdorp Municipal Council 1920 AD 530 at 550. 7 The Shipping Corporation of India Ltd v Evdomon Corporation & another [1993] ZASCA 167; 1994 (1) SA 550 (A) at 566C-D. 8 S v De Jager 1965 (2) SA 616 (A) at 625. 9 4(1) Lawsa 2 ed (2012) paras 67. his right of participation, are not directly affected by the wrong doing. The plaintiff still holds all the shares as his own absolutely unencumbered property.‟ [11] More recently, in Johnson v Gore Wood & Co (a firm) [2001] 1 All ER 481; [2002] 2 AC 1 (HL), Lord Bingham of Cornhill observed: „(1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder‟s shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company‟s assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, particularly at 222- 223 . . . (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. . . . (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. . . .‟ 10 [12] In my view, counterclaim A falls squarely within the first category alluded to by Lord Bingham. That being so, the following dictum from Prudential Assurance (at 222h- 223b) is particularly apposite: „But what [a shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a “loss” is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only “loss” is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent. shareholding. The plaintiff‟s 10 Johnson v Gore Wood & Co (a firm) [2001] 1 All ER 481 (HL) at 502. See also the judgments of Lord Hutton at 517 (51C-55G) and Lord Millett at 522 (61-66). shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company. A simple illustration will prove the logic of this approach. Suppose that the sole asset of a company is a cash box containing £100 000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiff‟s shares from a figure approaching £100 000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The deceit was merely a step in the robbery. The plaintiff obviously cannot recover personally some £100 000 damages in addition to the £100 000 damages recoverable by the company.‟ [13] According to the appellant, this case is distinguishable from those authorities because, so he asserts, Absa‟s conduct was „intentional‟. But, it matters not whether Absa‟s conduct was intentional or merely negligent for the wrong was committed against AMU and not the appellant. As Country Cloud (para 19) reminds us, the conduct must be wrongful, not in some general sense, but vis-à-vis the appellant. As the relationship between a company and shareholder is contractual in nature,11 there can, it seems to me, be no basis for distinguishing this case from Country Cloud. Moreover, as Country Cloud makes plain, intentional conduct causing economic loss is not per se actionable and is certainly not unlawful where the conduct involved is conduct permitted by law. Here, one of the key allegations against Absa is that it „intentionally‟ applied to court to liquidate AMU. The order was granted by the court and AMU was finally wound up. It can thus hardly be open to a shareholder thrice removed to contend that Absa, the major creditor of AMU, was legally not entitled to have applied to court to liquidate the 11 With reference to Gohlke and Schneider v Westies Minerale (Edms) Bpk 1970 (2) SA 685 (A), and recently confirmed in Communicare & others v Khan & another [2012] ZASCA 180; 2013 (4) SA 482 (SCA) para 11. company. To once again borrow from Country Cloud (para 43) „if [Absa] acted permissibly in causing [the appellant] that loss, it does not matter that it did so intentionally‟. [14] The appellant calls in aid three decisions of the High Court in support of his claim. In the first, McLelland v Hulett 1992 (1) SA 456 (D), a shareholder of a company sued two of its directors for negligence, which had resulted in the diminution of the value of his shareholding in the company. Despite recognising that the directors‟ conduct was a wrong committed against the company, Booysen J found that the shareholder had a personal claim against the directors. In that regard he stated (at 467B-H): „The rule in Foss v Harbottle [(1843) 67 ER 189] is not an absolute rule . . . While it is clear that the primary rule that a company must sue for a loss such as that in question in this case, and not a shareholder, is a logical reflection of the concept of limited liability, in practice the real reason why the rule must exist is linked more fundamentally to the separate existence of the company, with the result that, if the shareholder is allowed to sue, any wrongdoer will be subject to “double jeopardy” . . . Where, as in the present case, that risk is non-existent, and a shareholder is left with a diminished patrimony, the continued application of the rule would amount to an unwarranted and technical obstruction to the course of justice.‟ [15] In the second, Kalinko v Nisbet & others 2002 (5) SA 766 (W), a shareholder sued the company‟s directors for a breach of their fiduciary duty, which allegedly resulted in the diminution of the value of his shares in the company. The shareholder sued personally, and not on behalf of the company. The defendant directors argued that the conduct complained of, at best, established that the company may have a claim against its directors to be pursued at the election of the company‟s liquidator. Claassen J disagreed. He stated (at 778D-779C): „It has, however, been held that a shareholder should not be entitled to institute a derivative action where he complains that as a result of a wrong done to the company his shares have diminished in value in circumstances where the company itself has a claim against the wrongdoer for the loss suffered by it as a result of such wrong. This is so because to allow the shareholder a right to claim such loss could result in “double recovery” by both the shareholder and the company from the wrongdoer . . . In my view the mischief of a potential “double recovery” is not a matter which is to be decided at the exception stage . . . Furthermore, it must be remembered that the rule in Foss v Harbottle is not an absolute rule. Where the risk of double jeopardy is non-existent and the shareholder is left with a diminished patrimony, the continued application of the rule in Foss v Harbottle would amount to an unwarranted and technical obstruction to the course of justice. See McLelland v Hulett 1992 (1) SA 456 (D) at 467B-H.‟ [16] Both Booysen J and Claassen J overlooked the dictum of Innes CJ in Dadoo Ltd v Krugersdorp Municipal Council, that the conception of the existence of a company as a separate entity distinct from its shareholders is a matter of substance.12 Instead they allowed the likelihood of double recovery (a reason for the rule) – or more accurately its absence – to become the basis for a novel exception to the rule. In McCrae v Absa Bank Ltd,13 the third in the trilogy of cases relied upon by the appellant, a shareholder of a company sued the defendant bank for the diminution of the value of his shareholdings in four companies (where he was either the sole, or a substantial shareholder) caused by wrongful conduct of the bank in effecting unlawful transfers of ring-fenced funds belonging to the companies. The loss, so it would seem, had been suffered by the companies, and the bank‟s obligation had been to the companies, not to the shareholder. That notwithstanding, the shareholder sued in his personal capacity, not derivatively. Adopting the reasoning of Booysen J (in McLelland) and Claassen J (in Kalinko), Satchwell J dismissed the defendant‟s exception. In doing so, she made the same mistake as in the two earlier judgments of failing to first determine the logically anterior question, namely: into which of the three categories alluded to by Lord Bingham in Johnson v Gore, did the claim fall. Since the plaintiff in McCrae was not bringing a derivative action,14 the rule in Foss v Harbottle should have been irrelevant to an evaluation of that claim. The key question in McCrae ought to have been whether the plaintiff had been independently wronged by the defendant. Instead of first asking that 12 Dadoo Ltd v Krugersdorp Municipal Council 1920 AD 530 at 550. 13 McCrae v Absa Bank Limited unreported case no. 42229/2008 of the SGHC delivered on 7 April 2009. 14 Broadly stated, a derivative action (also referred to as the exception to the rule in Foss v Harbottle) arises where a shareholder brings a claim on behalf of the company, to recover for the company a loss which he alleges has been sustained at the hands of the individuals in control of the company. The benefits of the action accrue to the company and not the shareholder. To the extent that the benefits improve the balance sheet or prospects of the company, the reflective benefit may be realised in the value of his shares. question and determining into which category the claim fell, Satchwell J considered the possibilities of double recovery and, being on exception, held that she could not rule out the absence of a double recovery without evidence.15 In failing to first resolve the anterior categorisation question, the learned judge allowed the enquiry into whether there might be a double recovery to determine whether there was an actionable duty owed to the shareholder. [17] In Fourway Haulage SA (Pty) Ltd v South African National Roads Agency Ltd [2008] ZASCA 134; 2009 (2) SA 150 (SCA) para 25, Brand JA pointed out that: „But the absence of indeterminate liability itself will not automatically give rise to the imposition of liability.‟ The same must hold true of the risk of double recovery. The fact that a double recovery may not be likely in a particular situation does not create an entitlement in the hands of a shareholder which he or she did not have in the first place. Where there is only one wrong; that was committed against the company, the risk of double recovery simply does not arise. The fact that the company has chosen not to sue, or is unable to sue, does not convert that wrong into a wrong against its shareholders. The risk of double recovery only becomes relevant when both the company and its shareholder(s) have been independently wronged (the third category in Johnson v Gore). It is thus necessary to first determine into which category a claim advanced by a shareholder properly falls. [18] The final string to the appellant‟s bow on this leg of the case is that a claim such as this should not be decided on exception. It seems to me, however, that given the novelty of the claim and the clear legal principles involved this is „quintessentially a matter that is capable of being decided on exception‟.16 In Telematrix (Pty) Ltd v Advertising Standards Authority SA [2005] ZASCA 73; 2006 (1) SA 461 para 3, Harms JA stated: 15 Paragraph 36. 16 AB Ventures Ltd v Siemens Ltd [2011] ZASCA 58; 2011 (4) SA 614 (SCA) para 5, with reference to Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA [2005] ZASCA 73; 2006 (1) SA 461 (SCA) para 3. „Exceptions should be dealt with sensibly. They provide a useful mechanism to weed out cases without legal merit. An over-technical approach destroys their utility. To borrow the imagery employed by Miller J, the response to an exception should be like a sword that “cuts through the tissue of which the exception is compounded and exposes its vulnerability”.17 Dealing with an interpretation issue, he added: “Nor do I think that the mere notional possibility that evidence of surrounding circumstances may influence the issue should necessarily operate to debar the Court from deciding such issue on exception. There must, I think, be something more than a notional or remote possibility. Usually that something more can be gathered from the pleadings and the facts alleged or admitted therein. There may be a specific allegation in the pleadings showing the relevance of extraneous facts, or there may be allegations from which it may be inferred that further facts affecting interpretation may reasonably possibly exist. A measure of conjecture is undoubtedly both permissible and proper, but the shield should not be allowed to protect the respondent where it is composed entirely of conjectural and speculative hypotheses, lacking any real foundation in the pleadings or in the obvious facts.”‟ (Footnotes omitted.) [19] Here, there seems to be a fundamental illogicality to the litany of allegations relied upon by the appellant. It is common cause on the pleadings that Absa had lent AMU hundreds of millions of rands. Absa was a secured creditor with a pledge over the AMU shares held by QPG. On any reckoning, it had nothing to gain and everything to lose by a failure of AMU. What is more is that the focus of the appellant appears to be on the entitlement of a shareholder (in AMU) to pursue a claim for wrongs done to AMU. The additional shareholder levels (QPG and Compass) are simply ignored. But even if one were to assume in the appellant‟s favour that QPG as the sole shareholder in AMU had a right of action against Absa, it remains unclear on what basis Compass (as a 17.29 per cent shareholder in QPG) also acquired such a right. [20] In upholding Absa‟s exception to counterclaim A, the SGHC recognised that the wrongs alleged to have been committed by Absa were all supposedly committed against AMU in breach of duties owed by Absa to AMU. It found no facts to have been pleaded that established a separate and independent duty owed to the appellant, a 17 Davenport Corner Tea Room (Pty) Ltd v Joubert 1962 (2) SA 709 (D) at 715H. shareholder in Compass (three shareholding levels removed from AMU), and that Absa‟s knowledge of his shareholding did not establish such duty. Consequently, the court correctly found that the appellant could not proceed against Absa for wrongs done to AMU. This principle found expression in the judgment of the English Court of Appeal in Walker v Stones [2001] QB 902 at 932-933; [2000] 4 All ER 412 (CA) at 438-9. Sir Christopher Slade there stated that a claimant is entitled to recover damages where: „(a) the plaintiff can establish that the defendant‟s conduct has constituted a breach of some legal duty owed to him personally (whether under the law of contract, torts, trusts or any other branch of the law) and (b) on its assessment of the facts, the court is satisfied that such breach of duty has caused him personal loss, separate and distinct from any loss that may have been occasioned to any corporate body in which he may be financially interested. . .‟ It follows that the appellant‟s appeal must fail with costs. [21] Turning to Absa‟s cross-appeal: It relates to the dismissal of an exception. The question which at once suggests itself is whether that decision is appealable. According to Maize Board v Tiger Oats Ltd & others [2002] ZASCA 74; 2002 (5) SA 365 (SCA) para 14: „In the light of this court‟s interpretation of s 20, the decisions in Blaauwbosch, Wellington and Kett, and the well-established principle that this court will not readily depart from its previous decisions, it now has to be accepted that a dismissal of an exception (save an exception to the jurisdiction of the court), presented and argued as nothing other than an exception, does not finally dispose of the issue raised by the exception and is not appealable. Such acceptance would on the present state of the law and jurisprudence of this court create certainty and accordingly be in the best interests of litigating parties.‟ [22] It is so that Streicher JA said that in the context of s 20 of the now repealed Supreme Court Act 59 of 1959 and that ss 16 and 17 of the Superior Courts Act 10 of 2013 differ somewhat from that provision. But it was not suggested by Absa that anything should be made of the difference in language. Rather, so the argument went, whilst the Maize Board principle, the correctness of which has been accepted and followed by a long line of cases in this court,18 remained good under the new Act, it did not find application to a cross-appeal. [23] Howie JA pointed out in Guardian National Insurance Co Ltd v Searle NO [1999] ZASCA 3; 1999 (3) SA 296 (SCA) at 301, that: „As previous decisions of this Court indicate, there are still sound grounds for a basic approach which avoids the piecemeal appellate disposal of the issues in litigation. It is unnecessarily expensive and generally it is desirable, for obvious reasons, that such issues be resolved by the same Court and at one and the same time. Where this approach has been relaxed it has been because the judicial decisions in question, whether referred to as judgments, orders, rulings or declarations, had three attributes. First, they were final in effect and not susceptible of alteration by the court of first instance. Secondly, they were definitive of the rights of the parties, for example, because they granted definite and distinct relief. Thirdly, they had the effect of disposing of at least a substantial portion of the relief claimed. In this regard see Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 532I-533B.‟19 [24] In Blaauwbosch Diamonds Ltd v Union Government (Minister of Finance) 1915 AD 599 at 601, Innes CJ said in respect of the question whether an order dismissing an exception was final: „It was then laid down that a convenient test was to inquire whether the final word in the suit had been spoken on the point; or, as put in another way, whether the order made was reparable at the final stage. And regarding this matter from that standpoint, one would say that an order dismissing an exception is not the final word in the suit on that point [in] that it may always be repaired at the final stage. All the Court does is to refuse to set aside the declaration; the case proceeds; there is nothing to prevent the same law points being re-argued at the trial; and 18 See inter alia, American Natural Soda Corporation & another v Competition Commission & others 2003 (5) SA 655 (SCA) para 12; Ndamase v Functions 4 All 2004 (5) SA 602 (SCA); B v S 2006 (5) SA 540; [2006] 4 All SA 515 (SCA) para 20; Gutsche Family Investments (Pty) Ltd & others v Mettle Equity Group (Pty) Ltd & others 2007 (5) SA 491 para 12; Van Niekerk & another v Van Niekerk & another 2008 (1) SA 76 (SCA) para 4; Charlton v Parliament of the Republic of South Africa 2012 (1) SA 472 (SCA) para 19; Carstens NO v Carstens [2012] ZASCA 62 (SCA) para 1; Picbel Groep Voorsorgfonds (In Liquidation) v Somerville & related matters 2013 (5) SA 496 (SCA) para 6 and Thulamela Municipality & another v T Tshivhase & others [2015] ZASCA 57 (SCA) para 7. 19 Zweni has been cited with approval by the Constitutional Court in International Trade Administration Commission v SCAW South Africa (Pty) Ltd [2010] ZACC 6; 2012 (4) SA 618 (CC) para 49. though the Court is hardly likely to change its mind there is no legal obstacle to its doing so upon a consideration of fresh argument and further authority.‟ [25] I must confess to having some difficulty in fully understanding the distinction sought to be drawn by Absa. Maize Board laid down a general principle to the effect the dismissal of every exception (save an exception to the jurisdiction of the court), presented and argued as nothing other than an exception, is not appealable. Importantly, Maize Board drew no distinction between appeals and cross-appeals. A cross-appeal, as Schreiner JA pointed out in Goodrich v Botha 1954 (2) SA 540 (A) at 544, is „simply an appeal which is conveniently tacked on to another appeal.‟20 And, in general, the rules applicable to appeals apply to cross-appeals. Moreover, the considerations of principle and policy alluded to above that militate against entertaining an appeal against the dismissal of an exception, must no doubt, apply with equal force to a cross-appeal against the dismissal of an exception. Any other approach would in effect mean that precisely the same issue, if raised by way of an appeal would not be appealable but if raised by way of a cross-appeal would be appealable. Why, it must be asked, should a cross-appellant be treated more favourably than an appellant? If, indeed, the final word is yet to be spoken on the points raised in counterclaim B, as both parties accepted before us, an appeal can hardly avail Absa at this stage. It follows that Absa‟s cross-appeal must fail with costs. [26] In the result: Save for affording the appellant 15 days to deliver a notice to amend counterclaim A, if so advised, the appeal is dismissed and the cross-appeal is struck from the roll in each instance with costs. _________________ V M Ponnan Judge of Appeal 20 See also Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 606H-608A; National Union of Metalworkers of SA v Henred Fruehauf Trailers [1994] ZASCA 153; 1995 (4) SA 456 (A) at 475F-G and 4 Lawsa 3 ed (2011) para 410. APPEARANCES: For Appellant: M Dendy Instructed by: Itzikowitz Attorneys, Johannesburg Lovius Block, Bloemfontein For Respondent: D Turner Instructed by: Webber Wentzel Attorneys, Johannesburg Honey Attorneys, Bloemfontein	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 31 March 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. Itzikowitz v Absa Bank Ltd (20729/2014) [2016] ZASCA 43 (31 March 2016). The Supreme Court of Appeal (SCA) today handed down judgment relating to whether a shareholder can sue for the diminution in value of shares due to a wrong committed against a company. The appellant, Mr Itzikowitz, is a sole shareholder in a company (Compass) which in turn holds 17.29 per cent in another company (QPG). QPG was the sole shareholder in yet another company (AMU). Compass is owed over R5 million by AMU through a loan account. The respondent, Absa was the banker for AMU and QPG and had provided loan facilities to AMU which had been increased after June 2010 from R390 million to an amount in excess of R500 million as at 31 August 2011. On 4 June 2012 AMU’s board resolved to voluntarily commence business rescue. On 18 June 2012 Absa obtained an order setting aside the resolution in the Western Cape High Court (WCHC) and on 29 June 2012, Absa obtained an order placing AMU under provisional liquidation on the basis that AMU was hopelessly insolvent. The provisional order was made final by the WCHC on 14 August 2012. Then, on 30 August 2012, Absa sued Itzikowitz out of the South Gauteng High Court (SGHC) for the payment of R20 million on the basis of a suretyship he had signed on 9 January 2008 in terms of which he bound himself as surety and co-principal debtor jointly and severally liable with AMU in favour of Absa in the amount to R20 million. Itzikowitz filed a plea and two counterclaims which are the subject of the appeal to the SCA. In his counterclaims, Itzikowitz alleged that AMU’s demise was a result of intentional, reckless or negligent conduct by Absa in that it, among other things: advanced funds to AMU when there was no reasonable prospect of the monies being repaid; ignoring his written request in September 2011 to cease advancing funds to AMU; and setting aside the attempted business rescue and then applying for AMU’s winding-up. As a result of AMU being wound up, Itzikowitz alleged that: the value of QPG’s shareholding in AMU had reduced to nil; trading in QPG shares was suspended by the Johannesburg Stock Exchange; the value of Compass’ shareholding in QPG was reduced to nil; and Compass’ loan to AMU amounting to over R5 million was rendered irrecoverable. By way of his counterclaims Itzikowitz sought to recover from Absa the amount of the reduction in value of his shareholding in Compass, which he alleged to be R50 002 338. In counterclaim A, founded in delict, Itzikowitz alleged that: Absa knew that he stood surety for AMU and that he had an indirect financial interest in QPG and AMU; Absa knew and foresaw that a winding-up of AMU would materially impact on the value of QPG shares in AMU, Compass’ shares in QPG and the value of his shares in Compass. He alleged that Absa owed him a legal duty to conduct itself toward AMU as a reasonable banker by not taking any adverse decisions towards AMU’s business and share value. In counterclaim B, Itzikowitz pleaded the same allegations in the alternative, but relying on s 218(2) read with s 22 of the Companies Act 71 of 2008. He alleged that he could on this basis also recover the value of the devaluation directly from Absa. The SGHC: (a) upheld the exception against counterclaim A ruling that it did not disclose a cause of action against Absa because the legal duty relied upon was nonexistent; in respect of counterclaim B, the SGHC (b) dismissed the exception ruling counterclaim B to be valid and that it was allowed to proceed to trial for proof of the averment made in its respect. It was to the order under (a) that Itzikowitz appealed, whilst Absa cross-appealed in respect of the order under (b). As to Itzikowitz’s appeal in relation to (a), the SCA held it was a delictual claim for pure economic loss which was not prima facie wrongful. The SCA accepted Absa’s argument that Itzikowitz being no more than a shareholder three times removed from AMU, could not sue to recover its loss as he had not been wronged by Absa. The SCA held in this regard that the fundamental company law principle that a company is a separate entity had to be kept in mind. The SCA also held in the light of such principle that Itzikowitz’s personal claim for the diminished value of his shares in AMU was misconceived. The SCA found that it could hardly be open to Itzikowitz, a shareholder thrice removed from AMU to contend that Absa, AMU’s major creditor, was legally not entitled to have applied to court to liquidate the company. The SCA further held that a claimant in the position of Itzikowitz could only recover damages, firstly where he could establish that the wrongdoer’s conduct constituted a breach of a legal duty owed to him personally. Secondly, where on an assessment of the facts, a court is satisfied that the breach of duty caused the claimant personal loss that is distinct from that of the company as a separate corporate entity. The SCA according held that Itzikowitz’s appeal had to fail with costs. And as to Absa’s appeal in relation to (b), the SCA held that the dismissal of an exception is not appealable. The court held that it is trite that the dismissal of an exception (save an exception to the jurisdiction of the court) does not finally dispose of the issue and is thus not appealable. The SCA further rejected Absa’s argument that the court had jurisdiction to entertain its cross-appeal. It held that there is no distinction between appeals and cross-appeals as a cross-appeal is merely an appeal that is conveniently tacked on to another appeal, thus that in general, the rules applicable to appeals also apply to cross-appeals. The SCA accordingly ordered, except for allowing Itzikowitz 15 days to deliver a notice to amend counterclaim A if he is so advised, that Itzikowitz’s appeal is dismissed and that Absa’s cross-appeal is struck from the roll, and in each these instances with costs. --- ends ---
1892	non-electoral	2011	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 786/2010 In the matter between: LYNETTE MARY ROUX Appellant and HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA First Respondent OLIVER MICHAEL POWELL Second Respondent Neutral citation: Roux v Health Professions Council of SA (786/2010) [2011] ZASCA 135 (21 September 2011) Coram: Navsa, Lewis, Ponnan, Mhlantla and Malan JJA Heard: 17 August 2011 Delivered: 21 September 2011 Summary: Health Professions Act 56 of 1974 and regulations ─ interpretation and application of provisions dealing with disciplinary inquiries ─ principle of legality ─ council obliged to act in accordance with its statutory powers ─ decision of pro forma complainant to add additional charge not sanctioned by Health Professions Council and not sourced in law ─ additional charge set aside. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Tuchten J sitting as court of first instance): The appeal is upheld with costs. The order of the court below is set aside and replaced with the following: '(a) Count 1 of the charge sheet dated 4 September 2009 is set aside. (b) The first respondent is ordered to hold an inquiry into the appellant's alleged misconduct solely in respect of Count 2, within two months of the date of this judgment. (c) The first and second respondents are ordered jointly and severally, the one paying the other to be absolved, to pay the costs of the application.' ___________________________________________________________ JUDGMENT MHLANTLA JA (NAVSA, LEWIS, PONNAN and MALAN JJA) concurring): [1] This appeal, with leave of the court below, turns on the interpretation and application of the provisions of the Health Professions Act 56 of 1974 dealing with disciplinary enquiries. It also implicates the regulations relating to the conduct of inquiries into alleged unprofessional conduct, promulgated in Government Notice 765 dated 24 August 2001 and published in Government Gazette 22584, made under the Act. The specific provisions will be referred to in due course. The events leading up to the litigation that culminated in the present appeal are set out hereafter. [2] The appellant, Ms Lynette Mary Roux, a clinical psychologist, was appointed to conduct forensic work and furnish a report to the office of the Family Advocate in Johannesburg, regarding litigation between the second respondent, Mr Oliver Michael Powell and Ms Linda Petzer about access to a minor child Byron, born of the relationship between them. The appellant furnished the Family Advocate with her report on 19 March 2004. She thereafter assumed the role of a therapeutic psychologist and began treating Byron. During March 2005, and while still treating Byron, the appellant supplemented her March 2004 report. [3] On 11 April 2005 Powell, through the registrar, submitted a complaint to the first respondent against the appellant which he supplemented in September 2005. The first respondent, the Health Professions Council of South Africa (HPCSA), was established in terms of s 2 of the Act and has as its objects, amongst others, to promote and to regulate interprofessional liaison between health professions in the interest of the public and to control and exercise authority in respect of all matters affecting the profession. The HPCSA must, in terms of s 3(j) of the Act, serve and protect the public in matters involving the rendering of health services by persons practising a health profession. Importantly for this case, one of the functions of the HPCSA is set out in s 3(n) of the Act, which is: 'to ensure the investigation of complaints concerning persons registered in terms of this Act and to ensure that appropriate disciplinary action is taken against such persons in accordance with this Act in order to protect the interest of the public.' [4] In essence, Powell’s first complaint was that the appellant had acted unprofessionally when she assumed multiple relationships, that is, that of being an investigator appointed by the Family Advocate and then also a therapist to Byron. Secondly, Powell complained that the appellant had misdiagnosed his condition and had labelled him a liar. Powell requested the HPCSA to investigate these allegations and institute an inquiry into the conduct of the appellant. Acting in terms of regulation 3(1)b)1 the registrar forwarded a copy of the complaint to the appellant requesting her to respond. The appellant submitted a written response in February 2006. [5] Thereafter, in terms of regulation 3(2),2 the matter was placed before the committee of preliminary inquiry of the professional board for psychology (the committee). The committee obtained an opinion from Professor Charl Vorster, a clinical psychologist, in regard to the allegations of unprofessional conduct. His view was that the appellant should be prosecuted only on the allegation of multiple relationships. It is 1 Regulation 3(1)(b) reads: '3(1) The registrar may ─ . . . (b) within seven working days after he or she received a complaint, notify the accused of the complaint or forward particulars of the complaint to him or her – (i) requesting a written response from him or her within 21 working days after receipt of such notification or particulars, failing which the complaint will be forwarded to the preliminary inquiry committee without such written response; and (ii) warning him or her that the written response referred to in subparagraph (i) may be used in evidence against him or her. . . .' 2 Regulation 3(2) reads: 'On receipt by the registrar of further information or a written response referred to in subregulation (1)(a) or (b), the registrar shall submit such further information or written response to the committee of preliminary inquiry and if no further information or written response is received, the registrar shall report this to the committee of preliminary inquiry.' common cause between the parties that the committee accepted Prof Vorster's opinion. On 18 May 2007 the committee resolved, in terms of regulation 3(3) and (4), that an inquiry into the conduct of the appellant should be held. [6] The pro forma complainant3 prepared a draft charge sheet which referred to the multiple relationships charge only. This draft charge sheet was submitted to the chairman of the committee for final approval and was approved by the latter on 18 July 2007 – this procedure is not statutorily prescribed but appears to be established practice. The registrar, acting in terms of regulation 4(a), thereafter issued a notice enclosing the charge sheet to the appellant specifying the date, time and place where the inquiry into this lone charge would be held. [7] The inquiry was postponed on numerous occasions for various reasons. The charge sheet was also amended on at least three occasions. First, it was amended by the pro forma complainant, without reference to the professional committee, after Powell insisted that the pro forma complainant also prefer the misdiagnosis charge against the appellant. In this regard Powell relied on an opinion from Professor D A Louw, a clinical psychologist. Second, the pro forma complainant withdrew the charge sheet after Vorster advised him that the evidence before the committee of preliminary enquiry revealed only one count of misconduct, that is, the multiple relationships charge. A new charge sheet was served upon the appellant. The third occasion is referred to in para 9 below. [8] As the inquiry was repeatedly postponed, the appellant launched an application in the North Gauteng High Court, Pretoria for declaratory and 3 Regulation 1 defines a pro forma complainant as 'a person appointed by a professional board to represent the complainant and to present the complaint to a professional conduct committee'. interdictory relief against the HPCSA and Powell. She sought an order that the inquiry instituted against her in terms of s 41 of the Act be declared unlawful, unreasonable and/or procedurally unfair and directing that the inquiry be permanently stayed. [9] Following what is set out in para 7 Powell was even more insistent that the misdiagnosis charge be added. He placed reliance on an opinion from another expert, Dr Louise Olivier, a clinical and counselling psychologist. This stance by Powell led to the pro forma complainant withdrawing the old charge sheet and supplanting it with a new one containing two charges, the multiple relationships and misdiagnosis charges. This charge sheet was served on the appellant on 4 September 2009.The parties were at this stage exchanging affidavits in preparation for the hearing of the application in the court below. [10] This caused the appellant to file an amended notice of motion in which she sought additional relief, inter alia, a declarator that the charge sheet dated 4 September 2009 be set aside; alternatively, that count 1 thereof (the misdiagnosis charge) be set aside, and that the HPCSA be directed to hold an inquiry only into the alleged misconduct in respect of count 2 (the multiple relationships charge). [11] In the court below the appellant submitted that the charges be set aside due to the delays caused in bringing the matter to finality as well as the fact that the pro forma complainant had exceeded his authority when he preferred the misdiagnosis charge. The HPCSA and Powell, on the other hand, contended that it was premature for the appellant to approach the court as the actual inquiry had not been conducted and that the pro forma complainant had acted within his statutory authority. [12] Tuchten J in the court below held that there was insufficient evidence to support the claim for the undue delay in conducting the inquiry. Furthermore, the learned judge held that the committee had not authorised an inquiry into specific conduct, but merely considered the material placed before it and decided, in general terms, that an inquiry should be held. According to the judge, once the committee had decided that the complaint had merit, its function was complete. He held that the ambit of the inquiry was rightly determined by the pro forma complainant. He thus dismissed the application with costs. He later granted leave to this court. [13] Before us, the litigation between the parties has been reduced to a single issue: whether a pro forma complainant has the authority to prefer charges against a health practitioner which were not authorised by the committee of preliminary enquiry? [14] As in the court below, counsel for the appellant contended that the pro forma complainant had exceeded his authority when he included the misdiagnosis charge in the charge sheet as he was restricted to formulating a charge as determined by the committee. Put differently, the question concerned the principle of legality. The submission advanced on behalf of the respondents was that the relief sought by the appellant was not competent because the matter was not ripe for review, since the disciplinary enquiry had not even begun and that the pro forma complainant in any event had the requisite authority to determine the nature and extent of the charges to be brought against a health practitioner. [15] As indicated earlier in this judgment, the answer to this issue depends on the interpretation and application of the provisions of the Act and the regulations. It is thus apposite at this stage to consider the scheme of the Act. The relevant provisions of s 15 of the Act provide: '15. Establishment of professional boards: (1) The Minister shall, on the recommendation of the council, establish a professional board with regard to any health profession in respect of which a register is kept in terms of this Act, or with regard to two or more such health professions. . . . (5) Regulations relating to the constitution, functions and functioning of a professional board shall at least provide for─ . . . (f) the establishment by a professional board of such committees as it may deem necessary, each consisting of so many persons appointed by the board as the board may determine, but including at least one member of the board who shall be the chairperson of such committee, and the delegation to any person or any committee so established, such of its powers as it may from time to time determine, but shall not be divested of any power so delegated.' Section 41 provides: '41. Inquiries by professional boards into charges of unprofessional conduct: (1) A professional board shall have power to institute an inquiry into any complaint, charge or allegation of unprofessional conduct against any person registered under this Act, and, on finding such person guilty of such conduct, to impose any of the penalties prescribed in section 42(1). (2) A professional board may, whenever it is in doubt as to whether an inquiry should be held, in connection with the complaint, charge or allegation in question consult with or seek information from any person, including the person against whom the complaint, charge or allegation has been lodged.' [16] As stated above, s 3(n) empowers a council to investigate complaints against health practitioners and to ensure that appropriate disciplinary action is taken against such persons in terms of the Act. Section 41(1) confers on the professional board the power to institute inquiries into complaints, charges or allegations of unprofessional conduct. A board may in terms of s 15(5)f) establish committees comprising such persons as the board may deem fit, and shall include at least one member of the board. It may delegate to such committee such of its powers as it may determine. [17] In terms of s 61(h)(i) of the Act, the Minister is empowered, after consultation with the council, to make regulations relating to the manner in which complaints, charges or allegations brought against a registered person shall be lodged. The regulations promulgated in terms of the Act deal with the manner in which the complaints of alleged unprofessional conduct are to be dealt with. Regulation 2(1) states: 'A complaint shall be in writing and be addressed to the registrar or to the council or to a professional board.' [18] Regulation 3 sets out the procedure to be adopted upon receipt of a complaint. The registrar may either call for further information, or within seven days forward the complaint to the affected person, calling upon him or her to respond to such complaint or allegations. For present purposes the critical provisions are regulation 3(3) and (4) and regulation 4(a) and (b) and these provide: '(3) If a committee of preliminary inquiry decides, after due consideration of the matter, that there are no grounds for an inquiry, it shall direct the registrar to communicate in writing its decision to the complainant and the accused stating the reason(s) for such decision. (4) If a committee of preliminary inquiry decides, after due consideration of the matter, that an inquiry must be held into the conduct of the accused, it shall direct the registrar to arrange for the holding of an inquiry. 4(a) On receipt of a directive referred to in regulation 3(4), the registrar shall issue a notice, which is attached hereto and essentially in the form of Annexure A and addressed to the accused, stating where and when the inquiry will be held and enclosing a charge sheet as formulated by the pro forma complainant. (b) The notice referred to in paragraph (a) shall be served on the accused or mailed to him or her at his or her registered address by registered mail at least one month prior to the date of the aforesaid inquiry.' [19] The primary rule in the interpretation of statutes is to give effect to the object or purpose of the statute. The nature of the statute and the purpose for which it was enacted are important when it comes to matters of interpretation. This court has embraced the purposive approach, whereby statutory words must be interpreted in the context of the statute as a whole including its purpose.4 In Stopforth v Minister of Justice; Veenendaal v Minister of Justice5 this court confirmed that 'even where the language is unambiguous, the purpose of the Act and other wider contextual considerations may be invoked in aid of a proper construction'. It follows therefore that the Act and regulations must be given a purposive construction to give effect to their principal aims and purposes. [20] Before us, the parties were agreed that the committee's role as referred to in sub-regulations (3) and (4) was to ensure that only sustainable complaints were proceeded with ─ a sifting function. [21] It was contended on behalf of Powell that the sifting process was not one in respect of which a specific charge or charges was or were to be considered but rather where the committee decided whether all the information before it should form the basis of the charge or charges to be formulated by the pro forma complainant. 4 See Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School 2008 (5) SA 1 (SCA) paras 16-19. 5 Stopforth v Minister of Justice; Veenendaal v Minister of Justice 2000 (1) SA 113 (SCA) para 21. [22] In my view the submission on behalf of Powell is fallacious. The very basis of having a committee to conduct a preliminary inquiry, is to decide, with the skills available to it, which of the complaints put before it were warranted. The committee consists of health professionals who possess skills relative to the regulated profession. They are best suited to decide whether there are grounds on which to conduct an inquiry into unprofessional conduct. It is that committee's function to specify the conduct to be the subject of inquiry. [23] The pro forma complainant in this case is a person legally trained whose task, in my view, is to ensure that the circumscribed conduct is accurately encapsulated in an intelligible form by way of a formal charge sheet. If this were not so, the wrong professionals would be charged with tasks beyond their expertise. [24] That this is how the scheme of the Act is understood by the HPCSA, is borne out not only by what transpired in this case before the aggressive intervention by Powell, but also by how the process of inquiries is described in general terms by Mr Janzen, who was employed by the HPCSA as a pro forma complainant. [25] In the present case the committee had authorised only the bringing of the multiple relationships charge. This it did in terms of regulation 3(4). Janzen, who deposed to the answering affidavit and the supplementary answering affidavit on behalf of the HPCSA, stated that the committee had resolved that an inquiry be held in regard to the complaint of the appellant's multiple relationships. In consultation with Vorster, a draft charge sheet was prepared and approved on 4 July 2007. This charge sheet was later submitted to the chairman of the committee for final approval, who approved it on 18 July 2007. The new charge sheet dated 4 September 2009 which included two charges was never submitted to the chairperson of the committee for approval, nor were the reports by Olivier and Louw presented to the committee for its consideration. [26] It was submitted on behalf of Powell that the words 'an inquiry must be held into the conduct of the accused' meant that all that the committee was required to do was to decide whether an inquiry should be held into the conduct apparent from the information placed before the committee, without the need for specificity. In my view, this latter submission falls to be rejected. It renders the sifting process nugatory. Furthermore it is at odds with fundamental principles of administrative law, namely that decisions 'affecting individuals' should be based on substantiated information and that the person at the receiving end of disciplinary action should be clearly apprised of the nature of the charges he or she has to face to enable a proper defence to be mounted.6 [27] The pro forma complainant accordingly did not have the authority to include the misdiagnosis charge in the charge sheet. He was furthermore not entitled to accept expert opinions sourced by the second respondent and formulate the misdiagnosis charge based on such opinions. He had a duty to act in accordance with the instructions of the committee. In the result the high court erred in finding that the pro forma complainant had the power to determine the ambit of the inquiry, including the specific charges to be preferred. 6 Lawrence Baxter Administrative Law (1984) at 546. See also Cora Hoexter Administrative Law in South Africa (2007) at 334. [28] Counsel for the HPCSA and Powell submitted that the formulation of the charge sheet did not constitute 'administrative action' as defined in section 1 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and therefore that there were no grounds to review the decision. [29] Administrative action is defined in s 1 of PAJA as: 'any decision taken, or any failure to take a decision, by ─ (a) an organ of state, when ─ (i) exercising a power in terms of the Constitution or a provincial constitution; or (ii) exercising a public power or performing a public function in terms of any legislation; or (b) a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct, external legal effect . . . .'7 In my view, Janzen (however misguided), acting on behalf of the HPCSA, in deciding on and proceeding to add the additional charge, was engaging in administrative action. His decision clearly falls within the definition of 'administrative action' and is in the ordinary course subject to review for lack of statutory authority in terms of s 6 of PAJA. [30] Even if this were not so, the committee and the pro forma complainant exercised public power, purportedly in terms of the provisions of the Act and the regulations. In Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council the following was said in para 40:8 7 In Grey's Marine Hout Bay (Pty) Ltd v Minister of Public Works 2005 (6) SA 313 (SCA) para 24 Nugent JA summarised administrative action as 'the conduct of the bureaucracy (whoever the bureaucratic functionary might be) in carrying out the daily functions of the State, which necessarily involves the application of policy, usually after its transition into law, with direct and immediate consequences for individuals or groups of individuals'. 8 Fedsure Life Insurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374 (CC). See also Gerber v MEC for Development Planning & Local Government, Gauteng 2003 (2) 'It is not necessary in the present case to attempt to characterise the powers of local government under the new constitutional order, or to define the grounds on which the exercise of such powers by an elected local government council itself can be reviewed by the Courts. The exercise of such powers, like the exercise of the powers of all other organs of State, is subject to constitutional review which, . . . includes review for "legality" . . .'. [31] The principle of legality is implicit in our Constitution and applies to every exercise of public power, thus providing an essential safeguard even when action does not qualify as 'administrative action' for purposes of PAJA or the Constitution. As stated by Sachs J in Minister of Health NO v New Clicks South Africa (Pty) Ltd (Treatment Action Campaign as amicus curiae)9 'The constitutional principle of legality is of application even when the action in question is an exercise of public power that does not qualify as "administrative action" . . .'. The principle of legality requires that 'power should have a source in law' and 'is applicable whenever public power is exercised. Public power . . . can be validly exercised only if it is clearly sourced in law'.10 [32] The principle of legality dictates that administrative authorities such as the HPCSA cannot act other than in accordance with their statutory powers. The decision of the pro forma complainant to include the misdiagnosis charge was not 'sourced in law' and has offended against the principle of legality. The decision has to be reviewed and nullified for want of statutory power. It follows that the misdiagnosis charge has to be set aside. The inquiry, if it continues, can relate only to the multiple relationships charge. SA 344 (SCA) para 35 and Senwes Ltd v Competition Commissioner of South Africa (118/2010) [2011] ZASCA 99 para 51. 9 Minister of Health v New Clicks South Africa (Pty) Ltd 2006 (2) SA 311 (CC) para 613. Premier,Western Cape v Overberg District Municipality 2011 (4) SA 441 (SCA) paras 37-38. 10 AAA Investments (Pty) Ltd v Micro Finance Regulatory Council 2007 (1) SA 343 (CC) para 68. [33] It is necessary briefly to consider the respondents' submission that the matter was not ripe for review as the inquiry had not been held. This contention cannot be sustained. A person is not prevented from applying to court for relief where his very complaint is the illegality or fundamental irregularity in respect of the decision he seeks to challenge or impugn.11 There is no reason why a person such as the appellant should first subject herself to an unauthorised inquiry which would entail costs and wasted time before challenging its legality. This is not the kind of case where the question of ripeness arises as the challenge relates to the source of power and the principle of legality. The appellant was entitled to a declaratory order in that regard. [34] Finally, there is a disturbing aspect of this case that I am constrained to address. The purpose of establishing the HPCSA was to protect the public interest. The complaint was lodged in April 2005. The inquiry is yet to be heard, six years later. Such a state of affairs reflects badly on the HPCSA and affects public confidence in it. [35] For the reasons stated above the appeal succeeds. The following order is made: The appeal is upheld with costs. The order of the court below is set aside and replaced with the following: '(a) Count 1 of the charge sheet dated 4 September 2009 is set aside. 11 Welkom Village Management Board v Leteno 1958 (1) SA 490 (A) at 503A-D. (b) The first respondent is ordered to hold an inquiry into the appellant's alleged misconduct solely in respect of Count 2 within two months of the date of this judgment. (c) The first and second respondents are ordered jointly and severally, the one paying the other to be absolved, to pay the costs of the application.' _______________ N Z MHLANTLA JUDGE OF APPEAL APPEARANCES For Appellant: P Beltramo SC Instructed by: Bowman Gilfillan Inc, Johannesburg Symington & De Kok, Bloemfontein For 1st Respondent: E B Clavier Instructed by: Matabane Incorporated, Pretoria EG Cooper & Majiedt Inc, Bloemfontein For 2nd Respondent: F A Snyckers Instructed by: Darryl Furman & Associates, Johannesburg Matsepes, Incorporated, Bloemfontein	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 21 September 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. ROUX v HEALTH PROFESSIONS OF SA The Supreme Court of Appeal (SCA) today upheld an appeal against a judgment of the North Gauteng High Court, Pretoria. The high court had dismissed an application by Ms Roux, a clinical psychologist- the appellant in the present case- in which she sought to have a second charge of unprofessional conduct, which was preferred against her by a pro forma complainant purportedly acting on behalf of the Health Professions Council of South Africa (HPCSA), set aside. This court held that the pro forma complainant had no the authority to prosecute a charge of alleged unprofessional conduct which had not been authorised by the preliminary committee of inquiry of the board. It further held hat the decision of the pro forma complainant in including a charge of misdiagnosis was not sourced in law and had offended the principle of legality. The background facts to the application and the appeal are set out in brief hereafter. The second respondent, Mr Powell, had lodged a complaint with the HPCSA against the appellant who had been appointed by the office of the Family Advocate to compile a forensic report for the purpose of litigation between Powell and Ms Linda Petzer concerning Powell’s right of access to their minor son. Powell complained that the appellant had assumed multiple relationships, namely, that of a clinical (forensic) psychologist and that of a therapeutic psychologist to his son and that she had misdiagnosed him (Powell). The matter was referred to the committee of preliminary inquiry which decided, pursuant to expert opinion received by it, that only the multiple relationships charge should be prosecuted. The committee then referred its decision to the pro forma complainant for the formulation of the charge sheet. The pro forma complainant drafted a charge sheet which included only the multiple relationships charge. However, as a result of Powell’s aggressive intervention the pro forma complainant added the misdiagnosis charge. The high court in dismissing the application reasoned that the committee of preliminary enquiry had provided the entire dossier of information to the pro forma complainant and that he was at large to determine how the charges were to be formulated, including adding the second charge. In upholding the appeal, the SCA held that it was the function of the committee, not the pro forma complainant, to specify the conduct to be the subject of the inquiry. In the present case it had only authorised the prosecution of the multiple relationships charge. The SCA noted that the committee consisted of health professionals who possess skills in the field of psychology. These professionals were best suited to decide whether there were grounds on which to conduct an inquiry into unprofessional conduct. The pro forma complainant’s task, the SCA held, was only to utilise his legal skills to ensure that the circumscribed conduct was accurately encapsulated in an intelligible form by way of a formal charge sheet. If this were not so, the SCA stated, the wrong professionals would be charged with tasks beyond their expertise. The SCA further held that the decision of the pro forma complainant to include the misdiagnosis charge was not sourced in law and had offended the principle of legality. It had to be reviewed and set aside for want of statutory power. The SCA also held that the appellant was not prevented from applying to court for relief where her very complaint was the illegality or fundamental irregularity in respect of the pro forma complainant’s decision to include the misdiagnosis charge. There was no reason why she should first subject herself to an unauthorised inquiry which would entail costs and wasted time before challenging its illegality. Consequently, the SCA upheld the appeal and substituted the order of the high court with an order setting aside the misdiagnosis charge and directing the HPCSA to hold an inquiry only in respect of the multiple relationships charge within two months of the date of the judgment.
1474	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1060/2015 In the matter between: LOUISTEF (PTY) LTD APPELLANT and CWA SNYDERS NO AS TRUSTEE OF: LOUIS SNYDERS FAMILIE TRUST FIRST RESPONDENT THE CONTROLLER OF PETROLEUM PRODUCTS SECOND RESPONDENT MACROBERT INCORPORATED THIRD RESPONDENT Neutral citation: Louistef v Snyders NO [2016] ZASCA 182 (29 November 2016) Coram: Lewis, Pillay, Zondi and Mocumie JJA and Fourie AJA Heard: 14 November 2016 Delivered: 29 November 2016 Summary: Petroleum Products Act 120 of 1977: sale of site licence issued in terms of s 2D of the Act: whether site licence constituted a merchantable merx: held to be a valid agreement of sale. ________________________________________________________________ ORDER _______________________________________________________________ On appeal from: Gauteng Division of the High Court of South Africa, Pretoria (Janse van Nieuwenhuizen 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 the following substituted therefor: ‘(a) The application is dismissed with costs. (b) The counter-application succeeds with costs. (c) It is declared that the agreement of 26 March 2014 was legally and validly concluded between the applicant and the first respondent and is not null and void. (d) The applicant is ordered to pay the first respondent the amount of R1 million plus R140 000 VAT against delivery of a valid tax invoice.’ _________________________________________________________________ JUDGMENT _________________________________________________________________ Fourie AJA (Lewis, Pillay, Zondi and Mocumie JJA concurring): [1] This appeal concerns the validity of a written agreement of sale (the agreement) in terms of which the appellant, Louistef (Pty) Ltd (Louistef), sold a site licence issued to it in terms of the provisions of the Petroleum Products Act 120 of 1977 (the Act), to the respondent, the Louis Snyders Familie Trust (the trust), for a purchase consideration of R1 million. [2] The trust subsequently took the view that the agreement was invalid and unenforceable and launched application proceedings in the Gauteng Division of the High Court, Pretoria, seeking a declaratory order to that effect. Louistef, on the other hand, maintained that the agreement was valid and binding and as it had complied with all its obligations thereunder, it opposed the application and sought, by means of a counter-application, payment of the purchase price of R1 million. [3] In the event, the matter was heard by Janse van Nieuwenhuizen J, who upheld the trust’s application with costs and granted the declaratory order. The counter-application was dismissed with costs. Louistef now appeals the whole of the judgment and orders of the court a quo, which appeal is with the leave of that court. The second respondent, the Controller of Petroleum Products contemplated in s 3(1) of the Act (the Controller), and the third respondent, MacRobert Incorporated, the former attorneys of the trust, were cited as parties, but they abided the decision of the court a quo and have not participated in this appeal. [4] The background facts giving rise to the litigation are largely common cause: The trust is the registered owner of certain immovable property situated at Brits, North West Province (the site), which Louistef had hired from the trust since 1991. Louistef conducted a Toyota motor vehicle dealership at the site which included, inter alia, a fuel filling station. The lease had been renewed from time to time, finally until 31 May 2014. With effect from 17 March 2006, the Petroleum Products Amendment Act 58 of 2003 (the Amendment Act) introduced a new dispensation regarding the licencing of retail activities concerning petroleum products. The relevant statutory provisions will be discussed in more detail hereunder, but for present purposes it would suffice to record that on 9 October 2008, a ‘site licence’ and a ‘retail licence’ were issued to Louistef in terms of the Act, as amended, authorising it to retail prescribed petroleum products at the site. Louistef continued to conduct the business of a filling station at the site under the new dispensation until 15 May 2014. [5] During November 2013, MacRobert Incorporated, on behalf of the trust, commenced negotiations with Louistef with a view to obtaining the transfer of the site licence held by Louistef, to enable the trust to apply for a retail licence authorising it to conduct the business of a filling station at the site. These negotiations culminated in the conclusion of the agreement on 26 March 2014, which provided for the sale of Louistef’s site licence to the trust for a purchase price of R1 million. Louistef took the necessary steps to effect the transfer of the site licence, with the result that, on 14 May 2014, the Controller issued a site licence in the name of the trust. When Louistef ceased to conduct the business of a filling station at the site on 15 May 2014, the trust set in motion the process to acquire a retail licence to enable it or its nominee to retail petroleum products at the site. However, on 26 June 2014, the trust’s present attorneys addressed a letter to Louistef stating that the agreement was ‘invalid and unlawful’. The letter recorded that the trust objected to the payment of the agreed purchase price which had by then been deposited into the trust account of MacRobert Incorporated. [6] It is rather difficult to discern the trust’s cause of action from the affidavits filed and the submissions made on its behalf. Shorn of unnecessary verbiage, it appears that its case was based on common mistake, namely that both of the parties mistakenly believed that the res vendita, ie the site licence, constituted a merchantable merx, whilst this was not the case. This mistake rendered the agreement impossible of performance, with the result that it was void ab initio. [7] In adjudicating upon the validity of the agreement, it is necessary to first have regard to the relevant provisions of the Act, as amended. The Act initially did not, apart from price regulation, prescribe any method of control over the retailing of petroleum products in South Africa. However, the amended Act now provides for, inter alia, the issuing of licences by the Controller to persons involved in the manufacturing and sale of certain prescribed petroleum products. ‘Regulations Regarding Petroleum Products Site and Retail Licences, GN R286, GG 28665, 27 March 2006’ (the regulations) were simultaneously promulgated under the Act, prescribing, inter alia, the procedures to be followed for the obtaining of licences. Of particular importance in this appeal are the newly created categories of a ‘site licence’ and a ‘retail licence’. [8] Section 1 of the Act defines a ‘site’ as ‘premises on land zoned and approved by a competent authority for the retailing of prescribed petroleum products’. A ‘site licence’ is not defined in the Act, but the regulations define it as ‘a licence issued to a person who holds land or has permission from the owner of the land to develop a site for the purpose of retailing petroleum products’. A retail licence in terms of the Act is defined as a licence to conduct the business of a retailer, namely, the sale of petroleum products to an end-consumer at a site. It is important to note that a site licence and a retail licence are interlinked – a site licence application may only be accepted by the Controller where a corresponding valid retail licence application has been lodged for that site (regulations 5(1) and 15(4)), and a site licence remains valid for so long as there is a corresponding valid retail licence and the licenced activity (a filling station in this instance) remains a going concern (s 2B(3)(b) and (c) of the Act, read with regulation 30(1)(c)). [9] Any person who wishes to apply for a site licence has to do so in terms of s 2A(4) of the Act, read with regulation 13(1). Such a person has to be the owner of the relevant land or someone who has the written permission of the owner of the land. A person who wishes to apply for a retail licence, in terms of s 2A of the Act, read with regulation 15, has to be the owner of the business concerned. [10] Section 2D of the Act, however, contains transitional licencing provisions which provide that any person who, at the time of the commencement of the Amendment Act holds and is in the process of developing a site or retails prescribed petroleum products, shall be deemed to be the holder of a licence for that activity, on condition that an application is made within six months for a site or retail licence, as the case may be. Section 2D(1) provides that, for purposes of this section, ‘hold’ means to own or lease land. As recorded above, Louistef as the lessee who had been conducting the business of a filling station at the site, made application for the necessary site and retail licences in terms of s 2D of the Act and both licences were issued to it on 9 October 2008. Therefore, at the time of the conclusion of the agreement, Louistef was the lawful holder of a site licence in respect of the site, as well as a retail licence entitling it to conduct the business of a filling station at the site. [11] There is a significant difference between the requirements that an applicant has to meet when applying for a site licence in terms of s 2A of the Act, and those that govern the application for a site licence in terms of the transitional provisions of s 2D of the Act. In the case of the former, more onerous requirements are prescribed by the regulations, including, inter alia, the following: (a) The submission of an environmental management plan and proof that financial provision has been made for the rehabilitation of the site upon cessation of the retailing activities (regulations 14(b)(i) and (ii)). (b) The obtaining of a record of decision of the environmental authorities permitting retailing operations on the site (regulation 13(1)(d)(ii)). (c) Proof that proper notice by way of publication was given for public participation purposes (regulation 4). (d) Proof that there is a need for the site and that the site will promote the licensing objectives stipulated in s 2B(2) of the Act. These include objectives such as promoting an efficient petroleum industry, facilitating an environment conducive to efficient and commercially justifiable investment, creating employment opportunities, ensuring countrywide availability of petroleum products at competitive prices and promoting access to affordable petroleum products by low-income consumers. [12] On the other hand, the requirements for a site licence under the transitional licencing provisions of s 2D of the Act, are substantially less. The mere production of formal documentation such as the relevant lease agreement and documents of identification, as well as declarations regarding the retailing operations conducted on the site, are required (regulation 13(2)). [13] The regulations also deal with the transfer of licences. Regulation 22(7) states that a retail licence is not transferable. A site licence, however, is freely transferable and regulation 12 deals, inter alia, with the transfer of a site licence which had been issued in terms of s 2D of the Act. As recorded above, this is the section of the Act in terms of which the site licence was issued to Louistef on 9 October 2008. Regulation 12(3)(a) requires the lodging of an application for transfer of a s 2D site licence within six months ‘of change of ownership or lease’. In such event the site licence has to be transferred to the new owner or new lessee, as the case may be. [14] What is envisaged by regulation 12, read with regulation 15(4), is the continuation of the licenced retail activity at the site pending the transfer of the site licence within six months of the new owner or lessee taking ownership or possession of the site. For the site licence to be transferred it obviously has to be extant. Had the agreement providing for the transfer of Louistef’s site licence to the trust not been concluded, the site licence would have expired upon the termination of Louistef’s lease or any earlier termination of the filling station business. In such event the trust would have been obliged to apply de novo for a site licence in terms of s 2A of the Act. The trust would then have been obliged to comply with the more onerous requirements referred to in para 11 above. As pointed out by Louistef, this would not only have been the more onerous route to take, but the trust would then also run the risk of its application being refused. [15] Counsel for the trust submitted that the site licence did not constitute a merchantable merx as it only creates legal rights in favour of a land owner. Therefore, the submission continued, a site licence is inseparable from the land and as the trust was at all relevant times the owner of the site, Louistef derived no legal rights from its site licence. In view of this, the site licence could not have constituted a valid res vendita for purposes of the agreement of sale, thereby rendering the agreement void ab initio. [16] There is no merit in this submission. It is clear from the above provisions of the Act that the site licence confers a personal right upon the holder thereof which entitles the holder to enter the site and to prepare it for the purpose of retailing petroleum products at the site, upon the granting of a retail licence. There is certainly no room for the conclusion that the site licence confers rights upon the land owner only and not the holder of the licence. The granting of a site licence constitutes a delectus personae whereby the applicant for the licence is personally granted the right to exploit the site for the purpose of retailing petroleum products upon the granting of a retail licence. [17] A site licence bears a close similarity to a liquor licence as to which this court said in Aquatur (Pty) Ltd v Sacks & others 1989 (1) SA 56 (A) at 64H-I: ‘A liquor licence, it has been stated in decisions of this court, is a purely personal statutory privilege granted to a particular person under the liquor laws to sell liquor at particular premises. Its grant involves the exercise by the licencing authorities of a delectus personae so that the licensee cannot transfer or otherwise deal with the licence unless authorised thereto in terms of the Act, which provides for the strict supervision of the grant, transfer and removal of licences.’ [18] Louistef as the licensee was the person to whom the privileges attaching to the site licence had been granted. The site licence had a commercial value, not only to Louistef, but also to the trust, particularly as the transfer thereof resulted in the trust not having to follow the more onerous and risky route of an application for a site licence in terms of s 2A of the Act. Therefore the site licence constituted a merchantable merx, which is described in G Glover Kerr’s Law of Sale and Lease 4 ed (2014) at 36 as: ‘The thing [merx] may be movable or immovable, corporeal or incorporeal. It must be capable of being the subject matter of a private legal transaction (in other words, it must not be a res extra commercium).’ [19] It follows, in my view, that the site licence was an asset of Louistef, which it could sell and transfer with the consent of the Controller. In this regard too it is apposite to compare it with a liquor licence, of which the following remarks of Van Zyl JP (Jones J concurring) in Solomon v Registrar of Deeds 1944 CPD 319 at 325, were approved by this court in Slims (Pty) Ltd & another v Morris NO 1988 (1) SA 715 (A) at 724J-725A and 737E-G: ‘[A] liquor licence is not merely a privilege but is a right which has a potential commercial value which may sometimes be very considerable. And it is a right which is alienable and can be sold.’ [20] In Shoprite Checkers (Pty) Ltd v MEC for Economic Development, Eastern Cape & others [2015] ZACC 23; 2015 (6) SA 125 (CC), the main judgment of the court held that a grocer’s wine licence is ‘property’ for purposes of s 25(1) of the Constitution. Madlanga J (albeit in a judgment dissenting on a different issue) put it as follows (para 143): ‘By comparison, the grocer’s wine licence is something in hand: it grants the holder an entitlement to sell wine under certain specified circumstances . . . also, a grocer’s wine licence holds objective commercial value: its very raison d’être is to trade in accordance with its conditions. The licence is transferable, albeit subject to that being sanctioned by the authorities. As an item with objective economic value, the transfer may even be for a valuable consideration . . . All these point to the grocer’s wine licence being property for purposes of s 25(1).’ In my view, the same holds true mutatis mutandis for a site licence issued under the Act. [21] For all the above reasons, and particularly in view of the finding that the site licence constituted a merchantable merx, it follows that the parties did not labour under any mistake at the time of the conclusion of the agreement. The agreement is accordingly valid and enforceable. Therefore, the appeal should succeed. [22] In the result, the following order is made: The appeal is upheld with costs. The order of the court a quo is set aside and the following substituted therefor: ‘(a) The application is dismissed with costs. (b) The counter-application succeeds with costs. (c) It is declared that the agreement of 26 March 2014 was legally and validly concluded between the applicant and the first respondent and is not null and void. (d) The applicant is ordered to pay the first respondent the amount of R1 million plus R140 000 VAT against delivery of a valid tax invoice.’ _____________________ P B Fourie Acting Judge of Appeal APPEARANCES: Counsel for Appellant: J H Dreyer SC Instructed by: Coetzer and Partners, Pretoria Hill McHardy & Herbst Inc, Bloemfontein Counsel for First and Second Respondents: B G Savvas Instructed by: Venn & Muller Attorneys, Pretoria J L Jordaan Attorneys, Bloemfontein	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 November 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Louistef v Snyders NO [2016] ZASCA 182 (29 November 2016) The Supreme Court of Appeal (SCA) today upheld an appeal regarding the sale of a site licence issued in terms of the Petroleum Products Act 120 of 1977. The high court held that the site licence did not constitute an item which could be the subject matter of an agreement of sale. The SCA, however, held that the site licence constituted a merchantable item which could be sold and accordingly held that the agreement of sale was valid and enforceable.
2415	non-electoral	2013	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 297/12 In the matter between: EUGENE BERNHARD DE KLERK FIRST APPELLANT TANYA DE KLERK SECOND APPELLANT And STEVEN-LEE PROPERTIES (PTY) LTD FIRST RESPONDENT THE REGISTRAR OF DEEDS SECOND RESPONDENT Neutral citation: De Klerk v Steven-Lee Properties (297/12) [2013] ZASCA 54 (04 April 2013) Coram: Mthiyane DP, Brand, Lewis JJA, Van der Merwe, Saldulker AJJA Heard: 15 March 2013 Delivered: 04 April 2013 Summary: Whether clause in an agreement for the sale of immovable property creates a suspensive condition- Tacit term- proper formulation- Local authority. __________________________________________________________________ ORDER _______________________________________________________________________________________ On appeal from: Appeal from South Gauteng High Court, Johannesburg (Maluleke J): The appeal is dismissed with costs. JUDGMENT SALDULKER AJA (Mthiyane DP, Brand, Lewis JJA, Van der Merwe AJA concurring): [1] At the heart of this dispute is the interpretation to be placed on clause 15.1 of two identical sale agreements entered into by the appellants and the first respondent in respect of two properties, situated within a development (the development) in the municipal jurisdiction of Vanderbijlpark which in turn forms part of the Emfuleni Local Municipality (the municipality). The development is within the Vaal River Barrage area as defined in the Vaal River Guide Plan. [2] This appeal, with the leave of the court below, is against the judgment by Maluleke J in the South Gauteng High Court. In the court below the appellants sought an order declaring that clause 15.1 of the sale agreements created a true suspensive condition and that the non-fulfilment thereof had rendered the sale agreements unenforceable. In the alternative they claimed that the appellants were as a result of the non-performance entitled to, and in fact had lawfully cancelled the two sale agreements. The relief sought was the re-transfer of the properties to the first respondent against payment or refund of the purchase prices and interest thereon to the appellants. Maluleke J dismissed the application with costs. [3] I turn to consider the facts giving rise to this appeal. During March 2007, the appellants and the first respondent entered into two sale agreements for the purchase of the two properties. Pursuant to the obligations arising from the sale agreements, the immovable properties were registered in the names of the appellants on 31 May 2007 and 8 June 2007. The purchase prices of the two properties were respectively R261 000 and R271 000. [4] The relevant clause 15.1 reads as follows: ‘Clause 15 – Special Conditions 15.1 The DEVELOPER shall make the arrangements to the satisfaction of the appropriate local authority for the provision of essential services to the street border of the property. 15.5 The construction of the dwelling and outbuildings is to be completed prior to occupation and within 24 months from date of registration.’(My emphasis) [5] Prior to the sale of the immovable properties the first respondent applied for approval of the proposed township from both the municipality and Rand Water Board (Rand Water). Both the municipality and Rand Water would have to be satisfied with the proposed sanitation system of the proposed township. Rand Water, which is responsible for ensuring that proper sanitation systems are in place for any new developments to protect the ecosystem of the Vaal River, approved the plans for the proposed sanitation system, subject to the proposed upgrading of existing pump stations and service lines by the municipality. On 16 February 2006, the municipality granted such consent as set out in Annexure C1, and the township was proclaimed on 22 March 2006. Annexure C1 reads as follows: ‘We would hereby like to confirm that all criteria set with regard to the water and sanitation services to the abovementioned development have been met and the clearance for registration can now be issued.’ [6] However, after the establishment of the township, towards the end of 2009, a dispute arose between the municipality and Rand Water, as a result of failures that occurred at the municipality’s pump stations eight and ten. These pumps deal with the effluent waste of the development, and the responsibility for their proper functioning falls under the sphere of the municipality. Rand Water was of the opinion that the upgrade had not been adequate, and formed the opinion that the municipality would not be able to deal with the effluent waste of the development and refused to approve further building until the municipality had upgraded their pump stations. [7] Before us, the appellants contended that the sale agreements contained a suspensive condition in clause 15.1 that the first respondent had to make arrangements to the satisfaction of the appropriate local authority for the provision of essential services to the street border of the properties, and this condition had not been met, alternatively not met timeously. Additionally they contended that the term ‘appropriate local authority’ meant Rand Water. Alternatively, the appellants contended that there was a tacit term of the agreement ‘that the applicants would be entitled to construct dwellings and outbuildings on the properties within a reasonable time from date of registration of the properties into the names of the applicants, alternatively within 24 months from date of registration as envisaged in clause 15.5 of the sale agreement’. [8] The following issues arise in interpreting clause 15.1. Does clause 15.1 create a suspensive condition? Who is the local authority? Does an interpretation of this clause require more from the developer than what it can do? Was clause 15.1 a suspensive condition? [9] The most important characteristic of a condition is that it relates to a future uncertain event. In Design and Planning Service v Kruger,1 Botha J stated as follows: 1 Design and Planning Service v Kruger 1974 (1) SA 689 (T) at 695; Tuckers Land and Development Corporation (Pty) Ltd v Strydom 1984 (1) SA 1 (A) at 10B-G. ‘[I]n the case of a suspensive condition, the operation of the obligations flowing from the contract is suspended, in whole or in part, pending the occurrence or non-occurrence of a particular specified event . . . . A term of the contract, on the other hand, imposes a contractual obligation on a party to act, or to refrain from acting, in a particular manner. A contractual obligation flowing from a term of a contract can be enforced, but no action will lie to compel the performance of a condition.’ [10] The sale agreements were concluded in 2007 and the township was proclaimed in 2006. Whatever conditions there might have been no longer existed at the time of the transfer of the properties into the appellant’s names in 2007. It was a past event. There is also nothing conditional about the formulation of the provisions of clause 15.1. It is simply a term of the agreement which requires the developer to do whatever it can to get the approval from the local authority. There is nothing uncertain about this term, nor is it dependent on the happening of any uncertain future event. It does not say that the seller must comply with the local authority’s obligations, only that it must ‘make arrangements to the satisfaction of the appropriate local authority’. [11] Significantly, in their letter of demand to the first respondent to comply with clause 15.1, the appellants referred to the first respondent as not having complied with two conditions of the sale agreements and that the first respondent had failed ‘to secure the permission of Rand Water to approve residential developments of several stands’. The appellants did not refer to the non-fulfilment of any suspensive condition in the sale agreements. Non-performance [12] The appellants contend that the first respondent failed to make arrangements to the satisfaction of the appropriate local authority (on their version Rand Water) for the provision of essential services to the street border of the property as per clause 15.1. The question is whether the first respondent did in fact do so. In my view, it did. This much is clear from Annexure C1, which the first respondent has provided as proof of its compliance with the obligations set out in clause 15.1. Annexure C1 is a letter from Metsi-a-Lekoa, the Water Services Unit of the municipality confirming that all criteria in regard to the water and sanitation services have been met. The developer clearly made arrangements which satisfied the municipality. The response of the appellants to these averments is to merely deny that the terms of clause 15.1 had been complied with. [13] It makes no difference to suggest, as the appellants do, that Annexure C1, which is dated 16 February 2006, was sent prior to them entering into the agreements for the sale of the properties. Clearly, standard agreements for the conclusion of the sale of the properties were used, at a time when certain conditions of the sale had already been met. Transfer and registration of both properties in the names of the appellants were effected. The contract was performed. Upon transfer of the properties to the appellants the risk in the properties was transferred to the appellants. The registration of the properties into the names of the appellants could not have taken place without the first respondent having made the arrangements as per clause 15.1. [14] In fact, at the time of the registration, the appellants did not complain that clause 15.1 had not been complied with. Furthermore, any interpretation of the word ‘arrangements’ in my view, could never have included a guarantee that the seller would make some ‘future plan’ to provide the services to the appellants. No further contractual obligation rested on the first respondent to ensure that the local municipality complied with its undertakings to upgrade their existing infrastructure. Status of Rand Water [15] According to the appellants the parties intended that the ‘appropriate local authority’ was Rand Water and not the local municipality. For this contention, which they submit was common cause, the appellants sought to rely on two documents: the Services Agreement entered into between the first respondent and the local authority and Annexure C to the Guide Plan. The Services Agreement is an agreement between the first respondent and the municipality in regard to various services, as set out in that agreement, to be rendered for the whole proposed township for the mutual benefit of the relevant parties, which does not include the appellants. Not being a party to the Services Agreement, the appellants cannot in such circumstances rely on the Services Agreement to determine the content of the sale agreements in question. Furthermore, the relevant section 2.2 of the Guide Plan which reads ‘[e]xcept with the written consent of the Rand Water Board no habitable buildings. ..sewage pumping installations or sewage works shall be permitted below the flood control line, as defined’, does not bolster their argument any further. It is clear that the appellants are placing store on documents that they are not party to, and may not have seen, and documents which state what Rand Water will or may not allow in the development. [16] In terms of Chapter 7, s 151 of the Constitution, the local sphere of government consists of municipalities which have the right to govern the local government affairs of their communities in accordance with national and provincial legislation. Water and sanitation fall under local government matters. The municipality is the appropriate local authority. The Rand Water is a statutory public water authority which exercises its authority in terms of s 84 of the Water Services Act 108 of 1997.2 It cannot be regarded as a municipal structure, and is therefore not a local authority. The appellant’s reasoning is therefore flawed. It is clear from Ehlers v Rand Water Board,3 that the function of Rand Water includes environmental protection and the determination of floodlines in the Vaal Barrage Area. It does not qualify as a municipality or a local authority. 2 Rand Water Board v Milner (2003) JOL 10841 (SCA) para 2. 3 Ehlers v Rand Water Board 2006 (3) SA 299 (SCA) paras 7.4 and 7.9 ; Rand Water Board v Rotek Industries (Pty) Ltd 2003 (4) SA 58 (SCA) para 2; See s 84 of the Water Services Act 108 of 1997. [17] It has also been contended by the appellants that even if this court finds that the ‘appropriate local authority’ is the local municipality, there still has not been compliance with clause 15.1 by the first respondent. In this regard the appellants submit that there is an essential difference between what is contained in Annexure C1, the letter of approval from the municipality, and what the first respondent states it has complied with. The first respondent states that it has made arrangements to provide essential services to the street border of the properties. In contrast, the appellants point out that in terms of Annexure C1 the municipality has provided bulk services to the entire development, but has not done so to the individual erven. In my view the appellants have not advanced such a case on these papers. When the first respondent defended its stance that it had in fact made arrangements to the satisfaction of the local authority, and attached Annexure C1, the appellants simply denied this averment without any explanation of the kind now being raised in argument. In their papers, the appellants sought to blame the municipality for failing to upgrade the entire reticulation system, and stated that Annexure C1 confirmed only that water and sewage services were installed to the township. Tacit Term [18] A tacit term is not easily inferred by the courts. It has been contended by the appellants, correlative to clause 15.5, that it was a tacit term of the sale agreements that the appellants would be entitled to construct dwellings and outbuildings on the properties within a reasonable time from date of registration of the properties into the names of the appellants, alternatively within 24 months from date of registration. The difficulty for the appellants is that this so-called ‘tacit term’ that they seek to rely on in their alternative argument has not been formulated in precise or exact terms4 in their founding affidavit. In the absence of an obligation on the part of the first respondent to ensure that Rand Water approves building plans, specifically after registration, no such tacit term can be inferred in the sale agreements. 4 Desai v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) at 522H-523A; Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty)Ltd 2005 (6) SA 1 (SCA) para 51. [19] It is clear that the first respondent cannot be blamed for the municipality’s shortcomings in regard to its sewage system. Rand Water adopted the stance that the dwellings could be constructed only if proper sewage treatment works and a pump station was constructed that would service the properties. It is because of this dispute between Rand Water and the local authority that the appellants who have taken transfer of the properties now bear the risk, and must now deal with Rand Water. [20] The requirement by Rand Water, a statutory body, that the municipality upgrade its infrastructure, and any failure to do so by the municipality, cannot vest a claim for cancellation of the agreement against the first respondent. There is nothing more that the first respondent could do in terms of its obligations as per clause 15.1 of the sale agreements. The first respondent has no authority over the municipality nor over Rand Water. There was no contractual obligation on the first respondent to ensure that consent be granted by Rand Water for the approval of building plans. The first respondent was not in breach of any of its contractual obligations, and therefore no valid cancellations of the sale agreements could follow. [21] In regard to the question of costs of the appeal, the first respondent seeks the costs of two counsel. In the court below, the matter was argued by junior counsel on its behalf. The issues involved were not complicated, nor were any complex legal issues traversed, requiring the services of two counsel. Accordingly costs of two counsel are not warranted. [22] In the result the following order is made: The appeal is dismissed with costs. _____________________ H SALDULKER ACTING JUDGE OF APPEAL APPEARANCES For Appellants : HP Nieuwenhuizen Instructed by: Scholtz & Scholtz Correspondents : Schoeman Maree For First Respondent: M C Erasmus SC with Advocate N C Hartman Instructed by : F Van Wyk Inc Correspondents : TLI INC (Matus Michael Garber)	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: 4 April 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. EUGENE BERNHARD DE KLERK V STEVEN-LEE PROPERTIES (PTY) LTD The Supreme Court of Appeal (SCA) today held, that clause 15.1 in two identical sale agreements concluded between the appellants and the first respondent in 2007, in respect of two properties situated within a development in the municipal jurisdiction of Vanderbijlpark, which in turn forms part of the Emfuleni Local Municipality, did not create a suspensive condition. At the heart of the dispute between the parties was the interpretation to be placed on clause 15.1 which read as follows: ‘The developer (the first respondent) shall make the arrangements to the satisfaction of the appropriate local authority for the provision of essential services to the street border of the property. Prior to the sale of the properties, the first respondent applied for the approval of the proposed township from both the municipality and Rand Water Board. Rand Water, approved the plans for the proposed sanitation system , subject to the proposed upgrading of existing pump stations and service lines by the municipality. On 16 February 2006, the municipality granted such consent, stating that all criteria with regard to the water and sanitation services to the development had been met. The township was proclaimed in March 2006. During March 2007, pursuant to the obligations arising from the sale agreements, the immovable properties were registered in the names of the appellants. However, towards the end of 2009, a dispute arose between the municipality and Rand Water as a result of the municipality’s pump stations, eight and ten, which dealt with the effluent waste of the development. Rand Water was of the opinion that the upgrade had not been adequate, and refused to approve further buildings until the municipality had upgraded their pump stations. The Supreme Court of Appeal(SCA) held that whatever conditions there might have been no longer existed at the time of the transfer of the properties into the appellants’ names. Clause 15.1 was not dependant on the happening of any uncertain future event, nor was there anything conditional in its formulation. It was simply a term which required the developer to do whatever it could to get the approval from the local authority, which was the local municipality, and not Rand Water which was a statutory public water authority. The first respondent had provided a letter from the local municipality that all criteria had been met in regards to water and sanitation services, and thus complied with its obligations as set out in clause 15.1. The Supreme Court of Appeal further held that the tacit term that the appellants sought to rely on had not been formulated in precise or exact terms, and in the absence of an obligation on the part of the first respondent to ensure that Rand Water approve building plans , no such tacit term can be inferred in the sale agreements. The requirement by Rand Water , a statutory body, that the municipality upgrade its infrastructure, and any failure to do so by the municipality, cannot vest a claim for cancellation of the agreements. There was nothing more that the first respondent could do in terms of its obligations as per clause 15.1 of the sale agreements. The appeal against the order of the South Gauteng High Court was dismissed with costs.
2867	non-electoral	2012	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case no: 050/2012 In the matter between: THE TRUSTEES FOR THE TIME BEING OF THE CHILDREN’S RESOURCE CENTRE TRUST First Appellant THE TRUSTEES FOR THE TIME BEING OF THE BLACK SASH TRUST Second Appellant CONGESS OF SOUTH AFRICAN TRADE UNIONS Third Appellant NATIONAL CONSUMER FORUM Fourth Appellant TASNEEM BASSIER Fifth Appellant BRIAN MPAHLELE Sixth Appellant TREVOR RONALD GEORGE BENJAMIN Seventh Appellant NOMTHANDAZO MVANA Eighth Appellant FARIED ALBERTUS Ninth Appellant and PIONEER FOOD (PTY) LTD First Respondent TIGER CONSUMER BRANDS LTD Second Respondent PREMIER FOODS LTD Third Respondent LEGAL RESOURCES CENTRE Amicus Curiae Neutral citation: Children’s Resource Centre Trust v Pioneer Food (50/2012) [2012] ZASCA 182 (29 November 2012) Coram: NUGENT, PONNAN, MALAN, TSHIQI et WALLIS JJA. Heard: 7 November 2012 Delivered: 29 November 2012 Summary: Class action – when permissible – requirements for commencement of class action – cartel in bread industry fixing bread price – entitlement of non-governmental community organisations and individual consumers to institute action on behalf of all consumers – requirements in regard to cause of action and representation – definition of class – cause of action raising a triable issue – common issue – representation. ORDER On appeal from: Western Cape High Court, Cape Town (Van Zyl AJ sitting as court of first instance): The appeal against the refusal to certify a class action in respect of the national complaint and the class 2 claimants is dismissed. The appeal against the refusal to certify a class action in respect of the Western Cape complaint and the class 1 claimants is upheld and the application is remitted to the high court for determination in accordance with the principles in this judgment. The order of the high court is set aside and replaced with the following order: (a) If the applicants choose to pursue the application they are granted leave to supplement their papers within two months of this order by delivering supplementary affidavits, to which are annexed a draft set of particulars of claim in respect of their delictual claim against the respondents, embodying such further evidence as they deem meet in amplification of that claim. (b) The respondents are to deliver such further answering affidavits as they deem meet within four weeks of the date for delivery of the affidavits referred to in para (a) of this order. (c) The applicants are afforded two weeks thereafter to deliver their replying affidavits, if any. (d) The costs of the application are reserved. Each party is ordered to pay his, her or its own costs of this appeal. JUDGMENT WALLIS JA (NUGENT, PONNAN, MALAN et TSHIQI JJA concurring) [1] When may a class action be brought and what procedural requirements must be satisfied before it is instituted? These two questions confront this court in litigation arising from an investigation by the Competition Commission (the Commission) into the bread producing industry, initially in the Western Cape, and later in four other provinces in South Africa. In the light of the outcome of that investigation the appellants applied to the Western Cape High Court for the certification of a class action in which they proposed to pursue a claim for damages against the respondents. That application was dismissed and leave to appeal was refused. Such leave was granted on petition to this court. The determination of the appeal requires that we address the two questions I have described. To that end we heard detailed argument in this and a related application over two days and were furnished with copious reference materials. That has assisted in illuminating the path for us in this novel area of procedural law and it is appropriate at the outset to express our gratitude to counsel for their assistance. Background [2] A brief sketch of the Commission‘s investigation and the functioning of the bread market is necessary to provide the setting for the present litigation. In 2006 the respondents,1 to whom I will refer as 1 Pioneer Food (Pty) Ltd, Tiger Consumer Brands Ltd and Premier Foods Ltd. Pioneer, Tiger and Premier respectively, were the three largest bread producers in the Western Cape. At that time and for a considerable period prior to that they, together with Foodcorp,2 were the four largest bread producers in South Africa. In December 2006, the Commission received complaints in relation to the apparently co-ordinated implementation of price increases in the Western Cape, in conjunction with apparently co- ordinated changes in the terms upon which the producers dealt with bread distributors, who supplied the informal sector of the bread market. It then commenced an investigation in relation to the Western Cape in terms of the Competition Act 89 of 1998 (the Act). Premier came forward and disclosed details of anti-competitive conduct in which it had engaged together with the other three bread producers, not only in the Western Cape but also in other parts of the country. It sought and was granted leniency in terms of the Commission‘s corporate leniency policy.3 [3] The disclosures by Premier led to the Commission instituting a further investigation in relation to other parts of the country, which was referred to, somewhat misleadingly, as the national complaint. Tiger entered into a settlement agreement with the Commission in relation to conduct in both the Western Cape and under the national complaint. Foodcorp entered into a similar agreement in relation to the national complaint only. Both settlements were confirmed in orders of the Competition Tribunal (the Tribunal). They involved the payment of administrative penalties of nearly R99 million in the case of Tiger and about R45 million in the case of Foodcorp. The complaints in respect of Pioneer were referred to the Tribunal for adjudication. At the end of a lengthy hearing it was found to have perpetrated anti-competitive conduct 2 Foodcorp (Pty) Ltd. 3 The corporate leniency policy was dealt with recently in the judgment of this court in Agri Wire (Pty) Ltd v The Competition Commissioner [2012] ZASCA 134 (660/2011); [2012] 4 All SA 365 (SCA). in relation to both the Western Cape and the national complaint. Administrative penalties totalling nearly R 196 million were imposed upon it. It appealed against that decision but the matter was resolved before the hearing of the appeal. We were not told the basis for that resolution. [4] The bread producers do not sell bread directly to the public. They determine list prices at a national level. The retail market has three elements. They are the large national supermarket chains, which purchase some 25 to 30 per cent of these bread producers‘ total production, smaller general retailers, and an informal sector that obtains supplies of bread from resellers, who are distributors who purchase bread for onward sale to informal retail outlets. Strictly speaking the resellers are wholesalers not retailers. Each producer‘s list price provides the basis for negotiating the prices at which they supply retailers with bread. With the large national customers these negotiations take place at a national level. With other customers they take place at a regional level, subject to some constraints and a degree of national oversight. The price actually paid by the retailers is determined on the basis of a discount, expressed as a percentage, of the list price. There is no direct control by the bread producers of the prices at which bread is sold in the retail market. [5] The following conduct gave rise to the Commission‘s investigation. On 6 December 2006 the respondents‘ representatives in the Western Cape met and informed one another of the increases in the list price of bread determined by their respective national head offices. A date for implementation of the increases was agreed upon. At the same time it was agreed that discounts afforded to distributors would be restricted to 90 cents per loaf in Paarl and 75 cents per loaf in the Cape Peninsula and that the bread producers would not deal with one another‘s distributors. The effect of this was, indirectly, to fix the price of bread and trading conditions in contravention of ss 4(1)(b)(i) and (ii) of the Act. The national complaint was more diffuse and less clear-cut. It involved agreements in terms of which bakeries were sold by one large bread producer to another, resulting in the purchaser achieving dominance in a particular region; meetings on various occasions and at various places where bread prices in relation to particular areas were discussed or agreed, or the date of increases in bread prices in that region were agreed; and agreements not to poach one another‘s customers. It is apparent from the description of these meetings in the tribunal‘s determination of the Pioneer complaint that these anti-competitive activities were sporadic during a lengthy period; did not always involve all of the bread producers and were frequently restricted to relatively small regions or even specific places.4 Like the Western Cape they involved contraventions of ss 4(1)(b)(i) and (ii) of the Act. The determination by the tribunal that these provisions of the Act were contravened provides the foundation for the claims that are sought to be advanced in the proposed class action. [6] Three of the appellants are NGOs that work among children, the poor and the disadvantaged, of whom there are so many in our society. The fourth, COSATU, is the largest trade union federation in South Africa. The other five are individuals who were consumers of bread in the Western Cape at the time of the conduct that gave rise to the competition complaint. All of these individuals had limited means and would have been adversely affected by any increase in the price of bread. In that 4 The one agreement related to the Vanderbijlpark area alone. The bakery sales related to the Free State and Mpumalanga and did not involve Premier. An agreement in relation to price increases was confined to Gauteng. sense they are typical of many consumers of bread in both the Western Cape and the country as a whole. The proposed class action [7] Mr Solomon, the Centre Coordinator of the Children‘s Resource Centre, deposed to the founding affidavit. He alleged that the respondents‘ unlawful conduct had breached the rights of both bread consumers and bread distributors in the Western Cape, but expressly confined the scope of the application to consumers.5 In regard to the national complaint he accepted that the Western Cape court lacked jurisdiction to deal with it.6 In the result there were no allegations in his affidavit concerning the national complaint, its consequences or the identity of the persons injured by the conduct giving rise to the national complaints. Reverting to the Western Cape he alleged that: ‗Every consumer who bought their products during the period in question suffered damages as a result of the unlawful price fixing and other prohibited practices.‘ Mr Solomon said that the proposed class action was to be brought ‗on behalf of the consumers for compensation and related relief‘. He said that most were not in a position to afford to engage in litigation and that each individual‘s claim was too small to justify litigation as an individual, but that collectively the claims of consumers were ‗for a very large sum of money‘. That is hardly surprising, as he claimed that ‗literally millions of bread consumers in the Western Cape‘ had been affected by the unlawful conduct and that for practical purposes this amounted virtually to the public at large in the Western Cape. 5 The related application, heard at the same time as this case, was brought by a Mr Mukkadam on behalf of distributors. Judgment in that matter will be handed down simultaneously with this judgment. 6 It is irrelevant whether this view was correct. [8] Thus far the proposed action was expressed as one in which the claims of bread consumers against the respondents would be consolidated and dealt with in a single action with the appellants representing the interests of the consumers. However, there was an important shift in emphasis when Mr Solomon came to deal with the relief to be claimed in the action. He said this: ‗The damages which each individual bread consumer suffered are of the nature of things, very small. If a global sum of damages was awarded in respect of the unlawful conduct of the respondents, the cost of distributing to each consumer his or her share of those damages would be prohibitive and not viable. The further problem which would arise would be to establish precisely how much of the respondents‘ bread each individual consumer bought during the period in question. For this reason, in this class action the applicants will seek class relief, in the form of an order which will require the respondents to pay the unlawful overcharge into a trust or trust or similar institutions to be established for the benefit of the bread consumers who suffered damages. This relief was adapted in the appellants‘ heads of argument and is dealt with in para 80 below. [9] Having set out the basis for the proposed action in these terms, Mr Solomon claimed that the conduct of the respondents had infringed the constitutional right of all people in South Africa to sufficient food in terms of s 27(1)(b) of the Constitution. He invoked the section on the basis that it embodied a negative obligation on the respondents not to impair the right of access to sufficient food. His principal purpose in doing so appears to have been to bring the claim squarely within the provisions of s 38(c) of the Constitution that provides for class actions to be brought in respect of infringements of or threats to rights in the Bill of Rights. The reference to the right to sufficient food did not add anything to the cause of action or the contention that the anti-competitive conduct of the respondents had caused damage to consumers of bread and that this gave rise to claims against the respondents for damages. The application in the high court [10] Based on these allegations the appellants applied as a matter of urgency for the issue of a rule nisi calling upon the respondents to show cause against an order; ‗Declaring that all bread consumers in the Western Cape Province (“the consumers”) who were prejudicially affected by bread prices in consequence of the respondents‘ breach of section 4(1)(b)(i) and (ii) of the Competition Act … constitute members of a class.‘ The draft order went on to say that the class would be an ‗opt out‘ class and a declarator was sought that the members of the class would be bound by the judgment in the class action, unless they notified the appellants‘ attorneys that they wished to be excluded as members of the class. The other significant orders sought were a declaration that the appellants, duly assisted by their attorneys, to the extent necessary, had the requisite standing to bring the class action ‗on behalf of the consumers for damages‘ pursuant to the findings of the Commission and the Tribunal and an authorisation for the commencement of the action forthwith without waiting for the return day of the rule nisi. The remaining portions of the proposed rule nisi were largely procedural in nature and dealt with notice to the members of the class, discovery and other matters that depended on the grant of the primary relief. [11] The notice of motion was issued on 18 November 2010 and the application was heard on 23 and 25 November 2010. During the hearing the appellants were granted leave to amend the opening paragraph of the prayer, quoted above, by inserting the words ‗or elsewhere‘ after ‗Western Cape Province‘, presumably with a view to incorporating the national complaint. No additional affidavits were filed. In view of the urgency of the matter only short affidavits were delivered on behalf of the respondents. That procedure was adopted on the footing that the respondents could present their case on the return date. The order dismissing the application was made on 26 November 2010. [12] The result of this is that there is no evidence from the appellants in regard to the composition of the class in respect of the national complaint or the manner in which they propose to conduct that litigation. All we have is the description of the national complaint in the Tribunal‘s determination in relation to Pioneer We do not have full answering affidavits from the respondents in regard to the factual issues in respect of both complaints and the practical issues before the court. There is a further complication because the appellants accepted in their heads of argument that the certification originally sought was deficient. Instead they are now seeking a final order certifying two different classes described as follows: ‗Class 1; All persons who purchased the bread of the first, second or third respondents in the Western Cape Province during the period 18 December 2006 to 6 January 2009. Class 2: All persons who purchased the bread of the first, second or third respondents in Gauteng, Free State, North-West or Mpumalanga Province during the period 1 September 1999 to 6 January 2009‘ In the course of oral argument these orders were further amended by inserting the words ‗for personal consumption‘ after the word ‗respondents‘ in each class. In addition the end date of the period in respect of class 1 was changed to 14 February 2007 and in respect of class 2 to 8 May 2008. [13] We were thus asked to answer entirely novel questions, having potentially far-reaching implications for the respondents and our procedural law, in the absence of a complete set of affidavits and to grant relief different from that sought from the high court. This will not matter if the respondents‘ arguments prevail and we are satisfied that this is not a case that can, on any basis, be permitted to proceed as a class action. In that event the appeal must fail. However, if there is some merit in the appellants‘ application, but it does not satisfy all the requirements we now prescribe for the commencement of a class action, it would be patently unfair to deny them relief on a final basis without affording them the opportunity to address matters that would have been addressed had they been aware of those requirements. On the other hand it would be equally unfair to uphold their appeal and make a final order before the respondents have had an opportunity to present their case fully. It would also be inappropriate for the court to set in train this type of novel litigation without all the relevant facts before it. That must affect the manner in which we dispose of the appeal. The court raised with counsel the possibility of an order remitting the matter to the high court, with leave to file further affidavits and we received submissions on that. Whether that is an appropriate order is a matter to which I will revert after dealing with the merits. First it is necessary to deal with the circumstances in which our law permits a class action to be brought and the requirements for doing so. Class actions [14] South African law is familiar with proceedings in which a number of potential plaintiffs join together in one action to pursue claims against one or more defendants on the basis that the common issues of fact and law in relation to their claims make such a joinder appropriate.7 It is also familiar with the notion of a representative plaintiff, as in the case of an action pursued by a guardian or curator ad litem on behalf of a minor or person under disability. In some at least of those instances the court steps in to appoint the representative because the individual is unable to do so. However, it has not, until recently, recognised an action in which a representative brings proceedings on behalf of a group of persons who have not authorised the representative to act on their behalf. Such actions trace their roots back to the principles of equity in England, were developed in the United States of America and have spread to a number of jurisdictions around the world.8 They are generally referred to as class actions. There is now express provision for class actions in s 38(c) of the Constitution, which provides that: ‗Anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights. The persons who may approach a court are – … (c) anyone acting as a member of, or in the interest of, a group or class of persons.‘ [15] The South African Law Commission, in line with many other jurisdictions to which we have been referred, proposed that the procedures applicable to class actions be prescribed by statute, and to that end prepared a draft bill.9 However, Parliament has not yet acted on its recommendations or those of a judicial commission of enquiry which 7 Uniform Rule 10. In admiralty proceedings it is expressly permitted to bring proceedings under a collective title such as ‗the cargo laden and lately laden on board the MV …‘ (Admiralty Rule 2(3)). 8 World Class Actions: A Guide to Group and Representative Actions around the Globe (ed Paul G Karlsgodt) (Oxford, 2012) lists 38 jurisdictions plus the European Union with some or other form of class action. The majority of these regulate class actions by special legislation or rules of court. 9 South African Law Commission, Project 88, The Recognition of Class Actions and Public Interest Actions in South African Law, August 1998. made a similar recommendation.10 Academic voices over many years have likewise not been heard.11 The utility of a class action in certain circumstances is clear.12 We are thus confronted with a situation where the class action is given express constitutional recognition, but nothing has been done to regulate it. The courts must therefore address the issue in the exercise of their inherent power to protect and regulate their own process and to develop the common law in the interests of justice.13 This may on some occasions involve us, and courts that will follow the guidance we give, in having to devise ad hoc solutions to procedural complexities on a case by case basis – a possibility referred to by the Supreme Court of Canada14 – but the failure to pass appropriate legislation dealing with this topic leaves us little alternative in the face of the constitutional endorsement of class actions. In what follows we will give guidance as to the approach to be adopted in these cases. But first it is necessary to have clarity as to the essential nature of a class action. [16] In class actions the party bringing the action does so, on behalf of the entire class, every member of which is bound by the outcome of the action, so that a separate action by a member of the class after judgment 10 Commission of Enquiry into the Affairs of the Masterbond Group and Investor Protection in South Africa, Vol 3, Chapter 16 by Mr Justice H C Nel. 11 F R Malan ‗Siviele proses, verbruikersbeskerming en kollektiewe optrede‘ 1982 TSAR 1; Wouter de Vos, ‗Reflections on the introduction of a class action in South Africa‘ 1996 (4) TSAR 639 at 642; Wouter de Vos, ‗Is a class action a ―classy act‖ to implement outside the ambit of the Constitution?‘ 2012 TSAR 737. 12 See the history and justification proffered by McLachlin CJC in Western Canadian Shopping Centres Inc v Dutton [2001] SCC 46; 201 DLR (4th) 385 paras 19 – 29. 13 Section 173 of the Constitution. In Ngxuza & others v Permanent Secretary, Department of Welfare, Eastern Cape, and Another 2001 (2) SA 609 (E) Froneman J crafted an order to give effect to a class action that in due course received the approval of this court. Permanent Secretary, Department of Welfare, Eastern Cape & another v Ngxuza & others 2001 (4) SA 1184 (SCA). However, the appeal was argued on narrow grounds so that the general questions facing us were not canvassed in any detail. 14 Hollick v Toronto (City) 2001 SCC 68; [2001] 3 SCR 158; 205 DLR (4th) 19 (SCC) para 14. can be met with a plea of res judicata.15 The concept is most fully defined, by Professor Mulheron,16 in the following terms: ‗A class action is a legal procedure which enables the claims (or parts of the claims) of a number of persons against the same defendant to be determined in the one suit. In a class action, one or more persons (―representative plaintiff‖) may sue on his or her own behalf and on behalf of a number of other persons (―the class‖) who have a claim to a remedy for the same or a similar alleged wrong to that alleged by the representative plaintiff, and who have claims that share questions of law or fact in common with those of the representative plaintiff (―common issues‖). Only the representative plaintiff is a party to the action. The class members are not usually identified as individual parties but are merely described. The class members are bound by the outcome of the litigation on the common issues, whether favourable or adverse to the class, although they do not, for the most part, take any active part in that litigation.‘ [17] The class action serves to bring a number of separate claims together in one proceeding. In other words it permits the aggregation of claims. However, that is not its only function. Of equal or greater importance, as Professor Silver points out,17 is the fact that the class action is ‗a representational device‘. It is: ‗… a procedural device that expands a court‘s jurisdiction, empowering it to enter a judgment that is binding upon everyone with covered claims. This includes claimants who, not being named as parties, would not ordinarily be bound. A class-wide judgment extinguishes the claims of all persons meeting the class definition rather than just those of named parties and persons in privity with them, as normally is the case. Judges and scholars sometimes treat the class action as a procedure for joining absent claimants to a lawsuit rather than as one that permits a court to treat a named party as 15 A separate action instituted during the pendency of the class action could be met with a plea of lis pendens. 16 Professor Rachael Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective 3. 17 Charles Silver ‗Class Actions – Representative Proceedings‘ 5 Encyclopedia of Law and Economics 194. standing in judgment on behalf of them. This is a mistake … Class members neither start out as parties nor become parties when a class is certified.‘18 [18] Recognition of the representative nature of a class action has important implications for determining the requirements for such actions. If the action is representative it is essential to identify, not necessarily by name but by description, those who are being represented. As it is their rights that are to be adjudicated upon, they must either be given the opportunity to be excluded from the class (to opt out) or they must be required to join the class (to opt in). It is also necessary to identify the representative and to determine both their suitability to act as such and the basis upon which they will do so. The element of aggregation of claims dictates that the claims brought together in the action, whilst not necessarily identical, should raise common issues of fact or law, the resolution of which will serve to resolve or enable the resolution of all claims. When may class actions be brought in South Africa? [19] The Constitution, in s 38(c), recognises a class action specifically in relation to infringements of or threats to rights guaranteed in the Bill of Rights. That caused the appellants in this case to invoke s 27(1)(b) of the Constitution. However, that was unnecessary. The class of people on whose behalf the appellants seek to pursue claims, (leaving aside for the present the definition of that class), is both large and in general poor. Any claims they may have against the respondents are not large enough to warrant their being pursued separately, so that it is improbable that any lawyers would be willing to act for them on a contingency fee basis. If those claims cannot be pursued by way of a class action, they are not 18 See also Debra Lyn Bassett ‗Constructing Class Action Reality‘ 2006 Brigham Young University Law Review 1415 at 1417-8. capable of being pursued at all. The effect of that is to engage the right of access to courts vested in each of the members of the class by s 34 of the Constitution. The threatened infringement of that right may be challenged by way of a class action and the appropriate remedy is to permit a class action in respect of the underlying claims. It was accordingly unnecessary to seek in s 27(1)(b)an alternative peg on which to hang the entitlement to proceed by way of a class action. The right to proceed in that way was clear, subject to satisfying the other requirements for such an action.19 [20] Similar circumstances will be present in many other potential class actions and the entitlement to proceed by way of a class action will be clear. However, one can envisage circumstances in which parties may wish to bring a class action, but are unable to contend that, if they are not able to do so, their s 34 rights will be infringed. For example, the families of passengers, killed when an aeroplane on an international flight crashes, may be able to pursue litigation in their own interests and be unable to point to a right in terms of the Bill of Rights that is infringed or threatened as a result of the death of their family members. Similarly, mortgagors, who contend that the financial institution from which they have borrowed money has miscalculated the interest on their loans and added impermissible charges, may be in a position to sue in a suitable court to ventilate their claims. However, in both instances a class action may be the most appropriate means for determining their claims. [21] In my judgment it would be irrational for the court to sanction a class action in cases where a constitutional right is invoked,20 but to deny 19 This approach largely accords with that advanced by the Legal Resources Centre, which was admitted as amicus curiae. 20 As was done in Permanent Secretary, Department of Welfare, Eastern Cape & another v Ngxuza and Others 2001 (4) SA 1184 (SCA). it in equally appropriate circumstances, merely because of the claimants‘ inability to point to the infringement of a right protected under the Bill of Rights. The procedural requirements that will be determined in relation to the one type of case can equally easily be applied in the other. Class actions are a particularly appropriate way in which to vindicate some types of constitutional rights, but they are equally useful in the context of mass personal injury cases or consumer litigation. I accordingly reject the suggestion advanced in some of the academic writing, and in some of the heads of argument, that we should await legislative action before determining the requirements for instituting a class action in our law. The legislature will be free to make its own determination when it turns its attention to this matter and in doing so it may adopt an approach different from ours. In the meantime the courts must prescribe appropriate procedures to enable litigants to pursue claims by this means. [22] Having said that, it is right to enter one caveat. It is that, within the limited ambit of a class action as described earlier in this judgment, we are only concerned to determine the broad parameters within which class actions may be pursued and to lay down procedural requirements that must be satisfied in order to do so. Where necessary we must develop the common law in order to achieve this, for example, by expanding the scope of the res judicata principle. But, as the international literature shows, fundamental issues of policy may arise in determining the structure of such actions and their consequences. The resolution of those issues involves difficult policy choices that have received differing answers in different jurisdictions. It is not for us, in laying down procedural requirements, to make policy choices that may impinge upon, or even remove, existing rights. That would be to trespass upon the domain of the legislature, which the doctrine of the separation of powers – fundamental to our constitutional order – does not permit us to do. Against that background I turn to address the question of the requirements for pursuing a class action in South Africa. Requirements for a class action Certification [23] All of the parties accepted that it is desirable in class actions for the court to be asked at the outset, and before issue of summons, to certify the action as a class action. This involves the definition of the class; the identification of some common claim or issue that can be determined by way of a class action; some evidence of the existence of a valid cause of action; the court being satisfied that the representative is suitable to represent the members of the class; and the court being satisfied that a class action is the most appropriate procedure to adopt for the adjudication of the underlying claims. In my view they were correct to do so and we should lay it down as a requirement for a class action that the party seeking to represent the class should first apply to court for authority to do so.21 My reasons for adopting that requirement are the following. [24] Most jurisdictions around the world require certification either before institution of the class action or at an early stage of the proceedings. The exception is Australia. The justifications are various. First, in the absence of certification, the representative has no right to proceed, unlike litigation brought in a person‘s own interests. Second, in 21 In Ngxuza and Others v Permanent Secretary, Department of Welfare, Eastern Cape & another supra 624D-E Froneman J suggested that ‗the possibility of unjustified litigation can be curtailed by making it a procedural requirement that leave must be sought from the High Court to proceed on a representative basis prior to actually embarking on that road‘. In Firstrand Bank Ltd v Chaucer Publications (Pty) Ltd 2008 (2) SA 592 (C) para 26 Traverso DJP said that this suggestion should be followed in the future, which no doubt explains the applications in the two cases that served before us. view of the potential impact of the litigation on the rights of others it is necessary for the court to ensure at the outset that those interests are properly protected and represented. Third, certification enables the defendant to show at an early stage why the action should not proceed. This is important in circumstances where the mere threat of lengthy and costly litigation22 may be used to induce a settlement even though the case lacks merit.23 Fourth, certification enables the court to oversee the procedural aspects of the litigation, such as notice and discovery, from the outset. Fifth, the literature on class actions suggests that, if the issues surrounding class actions, such as the definition of the class, the existence of a prima facie case, the commonality of issues and the appropriateness of the representative are dealt with and disposed of at the certification stage, it facilitates the conduct of the litigation, eliminates the need for interlocutory procedures and may hasten settlement. Lastly the Australian experience has not proved entirely satisfactory, with numerous interlocutory applications and significant costs and delays being experienced.24 [25] Accordingly in my judgment an application for certification of the proposed action as a class action was necessary in the present case. As the dismissal of the application finally disposed of the question whether the appellants could institute such an action on behalf of the proposed class, it was appealable.25 It is unnecessary for present purposes to determine whether the grant of certification would be subject to an appeal or whether it is a decision capable of alteration by the court of first instance 22 In Tiemstra v Insurance Corp of BC (1996) 22 BCLR (3d) 49 (SC) para 20 Esson CJSC said ‗class actions have the potential for becoming monsters of complexity and cost‘. 23 Milton Handler 25 Years of Antitrust 864-5 (1973) wrote: ‗Any device which is workable only because it utilises the threat of unmanageable and expensive litigation to compel settlement is not a rule of procedure – it is a form of legalised blackmail.‘ 24 Mulheron, op cit (fn 13), 23-29. SA Law Commission Report, fn 9 ante, para 5.5. 25 Zweni v Minister of Law and Order 1993 (1) SA 523 (A) 532I–533B. and therefore not appealable. I turn next to consider the requirements for a certification application. [26] In the course of argument the presiding judge put to counsel the following list of the elements that should guide a court in making a certification decision. They were: the existence of a class identifiable by objective criteria; a cause of action raising a triable issue; that the right to relief depends upon the determination of issues of fact, or law, or both, common to all members of the class; that the relief sought, or damages claimed, flow from the cause of action and are ascertainable and capable of determination; that where the claim is for damages there is an appropriate procedure for allocating the damages to the members of the class; that the proposed representative is suitable to be permitted to conduct the action and represent the class; whether given the composition of the class and the nature of the proposed action a class action is the most appropriate means of determining the claims of class members. There is an element of overlapping in these requirements. For example, the composition of the class cannot be determined without considering the nature of the claim. The fact that there are issues common to a number of potential claimants may dictate that a class action is the most appropriate manner in which to proceed, but that is not necessarily the case. A class action may be certified in respect of limited issues, for example, negligence in a mass personal injuries claim, leaving issues personal to the members of the class, such as damages, to be resolved separately. [27] This list corresponds substantially with the factors identified by the Law Commission as the requirements for certification.26 It also overlaps with what Cameron JA said were ‗the quintessential elements of a class action‘, in dealing with a contention that a class had been inadequately described, namely ‗… that (1) the class is so numerous that joinder of all its members is impracticable; (2) there are questions of law and fact common to the class; (3) the claims of the applicants representing the class are typical of the claims of the rest; and (4) the applicants through their legal representatives, the Legal Resources Centre, will fairly and adequately protect the interests of the class.‘27 Similar requirements are prescribed in Federal Rule 23(a) of the Federal Rules of Civil Procedure in the United States of America, namely that the class is so numerous that joinder of all its members is impracticable; that there are questions of law or fact that are common to the class; that the claims of the representative parties are typical of the claims of the class; and that the representative parties will fairly and adequately represent the interests of the class. These requirements are referred to as numerosity, commonality, typicality and adequate representation.28 Similar requirements are to be found in other jurisdictions.29 [28] Counsel did not dispute that these were the issues that require to be addressed in an application for the certification of a class action and directed their arguments at certain of them, primarily the definition of the class; the nature and existence of the cause of action being advanced; the commonality of the claims of members of the class; and the 26 Law Commission Report, ante, para 5.6, pp 41-50 and recommendation 11. 27 Permanent Secretary, Department of Welfare, Eastern Cape & another v Ngxuza & others 2001 (4) SA 1184 (SCA) para 16. 28 Wal-Mart Stores, Inc, Petitioner v Betty Dukes et al 131 S Ct 2541 at 2550. 29 See Mulheron ante and Karlsgodt ante. appropriateness of the relief being sought. Without excluding the possibility of there being other issues that require consideration, it suffices for our purposes to say that a court faced with an application for certification of a class action must consider the factors set out in the list in para 26 and be satisfied that they are present before granting certification. I now address in greater detail some of these factors that are of particular relevance for this case. Class definition [29] In defining the class it is not necessary to identify all the members of the class. Indeed, if that were possible, there would be a question whether a class action was necessary, as joinder under Uniform Rule 10 would be permissible. It is, however, necessary that the class be defined with sufficient precision that a particular individual‘s membership can be objectively determined by examining their situation in the light of the class definition. It is important to be able to do this for three reasons. First, it affects the manner in which notice is given to the members of the class. In the conventional situation of an ‗opt out‘ class the entitlement to opt out is negated if people cannot ascertain with reasonable certainty whether they are members of the class in the first place. Second, it is necessary for people to know whether they can commence their own litigation against the defendant or defendants in the class action. Third, it is essential to the identification of those who are bound by the judgment.30 [30] Two problems with class definition that arise in this case are over- inclusive definition and definition by subjective criteria. Where the class 30 Bywater v Toronto Transit Commission (1998) 27 CPC (4th) 172 (Ont. Gen. Div.); [1998] OJ No 4913 (Ont Gen Div); 2038724 Ontario Ltd v Quizno’s Canadian Restaurant Corp (2008) 89 OR (3d) 252 (SCJ). suffers from these problems it impacts upon other elements relevant to the certification decision. Thus if the class is too wide, as in an Australian case31 where the original pleaded case included ‗every man, woman and child who has been in this country between 1992 and 1999‘, the litigation will be unmanageable because of the need to take the personal circumstances of every person in the class into account. That indicates that a class action is inappropriate. [31] An over-inclusive class also raises the question whether there are common issues of fact or law that can conveniently be resolved in the class action in the interests of all members of the class. The broader the class the less likely it will be that there is the requisite commonality. This was one of the reasons for the majority refusing certification in Wal-Mart Stores, Inc, Petitioner v Betty Dukes et al, the most recent decision of the United States Supreme Court on class actions. The claim for certification was denied because the statistical evidence of systemic discrimination against the 1.5 million members of the class, consisting of women employees from 1998 until the commencement of the litigation, scattered across 3 400 stores employing 1 million people in 50 states (in respect of 14 of which there was no anecdotal evidence of discrimination at all), was held to be inadequate. The sheer size of the class, the disparate circumstances of its members and the fact that policy for dealing with staffing issues was formulated by individual store managers, excluded the existence of a common issue and precluded certification.32 That did not 31 Bray v Hoffman-La Roche Ltd [2003] FCA 1505. 32 The minority dissented on the commonality issue but concurred on another issue leading to the same result. In Canada the class was held to be over inclusive in a claim for compensation for wrongful dismissal where it was defined as including persons dismissed for just cause (Webb v K-Mart Canada Ltd (1999), 45 O.R. (3d) 389 (Ont S.C.J.)). An amendment to the class definition remedied the problem. Certification of a class action, in a claim against a school that it misrepresented the quality of its education and thereby prejudiced its graduates in seeking employment, was refused on the basis that the class included students who had found work after graduation without problems. (Mouhteros v DeVry Canada Inc (1998), 41 O.R. (3d) 63 (Ont. Gen. Div.). mean that some, even many, of the members of the class may not have been the victims of discrimination. It meant only that the claim of systemic discrimination, essential to the existence of a common issue for determination in the class action, was insufficiently demonstrated. [32] The problem of certifying a class on the basis of subjective factors is particularly manifest when the definition makes membership of the class dependent upon the outcome of the litigation, for example, because it is dependent upon the class member having suffered loss, or dependent upon the ability of the defendant to raise defences to some claims and not others. The point is illustrated by the case of Emerald Supplies Ltd & another v British Airways PLC.33 The claimant claimed that British Airways participated in illegal price fixing cartels operating in the area of air freight charges. It sought redress for itself and all consumers of international air freight services. The members of the class were those persons who were direct or indirect purchasers of such services at prices inflated artificially by the activities of the price fixing cartels. Three different types of loss were identified as having potentially been suffered by members of the class. Whether they had in fact suffered such loss depended on the individual user and it was accepted that loss would have to be proved individually. The claim was for a declaration that British Airways was liable ‗in principle‘ to class members for the three different forms of loss. [33] The problem was that, until it had been established that the price fixing cartels existed; that British Airways participated in them; and that prices were artificially inflated thereby, it was impossible to identify any member of the class. In addition, as the class included both direct and 33 Emerald Supplies Ltd & another v British Airways PLC [2010] EWCA Civ 1284. indirect purchasers of such services, whether any particular purchaser had suffered loss depended on whether the overcharge had been absorbed by the direct purchaser in fixing its prices or passed on to an indirect purchaser by way of a price enhancement. In a judgment by Mummery LJ the entitlement to pursue the action as a representative action was rejected. He said the following: ‗Judgment in the action for a declaration would have to be obtained before it could be said of any person that they would qualify as someone entitled to damages against BA. The proceedings could not accurately be described or regarded as a representative action until the question of liability had been tried and a judgment on liability given. It defies logic and common sense to treat as representative an action, if the issue of liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class bound by the judgment.‘34 [34] Any attempt to define a class must take account of these potential pitfalls. The essential question will always be whether the class is sufficiently identified that it is possible to determine at all stages of the proceedings whether a particular person is a member of the class. A cause of action raising a triable issue [35] The appellants accepted that a class action should not be certified if the case is ‗hopeless‘. I am not sure that this constitutes a sufficiently clear standard to be applied on a case by case basis. Whether a case is 34 Para 63. In para 65 he added: ‗In brief, the essential point is that the requirement of identity of interest of the members of the represented class for the proper constitution of the action means that it must be representative at every stage, not just at the end point of judgment. If represented persons are to be bound by a judgment that judgment must have been obtained in proceedings that were properly constituted as a representative action before the judgment was obtained. In this case a judgment on liability has to be obtained before it is known whether the interests of the persons whom the claimants seek to represent are the same. It cannot be right in principle that the case on liability has to be tried and decided before it can be known who is bound by the judgment. Nor can it be right that, with Micawberish optimism, Emerald can embark on and continue proceedings in the hope that in due course it may turn out that its claims are representative of persons with the same interest.‘ Mulheron, ante, 329, fn 39 refers to a body of Canadian authority that highlights the same point. hopeless has two aspects. It is hopeless if it is advanced on a basis that is legally untenable. It is also hopeless if it is advanced in the absence of any credible evidence to support it. These are categories that have long been recognised in our law and practice. A case is legally hopeless if it could be the subject of a successful exception. It is factually hopeless if the evidence available and potentially available after discovery and other steps directed at procuring evidence will not sustain the cause of action on which the claim is based. In other words if there is no prima facie case then it is factually hopeless. [36] In my judgment these are the standards that should be applied in assessing whether a proposed class action reflects a cause of action raising a triable issue. I will deal with each in turn. Causes of action are not in the first instance dependent on questions of law. They require the application of legal principle to a particular factual matrix. The test on exception is whether on all possible readings of the facts no cause of action is made out. It is for the defendant to satisfy the Court that the conclusion of law for which the plaintiff contends cannot be supported upon every interpretation that can be put upon the facts. [37] An issue raised in argument was how this test could be applied in the context of a novel claim. The answer is that, provided the novel claim is legally plausible, the standard is met and the claim survives scrutiny and must be determined in the course of the action. Take a delictual claim based on a novel legal duty not to act negligently.35 The existence of such a duty depends on the facts of the case and a range of policy issues. The need for the court to be fully informed in regard to the policy elements of 35 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 22; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) paras 10 and 11. the enquiry militate against that decision being taken without evidence. As Hefer JA said: 36 ‗As the judgments in the cases referred to earlier demonstrate, conclusions as to the existence of a legal duty in cases for which there is no precedent entail policy decisions and value judgments which ‗shape and, at times, refashion the common law [and] must reflect the wishes, often unspoken, and the perceptions, often dimly discerned, of the people‖ (per M M Corbett in a lecture reported sub nom ―Aspects of the Role of Policy in the Evolution of the Common Law‖ in (1987) SALJ 104 at 67). What is in effect required is that, not merely the interests of the parties inter se, but also the conflicting interests of the community, be carefully weighed and that a balance be struck in accordance with what the Court conceives to be society's notions of what justice demands. (Corbett (op cit at 68); J C van der Walt ―Duty of care: Tendense in die Suid-Afrikaanse en Engelse regspraak‖1993 (56) THRHR at 563-4.) Decisions like these can seldom be taken on a mere handful of allegations in a pleading which only reflects the facts on which one of the contending parties relies. In the passage cited earlier Fleming rightly stressed the interplay of many factors which have to be considered. It is impossible to arrive at a conclusion except upon a consideration of all the circumstances of the case and of every other relevant factor.‘37 [38] That does not mean that certification should not be refused in an appropriate case, where there is no prospect of a trial court, with the benefit of all the evidence that the plaintiff can muster or suggest will be available to it, holding that the claim is legally tenable. Sometimes the test on exception can appropriately be applied in respect of novel legal claims. Harms JA pointed that out in the following passage from his judgment in Telematrix:38 ‗[2] The plaintiff's particulars of claim, with annexures, runs to 158 pages and contains a full exposition of the events surrounding the Directorate's decision. In addition we were provided with the ASA's Code of Advertising Practice and Procedural Guide and the parties, prudently, were content that regard could be had to 36 Minister of Law and Order v Kadir 1995 (1) SA 303 (A) 318E-I. 37 See also Axiam Holdings Ltd v Deloitte & Touche 2006 (1) SA 237 (SCA) para 25. 38 Telematrix, supra, paras 2 and 3. Footnote references omitted. it even though it does not form part of the pleadings. The case does not, therefore, have to be decided on bare allegations only, but on allegations that were fleshed out by means of annexures that tell a story. This assists in assessing whether or not there may be other relevant evidence that can throw light on the issue of wrongfulness. I mention this because, relying on the majority decision in Axiam Holdings Ltd v Deloitte & Touche, the plaintiff argued that it is inappropriate to decide the issue of wrongfulness on exception because the issue is fact-bound. That is not true in all cases. This Court, for one, has on many occasions decided matters of this sort on exception. Three important judgments that spring to mind are Lillicrap, Indac and Kadir. Some public policy considerations can be decided without a detailed factual matrix, which by contrast is essential for deciding negligence and causation. [3] Exceptions should be dealt with sensibly. They provide a useful mechanism to weed out cases without legal merit. An over-technical approach destroys their utility. To borrow the imagery employed by Miller J, the response to an exception should be like a sword that 'cuts through the tissue of which the exception is compounded and exposes its vulnerability'. Dealing with an interpretation issue, he added: ―Nor do I think that the mere notional possibility that evidence of surrounding circumstances may influence the issue should necessarily operate to debar the Court from deciding such issue on exception. There must, I think, be something more than a notional or remote possibility. Usually that something more can be gathered from the pleadings and the facts alleged or admitted therein. There may be a specific allegation in the pleadings showing the relevance of extraneous facts, or there may be allegations from which it may be inferred that further facts affecting interpretation may reasonably possibly exist. A measure of conjecture is undoubtedly both permissible and proper, but the shield should not be allowed to protect the respondent where it is composed entirely of conjectural and speculative hypotheses, lacking any real foundation in the pleadings or in the obvious facts.‖‘ [39] It must be borne in mind that, as a result of the procedure we now lay down, the party seeking certification will have set out in a draft pleading and in affidavits the basis for the proposed action. In so doing the court will probably have more material available to it in regard to the cause of action than would be the case with a normal exception. That will enable the court to make a proper assessment of the legal merits of the claim and, sensitively applied in this new area of law and procedure there should not be a difficulty. Unless it is plain that the claim is not legally tenable, certification should not be refused. The court considering certification must always bear in mind that once certification is granted the representative will have to deliver a summons and particulars of claim and that it will be open to the defendant to take an exception to those particulars of claim. The grant of certification does not in any way foreclose that or answer the question of the claim‘s legal merit in the affirmative. [40] Establishing a prima facie case on the evidence is not a difficult hurdle to cross. In the context of an attachment to found jurisdiction Scott JA set out the test as follows: ‗[12] The requirement of a prima facie case in relation to attachments to found or confirm jurisdiction has over the years been said to be satisfied if an applicant shows that there is evidence which, if accepted, will establish a cause of action and that the mere fact that such evidence is contradicted will not disentitle the applicant to relief — not even if the probabilities are against him; it is only where it is quite clear that the applicant has no action, or cannot succeed, that an attachment should be refused. . Nestadt JA, in the Weissglass case … warned that a court must be careful not to enter into the merits of the case or at this stage to attempt to adjudicate on credibility, probabilities or the prospects of success. [13] … [14] What is clear is that the evidence on which an applicant relies, save in exceptional cases, must consist of allegations of fact as opposed to mere assertions. It is only when the assertion amounts to an inference which may reasonably be drawn from the facts alleged that it can have any relevance. In other words, although some latitude may be allowed, the ordinary principles involved in reasoning by inference cannot simply be ignored. The inquiry in civil cases is, of course, whether the inference sought to be drawn from the facts proved is one which by balancing probabilities is the one which seems to be the more natural or acceptable from several conceivable ones … While there need not be rigid compliance with this standard, the inference sought to be drawn, as I have said, must at least be one which may reasonably be drawn from the facts alleged. If the position were otherwise the requirement of a prima facie case would be rendered all but nugatory …‘ [41] A similar standard is applied in other instances such as the test for the existence of a defence in summary judgment proceedings. There is no reason why it cannot be applied to determine whether the applicant for certification has shown the existence of a cause of action. I would add only this to Scott JA‘s exposition. The test does not preclude the court from looking at the evidence on behalf of the person resisting certification, where that evidence is undisputed or indisputable or where it demonstrates that the factual allegations on behalf of the applicant are false or incapable of being established.39 That is not an invitation to weigh the probabilities at the certification stage. It is merely a recognition that the court should not shut its eyes to unchallenged evidence in deciding a certification application. Properly applied the test for a prima facie case should not pose any insuperable difficulties for an applicant for certification. [42] The appellants accepted in their heads of argument that to obtain certification a prima facie case had to be established. They submitted that the existence of such a case did not involve any enquiry into the merits. In doing so they relied on two cases, Eisen v Carlisle & Jacquelin et al, from the United States of America,40 and Hollick v Toronto (City), from 39 Dabelstein & others v Lane and Fey NNO 2001 (1) SA 1222 (SCA) at 1227H–1228A; MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v Deiulemar Compagnia Di Navigazione Spa 2012 (1) SA 58 (SCA) paras 22 to 24. 40 Eisen v Carlisle & Jacquelin et al 417 US 156 (1974). Canada.41 Neither case supports this contention. The passage from Eisen on which reliance was placed was explained in Wal-Mart42 as not excluding the necessity for evidence to show that the requirements of Federal Rule 23(a) were satisfied and this would necessarily involve evidence on the merits. In Hollick the question was posed to what extent the class representative ‗should be allowed or required to introduce evidence in support of a certification motion.‘43 The answer in the light of the recommendations of the Ontario Law Reform Commission was that: ‗In my view, the Advisory Committee‘s report appropriately requires the class representative to come forward with sufficient evidence to support certification, and appropriately allows the opposing party an opportunity to respond with evidence of its own.‘ Evidence is therefore required to identify the class, identify the common issue or issues and show that a class action is appropriate. That necessarily means that there must be evidence showing a prima facie cause of action, because the existence of a cause of action underpins the existence of a class and serves to identify the issues common to that class that require determination. [43] It is desirable to say something about the procedure to be adopted in certification applications. The appeal was complicated by the absence of a clear statement by Mr Solomon of the cause of action that the appellants intended to advance. It was unclear whether the claim was based on the breach of the Act‘s provisions or was a constitutional claim seeking constitutional damages.44 In the appellants‘ heads of argument it was said to be a delictual claim, with an alternative claim based upon a breach of the constitutional right to sufficient food. This confusion would 41 Hollick v Toronto (City) supra para 16. 42 Page 2552, fn 6. 43 Para 22. 44 Fose v Minister of Safety and Security 1997 (3) SA 786 (CC). have been avoided if the application had been accompanied by a draft set of particulars of claim in which the cause of action was pleaded, the class defined and the relief set out. The affidavit or affidavits filed in support of the application would then have set out the evidence available to the appellants in support of that cause of action and the further evidence that they anticipated would become available to them to sustain the pleaded case and the means by which that evidence would be procured. That procedure should be followed in future applications. That will enable those opposing certification to respond meaningfully and the court to decide the application with a clear understanding of the nature of the case. That is not to say that the court must treat the draft pleading as if it were the law of the Medes and Persians, insofar as the content of the applicant‘s case is concerned. Manifestly it can be amended and the need for amendment may emerge in the course of the certification application. But it should at least serve to clarify the issues arising in the certification application. Common issues of fact or law [44] This does not require that every claim advanced in the class action, save possibly in relation to quantum, be identical. It requires that there be issues of fact, or law, or both fact and law, that are common to all members of the class and can appropriately be determined in one action. Dealing with the issue of commonality in Wal-Mart Scalia J said45 that the claims: ‗… must depend upon a common contention …That common contention, moreover, must be of such a nature that it must be capable of classwide resolution – which 45 At p 2551. Similarly in Hollick v Toronto (City), supra, McLachlin CJC said ‗an issue will be common ―only where its resolution is necessary to the resolution of each class member‘s claim‖ … Further, an issue will not be ―common‖ in the requisite sense unless the issue is a ―substantial … ingredient‖ of each of the class members‘ claims.‘ (para 18) means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.‘ In my view that is correct. The simplest example of such a common issue would be the issue of negligence in a case involving the derailment of a train. That could give rise to different claims, such as damages for personal injuries by passengers, dependents‘ claims for loss of support in respect of those killed, claims for loss of or damage to goods being carried on the train and damage to other property arising as a result of the derailment, but there would be sufficient commonality on the issue of negligence to sustain a class action. [45] That highlights the point that the class action does not have to dispose of every aspect of the claim in order to obtain certification. It might in an appropriate case be restricted to the primary issue of liability, leaving quantum to be dealt with by individual claimants. Certain common issues could be certified for the entire class, and other subsidiary issues certified in respect of defined sub-classes. But the question in respect of any class or sub-class is always whether there are common issues that can be determined that will dispose of all or a significant part of the claims by the members of the class or sub-class. The representative [46] In some jurisdictions, such as the United States, it is an express requirement that the representative plaintiff has a claim that is typical of the claims of the class. In Canada and Australia, whilst there is no express requirement of typicality, Professor Mulheron suggests that the jurisprudence of those countries in regard to commonality, makes that a requirement.46 That question does not arise in South Africa, because 46 Mulheron, supra, 309–313. s 38(c) of the Constitution expressly contemplates a class action being pursued by ‗anyone acting as a member of, or in the interest of, a class‘. Accordingly, while the appellants include five individuals who may be typical of the class they are seeking to represent, the other four appellants may permissibly act in the interest of the class. As already indicated there is no reason to differentiate in that regard between class actions based on infringement of rights protected under the Bill of Rights and other class actions. [47] The court must be satisfied of two broad matters in regard to the representatives of the class. The first is that they have no interests in conflict with those whom they wish to represent. A conflict of interest arises if the purpose of the litigation is to enrich the representatives, or to serve interests other than those of the class. The second issue is whether the representative has the capacity to conduct the litigation properly on behalf of the class. That is important because unsuccessful litigation will have the effect of destroying the claims. [48] The capacity to conduct the litigation has a number of aspects that must be dealt with in the application for certification. First, has the representative the time, the inclination and the means to procure the evidence necessary to conduct the litigation? Second, has the representative the financial means to conduct the litigation and, if not, how is it going to be financed? This will involve making some assessment of the likely costs. Third, does the representative have access to lawyers who have the capacity to run the litigation properly? This will require some consideration of the likely magnitude of the case and the resources involved in dealing with it. Fourth, on what basis are those lawyers going to be funded? Fifth, if the litigation is to be funded on a contingency fee basis, details of the funding arrangements must be disclosed to ensure that they do not give rise to a conflict between the lawyers and the members of the class. The court must also be satisfied that the litigation is not being pursued at the instance of the lawyers for their own gain rather than in the genuine interests of class members, as the risk of conflicts of interest is inherent in that situation. It is for this reason that in other jurisdictions the court‘s approval of any settlement is required. Whilst that issue does not arise in these proceedings, so that it is unnecessary for us to be prescriptive, some similar requirement will need to be imposed when that situation does arise. Application of principles in this case [49] Whilst much of the argument focussed around the Western Cape and what the appellants now describe as Class 1, it is convenient to deal in the first instance with Class 2 and the application to certify a class action in respect of the issues flowing from the national complaint to the Commission. Class 2 [50] This application did not originally seek certification in respect of the national complaint and a class consisting of purchasers of bread in the four provinces, Gauteng, Free State, North West and Mpumalanga, where the events giving rise to that complaint occurred. Accordingly we lack any evidence in regard to that class. All we have is the Tribunal‘s determination in the Pioneer case of the conduct that gave rise to the Tribunal‘s findings that Pioneer, in conjunction with the other bread producers, had engaged, directly or indirectly, in price fixing and the division of markets in those four provinces. However, there is no evidence as to the effect of that conduct in the market place and its impact on the price of bread for consumers. In addition the orders by the Tribunal in respect of Tiger and Foodcorp do not appear to overlap entirely with the findings in the determination in respect of Pioneer. [51] This is relevant because the claim is based upon anti-competitive conduct in terms of the Act. That claim must be pursued on the basis of a determination by the Tribunal. Given the passage of time and the provisions of s 67(1) of the Act it seems improbable that any further determination will be made about anti-competitive conduct in the areas covered by the national complaint. The certification of a class action must then be addressed on the footing that the case to be advanced will be in accordance with the determination by the Tribunal in the Pioneer case. [52] The Commission did not allege before the Tribunal that a cartel existed at all times across all regions of the country or that the co- ordination or agreement or understanding between the bread producers related to the same subject matter in all regions.47 The factual findings of the Tribunal were varied. In regard to the division of markets in 1999 Pioneer sold its bakery in Welkom to Tiger and Tiger agreed ‗to keep out of the wider Free State area‘ in favour of Pioneer. In the North West, also in 1999, the agreement was confined to the informal trade, where it was agreed that the four bread producers would not compete in supplying that trade in the areas around Krugersdorp, Orkney, Stilfontein and Potchefstroom. In Mpumalanga in 2001, Tiger and Pioneer jointly sold a bakery in Bushbuckridge, in which they owned equal shares, to 47 Tribunal determination in Pioneer para 81. Foodcorp. In return Foodcorp sold its bakery in Groblersdal to Pioneer and its share in the bakery in Ermelo to Tiger.48 [53] It is impossible on this evidence to say that this division of markets affected all purchasers of the respondents‘ bread in these four provinces, or even that it detrimentally affected all purchasers of their bread in the particular areas. Nor can it be said that its impact on consumers would have been similar. That will have depended on what occurred as the bread passed down the value chain from producer to distributor or retailer and thence to the consumer. Any impact on the national chains of supermarkets would have been different from any impact on smaller retail outlets and the informal sector. There is no evidence that it actually resulted in higher prices in those areas or caused prejudice to consumers. It may, for all we know have resulted in greater production efficiencies and lower prices, particularly if the bakery sales occurred because the sellers were not operating them profitably. Even if it had an adverse effect on consumers, the nature, geographic scope and duration of that effect is not known and would have differed from area to area. [54] In regard to price fixing, whether direct or indirect, there was no evidence of this in either the Free State or Mpumalanga. The Tribunal heard evidence about meetings in North West in 2003 or 2004, and another meeting in 2005, where information was exchanged about impending price increases and arrangements made to co-ordinate increases, not to undercut prices and not to poach customers when this occurred. These arrangements did not involve Tiger, but did include Foodcorp. There is no evidence that it had any effect elsewhere in the 48 Curiously the Tribunal found anti-competitive intent in the fact that in two instances the seller paid the purchaser to take over the bakery. One would have thought that more indicative of the bakeries being unprofitable to the sellers. other three provinces. Its impact in the North West is not dealt with and we do not know the nature, geographic extent or duration of any adverse effect. [55] In relation to Gauteng the Tribunal heard the evidence of one witness who testified to regular communications about price increases during 2003 and 2004 and the efforts made by the bread producers to ensure that this did not set off a round of discounting directed at increasing market share – probably the most significant element in determining profitability. This was done by exchanging information about price increases and, if one producer broke ranks by discounting in response to an increase, threats to retaliate. The same witness also testified to an agreement between Pioneer and Premier not to compete on price when a new distribution centre was opened in Vanderbijlpark and to an agreement on the co-ordinated implementation of price increases in Gauteng generally in December 2006. Once again there is no evidence of the nature, geographic extent or duration of any adverse effect. This is particularly necessary in relation to price increases because, as the Tribunal‘s determination records, a major driver of price increases is the cost of the inputs into production, in particular wheat and flour, but also electricity, labour costs, transport costs and the like. Co-ordination of price increases would have had little impact if an increase by the price leader (the dominant producer in a particular region) would, in any event, have resulted in the other producers following suit. [56] It is plain from this summary that the class for which certification is sought in Class 2 is over-broad; that the potential claims lack any central common feature; and that any losses that this anti-competitive conduct may have occasioned (none having been alleged or shown by evidence), would have varied from place to place, time to time and person to person. The class includes a considerable number of bread consumers who cannot possibly have been affected by the anti-competitive conduct of the bread producers, or would have been affected by some, but not all, of such conduct. I have considered whether there are common issues that would warrant certification in the wide class sought, together with the creation of sub-classes, to cover particular situations. However, the diversity of the Tribunal‘s findings in regard to the conduct falling under the national complaint precludes that. It cannot readily be segmented without information identifying the people affected by the division of markets in the Free State, or the agreement not to compete on price in Vanderbijlpark, or the coordinated increase in price in Gauteng in December 2006. [57] A class can only be identified with reference to the conduct of a specific potential defendant or defendants. However, Premier was not involved in the anti-competitive conduct in the Free State and Tiger was not involved in the agreement in respect of Vanderbijlpark or those in the North West. Premier was not party to the market division in Mpumalanga. This diversity precludes the identification of a common issue the disposal of which would have a decisive effect on the claims of all members of the class. [58] The findings by the Tribunal in the Pioneer case also preclude the possibility of there being a common issue or issues that can apply to a defined class of persons for the purpose of a class action. They involve six different types of conduct occurring respectively in 1999, 2003 and 2004, July 2006 and December 2006. The 1999 conduct did not extend to or impact upon Gauteng. The 2003 and 2004 agreements were confined to parts of the North West. The anti-competitive conduct in 2006 related to Gauteng alone. Although the findings and the papers before us repeatedly use the sweeping term ‗cartel‘ to describe this conduct, it is misleading to the extent that it suggests widespread conduct beyond that which the Tribunal held had occurred. There was no finding of the existence of a general cartel operating in the bread producing industry in Gauteng, Free State, North West and Mpumalanga from 1 September 1999 to 8 May 2008, which is the area and the period for which certification was sought. Indeed there could not have been such a finding because that was not an allegation made by the Commission. [59] Lastly it is necessary to mention that the absence of any evidence concerning the impact of this anti-competitive conduct on consumers also precludes certification. Without such evidence the requirement of commonality among the members of the class is not satisfied. The claim is said to be one for damages. The assessment of whether damages have been suffered arising from anti-competitive conduct is a complex issue. The following method is taken from an English case involving a price fixing cartel49 and adapted to this case: Determine or estimate the actual prices charged by the cartel during the relevant period. Estimate the price (known as the ‗but for‘ price) that would have been charged had there been no cartel. Subtract the ‗but for‘ price from the actual price. Determine the quantity of bread purchased by each claimant or by the class of claimants. 49 Devenish Nutrition Ltd & others v Sanofi-Aventis SA & others [2007] EWHC 2394 (Ch) para 19 Estimate the proportion of the ‗over-charge‘ absorbed by intervening distributors and the retailers as the bread is passed down the chain of purchases to the end consumer. [60] Applying this methodology – which was not challenged - to this case, involves entirely separate exercises being undertaken in a number of small regional areas in the four provinces, in respect of widely divergent conduct taking place at differing times and affecting consumers differently depending on the actions of the retailers and resellers. In addition the exercise is to take place in relation to three different bread producers who set list prices separately in relation to the different types of bread that they produced50 and negotiated discounts separately and in different ways for different groups. The result was that they charged varying prices to the retailers and resellers to whom they sold bread. In turn the retailers and resellers fixed their own prices independently. The inevitable result is that there is no commonality within the suggested class in regard to harm suffered or the nature of any damage that may have been caused to individual consumers. That would not matter if there were some overriding common issue that applied to all bread consumers in these four provinces during the relevant period, but none is identified. There is simply the sweeping statement (admittedly made in relation to the Western Cape) that ‗every consumer that bought their products during the period in question suffered damages‘. That cannot be correct in the light of the Tribunal‘s analysis of the offending conduct. [61] The inevitable conclusion is that, on the assumption that there is a delictual action available to consumers who suffer damage in the form of 50 The Tribunal determination reflects that Pioneer produced 32 different types of bread, not all of which are available throughout the country. higher prices in consequence of anti-competitive conduct, the proposed Class 2 is too broad because it includes people who were not injured by the conduct of the producers. Furthermore there is no common issue of fact or law shared by all the members of the class. Consumers who suffered damages as a result of any of the anti-competitive conduct constituting the national complaint did so for varying reasons arising from different conduct in different areas at different times. The cause, nature and extent of those damages are not common to the proposed class. The claim for certification in respect of Class 2 must therefore fail. Class 1 [62] This is the class to which the application related from the outset. The proposed action arises from the co-ordinated implementation of price increases in the Western Cape by the respondents from 18 December 2006. Although reference is made in the founding affidavit to the other practices concerning the distributors it is not clear how they could have adversely affected the consumers. If the distributors‘ discounts were reduced, and they absorbed the reduction by accepting a decline in their profit margins, that would not have affected consumers at all. If they increased their prices in order to maintain their profit margins, not only would their sales have fallen, because consumers refused to buy bread at those prices or obtained it elsewhere, but any loss to consumers would have flowed from the independent actions of the distributors. Similarly the agreement not to poach distributors was supplementary to the discount agreement. It is, however, unnecessary for present purposes to decide this, as it suffices for the purpose of certification for the appellants to show that consumers would have a cause of action arising from the co- ordinated increase in list prices. [63] The appellants have now nailed their colours to the mast of a delictual action flowing from a breach of statutory duty. They persisted with their constitutional claim based on a breach of a negative obligation not to interfere with the right to sufficient food in s 27(1)(b) of the Constitution, but only in the alternative. Whilst there was some criticism in argument of the manner in which their claim had fluctuated in the course of these proceedings I do not think that should affect matters. On any basis the proposed claim is a novel one and identifying the proper basis for it is a matter of some complexity. The appellants should not be penalised in certification proceedings for variations in the legal foundation of the claim they seek to advance. On a factual level it has always been the same claim, namely that consumers of bread in the Western Cape were obliged to pay more for bread than they would otherwise have done if the bread producers had not engaged in the prohibited anti-competitive conduct the Tribunal found they had perpetrated. [64] The claim is advanced on the following basis. The appellants say that this type of anti-competitive conduct is prohibited in the interests of competition and the interests of consumers. These prohibitions serve to fulfil the aim of the Act as set out in the preamble and in particular the aim of providing markets in which consumers can freely, that is, without coercion by anti-competitive conduct, purchase the quality and variety of goods they desire. They also serve to provide consumers with competitive prices as provided in s 2(b) of the Act. Founding upon cases that say that a breach of a statutory duty can give rise to a legal duty not to cause financial loss,51 the appellants contend that such a legal duty rested on the 51 Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) paras 19-21 and Olitzki Property Holdings v State Tender Board & another 2001 (3) SA 1247 (SCA) paras 12-14. bread producers and that they breached it deliberately by their actions in agreeing on the co-ordinated increase of list prices. In support of such a duty they point to s 65(6) of the Act that contemplates that a person who has suffered loss or damage as a result of a prohibited practice may have an action to recover that loss or damage. They contend that the prohibited practice in this case resulted in consumers in the Western Cape paying more for the respondents‘ bread than they would otherwise have done. [65] The respondents challenge this case on a variety of levels. First, they submit that as a matter of interpretation the Competition Act was not enacted for the benefit generally of the consumers on whose behalf it is sought to proceed and therefore does not create the alleged legal duty. Second, they contend that there is no evidence of loss suffered by the consumers arising out of the anti-competitive conduct. Third, they submit that there is no evidence linking the anti-competitive conduct with any increase in prices or damage to consumers, and hence the necessary causal element is missing. In other words, on the first leg they raise a legal argument and on the latter two legs they say there is no prima facie case in relation to these elements of a delictual action. [66] Premier challenges the delictual claim on two other bases. Its principal argument is that such a claim is bad in law because s 65 of the Act provides for a ‗follow on‘ claim founded on a finding of prohibited anti-competitive conduct by the Tribunal, and that on a proper construction of the Act this remedy is exclusive and precludes a common law delictual action. In the alternative it contends that the proposed claim is, by virtue of the relief being sought, not a claim for damages and accordingly not a valid delictual claim. [67] The legal arguments about the existence of a legal duty and the existence of an exclusive statutory claim in terms of s 65 of the Act are linked. If Premier is correct that the Act provides an exclusive follow on claim then the legal duty on which the appellants rely does not exist. However, if it is incorrect, that strengthens the appellants‘ hand considerably, because, s 65(6) recognises the possibility of claims arising from prohibited anti-competitive conduct, so that the absence of a specific statutory claim would suggest that there must be a delictual claim available to at least some persons injured by such conduct. [68] I am not convinced that s 65 of the Act provides for the type of exclusive follow on remedy for which Premier contends. The relevant portions of the section read as follows: ‗(2) If, in any action in a civil court, a party raises an issue concerning conduct that is prohibited in terms of this Act, that court must not consider that issue on its merits, and— (a) if the issue raised is one in respect of which the Competition Tribunal or Competition Appeal Court has made an order, the court must apply the determination of the Tribunal or the Competition Appeal Court to the issue; or (b) otherwise, the court must refer that issue to the Tribunal to be considered on its merits, if the court is satisfied that— (i) the issue has not been raised in a frivolous or vexatious manner; and (ii) the resolution of that issue is required to determine the final outcome of the action. (6) A person who has suffered loss or damage as a result of a prohibited practice— (a) may not commence an action in a civil court for the assessment of the amount or awarding of damages if that person has been awarded damages in a consent order confirmed in terms of section 49D(1); or (b) if entitled to commence an action referred to in paragraph (a), when instituting proceedings, must file with the Registrar or Clerk of the Court a notice from the Chairperson of the Competition Tribunal, or the Judge President of the Competition Appeal Court, in the prescribed form— (i) certifying that the conduct constituting the basis for the action has been found to be a prohibited practice in terms of this Act; (ii) stating the date of the Tribunal or Competition Appeal Court finding; and (iii) setting out the section of this Act in terms of which the Tribunal or the Competition Appeal Court made its finding. (7) A certificate referred to in subsection (6)(b) is conclusive proof of its contents, and is binding on a civil court. (8) An appeal or application for review against an order made by the Competition Tribunal in terms of section 58 suspends any right to commence an action in a civil court with respect to the same matter. (9) A person‘s right to bring a claim for damages arising out of a prohibited practice comes into existence— (a) on the date that the Competition Tribunal made a determination in respect of a matter that affects that person; or (b) in the case of an appeal, on the date that the appeal process in respect of that matter is concluded. (10) For the purposes of section 2A(2)(a) of the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), interest on a debt in relation to a claim for damages in terms of this Act will commence on the date of issue of the certificate referred to in subsection (6).‘ [69] Whilst the section contemplates the possibility of a claim for damages at the instance of a person who suffers loss or damage in consequence of a prohibited practice, it does not state that such a person will have an action, nor does it purport to determine the requirements for such an action. Its provisions are rather directed at the relationship between the Tribunal‘s determination and the court before which such an action is brought; the timing of such an action; the running of prescription in relation to the claim underlying such action and interest on the claim. As regards the first of these, it says in s 65(2) that the issue of whether prohibited conduct has occurred must be determined by the Tribunal, or the Competition Appeal Court on appeal from it, to the exclusion of the court before which the action is commenced. Proof of such prohibited conduct is provided by the certificate of the Chairperson of the Tribunal or the Judge President of the Competition Appeal Court (ss 65(6) and (7)). Until the proceedings before the competition authorities are complete an action may not be pursued (s 65(8)). If the Tribunal has already awarded damages in a consent order under s 49D(1) a further claim for damages is excluded. The commencement date for the running of prescription is dealt with in s 65(9) and the date upon which interest on a claim will start to run is dealt with in s 65(10). All of these are essentially procedural matters or, in the case of prescription and interest, matters dealt with in other statutes that require special treatment in this particular context.52 [70] Premier draws attention to the bifurcation of jurisdiction created by the Act, where the specialist tribunals have exclusive jurisdiction over the question whether prohibited practices have been committed and the civil courts have no say. However, to my mind that is a two-edged sword. The writ of the specialist competition tribunals runs only to the extent of determining whether a prohibited practice has occurred and no further. Beyond that the civil courts provide the forum to which parties who suffer damages arising from the prohibited practice must turn in order to recover those damages. They will clearly apply conventional principles in regard to the assessment of damages and causation of loss. However, the more difficult question is to identify those who are entitled to pursue 52 There is nothing unusual in this. Section 8(3) of the Extension of Security of Tenure Act 62 of 1997 contains a similar provision. claims to recover such loss. Premier‘s argument assumes that anyone who has suffered loss or damage and can demonstrate a causal link between that loss and damage is entitled to be compensated for that loss or damage. That is consistent with its contention that the Act provides for strict liability. [71] Under the principles of the law of delict it is insufficient for someone to say that they have suffered loss as a result of the conduct of another, even where such conduct was deliberate or negligent. They must first establish that the person from whom they seek to recover that loss owes them a legal duty to prevent such loss so that their failure to do so is wrongful in accordance with the legal convictions of the community.53 In the context of pure economic loss, into which category this claim falls, that is a particularly complex enquiry.54 For example the risk of indeterminate loss would have to be weighed against the inability of the consumers to protect themselves against loss flowing from the prohibited practice. It would be a startling departure from principles that have been recognised as compatible with our new constitutional order,55 for liability to compensate for loss or damage flowing from a prohibited practice to exist in the absence of any duty to prevent such loss. It would eliminate one of the basic principles by which our law prevents liability for acts causing damage from being extended beyond acceptable limits. [72] On the other hand there are textual factors that lend support to Premier‘s argument. Thus s 65(6)(a) speaks of a person who has suffered 53 Minister of Safety and Security v Van Duivenboden, supra, para 21;Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) paras 12-16; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd supra, paras 10-12. 54 Fourway Haulage SA (Pty) Ltd v South African National Roads Agency Ltd 2009 (2) SA 150 (SCA). 55 Rail Commuters Action Group & others v Transnet Ltd t/a Metrorail & others 2005 (2) SA 359 (CC) para 15; Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC) paras 37-47 and 69-70. loss or damage as a result of a prohibited practice commencing an action in a civil court ‗for the assessment of the amount or awarding of damages‘. The first part of that is consistent with the action concerning only the quantum of damages and nothing more. Section 49D(4) refers to a complainant ‗applying for an award of civil damages‘. That is also consistent with the making of the award being a mechanical process in which only the quantum of the claim must be assessed. [73] The record as it stands is not apt for determining questions of this importance and difficulty. The claim by the appellants has been advanced on too simple a basis to determine whether the foundation for the legal duty necessary to support a delictual claim exists. That is not surprising. After all, the claim was only advanced on that basis when their heads of argument were filed in this court. However, the contention by Premier is not clearly correct and the corollary to its rejection appears to me to be that a delictual action would lie at the instance of at least some claimants. In my view it is undesirable to determine these issues in an appeal where the arguments being advanced, both as to legal duty and as to the effect of s 65, are raised for the first time on papers that are admittedly incomplete. [74] The arguments that the factual allegations made by the appellants were insufficient to make a prima facie case in respect of a delictual claim have force in the light of the limited evidence proffered by the appellants. However, the case is one of price fixing by agreeing on a date for implementation of price increases by all three respondents. That agreement would have served to stifle competition that might otherwise have resulted from any one of the respondents increasing its prices without such an agreement. As such it would have tended to increase the prices that the bread manufacturers were able to charge to their customers and, markets being what they are, it is probable that to some extent at least those price increases would have been passed on to consumers. After all part of the justification given by the bread producers for the increases was that prices of wheat and flour and other major input costs had risen and they needed to pass these on to consumers if their businesses were to remain profitable. If artificially high increases in the price of bread resulted from this prohibited practice by the respondents, it is a logical inference that consumers would have paid more for bread than would otherwise have been the case. In the absence of rebutting evidence from the respondents, demonstrating the falsity of that line of reasoning, the appellants‘ case on the facts cannot be rejected at this stage of proceedings. It is plain that the claim as now advanced raises both legal and factual issues that would be common to all affected consumers. [75] In summary the claim that the appellants seek to advance has a potentially plausible basis, but it is premature at the stage of this appeal for this court to determine the questions raised by these arguments in view of their novelty, complexity and the fact that they are raised for the first time in this court. The appellants should not be non-suited on these grounds, which would be the effect of dismissing their appeal, but equally the respondents‘ arguments cannot be rejected at this stage. That indicates that it is desirable to refer the present application back to the high court, with appropriate directions for the delivery of further affidavits, for it to be dealt with on a complete set of papers and in the light of the principles laid down in this judgment. [76] There are two possible reasons why this court should not make that order. The first concerns the definition of the potential class and the second the proposed remedy. If we were to conclude that the class is incapable of satisfactory definition or that no proper relief can be claimed in this action then it would be wrong to remit the matter and cause further expense to be incurred and valuable court time consumed on a fruitless exercise. However, in considering that question one must be cautious not to stifle what may be litigation properly, if inadequately, commenced when we do not have all the facts and do not have the advantage of full affidavits on both sides of the question and argument that would clarify what is at present obscure. [77] In regard to the proposed class it is clearly too broadly stated. The proposition that it includes virtually all consumers of bread in the Western Cape cannot be correct, when the market share of the respondents in South Africa as a whole was said by the Tribunal to be some 50 to 60 per cent of the domestic bread market. For all we know the respondents‘ operations may have been largely confined to the Cape peninsula and the winelands, leaving the vast hinterland of the province to smaller operations. That would suggest that the class should be confined to people resident in that more limited area. The sales of the respondents in the Western Cape will have included sales to institutions, such as schools, hospitals and prisons, and commercial establishments, such as hotels, bed and breakfast establishments, restaurants and other establishments where food is served. These should be excluded. It may be that on further consideration it is appropriate to exclude consumers whose bread purchases were made through the national chains of supermarkets and garage forecourts, where prices were negotiated nationally and the impact of the price fixing may have been significantly different. It may also be appropriate to restrict the case to the basic types of bread – the standard loaf of white and brown bread, sliced and unsliced – and not include all the varieties that were available from the bread producers at the time, which are probably not the staple fare of the poor consumer. The fact that none of this was done illustrates that the proposed class is over-broad and cannot be certified as such. [78] Having said that, however, can it be said that the proposed class is incapable of adequate definition? The evident aim of the appellants is to represent the interests of poor consumers in the Western Cape, or the relevant part of it, those who would have been hardest hit by any artificially sustained increase in the price of bread. It should be possible to define that group with greater specificity perhaps by using the income bands that economists, and many in the commercial world, use to differentiate differing economic groups. No doubt statistical information is available from Statistics SA and other sources. Information about the sources of bread for these consumers may enable the class to be defined with greater precision. It is probably inevitable that any class will include some people who do not consume bread or did not consume the respondents‘ bread, but that should not preclude certification if the class is otherwise adequately defined and statistical controls are in place to accommodate that possibility. [79] If one takes all these factors into consideration I do not think that it is necessarily impossible for the appellants to define the class they wish to represent with the degree of clarity that is required. I may be wrong in the light of information produced by the respondents when they have an opportunity to deliver full affidavits, which may show that the bread market is more fragmented than it may appear at first sight. However, that is not a reason at this stage to say that the appellants‘ task in seeking certification is doomed to failure. [80] That leaves the question of remedy. The remedy that the appellants propose at this stage suffers from many defects. Whilst the appellants say that they wish to represent the consumers of bread and pursue the claims for damages of that class, the remedy they seek is that money be paid to unnamed and as yet unconstituted trusts or similar bodies that they say will use the funds generally to benefit bread consumers. How this is to be done is not explained. In the heads of argument it is suggested that the money would be used to fund community and school feeding schemes. Commendable though that may be it is not a means of compensating consumers of bread, who suffered loss or damage in consequence of the prohibited practices of the respondents, for their loss or the damage they suffered. It is a means of providing food – not necessarily bread – to those who lack it. Many of those will be people who suffered no loss or damage at all in consequence of the prohibited practices. Some, such as children, who are frequently the principal beneficiaries of such schemes, would not even have been alive at the time. Others may not have had the means to buy bread at the time or may not have been in the Western Cape. This is clearly recognised in the appellants‘ heads of argument where they say that the purpose of the proceedings is not to identify the members of the class and distribute the proceeds to them. In fact the appellants seek to turn this to their advantage by saying that in view of the intended form of relief ‗an over-inclusive class definition would be harmless‘. [81] The litigant who sues in delict sues to recover the loss suffered in consequence of the wrongful act of the defendant.56 The appellants propose to prove the claim on this basis, but then not pay the damages to 56 Trotman & another v Edwick 1951 (1) SA 443 (A) at 449B-C; Ranger v Wykerd & another 1977 (2) SA 976 (A) at 986D-E. the members of the class. The justification for this approach is said to be that in circumstances where it is impractical to distribute to the members of the class directly the damages should be distributed cy-près, that is, in a manner as near as possible to a direct distribution. That would be a novel development in our law, but we were referred to foreign jurisprudence in relation to class actions that supports some alternative form of distribution of damages where distribution to the members of the class is impractical and urged to permit such a mode of distribution in the present case. [82] According to Professor Mulheron,57 Australia does not permit a distribution other than to the members of the class, although this has occasionally caused difficulties in distributing the balance of a settlement fund when all the beneficiaries that have come forward have been paid and there is a residual amount in the fund. In Canada provision is made by statute for such distributions in certain cases. Only in the United States does it appear that courts have permitted such distributions. Even there this has usually been in relation to settlement agreements, where the court is asked to confirm a settlement the terms of which have been devised by the parties to the litigation, or in respect of residual amounts remaining after distribution to all members of the class who have come forward with claims. As a remedy in disputed litigation, distributions cy-près appear to have gained little purchase and they have by and large not been welcomed by appellate courts. 57 Mulheron ante 426-434 and The Modern Cy-près Doctrine Chapter 7, pp 215-252. [83] In South Africa the Law Commission‘s working paper on class actions58 proposed the application of an aggregate award of damages or a settlement amount in a way that could reasonably be expected ‗to compensate or benefit class members, where actual division and distribution of the award among the class members is impossible or impracticable‘. It gave as examples a price reduction for a certain time, where there had been an illegal overcharge for goods or services, and the use of compensation to clean up pollution or provide health services to those who were injured by the pollution. In each case whilst the money would not go directly to the beneficiaries it would be used for their benefit as a remedy for the harm they had suffered. However, when the Law Commission came to deliver its final report even this relatively modest proposal did not find favour. It limited its recommendations to the following: ‗When an aggregate assessment is made the court should give directions regarding the distribution of the award to class members and may, where appropriate, require the defendant to distribute the damages directly to the class members. The Act should contain an express provision with regard to the aggregate assessment of monetary awards and the disposal of any undistributed residue of an aggregate award.‘59 The draft bill that accompanied the report did not in fact make provision for the distribution of an undistributed residue of an aggregate award, but presumably that was a drafting oversight. [84] The remedy that is being sought at this stage does not aim to compensate the members of the proposed class in any way. It is unconnected to that goal. Its aim is purely punitive, a matter already dealt with by the Tribunal in the substantial administrative penalties that it 58 South African Law Commission The Recognition of a Class Action in South African Law (Working Paper 57, 1995) para 5.38. 59 Recommendation 18, para 5.13.5, p 66. levied against the respondents.60 It has the effect of depriving the members of the class of their claims in order to enable the appellants (and this is likely in practice to mean the first four appellants, not the individual appellants) themselves, through a trust they control or set up, to oversee the distribution of the damages in a manner they think appropriate. That is a remedy that in some other jurisdictions has been introduced by way of legislation after a careful policy review and in other jurisdictions is simply impermissible. It is not a remedy foreshadowed by the Law Commission in its report. It has been adopted by some lower courts in the United States in different circumstances and has received at best a lukewarm and at worst a hostile reception from higher courts. As a remedy it is controversial as Professor Mulheron demonstrates in her comprehensive works in this area of the law. [85] It is at this point that the warning I sounded earlier, about the court not making policy decisions that are properly the preserve of the legislature, comes to the fore. In my view the suggested remedy is not a permissible one. It departs from the purpose of the class action to compensate those who have suffered loss for that loss, by stripping them of their claims, with the excuse that as they are small they are worthless, and vests those claims in others to pursue in their own interests. Worthy though those interests are that cannot justify the court in permitting this. It would not involve a development of the common law, but rather a substantial alteration to it. The new principle that would be created would be that where a large number of people had relatively small claims against a defendant, that it would not be worth their while to pursue individually, those claims can be confiscated from them by judicial fiat and vested in a person that will be able to use the proceeds of those 60 Para 3 ante. claims in a socially useful manner. In my view that is a bridge we should decline to cross. [86] Does that mean that, where the claims are so small that there is no practical way in which to pursue them and distribute the proceeds to the individual claimants, no class action can be brought? In my view not. The problem can be solved by a small extension of our existing principles of the law governing damages along the lines suggested in the Law Commision‘s working paper. The action proceeds on the basis that the claim is one to recover the damages suffered by the members of the class. Where those damages are all of the same nature, which is the case here where the complaint is that consumers were allegedly unlawfully forced to pay more for bread than they would otherwise have done, they can be computed on an aggregate basis using well-established statistical methods. There is nothing novel in this. Statistical methods are used in many aspects of the computation of damages. [87] Once the aggregate damages have been computed the next step is for the appellants to identify the mode of distribution that will serve as a surrogate for the distribution directly to individuals of the amount of their loss. That may be by way of a targeted price reduction for a period, a remedy that Professor Mulheron says has been found to be ‗particularly effective for remedying overcharges on items which are repeatedly purchased by the same individuals‘.61 Alternatively it may be by way of distribution in a way that can be shown to be likely to benefit, directly or indirectly, the members of the class. This calls for the type of judicial creativity that Harms JA said is essential to provide an effective relief to 61 Mulheron, supra 427. See the potential pitfalls with this remedy in her The Modern Cy-près Doctrine 218-222. those affected by a constitutional breach.62 As we are extending the availability of a class action in order to give effect to the right of access to courts it is incumbent on us to ensure that the right is rendered effective by ensuring that appropriate remedies will flow from its exercise.63 In my judgment that can be done in a class action for damages, where the damages cannot be distributed practicably to the members of the class, by way of alternative methods that will, directly or indirectly compensate the members of the class for their loss. The methods outlined above are examples of how that can be done, but do not constitute a closed list of possibilities. In each case the proposed remedy must be identified at the outset and must be appropriate to the facts of the particular case. What is impermissible is the type of remedy proposed in the present case where the members of the class are not compensated either directly or indirectly for the loss they have suffered. Conclusion in respect of Class1 [88] In my judgment on the record before us the appellants have shown that there is a potentially viable claim for delictual damages vested in a class of consumers. That does not mean that the claim is a good claim in law or that on these papers there is sufficient evidence available to demonstrate the existence of a prima facie case if it is sound in law. Those matters are not yet ripe for determination for the reasons given in para 75. All that can be said at this stage on these papers is that the claim is not legally untenable. The class is defined in terms that are overbroad, but there are grounds for believing that it is capable of more precise definition. The case raises issues common to all members of the class. It 62 Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae): President of the Republic of South Africa & others v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae) 2004 (6) SA 40 (SCA) para 42. 63 Fose v Minister of Safety and Security 1997 (3) SA 786 (CC) paras 19 and 69. may, however, be open to attack both as a matter of law and on the grounds that there is insufficient evidence to sustain it even at a prima facie level. That can only be determined once a complete set of affidavits has been filed. In addition the relief that the appellants have indicated they wish to claim is not competent. However, there is no reason to think that in the light of the principles laid down in this judgment an appropriate prayer for relief cannot be formulated. [89] I have considerable sympathy for the learned acting judge who was confronted with this application on a basis of extreme urgency and had to wrestle with these novel and difficult issues within a short time and against a background where there was no clarity as to the requirements for a class action beyond those he distilled from the Law Commission‘s report. In addition the arguments presented to us were not presented to him and he did not have the advantage we have had of full argument and reference to international authority by able counsel. His principal concern appears to have lain with the appellants‘ view that the claim against Tiger would prescribe and the consequent prayer to be permitted to issue summons before certification, which he treated as a prayer for final relief. That concern may have been misplaced. If, as we now hold, an application for certification is the first necessary step in proceedings to pursue a class action there is much to be said for the proposition that, for purposes of prescription, service of the application for certification would be service of process claiming payment of the debt for the purposes of s 15(1) of the Prescription Act.64 Such an interpretation would be supported by cases, where the institution of 64 Act 68 of 1969. similar necessary preliminary proceedings, have been held to constitute the bringing or commencement of suit for various purposes.65 [90] Even if the prayer seeking authority to issue summons before finalising the issue of certification was bad, it did not necessitate the dismissal of the application at that stage. Had the learned acting judge had deployed before him the arguments that we have heard, and had the benefit of knowing the parameters that we now lay down within which such applications must be determined, I do not think that he would have disposed of the application in that summary way. He would (and should) have refused to certify the claim in respect of the national complaint now described as the claim in respect of Class 2. However, viewing the claim in respect of Class 1 in the light of the requirements of this judgment, he should have required that the appellants supplement their application by presenting a draft set of particulars of claim and afforded them the opportunity of addressing the issues of a prima facie case, the definition of the class, the appropriateness of the relief being claimed and the suitability of the representative (in the sense dealt with in paras 47 and 48) in further affidavits. He should then have given an opportunity to the respondents to file full answering affidavits and to the appellants to reply, after which the application could have been dealt with in the light of a full appreciation of the respective parties‘ cases. [91] As that is the approach that in my judgment should have been adopted, the appeal must succeed in relation to Class 1 and the matter must be referred back to the high court to be dealt with in accordance 65 The Merak: T B & S Batchelor & Co Ltd (Owners of Cargo on the Merak) v Owners of SS Merak [1965] 1 All ER 230 (CA) at 238 ‗'(t)o bring suit, it is said, means to pursue the appropriate remedy by the appropriate procedure'. Dave Zick Timbers (Pty) Ltd v Progress Steamship Co Ltd 1974 (4) SA 381 (D) at 384A-D; IGI Insurance Co Ltd v Madasa 1995 (1) SA 144 (TkA) at 147B-C. with the requirements of this judgment. In view of the fact that this is novel litigation, in which at first instance the parties were in large measure operating in the dark, and in view of the fact that such success as the appellants have obtained as a result of this judgment may in the long run bring them little advantage, the fairest order to make in regard to costs is that all the parties should bear their own costs in this appeal. [92] The following order is made: 1 The appeal against the refusal to certify a class action in respect of the national complaint and the class 2 claimants is dismissed. 2 The appeal against the refusal to certify a class action in respect of the Western Cape complaint and the class 1 claimants is upheld and the application is remitted to the high court for determination in accordance with the principles in this judgment. 3 The order of the high court is set aside and replaced with the following order: (a) If the applicants choose to pursue the application they are granted leave to supplement their papers within two months of this order by delivering supplementary affidavits, to which are annexed a draft set of particulars of claim in respect of their delictual claim against the respondents, embodying such further evidence as they deem meet in amplification of that claim. (b) The respondents are to deliver such further answering affidavits as they deem meet within four weeks of the date for delivery of the affidavits referred to in para (a) of this order. (c) The applicants are afforded two weeks thereafter to deliver their replying affidavits, if any. (d) The costs of the application are reserved. 4 Each party is ordered to pay his, her or its own costs of this appeal. M J D WALLIS JUDGE OF APPEAL Appearances For appellant: W H van der Linde SC (with him Steven Budlender and Michelle le Roux), the heads of argument having been prepared by Wim Trengove SC with Mr Budlender and Ms Le Roux. Instructed by: Abrahams Kiewitz Attorneys, Cape Town Honey Attorneys, Bloemfontein For first respondent: S F Burger SC (with him J P V McNally SC and J A Cassette) Instructed by: Cliffe Dekker Hofmeyr Inc, Sandton Symington & De Kok, Bloemfontein. For second respondent John Dickerson SC (with him Michelle O‘Sullivan and Ross Garland) Instructed by: Edward Nathan Sonnenbergs, Cape Town Matsepes Inc, Bloemfontein For third respondent David Unterhalter SC (with him Max du Plessis and Michelle Goodman) Instructed by: Nortons Inc, Sandton McIntyre & Van der Post, Bloemfontein. For amicus curiae Tembeka Ngcukaitobi, the heads of argument having been prepared by Geoff Budlender SC with Mr Ngcukaitobi. Instructed by: Bloemfontein Justice Centre, 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 November 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Children’s Resource Centre Trust & others v Pioneer Food & others The SCA has referred back to the Western Cape High Court an application by a number of NGOs and five individual consumers for the certification of a class action against three of the major bread producers, Pioneer, Premier and Tiger arising out of anti-competitive conduct that occurred in the Western Cape at the end of 2006. The Court held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where that would be the most appropriate means of litigating the claims of the members of the class. It then laid down the requirements for such an action, commencing with the need for certification by the court at the outset before the issuing of summons. These are that the court asked to certify such an action must be satisfied that there is an objectively identifiable class; a cause of action raising a triable issue, and common issues that can appropriately be dealt with in the interests of all members of the class. There must be appropriate procedures for distributing damages to the members of the class and the representatives must be suitable to conduct the litigation on behalf of the class. In remitting the case to the high court the SCA held that the issue of certification must be determined on complete papers and these must include draft particulars of claim and affidavits indicating that there is a prima facie case on the merits. The application had been dealt with as a matter of urgency and as a result the respondent bread producers had not been able to put their full case before the court. The appellants’ case had changed during the course of the litigation. Its definition of the proposed class was over-broad and the relief it sought inappropriate. However its claim was potentially plausible and as this was the first time that the SCA had laid down the requirements for bringing a class action it was appropriate to afford the appellants an opportunity to remedy the flaws in their papers in compliance with these new requirements. Once they had done so the respondents would have the opportunity to put their full case before the court and the application could be dealt with in accordance with the procedures laid down by the SCA.
2374	non-electoral	2013	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 320/12 In the matter between: LAGOONBAY LIFESTYLE ESTATE (PTY) LTD Appellant and THE MINISTER FOR LOCAL GOVERNMENT, ENVIRONMENTAL AFFAIRS AND DEVELOPMENT PLANNING OF THE WESTERN CAPE First Respondent THE GEORGE MUNICIPALITY Second Respondent CAPE WINDLASS ENVIRONMENTAL ACTION GROUP AND 24 OTHERS Third Respondent Neutral citation: Lagoonbay Lifestyle Estate (Pty) Ltd v The Minister for Local Government, Environmental Affairs and Development Planning of the Western Cape & others (320/12) [2013] ZASCA 13 (15 March 2013) Bench: NUGENT, PONNAN, TSHIQI and MAJIEDT JJA and SALDULKER AJA Heard: 25 FEBRUARY 2013 Delivered: 15 MARCH 2013 Summary: Land use – regulation of - regional structure plan and zoning and subdivision – applications to amend. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape High Court (Cape Town) (Griesel J sitting as court of first instance): 1. The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel to be paid jointly and severally by the respondents. 2. The order of the court below dismissing the application with costs is set aside and in its stead is substituted the following: ‘(a) It is declared that the purported decision by the first respondent dated 28 April 2011 refusing the applicant's application for rezoning and subdivision in respect of the proposed Lagoonbay development is unlawful and is accordingly set aside. (b) It is declared that the second respondent is the competent authority to consider and determine the applicant's application for rezoning and subdivision in respect of the proposed Lagoonbay development and its decision to approve that application on 17 July 2010 is confirmed. (c) The applicant’s application for the amendment of the George and Environs Urban Structure Plan from agriculture/forestry to township development in respect of the farm Hoogekraal 238 is remitted to the first respondent for reconsideration. (d) The respondents are ordered to pay the costs of the application jointly and severally such costs to include those of two counsel.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA (NUGENT, PONNAN, TSHIQI and MAJIEDT JJA and SALDULKER AJA concurring): [1] At the heart of the dispute in this matter is a proposed development on the farm Hoogekraal 238, which is situated within the George Municipality in the Southern Cape. The development, which is being promoted by the appellant, the Lagoonbay Lifestyle Estate (Pty) Ltd (Lagoonbay), envisages a gated community spanning some 655 hectares. It includes: two 18-hole golf courses; 895 single residential houses; 320 single and fractional title lodges; 150 single and fractional title apartments; a hotel, wellness centre, spa and clubhouse precinct; a commercial area; conference centre and private nature reserve. It is by all accounts a fairly ambitious and expensive project - R5 billion is its projected cost. [2] Given its vast scale as also the fact that the land on which the proposed development is to be undertaken is zoned ‘agriculture/forestry’, Lagoonbay had to secure approval for the project in four different phases. The first related to an amendment of the George and Environs Urban Structure Plan (1982) (the structure plan) in terms of s 4(7) of the Land Use and Planning Ordinance 15 of 1985 (LUPO). The second - to an environmental impact assessment process (EIA) in terms of the Environment Conservation Act 73 of 1989 (ECA) and the National Environmental Management Act 107 of 1998 (NEMA). The third - to the rezoning and subdivision of the property in terms of ss 16(1) and 25(1) of LUPO. And, the fourth and final phase - to the approval of building plans under the National Building Regulations and Building Standards Act 103 of 1977. For the purposes of this appeal only the first and third phases are relevant. [3] On 17 July 2007 and in response to an application by Lagoonbay for an amendment to the structure plan the then Minister for Local Government, Environmental Affairs and Development Planning of the Western Cape (the Minister), Ms Tasneem Essop, wrote to the municipal manager of the George Municipality: '1. The Competent Authority for the administration of [LUPO] has decided that the application for the amendment of the Urban Structure Plan, from "Agriculture / Forestry" to "Township Development", on the combined properties known as Hoogekraal 238 in order to allow for a development be approved in terms of section 4(7) [LUPO] subject to the following conditions: 1.1 The applicant must investigate the viability of alternative land-uses which should take into account a triple-bottom line approach, i.e. a principle that must be considered in a balanced manner and within a regional context. 1.2 The current development proposal as it stands should not be regarded as approved. The details of a possible development alternative on the land in question as well as the detail and extent should be resolved during the integrated environment process and planning processes. 1.3 The associated future zoning application in respect of the land concerned shall be subject to approval by the Provincial Government as the location and impact of the proposed development constitutes "Regional and Provincial Planning."'. [4] On 14 June 2010 the Council of the George Municipality adopted the following resolution: '"That the rezoning and subdivision of portion of Hoogekraal no. 238, George (Lagoon Bay Lifestyle Estate) be approved subject to the conclusion of a detailed services agreement and as per the conditions laid down by the administration." . . . In terms of condition 1.3 of the letter of approval dated 17 July 2007 regarding the amendment of the Regional Structure Plan received from the Department of Environmental Affairs and Development Planning, the rezoning application in respect of the land concerned is subject to approval by the Provincial Government.' [5] That decision was communicated to the current Minister, Mr Anton Bredell, who after having considered the matter, wrote to Lagoonbay on 28 April 2011: '1. Your application dated 4 August 2009, referred to me (in terms of condition 1.3 of the approval of the George and Environs Urban Structure Plan, from "Agriculture/Forestry" to "Township Development", dated 17 July 2007), by the George Municipality on 14 July 2010, refers. 2. I, as the Competent authority for the administration of [LUPO], have decided that the applications for: 2.1 the subdivision of Portions . . . of the Farm Hoogekraal No. 238, George, be refused, in terms of section 25 of [LUPO]; 2.2 the rezoning of the consolidated project site consisting of Portions . . . of Hoogekraal . . . George, from "Agricultural Zone 1" to "Subdivisional Area" to allow the following land uses: . . . be refused, in terms of section 16 of [LUPO]; and 2.3 the subdivision of the consolidated project site into . . . be refused, in terms of section 25 of [LUPO].' [6] Aggrieved by that decision of the Minister, Lagoonbay launched an application in the Cape High Court. It cited the Minister as the first respondent, the George Municipality as the second and the Cape Windlass Environmental Action Group, an environmental organisation committed to the protection of the environmental integrity of the Garden Route (also known as the Cape Windlass) and the rural character of the high plateau between George and Mossel Bay, as the third. To the extent here relevant the Notice of Motion read: '3. It is declared that the decision by the First Respondent dated 28 April 2011, in terms of which Applicant's application for the rezoning and subdivision relating to the proposed Lagoon Bay development, was refused, is constitutionally unlawful and a nullity; . . . 5. It is declared that the decision taken by the Second Respondent on 17 July 2010, in terms of which the Applicant's application for the rezoning and subdivision in respect of the proposed Lagoon Bay development, was approved, was a decision taken by the correct designated functionary and constitutes the required approval under the Land Use Planning Ordinance, 15 of 1985, as read with the Constitution.’ That application failed before Griesel J, who dismissed it with costs including those of two counsel, but granted leave to Lagoonbay to appeal to this court. [7] As Nugent JA observed in Johannesburg Municipality v Gauteng Development Tribunal & Others 2010 (2) SA 554 (SCA) para 15: 'The Constitution establishes government at three levels. At national level, legislative authority vests in Parliament and executive authority vests in the President (who exercises it together with other members of the Cabinet). At provincial level, legislative authority vests in the provincial legislatures and executive authority vests in the provincial Premiers (who exercise that authority together with other members of the executive councils). At local level, government comprises municipalities, which must be established for the whole of the territory of the Republic, and the legislative and executive authority of a municipality vests in its municipal council.' [8] What occupies our attention in this case is the interrelationship between the second and third of those three spheres of government. South Africa consists of wall-to- wall municipalities. Municipalities make up regions. And regions, in turn, constitute provinces. A use right in relation to land is a right to utilise that land in accordance with a category of directions setting out the purpose for which the land may be used. The authority to regulate the use of land within a municipal area is conferred upon a municipality, whilst the authority to regulate the use of land within a particular region is a provincial competence. Different considerations will obviously weigh with each in the exercise of those powers. Decisions as to the uses that a municipality will allow will necessarily be influenced by local considerations including its capacity to provide the necessary infrastructure and services within the constraints of its budget (Johannesburg Municipality para 9). Regional planning, on the other hand, is informed by broader interests and objectives. In terms of LUPO, the principal tools for the regulation of land use is through the introduction and enforcement of structure plans at a regional level and zoning schemes at a municipal level. The general purpose of a structure plan is to lay down guidelines for the future spatial development of the area to which it relates in such a way as will most effectively promote the order of the area and the general welfare of the community concerned (s 5). And the general purpose of a zoning scheme is to determine use rights and to provide for control over use rights and over the utilisation of the land in the area of jurisdiction of a local authority (s 11). Thus while a comprehensive land-use regime calls for integrated and coordinated interaction on the part of provincial and municipal government, it goes without saying that the one may not usurp the powers of the other. [9] Here there is no attack on the structure plan. Nor on the Minister’s powers to amend it. Lagoonbay’s case is that the Minister’s decision constituted a final approval of its application to amend the structure plan. I cannot agree. It seems to me that had the Minister not been satisfied with Lagoonbay’s application, it would have been open to her to have refused the amendment. Instead she chose to defer her decision. I cannot comprehend why she was not entitled to say: ‘I will not amend the structure plan until I know exactly what is envisaged’, or ‘I will let you have a provisional approval subject to the relevant officials in my department being satisfied as to what the final development will look like’. For, I daresay, she could hardly have approved the amendment whilst being indifferent to what the development would in due course look like. The logical corollary of that is that she reserved for herself the right to say no after she had been apprised of the detail. It is thus plain that, properly construed, what the Minister did, did not amount to an unconditional approval of Lagoonbay’s application. [10] The Minister’s approval was subject to what I, for convenience, shall refer to as three conditions. Those are set out in paragraphs 1.1 to 1.3 of her letter of 17 July 2007 to the George Municipality. Only the third, which provides ‘the associated future zoning application in respect of the land concerned shall be subject to approval by the Provincial Government . . .’, merits consideration. Zoning, as I have endeavoured to illustrate, was a municipal competence. The rezoning application was thus a matter for the George Municipality, not provincial government. It follows that the Minister usurped for herself and her departmental officials a power that had been reserved for the George Municipality. Accordingly, the condition upon which the Minister’s approval was dependent was incapable of fulfilment. And, in consequence, her final decision, which had been deferred, has become impossible of performance. It follows that the structure plan remains unamended and the application for its amendment falls to be considered afresh by the provincial authorities. The upshot of all of this is that the development cannot go ahead until such time as the Minister approves the application to amend the structure plan. [11] That leaves the rezoning application: The George Municipality resolved to approve Lagoonbay’s rezoning and subdivision application. That decision has not been assailed. The municipality thereafter and in the erroneous belief that that application was subject to approval by the provincial government as per condition 1.3 of the Minister’s letter of approval, referred it to the present incumbent of that office, Mr Bredell, who, without an appreciation that his predecessor had misconceived her powers, proceeded to deal with the matter. That he lacked the authority to do, for it was a matter that was reserved for the administration of the municipality (Johannesburg Municipality para 30). It must follow that his decision in that regard cannot stand and it accordingly falls to be set aside. [12] In the result the appeal succeeds and it is upheld with costs, such costs to include those consequent upon the employment of two counsel to be paid jointly and severally by the respondents. The order of the court below dismissing the application is set aside and in its stead is substituted the following: ‘(a) It is declared that the purported decision by the first respondent dated 28 April 2011 refusing the applicant's application for rezoning and subdivision in respect of the proposed Lagoonbay development is unlawful and is accordingly set aside. (b) It is declared that the second respondent is the competent authority to consider and determine the applicant's application for rezoning and subdivision in respect of the proposed Lagoonbay development and its decision to approve that application on 17 July 2010 is confirmed. (c) The applicant’s application for the amendment of the George and Environs Urban Structure Plan from agriculture/forestry to township development in respect of the farm Hoogekraal 238 is remitted to the first respondent for reconsideration. (d) The respondents are ordered to pay the costs of the application jointly and severally such costs to include those of two counsel.’ _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: For Appellant: M C Maritz (with him H J de Waal) Instructed by: Werksmans Attorneys, Cape Townd Phatsoane Henney Attorneys, Bloemfontein For First Respondent: S Rosenberg SC (with him D Borgstrom) Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein For Third Respondent: I D Potgieter (with him E v d Horst (Ms) Instructed by: Chennels Albertyn, Rondebosch Honey Attorneys 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 15 March 2013 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Lagoonbay Lifestyle Estate (Pty) Ltd v The Minister for Local Government, Environmental Affairs and Development Planning of the Western Cape & others (320/12) [2013] ZASCA 13 (15 March 2013) Media Statement Today the Supreme Court of Appeal (SCA) upheld an appeal by Lagoonbay Lifestyle Estate (Pty) Ltd (Lagoonbay), the proposed developer of a rather ambitious development project in George. The development envisages a gated community spanning some 655 hectares, which will consist, inter alia, of two golf courses, single residential houses, fractional title lodges, a wellness centre, spa and clubhouse precinct, a commercial centre, conference centre and private nature reserve. R5 billion is the projected cost of the development. Given its vast scale, Lagoonbay required approval for the project in four different phases – two of which, namely, an amendment to the George and Environs Structure Plan and a rezoning and subdivision application were relevant for the purposes of the appeal. When Laggonbay’s application for the amendment of the structure plan came before the then Minister for Local Government, Environmental Affairs and Development Planning of the Western Cape (the Minister), she provisionally approved the application. In doing so she made it a condition of her approval that Lagoonbay’s future zoning application shall be subject to approval by provincial government. Thereafter Lagoonbay’s rezoning and subdivision application was approved by the George Municipality. But, acting in accordance with the condition imposed by the Minister, the Municipality then forwarded the application to the present Minister, who refused to approve it. Aggrieved by that refusal, Lagoonbay applied to the Western Cape High Court for various declaratory orders. It cited the Minister as the first respondent, the George Municipality as the second and the Cape Windlass Environmental Action Group, an environmental organisation committed to the protection of the environmental integrity of the Garden Route (or Cape Windlass as it is known), as the third. The George Municipality took no part in the proceedings. The high court dismissed Lagoonbay’s application with costs, but granted leave to it to appeal to the SCA. In upholding the appeal, the SCA held that the rezoning application was a matter for the George Municipality, not provincial government. Thus, according to the SCA, the Minister had usurped for herself and her departmental officials a power that had been reserved for the Municipality when she made her approval of Lagoonbay’s application for the amendment of the structure plan conditional upon the provincial government’s approval of the zoning application. As such, the decision by the Minister to refuse the amendment of the rezoning and subdivision application could not stand and it accordingly fell to be set aside. The SCA confirmed that the George Municipality was the competent authority to consider and determine Lagoonbay's application for rezoning and subdivision in respect of the proposed development and its decision to approve that application was accordingly confirmed. The SCA further held that as Lagoonbay’s application for the amendment of structure plan had not been approved by the Minister it had to be remitted to him for reconsideration. It accordingly upheld the appeal and ordered the Minister and the Cape Windlass Environmental Action Group to pay Lagoonbay’s costs. --- ends ---
3517	non-electoral	2021	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1199/2019 In the matter between: JOSE AQUINO MONTEIRO FIRST APPELLANT AUTOGLEN MOTORS (PTY) LTD SECOND APPELLANT and KENNETH LEONARDO DIEDRICKS RESPONDENT Neutral citation: Monteiro and Another v Diedricks (Case no 1199/19) [2021] ZASCA 015 (2 March 2021) Coram: DAMBUZA, SCHIPPERS and PLASKET JJA and GOOSEN and MABINDLA-BOQWANA AJJA Heard: 4 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 2 March 2021. Summary: Mandament van spolie – principle affirmed that remedy possessory in nature – order requiring restoration of possession must be capable of being carried into effect – high court having ordered party not in possession of spoliated property to restore possession thereof to despoiled party – whether agent of company a co-spoliator - order set aside as not capable of being carried into effect. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mtati AJ sitting as court of first instance): The appeal is upheld with costs. The order of the Gauteng Division of the High Court, Johannesburg is set aside and replaced with the following order: ‘The application is dismissed with costs.’ JUDGMENT Goosen AJA (Dambuza and Plasket JJA concurring) [1] The central issue in this appeal is whether a court can order a party to restore possession of goods of which it is not in possession. It is a question which has served before our courts in applications for a mandament van spolie on numerous occasions. As with most questions regarding the application of legal principles to facts, controversy can arise. In this instance the controversy extends to the proper interpretation of the principles. [2] Mtati AJ, in the Gauteng Division of the High Court, Johannesburg (the high court), on 12 September 2019, ordered the appellants to restore possession of a BMW motor vehicle to the respondent. Leave to appeal to this Court was granted by the high court. The facts [3] The respondent, Mr Kenneth Leonardo Diedricks (Diedricks), was in possession of a BMW motor vehicle and, on 28 August 2019, he delivered the vehicle to the second applicant, Autoglen Motors (Pty) Ltd (Autoglen) for a routine maintenance service. He handed the keys to the vehicle to Roger Quintal (Roger), a consultant employed by Autoglen. At approximately 13h30 he received a telephone call from Roger advising him that he could collect the vehicle. When, later that afternoon, Diedricks went to Autoglen’s premises to collect the vehicle he discovered that the keys to the vehicle had been handed over to representatives of an entity that claimed to own it. [4] It transpired that shortly after Roger had called Diedricks to advise him that he could collect the vehicle two persons, Louis and Diane, had arrived at Autoglen’s premises. They spoke to Sergio Quintal (Sergio), and told him that they represented the owner of the vehicle. They showed him eNATIS1 registration papers which reflected that the vehicle was owned by Street Talk Trading 178 (Pty) Ltd (Street Talk Trading). Sergio was persuaded to hand over the keys to the vehicle but kept possession of the vehicle. When Diedricks went to collect the vehicle, using a spare set of keys, he was informed by Sergio that Autoglen had been instructed by the first appellant, Mr Jose Aquino Monteiro (Monteiro), not to hand over the vehicle to him. It was common cause that Monteiro is a director of Street Talk Trading. 1 This is the national vehicle registration system established in terms of the National Land Transportation Act 5 of 2009. [5] Autoglen retained possession of the BMW motor vehicle until 29 August when it handed the vehicle to Street Talk Trading upon payment of the invoice for the service it had performed on the vehicle. [6] Diedricks launched an urgent spoliation application on 29 August 2019. BMW South Africa (Pty) Ltd (BMW SA) was cited as first respondent, Autoglen as second respondent and Monteiro as third respondent. No relief was sought against BMW SA2 or Monteiro. Diedricks sought only an order that Autoglen restore possession of the BMW motor vehicle to him. He stated in his founding affidavit that until 28 August 2019 he was in peaceful and undisturbed possession of the BMW motor vehicle. He explained that he was a party to a vindicatory action in which Street Talk Trading claimed repossession of the vehicle on the basis of ownership. That action was pending before the high court. He had given no instruction to nor authorised the release of the motor vehicle to Street Talk Trading or Monteiro. He accordingly alleged that Autoglen had unlawfully dispossessed him of the motor vehicle. [7] In its answering affidavit Autoglen set out the circumstances, described above, in which it had released the vehicle to Street Talk Trading. Monteiro, in his answering affidavit, confirmed these facts. He confirmed that a vindicatory action was pending before the high court. He alleged however, that since Street Talk Trading was the owner of the vehicle, it was entitled to take possession thereof as it did. He further stated that Street Talk Trading had sold the vehicle, on 29 August, to a Mr Kioilos and had delivered it to him. He, Monteiro, was at no stage in possession of the vehicle. Street Talk Trading 2 The high court made no order against BMWSA. It is accordingly not before this Court. was no longer in possession thereof having entered into an agreement of sale with a third party. Proceedings before the high court [8] Before the high court, Autoglen and Monteiro based their resistance to the spoliation application on several grounds. Apart from contending that a spoliation order could not be granted against them because they were not able to restore possession, both raised a challenge to the alleged non-compliance with regulations governing the administration of the oath and to the urgency with which the application was pursued. [9] The high court quite correctly ruled that the respondent had made out a proper case for urgency. This aspect was abandoned. Insofar as the alleged non-compliance with rules regulating the administration of the oath is concerned, Monteiro persisted with this issue on appeal. The high court condoned Diedricks’ non-compliance with the regulations. I accept that, for the reasons given by the high court, it was entitled to condone the non- compliance and that it did so properly. [10] In the notice of motion Diedricks only sought an order against Autoglen. However, such relief was abandoned in his replying affidavit. He sought then, without formal amendment of the notice of motion, an order against Monteiro. The high court granted an order, however, that: ‘Possession of a BMW motor vehicle . . . is to be restored to the applicant immediately by the 2nd and / or 3rd respondent. . . .’ The issues [11] Before this court Monteiro and Autoglen relied upon two primary grounds. The first was that a mandament van spolie ought not to have been granted because Diedricks was not, as matter of fact and law, in possession of the motor vehicle when the spoliation occurred. It was submitted that he had, by delivering the vehicle to Autoglen for repairs given up possession thereof. In relation to Autoglen he had consented to its possession. Autoglen could therefore not be said to have spoliated the property. In relation to Monteiro it was submitted that inasmuch as the vehicle was taken into the possession of Street Talk Trading, Diedricks was not deprived of possession since it was then in the possession of Autoglen. On this basis, it was contended that Diedricks did not establish the first requisite for an order restoring possession, namely that he was deprived of possession. [12] The second point relied upon was that neither Autoglen nor Monteiro were in possession of the motor vehicle. Autoglen had passed possession on to Street Talk Trading and could therefore not restore it to the possession of Diedricks. As for Monteiro, he asserted that the vehicle had been sold by Street Talk to a third party. [13] For reasons which will become apparent hereunder I propose to deal with the second issue raised by Monteiro and Autoglen since it is, having regard to the facts, entirely dispositive of the appeal. The principles [14] The mandament van spolie is a possessory remedy which is available to a person whose peaceful possession of a thing has been disturbed. It lies against the person who committed the dispossession. The mandament is not concerned with the underlying rights to claim possession of the property concerned. It seeks only to restore the status quo ante. It does so by mandatory order irrespective of the merits of any underlying dispute regarding the rights of the parties.3 The essential rationale for the remedy is that the rule of law does not countenance resort to self-help. [15] In Rikhotso v Northcliff Ceramics (Pty) Ltd and Others (Rikhotso)4 it was held that: ‘The remedy afforded by the mandament van spolie, expressed in the maxim spoliatus ante omnia restituendus est, is generally granted where one party to a dispute concerning possession of property seizes the property pursuant to what he believes to be his own entitlement thereto. In such cases a court will summarily order return of the property irrespective of either party’s entitlement to possession, and will not entertain argument relating to their respective rights until this has been done. The principle underlying the remedy is that the entitlement to possession must be resolved by the courts, and not by a resort to self-help. By its nature then a spoliation order will usually operate as no more than a preliminary order for restoration of the status quo until the entitlement to possession of the property is determined. The assumption underlying the order is that the property exists and may be awarded in due course to the party who establishes an entitlement thereto.’ [16] This doctrinal basis of the remedy has been approved both by this Court in Tshwelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality and Others5 and the Constitutional Court in 3 Van Rhyn and Others NNO v Fleurbaix Farm (Pty) Ltd 2013 (5) SA 54 (WCC) para 7. 4 Rikhotso v Northcliff Ceramics (Pty) Ltd and Others 1997 (1) SA (W) at 532G-I. 5 Tshwelopele Non-Profit Organization and Others v City of Tshwane Metropolitan Municipality and Others 2007 (6) SA 511 (SCA) para 24. Schubart Park Residents Association and Others v City of Tshwane Metropolitan Municipality.6 [17] Two requirements must be met in order to obtain the remedy. Firstly the party seeking the remedy must, at the time of the dispossession, have been in possession of the property. The second is that the dispossessor must have wrongfully deprived them of possession without their consent. As indicated in Rikhotso the assumption underlying the granting of the remedy is that the property exists and is capable of being restored to the possession of the party that establishes entitlement thereto. It is for this reason that the remedy is not available in circumstances where it has been destroyed. It is also not available, generally, in circumstances where the property is no longer in the possession of the spoliator. [18] Our courts have accepted that in certain circumstances a remedy may nevertheless be granted where the property concerned has been destroyed. These circumstances are not relevant to the present matter. They relate, as indicated in Tshwelopele and Schubart Park to instances where the dispossession also implicates constitutionally protected rights such as the right to housing and shelter. Importantly, it was held in Tshwelopele that there is no need to develop the remedy’s essential possessory character or to graft onto it a constitutional element. In that matter, as in Schubart Park, the remedy was based upon the court exercising its constitutional jurisdiction to grant an appropriate remedy distinct from the essential mandament. 6 Schubart Park Residents Association and Others v City of Tshwane Metropolitan Municipality (Socio- Economic Rights Institute of South Africa as amicus curiae) 2013 (1) SA 323 (CC) para 24. [19] Our courts have also accepted that the remedy may be granted in circumstances in which the property is no longer in the possession of the spoliator, but is held by a third party. In Malan v Dippenaar7 it was held: ‘Na my mening is ’n Hof geregtig om ’n bevel te maak teen ’n spoliator vir teruglewering van die besit van gespolieerde eiendom al is hy nie meer in besit daarvan nie tensy, om een of ander rede—bewys waarvan op die spoliator is—dit duidelik is dat dit onmoontlik vir hom sal wees om die Hof se bevel uit te voer.’8 [20] There is, however, a contrary view to the effect that the mandament does not lie in circumstances where possession of the property has passed into the possession of a bona fide third party.9 In Jamieson and Another v Loderf (Pty) Ltd and Others10 Rogers J outlined and considered the nature of this controversy in the authorities. The court came to the conclusion that it was unnecessary to resolve it. Instead it held, on the facts, that the immovable property in issue in that matter had been sold and transferred to the third party who had no knowledge of the pending spoliation proceedings and had purchased the property bona fide. Accordingly as a matter of fact restoration of the property was not possible. For this reason an order restoring the property could not be granted. The court nevertheless framed a declaratory remedy to vindicate the underlying principle of the rule of law. It did so primarily because the property had been sold after an unsuccessful application for a mandament but while an appeal was pending, in which the court of first instance was found to have been wrong. 7 Malan v Dippenaar 1969 (2) SA 59 (O) at 65G-66A; see also Painter v Strauss 1951 (3) SA 307 (O); Sityata v Eastern Cape Development Corporation [2018] ZAECMHC 34. 8 ‘In my view a Court would be entitled to make an order against a spoliator for the return of possession of spoliated property even if he is no longer in possession thereof unless, for one or other reason – proof thereof being on the spoliator – it is clear that it will be impossible for him to carry out the Court’s order’. 9 Burnham v Neumeyer 1917 TPD 630 at 633; Jivan v National Housing Commission 1977 (3) SA 890 (W) at 894A – 896G. 10Jamieson and Another v Loderf (Pty) Ltd and Another [2015] ZAWCHC 18. [21] In this matter I am similarly of the view that it is unnecessary to enter upon the terrain of the academic controversy regarding the availability, in principle, of the remedy where the spoliator is no longer in possession of the spoliated property. That is so because the mandament by its nature may involve either mandatory elements, such as the delivery of movable property, or prohibitory elements, as in the case where a party is restrained from preventing certain steps being taken to restore possession.11 Where the order cannot be carried into effect it cannot, competently, be granted. Whether the order can be carried into effect is a question of fact to be determined by the court asked to grant an order. [22] In Administrator, Cape and Another v Ntshwaqela 12 the court said of this essential consideration, ‘It is trite that a court will not engage in the futile exercise of making an order which cannot be carried out. So, an order for specific performance of a contract will be refused where performance is impossible; and an order ad factum praestandum will similarly be refused in such circumstance (e.g. an order for maintenance where the defendant is destitute). The principle is embodied in the maxim lex non cogit ad impossibilia, which is discussed in Broome’s Legal Maxims, 10th ed. at 162: “This maxim, or, as it is also expressed, impotentia excusat legem, must be understood in this qualified sense, that impotentia excuses when there is a necessary or invincible disability to perform the mandatory part of the law, or to forbear the prohibitory. It is akin to the maxim of the Roman law, nemo tenetur ad impossibilia, which, derived from common sense and natural equity, has been adopted and applied by the law of England under various and dissimilar circumstances. 11 See Administrator, Cape and Another v Ntshwaqela 1990 (1) SA 705 (A) at 720; [1990] 2 All S 34 (A) 12 Ibid at 720. The law itself and the administration of it, said Sir W. Scott, with reference to an alleged infraction of the revenue laws, must yield to that to which everything must bend, to necessity; the law, in its most positive and peremptory injunctions, is understood to disclaim, as it does in its general aphorisms, all intention of compelling to impossibilities, and the administration of laws must adopt that general exception in the consideration of all particular cases.” The same principle must apply where the question is one not of obeying the law but of complying with an order of court. In the context of the mandament van spolie, impossibility is a question of fact, and where it is contended that an order should not be granted because it cannot be complied with, it must be shown that compliance is impossible on the facts.’ [23] In Eke v Parsons13 the Constitutional Court affirmed the essential characteristics of a court order. It accepted that a court order must be effective, enforceable and immediately capable of execution. In a minority concurring judgment Jafta J stated that: ‘The rule of law requires not only that a court order be couched in clear terms but also that its purpose be readily ascertainable from the language of the order. This is because disobedience of a court order constitutes a violation of the Constitution.’ [24] It bears emphasis that in order to be an effective order, whether or not its language is clear, the order must be capable of being carried into effect by the party under burden of that order. Assessment [25] The facts in this matter are those which, on the principle set out in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd,14 are set out in the 13 Eke v Parsons [2015] ZACC 30; 2016 (3) SA 37 (CC) para 12. 14 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A). answering affidavits filed by Monteiro and Autoglen. It must be accepted therefore that Monteiro, acting in his capacity as a director of Street Talk Trading, caused it to take possession of the motor vehicle from Autoglen. What occurred immediately thereafter, indeed on the day that the spoliation application was launched, is set out in Monteiro’s affidavit as follows: ‘Street Talk had no use for the motor vehicle and for this reason it sold the motor vehicle to Mr Kioilos on 29 August 2019. The agreement in terms of which the motor vehicle was sold was concluded orally. I represented Street Talk and Mr Kioilos acted personally. Pursuant to the sale of the motor vehicle to Mr Kioilos, Street Talk delivered the motor vehicle to Mr Kioilos who is in possession thereof.’ [26] It is apparent from these facts that, to the extent that Monteiro exercised possession over the motor vehicle, he did so on behalf of Street Talk Trading. It is also apparent that Street Talk Trading, a separate legal persona, sold the motor vehicle and perfected the sale by delivery of the merx to the third party purchaser. [27] The order that was granted by the high court required Autoglen and / or Monteiro to restore possession of the motor vehicle to Diedricks. In the light of these facts it is difficult to conceive how Autoglen and Monteiro could give effect to the order. Neither was in possession of the motor vehicle. Autoglen could not be expected to intervene in a contractual relationship to which it was not a party. No doubt, for this reason Diedricks did not move for an order against Autoglen. Nevertheless, an order was made against it by the high court. [28] Just as Autoglen could not, in law or fact, give effect to the order made, so too was Monteiro not capable of giving effect to the order. Certainly, Monteiro could not be compelled to take steps to restore possession without Street Talk Trading, the entity which took possession of the motor vehicle and disposed of it to a third party, being compelled, by a court order, to forbear such steps or to take them itself. Street Talk Trading was not joined in the proceedings. This is inexplicable given the facts disclosed in the affidavit filed by Monteiro and also in the light of the fact there was pending litigation between Street Talk Trading and Diedricks, in which ownership of the motor vehicle was at issue. Had Street Talk Trading and Kioilos, the third party, been properly joined, even after the answering affidavits were filed in the application, Diedricks may well have been able to obtain proper relief. [29] It follows, that upon a proper appreciation of the facts of the matter, an order requiring Monteiro to restore possession of the motor vehicle to Diedricks was not an order with which compliance was possible. [30] It was suggested in argument that Monteiro did not assert that it was impossible to comply with the order. It was also submitted that since the onus is borne by the party asserting such impossibility more was required than the ‘mere’ assertion that the vehicle had been sold. In this regard it was suggested that such ‘mere’ assertion would defeat a party’s entitlement to the restoration of possession and would undermine the administration of justice. In developing the argument, counsel suggested that Monteiro ought to have provided greater detail regarding the sale of the motor vehicle so that the court would be able to assess whether it was a bona fide sale. Counsel was, however, unable to point to any particular allegation regarding the sale which would alter the essential fact, namely that the sale had been perfected. [31] The argument regarding the ‘mere’ assertion of disposal of the vehicle loses sight of how an onus or evidentiary burden is discharged. The burden is discharged upon application of a single standard and upon the facts as are found to be established. In this instance those facts are that the vehicle was sold and delivered to a third party. They do not permit of a finding that an order for restoration could properly be made against Monteiro. The failure to allege that compliance with a restoration order is impossible would not add to the weight in favour of such conclusion. In each instance the court deciding whether to grant a mandament van spolie against a particular respondent must make its decision upon the facts and, as it must necessarily do when making an order, alert to whether the order it makes can be carried into effect. [32] Counsel for Diedricks argued that the rapid sale of the motor vehicle suggested that Monteiro and Kioilos had ‘colluded’ in some manner to frustrate Diedricks’ claim to possession of the motor vehicle. There is however, no evidence to support this. The conclusion, to which the high court came, is based upon an inference. It is however, not the only one which can reasonably be drawn. Even if it were to be accepted that Monteiro conducted himself in a manner which was deliberately calculated to deprive Diedricks of possession of the vehicle and to frustrate his defence to the pending vindicatory action, it is not possible to conclude that Kioilos was a party to such scheme. The fact that Monteiro’s conduct may be reprehensible does not render the order an effective order. [33] For the reasons already indicated, the order against both Autoglen and Monteiro is not one that competently could be made. The appeal must therefore succeed. Costs [34] As already indicated the high court ought not to have granted an order against Autoglen in circumstances where such relief was abandoned at the hearing of the application. Autoglen was obliged to come to this court on appeal to set that order and the associated costs order aside. It was open to Diedricks to abandon the orders obtained against Autoglen. He did not. In these circumstances Autoglen is entitled to its costs on appeal on the ordinary principle that it was successful. It is also entitled to its costs in the high court. [35] The same is true of Monteiro notwithstanding that he, as the agent of Street Talk Trading, conducted himself in manner that suggests a deliberate resort to self-help. For reasons I have already mentioned relief was sought against the wrong party. The order by the high court ought not to have been granted. For as long as that order subsisted and had not been abandoned, Monteiro was obliged to approach this Court. He is accordingly entitled to his costs on appeal. He is also entitled to his costs in the high court for the reasons already mentioned. I do not consider that it will be appropriate to issue a declaratory order such as was done in the Loderf matter, given the particular circumstances of that case. Similar circumstances do not apply in this case. [36] In the result, I make the following order: The appeal succeeds, with costs. The order of the high court is set aside and is replaced with the following order: ‘The application is dismissed with costs.’ ________________________ G. GOOSEN ACTING JUDGE OF APPEAL Schippers JA (Mabindla-Boqwana AJA concurring): [37] I am grateful to my colleague, Goosen AJA, for his statement of the circumstances in which the claim in this case arose and for setting out the issues debated before us. I agree that an order should not have been granted against the second appellant, Autoglen, since Diedricks had abandoned the spoliation order sought against it. However, he persisted with his claim for costs, as the actions by both Autoglen and Monteiro resulted in Diedricks being dispossessed of the vehicle. In my view he is entitled to part of his costs of suit in the high court. [38] Unfortunately, however, I find myself in disagreement with Goosen AJA on the outcome of the appeal in relation to the first appellant, Monteiro. In my judgment, on the particular facts of the case, the high court was correct to hold that Monteiro had unlawfully despoiled Diedricks of his possession of the vehicle, and to grant a spoliation order. [39] To explain my reasons for differing from the majority, it is necessary to state the basic facts, which in my opinion clearly show that Monteiro engineered the dispossession of the vehicle. They are largely common ground. Monteiro is a director of Street Talk Trading, the registered owner of the vehicle. The latter has instituted a vindicatory action against Diedricks in the high court under case number 42871/2018, for delivery of the vehicle (the vindicatory action). That action is defended and when the spoliation application was launched, had reached the stage where the parties were required to deliver their heads of argument. [40] On the morning of 28 August 2019 Diedricks delivered the vehicle to Autoglen for a service. It was not the first time that Diedricks had taken the vehicle to Autoglen for a service or repairs. He had done so in April 2019, without incident. Autoglen sent an automated message via SMS to the contact person on its system, ie Monteiro, confirming delivery of the vehicle. Monteiro would otherwise not have known that the vehicle was at the premises of Autoglen. Monteiro then advised Mr Sergio Quintal (Sergio), Autoglen’s Service Manager that the vehicle should not be handed to Diedricks, but to Street Talk Trading. [41] Around 15h00 on 28 August 2019, Diedricks telephoned Autoglen to arrange transport in order to collect the vehicle. He was referred to Sergio who informed him that Monteiro had instructed him to give the key of the vehicle to one, Louis, which he did. A short while later Diedricks took the spare key and the court documents relating to the vindicatory action, and went to collect the vehicle from Autoglen. He showed those documents to Sergio and said that he was in lawful possession of the vehicle. In addition, Diedricks’ attorney telephoned Sergio and sent him further documents. Sergio however informed Diedricks that Monteiro had given instructions that the vehicle must not be delivered to him, and he refused to deliver it to Diedricks. [42] Consequently, on the same day, ie 28 August 2019, Diedricks’ attorneys wrote to Martins Weir-Smith, the attorneys acting for Monteiro, and to Sergio, advising them of the vindicatory action, and stating that if Diedricks was not placed in possession of the vehicle, the court would be approached urgently for relief. It is not disputed that Monteiro had informed Sergio that the vehicle was not to be released to Diedricks under any circumstances, and that Monteiro would pay any costs incurred by Autoglen. The vehicle was handed to Monteiro at about 11h00 on 29 August 2019, although it was driven away from the premises of Autoglen by someone else. On the same day that the application was launched, Monteiro says that that Street Talk Trading sold the vehicle. The relief against the first appellant [43] In order to obtain a spoliation order, an applicant must show that he was in peaceful and undisturbed possession of a thing; and that he was unlawfully deprived of such possession.15 These two requirements must be proved on a balance of probabilities: a prima facie case will not suffice, since the mandament van spolie is a final court order.16 [44] It is necessary firstly, to consider the argument by counsel for Monteiro that, at the time of the spoliation, Diedricks was not in peaceful and undisturbed possession, because he had handed over control of the vehicle to Autoglen. Diedricks, so it was argued, also gave up the intention to possess 15 WA Joubert and J A Faris The Law of South Africa 2 ed (2014) vol 27 at 113 para 74. 16 P J Badenhorst, J M Pienaar and H Mostert Silberberg and Schoeman's The Law of Property 5 ed (2006). at 292. the vehicle when he delivered it to Autoglen. This argument has no merit and can be disposed of shortly. [45] It is trite that possession comprises an objective or physical element (corpus, detentio) and a subjective or mental element (animus).17 The objective element consists in effective physical control or custody of the thing in a person’s possession. The measure of control required is a question of degree that differs with the circumstances of each case. In this regard, one of the factors taken into account is whether acquisition or retention of possession is being considered.18 Once possession has been required initially, continuous physical contact with or control over the thing, is not required for the retention of such possession.19 [46] As to the mental element, the person must have the will to possess (animus possidendi), which includes (a) an awareness that physical control is being exercised over the thing; (b) the direction of the possessor’s will towards exercising control over the thing for himself; and (c) the peculiar animus required in view of the function served by possession in the particular case.20 As regards (c), where the possessor wishes to protect his possession, the will to have the thing for oneself is required.21 [47] In Yeko v Qana,22 Van Blerk JA said: 17 Lawsa fn 15 at 81 para 74. 18 Lawsa fn 15 at 81 para 75. 19 Lawsa fn 15 at 84 para 78. 20 Lawsa fn 15 at 85 para 80. 21 Rubin v Botha 1911 AD 568 at 579; Groenewald v Van Der Merwe 1917 AD 233 at 240; Lawsa fn 15 at 86 para 80. 22 Yeko v Qana 1973 (4) SA 735 (A) at 739D-E. ‘The very essence of the remedy against spoliation is that the possession enjoyed by the party who asks for the spoliation order must be established. As has so often been said by our Courts the possession which must be proved is not possession in the juridical sense; it may be enough if the holding by the applicant was with the intention of securing some benefit for himself.’ [48] Following this decision, in Bennett Pringle (Pty) Ltd v Adelaide Municipality,23 Addelson J stated: ‘If one has regard to the purpose of this possessory remedy, namely to prevent persons taking the law into their own hands, it is my view that a spoliation order is available at least to any person who is (a) making physical use of property to the extent that he derives a benefit from such use; (b) intends by such use to secure that benefit to himself; and (c) is deprived of such use and benefit by a third person.’ [49] Applied to the present case, Diedricks plainly was in possession of the vehicle, both when it was delivered to and while it remained with Autoglen for a service. He had used the vehicle and held it with the intention of securing that benefit for himself. In the founding affidavit Diedricks says that the vehicle is his primary means of transport for personal and business use. He was still capable of exercising physical control over the vehicle after its delivery to Autoglen. Indeed, the defence of the vindicatory action is a powerful indicator that Diedricks had no intention of forfeiting the benefits derived from his possession of the vehicle. [50] As indicated above, the measure of control required for possession depends on whether the acquisition or retention of possession is in issue. In in the former case, more stringent control is required; and in the latter, 23 Bennett Pringle (Pty) Ltd v Adelaide Municipality 1977 (1) SA 230 (E) at 233. continuous physical contact with the thing is not necessary.24 As stated in Bennett Pringle,25 detentio will be held to exist despite the fact that the claimant may not possess the whole property, or possess it continuously. Thus, in Lawsa, the example is given of a person who has left his coat in the foyer of a dance-hall (normally handed to another for safekeeping). While he is dancing, he retains possession of the coat.26 Likewise, persons who leave their cars to be guarded by an attendant in a parking lot, and those who leave their cars at a carwash, do not lose possession of their cars, although they are unable for a period of time to exercise physical control over the cars. There is no difference in logic or principle between these examples and the facts of this case. Once possession is acquired it will be retained, as long as the possessor is capable of exercising physical control over the thing.27 [51] The contrary approach in Bank van die Oranje Vrystaat v Rossouw,28 in which it was said that the respondent gave up possession of a vehicle when he delivered it to a panel beater for repairs, is in my view, incorrect. The judge in that case seems to acknowledge that the approach is inconsistent with Yeko v Qana and Bennett Pringle.29 Aside from this, it is not clear whether the respondent lost possession upon delivery of the vehicle, or as a result of the panel beater’s exercise of its right of retention. The judge said: ‘Dit sal onthou word dat hy [die bank] die voertuig uit die besit van van ’n derde verkry het nadat hy hom betaal het om sy retensiereg af te los. Na my mening was die verweerder 24 Lawsa fn 15 at 84 para 78. 25 Bennet Pringle fn 24 at 233. 26 Ibid. 27 Lawsa fn 15 at 84 para 78. 28 Bank van die Orange Vrystaat v Rossouw 1984 (2) SA 644 (C) at 648C. 29 Bank van die Orange Vrystaat fn 28 at 648H. op daardie stadium nie in besit van die voertuig nie. Met ander woorde, die nodige detentio het by die verweerder ontbreek.’30 [52] It follows that when Diedricks delivered the vehicle to Autoglen, he did not relinquish possession of it. Otherwise viewed, the mandament van spolie – rooted in the rule of law, whose main purpose is to preserve public order by preventing persons from taking the law into their own hands31 – is unavailable to the party unlawfully deprived of possession in circumstances such as the present, and those described in paragraph 50 above. [53] This brings me to the second issue: whether the high court was correct to grant a spoliation order. The majority judgment states that Monteiro, ‘as the agent of Street Talk Trading, conducted himself in a manner that suggests a deliberate resort to self-help’. That Monteiro deliberately resorted to self- help is, on his own version, in my view beyond question. He played a pivotal role in the dispossession. Without Monteiro’s active intervention, Diedricks could not and would not have been dispossessed of the vehicle.32 A person who has ordered or ratified an act of spoliation is also deemed a spoliator.33 What the facts show, in my respectful opinion, is that Monteiro did not exercise possession or control over the motor vehicle on behalf of Street Talk Trading. But even if he had, it would not assist him, for two reasons. The first is that throughout, Monteiro was a co-spoliator and the claim that he acted in 30 Bank van die Orange Vrystaat fn 28 at 648C. Emphasis added. My translation: ‘It will be recalled that it [the bank] obtained the vehicle from the possession of a third party after it had paid the third party to relinquish its right of retention. In my opinion, the defendant at that stage was not in possession of the vehicle. In other words, the necessary detentio on the part of the defendant was lacking.’ 31 Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality and Others 2007 (6) SA 511 (SCA) para 22; 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) paras 10-12. 32 Adminstrator, Cape, and Another v Ntshwaqela and Others 1990 (1) SA 705 (A) at 718G-719A. 33 See Lawsa fn 15 at 113 para 107 and the authorities there collected. a representative capacity is immaterial, in my view. So too, the fact that Diedricks must have known of Street Talk Trading’s claim of ownership. The second is that a better title to possession of a thing – Street Talk Trading’s ownership of the vehicle – is not a defence to the mandament van spolie.34 [54] In Administrator Cape v Ntshwaqela,35 the applicants, who had been unlawfully dispossessed of their sites on a farm in Noordhoek in the Western Cape, obtained a mandament van spolie against the former Cape Provincial Administration (CPA), the South African Police (SAP) and the owners of the farm. It was argued that the role of the CPA was essentially to provide transport for the removal of the applicants and that of the SAP, to maintain order and to prosecute should that prove necessary. Rejecting this argument, Nicholas AJA said: ‘There can be no doubt that the CPA and the SAP were co-spoliators with the respective owners. . . . Mr Comrie, who appeared for the second and third respondents in this Court, said that although the CPA was vitally involved in the pre-planning, its role was essentially that of providing transport for the removal of the squatters from Dassenberg Farm and The Tip to Khayelitsha. It played no part in the demolition of structures or bulldozing activities or anything else. This is no doubt correct, but the part played by the CPA was nevertheless a vitally important one: without its assistance and support there could have been no removal of the squatters. Mr Comrie said that the role of the SAP was essentially to maintain order and prosecute if that should prove necessary; the police were not involved in the demolition of any structures. I do not think that this is a correct assessment of the part played by the police. They provided the driving force for the operation.’36 [55] Nicholas AJA went on to say: 34 Lawsa fn 15 at 124 para 111. 35 Ntshwaqela fn 32. 36 Ntshwaqela fn 32 at 718C-F. ‘There is a dearth of authority on the question of the liability of co-spoliators. In his unpublished doctoral thesis, Die Mandament van Spolie in die Suid-Afrikaanse Reg (1986), Prof D G Kleyn says the following at 253: “7,2.2.7 Teen wie mandament aangevra word Die mandament is in die eerste plek teen die spoliator self gerig. Voorts kan diegene wat opdrag gegee het tot ’n daad van spolie (prinsipaal), asook diegene wat dit ratifiseer (rationem habere) aangespreek word. Die rede vir laasgenoemde persone se aanspreeklikheid is volgens Zoesius “quia ratihabitio in delictis mandato comparatur”. Die gedagte is dus dat die ratifiseerder as ’n prinsipaal en derhalwe as ’n socius delicti, beskou word. Waar die spoliator wat in opdrag gehandel het aangespreek word, word geen tussenkoms van die prinsipaal toegelaat nie aangesien spolie ’n “species delicti” is. Die vraag of beide die prinsipaal en die lashebber en of net een van die twee aangespreek kan word, word ontbeantwoord gelaat deur genoemde skrywers.” In support of these statements, the learned author refers to Christaneus, Schrassert, Zoesius and Nassau la Leck. Although Prof Kleyn does not specifically discuss the liability of co-spoliators, the principle is clear and there can be no doubt that they are liable as joint wrongdoers.’37 [56] Applied to the facts of this case, Monteiro was the spoliator. He was the driving force behind the removal of the vehicle. He ordered and executed the act of spoliation from start to finish. Upon being informed that the vehicle was at the premises of Autoglen, Monteiro decided to take possession of the vehicle unlawfully, and instructed Sergio not to release it to Diedricks under any circumstances. When Sergio refused to release the vehicle on 28 August 2019, it was Monteiro who went to the premises of Autoglen and convinced 37 Ntshwaqela fn 32 at 718H-719A. Emphasis added. My translation: ‘7.2.2.7 Against whom the mandament may be sought The mandament is in the first place directed at the spoliator himself/herself. Moreover, those who gave an instruction for an act of spoliation (principal), as well as those who ratify if (rationem habere) can be held liable. The reason for the liability of the latter persons is according to Zoesius, “quia ratihabitio in delictis mandato comparatur”. The idea is thus that the person who ratifies is regarded as a principal and therefore as a socius delicti. Where the spoliator who has acted on instruction is sought to be held liable, the interposition of the principal is not permitted because spoliation is a “species delicti.” The question whether the principal and the agent or only one of the two can be held liable, is left unanswered by the said writers.’ the dealer principal to release it, against payment of Autoglen’s invoice. The vehicle was released to Monteiro on condition that he (not Street Talk Trading) would deal with any issues which could arise from its release. [57] The sole reason for his instruction that Diedricks should not be placed in possession of the vehicle, in Monteiro’s own words, was this: ‘Since Street Talk is the owner of the vehicle, it was perfectly entitled to take possession of the motor vehicle as it did. For this reason, I advised the second respondent’s representative Mr Sergio Quintal that the motor vehicle should be handed to Street Talk and not the applicant.’38 [58] Plainly, it was Monteiro who took this decision. On his own showing, he was intent on unlawfully despoiling Diedricks of possession of the vehicle, well-knowing that ownership thereof was the subject of the vindicatory action. Street Talk Trading, the registered owner of the vehicle, instituted that action. It did so – it must be accepted – precisely because it could not take the law into its own hands. In these circumstances, it is inconceivable that Monteiro could honestly have believed that he, or Street Talk Trading, was entitled to take possession of the vehicle. This is the clearest indication that Monteiro’s conduct was mala fide. [59] Apart from this, the fact that Street Talk Trading is the registered owner of the vehicle, or that it produced proof of its ownership to Autoglen, is not a permissible defence in spoliation proceedings: possession of the spoliatus must first be restored before the merits of the case can be considered.39 The 38 Emphasis added. 39 Nino Bonino v De Lange 1906 TS 120 at 122; Nienaber v Stuckey 1946 AD 1049 at 1053; Lawsa fn 15 at 124 para 111. essence of spoliation proceedings is the restoration of possession before anything else is decided (spoliatus ante omnia restituendus est).40 [60] The next question is whether restoration is impossible. In principle, the mandament should apply in all cases where a person dispossesses another even without acquiring possession himself, when in so doing he has taken the law into his own hands, and when he is afterwards capable of restoring the status quo ante.41 The authors of Silberberg and Schoeman’s The Law of Property, rightly in my view, state that transfer of possession to a third party cannot imply that restoration will always per se be impossible.42 Where a third party has acquired possession a spoliation order can still be granted, unless the spoliator proves that it is impossible for him to give effect to the order.43 [61] In Administrator Cape v Ntshwaqela Nicholas AJA said:44 ‘In the context of the mandament van spolie, impossibility is a question of fact, and where it is contended that an order should not be granted because it cannot be complied with, it must be shown that compliance is impossible on the facts.’ [62] Monteiro simply failed to show that it was impossible for him to comply with the spoliation order. The explanation for his alleged inability to restore possession, comprises the most perfunctory assertions. He said: ‘Street Talk had no use for the motor vehicle and for this reason it sold the motor vehicle to a Mr Kioilos on 29 August 2019. The agreement in terms of which the motor vehicle was sold to Mr Kioilos was concluded orally. I represented Street Talk and Mr Kioilos 40 Tswelopele fn 31 para 21; Ngqukumba fn 31 para 10. 41 Lawsa fn 15 at 120 para 110. 42 Silberberg and Schoeman's The Law of Property fn 16 at 305. 43 Painter v Strauss 1951 (3) SA 307 (O) at 318B-D; Malan v Dippenaar 1969 (2) SA 59 (O) at 65H-66C; Silberberg and Schoeman's The Law of Property fn 16 at 305. 44 Ntshwaqela fn 32 at 720G-H. acted personally. Pursuant to the sale of the motor vehicle to Mr Kioilos, Street Talk delivered the motor vehicle to Mr Kioilos who is in possession thereof.’ [63] To begin with, apart from Monteiro’s say-so, there is no evidence of the sale of the vehicle to the third party on 29 August 2019. Unsurprisingly, no affidavit by Mr Kioilos confirming the so-called sale has been filed. Monteiro gives no indication of the purchase price, whether the vehicle was sold for cash or on terms, whether the purchase price has been paid, or whether the proceeds of the alleged sale have been paid to Street Talk Trading. And the whereabouts of the vehicle were masked with the simple statement that Mr Kioilos ‘is in possession thereof’. [64] Now, if the courts were to countenance such a ‘defence’, in my view every application for a spoliation order would be dismissed by the sleight of an allegation that the thing has been sold in terms of an oral agreement, and is in the possession of a third party. Little wonder then, that Mtati AJ, correctly, came to the following conclusion: ‘Under the circumstances, I am not persuaded that the action of the second respondent [Autoglen] to release the vehicle was to err on the side of caution, nor am I persuaded that the reasons proffered by the third respondent [Monteiro] of being no longer in possession of the motor vehicle was as a result of a sale to an innocent party and that same was bona fide.’ [65] Further, it will be recalled that in the afternoon of 28 August 2019, Monteiro’s attorneys had been informed that a spoliation application would be brought. The papers in that application were issued the next day and served on his attorneys by e-mail, the very day on which Monteiro says he sold the vehicle. The time at which the papers were served does not appear from the record. Monteiro does not say precisely when on 29 August 2019, the sale was concluded. This too, is not surprising. What is clear, however, is that the vehicle could not have been delivered to a buyer before 11h00 on 29 August 2019 – when it was handed to Monteiro by Autoglen. And there is nothing in the answering affidavit to suggest that Mr Kioilis is an innocent third party. But even on the assumption that he is, Monteiro did not allege that it was impossible for him to restore possession of the vehicle; neither did he adduce any evidence of steps he had taken to do so.45 The high watermark of his case on this score was that the application had to fail, simply because he was not in possession of the vehicle. [66] What is more, Monteiro himself said that Street Talk Trading ‘had no use for the motor vehicle’, which he knew or ought to have known when he instructed Sergio not to hand it to Diedricks. Why then was it necessary for Monteiro to give this instruction and remove the vehicle from the premises of Autoglen in the first place, if not to unlawfully deprive Diedricks of possession of the vehicle, and subvert the vindicatory action? This, after he was given notice of the intended spoliation proceedings. The most plausible and readily apparent inference to be drawn from the above facts,46 is that throughout, Monteiro acted mala fide, with the intention of despoiling Diedricks of possession and undermining the vindicatory action. [67] For these reasons, the high court’s finding that Monteiro unlawfully dispossessed Diedricks of the vehicle, and that he took an easier route by taking the law into his own hands so as to avoid the vindicatory action, cannot 45 Ntshwaqela fn 32 at 720G-H. 46 Ocean Accident and Guarantee Corporation Ltd v Koch 1963 (4) SA 147 (A) at 159D, affirmed in Kruger v National Director of Public Prosecutions [2019] ZACC 13; 2019 (6) BCLR 703 (CC) para 79. be faulted. Monteiro’s version that a spoliation order should not have been granted because he was no longer in possession of the vehicle, or because the order could not be complied with as restoration was impossible, does not raise a genuine dispute of fact. That version is so clearly untenable that the high court rightly rejected it merely on the papers.47 This approach is permitted because motion proceedings are quicker and cheaper and it is in the interests of justice that unvirtuous respondents should not be allowed to hide behind patently implausible versions on affidavit.48 For this reason, the robust practice of rejecting a plainly untenable version on the papers alone, referred to in Fakie,49 is not out of place in spoliation proceedings. [68] As has been shown above, the high court was correct to grant an urgent spoliation order against Monteiro, in light of his patently untenable version and the circumstances at the time that the application was launched and when judgment was delivered. However, more than a year has passed since the granting of that order. There is no evidence as to the present whereabouts of the vehicle or who has possession or ownership of it. Does the possibility, in the particular circumstances of this case, that an order to restore possession of the vehicle may not be able to be carried into effect leave Diedricks without a remedy? In my view, not, particularly because it was Monteiro who by his conduct, made it impossible for Diedricks to obtain full relief.50 [69] For these reasons, I consider that a declaratory order that Diedricks was unlawfully dispossessed of the vehicle, together with an order for costs in the 47 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. 48 Fakie NO v CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) paras 55-56. 49 Fakie fn 48 para 56. 50 Jamieson and Another v Loderf (Pty) Ltd and Others [2015] ZAWCHC 18 para 59. high court, is appropriate.51 This, it seems to me, is a matter of principle: the essential aim of the mandament van spolie, which is deeply rooted in the rule of law, is the preservation of the legal order, by preventing individuals from taking the law into their own hands to enforce their rights. Its purpose is to vindicate the rule of law.52 As Prof Kleyn has observed, the Constitutional Court’s decision in Ngqukumba ‘underscores and heralds a re-look at the interpretation and application of South African common law provisions within the new supreme constitutional context’.53 The relief against the second appellant [70] Autoglen opposed the spoliation application on the same grounds as the first appellant. It claimed that Diedricks was not entitled to any relief at all; that he was not in possession or control of the vehicle at the time of the dispossession; and that it was unable to return the vehicle to Diedricks ‘due to the documentation handed to [Sergio] on behalf of the third respondent [Monteiro]’. As stated earlier, Autoglen handed the vehicle to Monteiro on 29 August 2019 after he had convinced the dealer principal to do so and undertook to deal with any consequential issues. It did so on the impermissible basis that Diedricks was not the owner of the vehicle. As already stated, a court does not consider title, or the merits of the case, in a spoliation application. [71] It is common ground that when the spoliation application was launched, Diedricks was unaware of what had transpired at the dealership on 29 August 51 Jamieson fn 48 paras 59 and 62. 52 Ngqukumba fn 31 para 10. 53 D G Kleyn and B Bekink ‘The Mandament van Spolie, The Restitution of Unlawful Possession and the Impact of the Constitution’ 2016 (79) THRHR 308 at 321. 2019, more specifically that Autoglen had handed over the vehicle to Monteiro. That Autoglen was a co-spoliator, in my opinion, is also beyond doubt. However, in the replying affidavit Diedricks gave notice of his intention to amend the notice of motion that possession of the vehicle be restored only by Monteiro; and to seek a costs order against both Autoglen and Monteiro because of their collective actions which resulted in the dispossession. [72] Given Diedricks’ stated intention not to proceed against Autoglen, the high court erred in granting the order that it did against Autoglen. On the facts, and given that Diedricks achieved substantial success, I consider it reasonable that in relation to Autoglen, he should be awarded costs up to and including the date of delivery of the replying affidavit, ie 2 September 2019. [73] In the result, I would make the following order: The first appellant’s appeal is dismissed with costs, including the costs of two counsel. The second appellant’s appeal succeeds with costs. Paragraphs 2 and 3 of the order of the court a quo are set aside and replaced with the following order: ‘1 It is declared that the third respondent on 29 August 2019 unlawfully despoiled the applicant of his possession of a BMW motor vehicle with engine number 67259275 and chassis number WBA8F36060NT48007. The third respondent is directed to pay the applicant’s costs of suit. The second respondent is directed to pay the applicant’s costs of suit, up to and including 2 September 2019.’ A. SCHIPPERS JUDGE OF APPEAL Plasket JA [74] I am in agreement with the order proposed by my brother Goosen AJA and agree too with his reasoning for arriving at the conclusion that the appeal should succeed with costs. Consequently, I disagree with the order proposed by my brother Schippers JA and with his reasons therefor. I consider it necessary to deal briefly with why I disagree with his reasoning. In doing so, I rely largely on the facts set out by Goosen AJA in paragraphs 3 to 7 of his judgment. [75] Schippers JA’s judgment raises two issues that require consideration. The first is the capacity in which Monteiro acted and whether he was a co- spoliator; and the second is whether Monteiro was able to restore possession of the vehicle to Diedricks. [76] It is undoubtedly so that Monteiro played a prominent role in the spoliation of the vehicle and its disposal by sale. This, on its own, does not necessarily mean that, as Schippers JA concluded, he was ‘a co-spoliator’ or ‘the spoliator’. Given these conclusions, it is necessary to consider the facts in finer detail. Those facts are, on the basis of the Plascon-Evans rule,54 the facts put up by Diedricks that have not been disputed or denied, and the facts put up by Monteiro and Sergio. 54 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd fn 47 at 634E-I. [77] What appears clearly from Monteiro’s answering affidavit is that, at all times, he acted in a representative capacity on behalf of Street Talk Trading, a company. He acted in that capacity because he was a director of the company. It must be accepted as a fact for purposes of this case that the vehicle at the centre of this dispute belonged to Street Talk Trading. Monteiro stated that, on 28 August 2019, Autoglen advised Street Talk Trading by SMS that the vehicle was at its premises for a service. It did so because, according to Sergio, Autoglen’s records reflected that Street Talk Trading was the owner of the vehicle. Because Street Talk Trading was the owner of the vehicle, Monteiro, obviously in his capacity as a director, told Sergio, when they met on 29 August 2019, ‘that the motor vehicle should be handed to Street Talk and not to the applicant’. And Monteiro expressly made it clear that he acted in a representative capacity when Street Talk Trading sold the vehicle to Kioilos on 29 August 2019: having stated that the sale agreement was concluded orally, he said that ‘I represented Street Talk and Mr Kioilos acted personally’. [78] It is clear too from Sergio’s answering affidavit that whatever Monteiro did, he did on behalf of Street Talk Trading: Monteiro provided Sergio with proof that Street Talk Trading was the owner of the vehicle; when Monteiro spoke to Sergio for the first time on the afternoon of 28 August 2019, he tried to persuade Sergio to hand over the vehicle to ‘the owner’; and the following morning, when they met for the first time, Monteiro succeeded in persuading Autoglen ‘to release the motor vehicle to the owner against the payment of the invoice in relation to the service which had been carried out, and on condition that he, the third respondent, would deal with any issues which could arise from [Autoglen] handing the vehicle over to the owner’. [79] Sergio’s interactions with Louis and Diane are to the same effect: they told him that they ‘represented the owner of the motor vehicle’ and provided him with proof of Street Talk Trading’s ownership; Louis made it clear to Sergio that ‘as far as the owner was concerned, I was not to return the motor vehicle to [Diedricks]’; and Sergio told Diedricks that ‘on instructions of the owner, I had given the keys of the motor vehicle to Louis on its behalf’. By this stage, Sergio had never had any dealings with Monteiro and there is no evidence that Louis and Diane acted on his instructions. [80] In my view, Schippers JA has misconstrued the evidence in important respects. First, it was not Monteiro who told Sergio, immediately after the SMS was sent automatically, that the vehicle was not to be returned to Diedricks but should be handed over to Street Talk Trading. Instead that was the upshot of Sergio’s dealings with Louis and Diane. Secondly, when Sergio spoke to Diedricks on the afternoon of 28 August 2019, he did not tell him that Monteiro had instructed him to give the keys to Louis. Rather, he told Diedricks that, on the instructions of ‘the owner’, he had given the keys to Louis ‘on its behalf’. Thirdly, Sergio did not say, when Diedricks went to Autoglen (armed with spare keys), that Monteiro had told him not to release the vehicle to Diedricks. Instead, it was Louis who had said earlier that the owner’s view was that the vehicle should not be released to Diedricks, and Sergio had simply told Diedricks that ‘due to the documentation handed to me on behalf of the third respondent, I was unable to give him the motor vehicle’. [81] This reference to the ‘third respondent’ requires clarification. It cannot be a reference to Monteiro because, at that stage, on the afternoon of 28 August 2019, Sergio had not had any dealings with Monteiro, and Louis and Diane had not mentioned him: all they had said was that they represented the owner. Furthermore, it was only ‘[l]ater that same afternoon’ that he had ‘a discussion’ with Monteiro. In these circumstances, it is fair to assume that the reference to the third respondent was, in fact, intended to be a reference to Street Talk Trading. [82] The effect of Schippers JA’s judgment is to collapse the distinction between the separate legal personality of Street Talk Trading and its human agents such as Monteiro. It also has the effect of collapsing the distinction between a principal and an agent by seeking to visit liability on an agent for a representative act on behalf of the principal. Both of these outcomes are in conflict with first principles of company law55 and the law of agency.56 They would have far-reaching and deleterious consequences for both company law and the law of agency. [83] The visiting of liability on Monteiro is not a proper or acceptable alternative to the course Diedricks ought to have followed namely, citing Street Talk Trading as a respondent, rather than one of its agents. His failure to do so is inexplicable, and no attempt was made to explain or justify this failure. In the light of the litigation concerning the ownership of the vehicle, Diedricks must have known of Street Talk Trading’s claim of ownership; and if he did not, he was apprised of this fact clearly enough before he deposed to his founding affidavit in this matter. Despite amending his notice of motion (in his reply) in order to change his target for the spoliation order from 55 Du Bois (ed) Wille’s Principles of South African Law (9 ed) at 400-401; Webb & Co v Northern Rifles; Hobson & Sons v Northern Rifles 1908 TS 462 at 464-465; Morrison v Standard Building Society 1932 AD 229 at 238; Lewis & Co (Pty) Ltd v Pietersburg Ko-operatiewe Boere Vereeniging and Others 1936 AD 344 at 353. 56 Du Bois fn 55 at 997-998; Blower v Van Noorden 1909 TS 890 at 899-900. Autoglen, he chose to cite Monteiro and seek an order against him, rather than Street Talk Trading. In my view, this amounts to a fatal non-joinder. [84] I turn now to the second issue, which is in truth the nub of the case – whether restoration of the vehicle to Diedricks by Monteiro is possible, and whether an order directing restoration of possession would be effective. Schippers JA found that restoration was not impossible and that the court below was correct in finding that the sale of the vehicle was mala fide. The order proposed by Schippers JA, however, does not confirm the order of the court below. Instead, it would set aside that order and replace it with an order declaring that the dispossession was unlawful. I am of the view for the reasons that follow that the finding and the proposed order are both unsustainable. [85] It is a defence to an application for a mandament van spolie that it is impossible for the person who dispossessed the possessor to restore possession of the spoliated property to him or her. The reason that underpins this defence is that courts generally do not make orders that cannot be carried out. Whether restoration of possession is possible or not is a question of fact.57 [86] It is not in dispute that Monteiro, in his capacity as a director of Street Talk Trading, sold the vehicle to one Kioilos, and that the vehicle was delivered to Kioilos. (There is no evidence upon which an inference may be drawn that Kioilos was not a bona fide purchaser.) Monteiro’s evidence of the sale was rejected by Schippers JA on the basis that it did not create a genuine dispute of fact and was ‘clearly untenable’. I am unable to agree. 57 Administrator, Cape and Another v Ntshwaqela fn 11 at 720C-H. [87] There was no dispute of fact insofar as the sale of the vehicle by Street Talk Trading to Kioilos is concerned. In the founding papers, an order was sought against Autoglen only, because Diedricks obviously believed that Autoglen was in possession of the vehicle. Evidence of the sale of the vehicle only emerged in Monteiro’s answering affidavit and, in his reply, Diedricks said that he had ‘no knowledge of the alleged sale of the vehicle’. Diedricks never applied for Monteiro to be cross-examined on the issue. Monteiro’s version that Street Talk Trading sold the vehicle must be accepted, even if Monteiro did not provide the detail that Schippers JA expected him to provide. The absence of those details does not alter the fact that the evidence is that the vehicle was sold and delivered to Kioilos. That is an inescapable bottom line: the vehicle has been sold and is no longer in the possession of Street Talk Trading. [88] In order for Monteiro, in his personal capacity, to restore possession of the vehicle to Diedricks, as he was ordered to do by the court below, he would have to take legal steps to set aside the contract of sale entered into by Street Talk Trading and Kioilos. It seems to me that he may encounter insurmountable difficulties. For instance, I have my doubts that a person who is not a party to a contract has standing to institute proceedings to set it aside. Secondly, if he cleared this hurdle, he would have to establish a basis for the setting aside of the agreement. No one has suggested what this may be. Even if a ground was established, Kioilos may take the view that he wishes to abide by the contract even if it was induced by a misrepresentation or non- disclosure. All of this illustrates that, whatever one thinks of Street Talk Trading’s conduct in selling the vehicle, the issuing of an order directing Monteiro – in his personal capacity, I stress – and not Street Talk Trading, to restore possession of the vehicle to Diedricks, would be an exercise in futility. The order would be impossible to enforce. [89] I do not understand why Schippers JA, having rejected the defence of the impossibility of the restoration of the property, proposed the alteration of the order of the court below to a declarator that Monteiro ‘unlawfully despoiled’ Diedricks of his possession of the vehicle. On the one hand, to issue a declarator rather than an order directing the restoration of possession defeats the purpose of a mandament van spolie. Its very object is that ‘possession of the thing of which the applicant has been dispossessed should be restored to him’.58 If, on the other hand, he entertained doubts that possession could be restored, a declarator could not have been made because a successful defence would have been raised. [90] Schippers JA’s reliance on Jamieson and Another v Loderf (Pty) Ltd and Others,59 in which a declarator was issued, requires brief consideration. This judgment is not authority for the proposition that a declarator may be issued if restoration of possession is impossible. The declaratory relief granted on appeal is tied tightly to the peculiar facts of the case. The appellants had brought an application for a mandament van spolie. The application was dismissed. They took the matter on appeal to a full court. After the dismissal of the application, but before the hearing of the appeal, the property was sold by the first respondent. The full court concluded that the appellants should have succeeded in the court of first instance but, because of the disposal of the property, could not make the order that should have been made. Instead, in 58 Burnham v Neumeyer fn 9 at 633. 59 Footnote 10. order to reflect the success of the appeal in these unusual circumstances, the full court replaced the court of first instance’s order dismissing the application with a declarator that the dispossession had been unlawful. Similar circumstance do not prevail in this case. [91] For these reasons, additional to those set out in Goosen AJA’s judgment, I am in respectful agreement with the order proposed by him. C. PLASKET JUDGE OF APPEAL Appearances For first appellant: H A Van der Merwe Instructed by: Maree & Partners, Bloemfontein For second appellant: B D Hitchings Instructed by: Maree & Partners, Bloemfontein For respondent: M S Baloyi SC C Rowji Instructed by: Webbers 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: 2 March 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. Monteiro and Another v Diedricks (119/2019) [2021] ZASCA 015 (2 March 2021) The Supreme Court of Appeal (the SCA) today upheld an appeal against an order by the Gauteng Division of the High Court, ordering the appellants to restore possession of a BMW motor vehicle to the respondent. In August 2019 the respondent, Diedericks, delivered a BMW motor vehicle to Autoglen Motors (Pty) Ltd (Autoglen) for routine maintenance. Street Talk Trading 178 (Pty) Ltd (Street talk Trading), the registered owner of the vehicle received a SMS notification from Autoglen that the vehicle was under maintenance. At the time Street Talk Trading and Diedericks were parties to a vindicatory action brought by Street Talk Trading. Following receipt of the SMS notification Monteiro, the first appellant, as director of Street Talk Trading took steps to ensure that Autoglen delivered the vehicle to Street Talk Trading. Upon discovery of this Diedericks launched a spoliation application against Autoglen. He cited BMW South Africa and Monteiro as respondents, although no spoliation order was sought against them. Autoglen opposed the relief on the basis that it was not in possession of the vehicle having delivered it to Street Talk Trading. Monteiro opposed the costs order sought on the basis that Street Talk Trading had taken possession of the vehicle and had sold it to a third party. The high court granted an order requiring Autoglen and Monteiro to restore possession of the motor vehicle. In a split decision (penned by Goosen AJA with Dambuza and Plasket JJA concurring) the SCA found that the high court had erred in granting a spoliation order against Autoglen when such relief had been abandoned by Diedericks. It further found that the facts established that Monteiro had acted in his capacity as director of Street Talk Trading; that Street Talk trading had taken possession of the vehicle and that it had sold the vehicle. The order compelling Monteiro to restore possession was not capable of being carried into effect since Monteiro was not in possession of the vehicle and could not take steps to intervene in the contract of sale entered into between Street Talk Trading and the third party. The majority accordingly upheld the appeal with costs. The minority (per Schippers JA with Mabindla-Boqwana AJA concurring) found that both Autoglen and Monteiro were, on the facts disclosed by them, co-spoliators together with Street Talk Trading. It was found that Monteiro had acted deliberately and mala fide to secure possession of the vehicle by Street Talk Trading in order to subvert the vindicatory action to which it was a party. He had thereupon sold the vehicle to a third party. It was found that no evidence was presented by Monteiro to establish that the sale was bona fide. Nor was evidence presented to establish that an order requiring him to restore possession could not be carried into effect. The minority accepted that the high court order against Autoglen was wrongly granted in the light of such relief having been abandoned. In a separate judgment concurring with the majority, Plasket JA, took issue with the minority judgment’s factual findings. He held that upon the application of the principles by which facts are determined in opposed applications, the averments of Monteiro must be accepted. The effect was that Monteiro was acting as the agent of Street Talk Trading. The effect of the minority judgment, Plasket JA held, was to collapse the distinction between the separate legal personality of Street Talk Trading and its human agents. The failure to join Street Talk Trading, in the circumstances of the case, constituted a fatal non-joinder. Plasket JA also held that essential difficulty faced by Diedericks was that the order requiring Monteiro to restore possession of the vehicle was not capable of being carried into effect.
2723	non-electoral	2012	SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 221/2011 Reportable In the matter between: ANDREW LIONEL PHILLIPS APPELLANT and SOUTH AFRICAN RESERVE BANK 1ST RESPONDENT MINISTER OF FINANCE 2ND RESPONDENT PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA 3RD RESPONDENT Neutral citation: Andrew Lionel Phillips v South African Reserve Bank & Others (221/11) [2012] ZASCA 38 (29 March 2012). Coram: Mthiyane DP, Farlam, Majiedt JJA et Petse, Ndita AJJA Heard: 02 March 2012 Delivered: 29 March 2012 Summary: Costs – Uniform Rules of Court – Interpretation of Rule 16A – Whether the findings and order for the appellant to pay the respondents’ wasted costs are appealable – whether presumption of regularity applies where no evidence that Rule 16A notice was dealt with by registrar under Rule 16(A)(1)(c) and (d) - practice to be followed where Rule 16A applies – whether general rule as to costs in constitutional matters applies to ancillary orders in such cases. ORDER On appeal from: Gauteng North High Court, Pretoria (Makgoba J, sitting as court of first instance): 1. The appeal is upheld with costs, including the costs of two counsel. 2. The costs order of the court below is set aside. _______________________________________________________________ JUDGMENT FARLAM JA (MTHIYANE DP concurring) Introduction [1] The appellant in this matter instituted proceedings in the North Gauteng High Court, Pretoria, against the first respondent, the South African Reserve Bank, the second respondent, the Minister of Finance, and the third respondent, the President of the Republic in January 2009. The relief he sought was: (a) an order reviewing and setting aside a decision by the first respondent, the South African Reserve Bank, not to return certain foreign currency seized from him at Oliver Tambo International Airport on 10 February 2008; and (b) orders declaring that the Exchange Control Regulations promulgated in Government Notice R 1111 of 1 December 1961, as amended, alternatively certain provisions in the Regulations are inconsistent with the Constitution and invalid. [2] The third respondent, from whom no relief was sought, did not participate in the proceedings. Judgment of the court a quo [3] On 1 June 2010, the date on which the application was set down for hearing, it was postponed sine die by Makgoba J, who ordered the appellant to pay the first and second respondents’ wasted costs (including in the case of both respondents, those occasioned by the employment of two counsel). The learned judge made this order because in his view, the appellant had not complied with rule 16A of the Uniform Rules of Court. [4] Rule 16A(1) reads as follows: ‘(a) Any person raising a constitutional issue in an application or action shall give notice thereof to the registrar at the time of filing the relevant affidavit or pleading. (b) Such notice shall contain a clear and succinct description of the constitutional issue concerned. (c) The registrar shall, upon receipt of such notice, forthwith place it on a notice board designated for that purpose. (d) The notice shall be stamped by the registrar to indicate the date upon which it was placed on the notice board and shall remain on the notice board for a period of 20 days.’ [5] The court a quo found that there was no indication that the rule 16A notice which the appellant’s attorney had prepared when the application was instituted was filed or, if it was filed with the registrar, that it was put on the notice board as required by the rule. [6] The learned judge also found that it was the responsibility of the appellant to satisfy himself that the registrar had caused the notice to be put on the notice board and that the notice which the appellant’s attorney had prepared did not adequately set out the basis on which the constitutionality of the Exchange Control Regulations was challenged. [7] He motivated this part of his judgment as follows: ‘If one were to look at the purported notice which does not in itself comply with the rule in that as Mr. Lüderitz [one of the counsel for the first respondent] correctly said or argued no particularities of the constitutional challenge had been set out fully. Much as in a notice of appeal a litigant is expected to set out the grounds of appeal both on facts and on law it is likewise in this particular matter that the grounds of constitutional challenge should be succinctly set out for the interested party to know what the case is all about.’ [8] He had earlier referred to what Ackermann J said in Shaik v Minister of Justice and Constitutional Development & others 2004 (3) SA 599 (CC) at 610H–I (para 24) about the purpose of rule 16A. The passage to which he referred reads as follows: ‘The purpose of the Rule is to bring to the attention of persons (who may be affected by or have a legitimate interest in the case) the particularity of the constitutional challenge, in order that they may take steps to protect their interests.’ He proceeded: ‘I underline the particularity of the constitutional challenge.’ [9] He proceeded to hold that non-compliance with rule 16(A)(1) cannot be condoned and that if the appellant wished to proceed with the constitutional challenge the matter would have to be postponed for the rule to be complied with and that the appellant would have to bear the wasted costs occasioned by the postponement. [10] The conclusion that the costs of the postponement had to be borne by the appellant was based on a finding that the postponement had been brought about ‘by the conduct of the [appellant] and nobody else and it is only fair that [he] should bear the costs thereof’. [11] During the proceedings in the court a quo a notice in terms of rule 16A, which bore the registrar’s stamp but did not have the case number written on it, was handed in from the bar. The registrar’s stamp indicated that it was filed with the registrar on 28 January 2009. Facts [12] The notice reads as follows: ‘BE PLEASED TAKE NOTICE that the Applicant herein has raised a constitutional issue in the application filed under the above case number. TAKE NOTICE FURTHER that the Applicant seeks an order: Declaring that paragraphs (a), (c) and (d) of Regulation 3(1) of the Exchange Control Regulations as promulgated by Government Notice R1111 of 1 December 1962 and as amended (“the Exchange Control Regulations”) are inconsistent with the Constitution and are invalid. Declaring that all of the provisions of Regulation 3(3) of the Exchange Control Regulations, following the semi colon at the end of paragraph (b) of that sub-regulation, are inconsistent with the Constitution and invalid. Declaring that Regulation 3(5) of the Exchange Control Regulations is inconsistent with the Constitution and are invalid. In the alternative to prayers 1 to 3 above, declaring that the Exchange Control Regulations in their entirety are inconsistent with the Constitution and are invalid. AND TAKE NOTICE FURTHER that any interested party in any of the aforementioned constitutional issues may, with the written consent of all the parties to the proceedings, given by no later than 20 days after filing of the Plaintiff’s Affidavit, be admitted therein as amicus curiae, upon such terms and conditions as may be agreed upon in writing by the parties. KINDLY forthwith place this notice on the notice board designated for this purpose and ensure that same remains on such notice board for a period of 20 days, whereafter you shall endorse the notice to state on which day the notice was placed on the notice board and, on expiry of the 20 day period, place such endorsed notice in the court file.’ [13] At no stage prior to 17 May 2010 did either the first or the second respondent raise the contention that rule 16A had not been complied with. [14] On 17 May 2010 the second respondent filed his heads of argument, in which the following was said: ‘We submit that both the content and the context of the challenge address a constitutional issue. In the circumstances the applicant ought to have issued the required Rule 16A notice, putting all participating parties, and any prospective parties with an interest in the legislation that is challenged herein, on terms regarding the orders that it seeks. Its failure to do so has compromised its ability to proceed with the constitutional challenge to the legislation.’ [15] By this time it was, of course, too late for the appellant to comply with the rule before the date on which the application was set down for hearing. [16] At some stage after 8 April 2010 when the appellant’s attorney met with the first respondent’s attorney to reach agreement on the index and record for the high court hearing the court file was misplaced in the registrar’s office. The appellant’s attorney has reconstructed the record in the main application but he had not retained a copy of the bundle of additional non-contentious documents, which included the original rule 16A notice, and so was only able to produce the copy of the notice to which I have referred. [17] When the case was called before the court a quo both the first and the second respondents argued that rule 16A had not been complied with and that the appellant was left, as counsel for the first respondent put it, ‘with a choice of either abandoning [his] constitutional challenge or seeking a postponement of the hearing of the application’. Counsel for the first respondent went on to submit that whatever course he adopted the appellant should ‘be held responsible for the wasted costs occasioned by his failure to comply with the rules of Court’. Counsel for the second respondent did not go so far as regards costs because it was only in the event of the appellant’s choosing to ask for a postponement that they submitted that the appellant should tender the respondents’ costs. Application for leave to appeal [18] The appellant applied for leave to appeal against the costs order to the full bench of the North Gauteng High Court. Because he was seeking leave to appeal against a costs order he set out in the founding affidavit filed on his behalf the exceptional circumstances which indicated why, in his submission, it was in the interests of justice for leave to appeal to be granted against the costs order: cf s 21A(3) of the Supreme Court Act 59 of 1959, as amended. [19] Makgoba J refused the application for leave to appeal with costs, including those occasioned by the employment of two counsel by both first and second respondent. [20] In his judgment refusing leave, Makgoba J held that his decision that rule 16A had not been complied with was a ruling which was not a final order, that his costs order had not been given in what he called ‘proceedings…wholly of a constitutional nature’ (so that the general rule that adverse costs orders should not be made against parties seeking to assert constitutional rights unless there are exceptional circumstances did not apply) and that the appellant had been ‘rather lackadaisical in conducting the proceedings’. In his main judgment the judge had justified this finding on the basis that the appellant’s attorney, who was aware of the requirements of rule 16A(1) and that they had to be complied with before the matter could properly be before the court, had only gone ‘as far as just filing the notice’ and had ‘never satisfied himself that the registrar [had] duly publicised the…notice and endorsed [it]’. [21] The judge appears to have been of the view that exceptional circumstances as referred to in s 21A(3) were not present because he said: ‘In the circumstances I am not persuaded that another court will come to a different finding, especially if I also have to regard to the provisions of section [21A] of the Supreme Court Act, as [counsel for the second respondent] has presented that the appeal in this matter will not take this matter any further whatsoever.’ [22] On petition this court granted the appellant leave to appeal to it against the whole of the order made by the court a quo on 1 June 2010. Its order also contained the following: ‘The affidavits that were filed by the parties in the application for leave to appeal to this court are admitted as evidence in the appeal and must be included in the record.’ Issues [23] The following issues were debated during the hearing of the appeal: (a) whether Makgoba J’s findings and order are appealable; (b) whether the notice compiled by the appellant’s attorney complied with rule 16A(1); (c) whether the appellant or the registrar bore the duty to ensure that a rule 16A notice is placed on the notice board for a period of 20 days; (d) whether it is appropriate for an organ of state to raise any alleged non- compliance with rule 16A at a time and in a manner that prevents the defect being corrected and then to require an applicant either to pay the costs of a postponement to have his or her matter proceed on the merits or to abandon his or her constitutional challenge in order to allow the matter to proceed immediately; (e) whether the appellant could have avoided the problem by moving for a separation of issues under rule 33(4) and proceeding only with the review, leaving the constitutional challenge to be decided later if the review did not succeed; and (f) whether the general rule in constitutional litigation that an unsuccessful litigant in proceedings against the State ought not to be ordered to pay costs applies also to costs orders relating to what were called ancillary matters, such as the question which arose in the present matter. Discussion (a) Is the order appealable? [24] Counsel for both respondents contended that the order was not appealable because it is not definitive of the rights of the parties and not dispositive of at least a substantial portion of the relief claimed in the main proceedings. In this regard reliance was placed on what was said by this court in, inter alia, Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 536B-C. [25] It must be remembered, however, that, as Hefer JA said in Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) at 10F, the passage in Zweni: ‘does not purport to be exhaustive or to cast the relevant principles in stone.’ [26] The question of appealability in a case such as this, where a party seeks to attack on appeal an order made in judicial proceedings which have not yet terminated, was discussed by Nugent JA in a judgment with which the other members of the court concurred in NDPP v King 2010 (2) SACR 146 (SCA) at 166e–167c (paras 50–51), where he said the following: ‘There will be few orders that significantly affect the rights of the parties concerned that will not be susceptible to correction by a court of appeal. In Liberty Life Association of Africa Ltd v Niselow (in another court), which was cited with approval by this court in Beinash v Wixley 1997 (3) SA 721 (SCA), I observed that when the question arises whether an order is appealable what is most often being asked is not whether the order is capable of being corrected, but rather whether it should be corrected in isolation and before the proceedings have run their full course. I said that two competing principles come into play when that question is asked. On the one hand justice would seem to require that every decision of a lower court should be capable not only of being corrected but of being corrected forthwith and before it has any consequences, while on the other hand the delay and inconvenience that might result if every decision is subject to appeal as and when it is made might itself defeat the attainment of justice. In this case it was said on behalf of Mr King that the order is not appealable because it is interlocutory. Whether that is its proper classification does not seem to me to be material. I pointed out in Liberty Life that while the classification of the order might at one time have been considered to be determinative of whether it is susceptible to an appeal the approach that has been taken by the courts in more recent times has been increasingly flexible and pragmatic. It has been directed more to doing what is appropriate in the particular circumstances than to elevating the distinction between orders that are appealable and those that are not to one of principle. Even the features that were said in Zweni v Minister of Law and Order to be characteristic, in general, of orders that are appealable was later said by this court in Moch v Nedtravel (Pty) Ltd not to be exhaustive nor to cast the relevant principles in stone. As appears from the decision in Moch, the fact that the order is not ‘definitive of the rights about which the parties are contending in the main proceedings’ and does not ‘dispose of any relief claimed in respect thereof’, which was one of the features that was said in Zweni to generally identify an appealable order, is far from decisive.’ [27] The matter was further discussed in two recent decisions of this court Health Professions Council of South Africa v Emergency Medical Supplies and Training CC t/a EMS 2010 (6) SA 469 (SCA) at 473C – 475E (paras 14 – 19) and Government of the RSA v Von Abo 2011 (5) SA 262 (SCA) at 270B - D (para 17), where Snyders JA (with whom the rest of the court concurred) said: ‘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.’ [28] In the present case the order made by Makgoba J will stand, unless upset on appeal in these proceedings, until at the earliest the main case is dealt with on appeal. If it was wrongly made (as I believe it was, for reasons set out later in this judgment) it may well give rise to considerable inconvenience and prejudice and impede the attainment of justice in cases involving constitutional issues where arguments arise as to whether rule 16A(1) has been complied with. In my view that in itself affords sufficient reason to allow an appeal at this stage. [29] A further aspect which was argued in the context of appealability was whether exceptional circumstances within the meaning of s 21A(3) of the Supreme Court Act 59 of 1959 are present so as to permit an appeal to be brought solely against a costs order. In my view the obtaining of a decision by this court on the interpretation of rule 16A(1)(b) as well as the other issues relating to the question as to whether the rule was complied with satisfies this requirement. (b) Did the notice comply with the rule? [30] The Constitutional Court and this court have repeatedly in recent years stressed the need to interpret the Constitution and other statutory provisions purposively (see, eg, Department of Land Affairs v Goedgelegen Tropical Fruits 2007 (6) SA 199 (CC) at 217F – 218A (para 51) and Standard Bank Investment Corporation v Competition Commission; Liberty Life Association of Africa Ltd v Competition Commission 2000 (2) SA 797 (SCA) at 810D – 812E (paras 16 to 22)). [31] Rule 16A(1)(I) has accordingly to be interpreted in the light of the purpose for which it was enacted, viz. to bring cases involving constitutional issues to the attention of persons who may be affected by or have a legitimate interest in such cases so that they may take steps to protect their interests by seeking to be admitted as amici curiae with a view to drawing the attention of the court to relevant matters of fact and law to which attention would not otherwise be drawn (Shaik v Minister of Justice and Constitutional Development, supra, at 610H–I (para 24) and In re Certain Amicus curiae Applications: Minister of Health v Treatment Action Campaign 2002 (5) SA 713 (CC) at 715F – G (para 5)). [32] In the Shaik case, as appears from the passage quoted above in para 8 of this judgment, Ackermann J said that the purpose of the rule was to bring to the attention of the persons affected ‘the particularity of the constitutional challenge’. This passage was stressed by the judge in his judgment and he relied on it in coming to his conclusion that the appellant’s notice did not comply with the rule. But Ackermann J’s reference to particularity related to the desirability of specifically identifying any statutory provision being attacked on the ground of its constitutional invalidity. In the Shaik case, although the notice said that the applicant contended that s 28(6) of the National Prosecuting Authority Act 32 of 1998 was unconstitutional and invalid because it violated the rights entrenched in certain sections of the Bill of Rights, the constitutional attack in the High Court and the Constitutional Court focused on the alleged constitutional inadequacy of s 28(8) of the Act. In the present case the notice correctly and specifically identifies the constitutional provisions under attack. [33] The question arising in this case is thus different from the question in the Shaik case. It is this: does a notice which correctly specifies the statutory provisions being attacked comply with the rule if it simply states that the attack is based on inconsistency with the Constitution without specifying the grounds of the alleged inconsistency? [34] What is an ‘issue’? Among the definitions of the word ‘issue’ in the Shorter Oxford English Dictionary are ‘a point on the decision of which something depends or is made to rest’ and ‘a point or matter in contention’. [35] What is the point on the decision of which the appellant’s case depends, and which is in contention in this case? The answer is clear: the constitutional invalidity of the Exchange Control Regulations. Is it necessary for the point to be elaborated by specifying, as the judge held, the grounds of the challenge? I think not. When one bears in mind the purpose of the Rule as stated above it is clear that while the wording in the Rule might in another context be interpreted so as to require the grounds of the constitutional challenge to be stated this is not the case here because the role of the prospective amici to whom the notice is directed is ‘to draw the attention of the court to relevant matters of law and fact to which attention would not otherwise be drawn...[He or she] must raise new contentions’ (In re Certain Amicus curiae Applications, supra at 715F - G (para 5).) [36] All a prospective amicus needs to know in a case such as this is what provision is being attacked. He or she can then examine the court file to see whether the matters of law and fact he or she considers relevant are contained in the applicant’s papers. If not, he or she may wish to raise such matters to assist the court correctly to decide the issue before it. [37] Indeed it is difficult to conceive of a case where the perusal of the founding affidavit (or where appropriate the answering affidavit in which a constitutional issue is raised) would not be required. After all an amicus curiae may only be admitted if his or her participation would draw the attention of the court to relevant matters of law and fact to which attention would not otherwise be drawn, i.e. if he or she raised new contentions. [38] Counsel for the second respondent contended that it should not be necessary and would in fact be unduly burdensome for a prospective amicus to have to peruse the court file to ascertain whether to apply to be admitted as an amicus. I cannot agree. It is difficult to see how a description of the issue can be ‘succinct’ if it is not such as to require an examination of the file. Furthermore it should be apparent after a relatively brief perusal of the founding affidavit in such a case what contentions are being relied on by the applicant. But such a perusal will in almost all cases be required by a prospective amicus who wants to see if there is something new to be put before the court. [39] Support for this approach in the matter may in my opinion be found in the decision of the Constitutional Court in Nyathi v MEC, Department of Health, Gauteng 2008 (5) SA 94 (CC). [40] In that case, as appears from the judgment of the court a quo reported at [2007] JOL 19612 (T), the rule 16A notice before the court read as follows: ‘Be pleased to take note that the above Applicant has lodged an application with this Honourable Court for, inter alia, an order declaring s 3 of the State Liability Act, no. 20 of 1957 unconstitutional. In terms of the aforesaid section no execution, attachment or like process shall be issued against the Defendant or Respondent in any action or proceedings or against any property of the state. Applicant contends that the provisions of the aforesaid sections [are] inconsistent with the Constitution of South Africa and should be declared unconstitutional.’ [41] The court a quo (Davis AJ) held that that notice complied with the rule. When the case came before the Constitutional Court the court clearly agreed because it allowed the appeal to proceed without more. As the purpose of the rule is to alert prospective amici the Constitutional Court was under a duty to satisfy itself that the Rule had been complied with. It was obviously aware of Davis AJ’s finding regarding rule 16A. The only inference one can draw is that it also was satisfied that the rule had been complied with. The fact that the respondents did not raise the point is of no moment because as I have said the Constitutional Court was obliged to satisfy itself on the point. [42] In the course of argument reference was also made to a case before the Constitutional Court in which the present appellant featured as one of the appellants, viz Phillips v National Director of Public Prosecutions 2006 (1) SA 505 (CC). The appellant and his co-applicants unsuccessfully sought leave from the Constitutional Court to appeal against a judgment of this court dealing with the powers of the High Court to rescind orders made in terms of s 26(1) of the Prevention of Organized Crime Act 121 of 1998. This court’s interpretation of s 26(10) of that Act was sought to be attacked by the appellant on the ground that it did not advance the values enshrined in the Bill of Rights and was inconsistent with the Constitution. The constitutional complaints raised by the appellant in the Constitutional Court had not been argued in this court and no notice had been give to interested parties of the intention to argue them. In para 43 of the judgment of the Constitutional Court (at 520A–C) Skweyiya J said: ‘It is not ordinarily permissible to attack statutes collaterally. The constitutional challenge should be explicit, with due notice to all affected. This requirement ensures that the correct order is made; that all interested parties have an opportunity to make representations; that the relevant evidence can, if necessary, be led and that the requirements of the separation of powers are respected.’ [43] The passage does not support the arguments of the respondents in this case. The constitutional challenge here was explicit and the screening of the notice on the notice board (a topic I deal with below) constitutes due notice to all affected. [44] In all the circumstances I am satisfied that the notice drawn up by the appellant’s attorney complied with the rule. (c) Did the appellant or the registrar bear the duty to ensure that the rule 16A notice was placed on the notice board for a period of 20 days and was it so placed? [45] It is clear from rule 16A(1)(c) that it is the duty of the registrar to see to it that the notice is put on the notice board designated for that purpose and I think it must follow that it is his or her duty to see to it that it stays there for the required period. [46] In his replying affidavit, which neither respondent sought to challenge, the appellant’s attorney, correcting to some extent what he had said in his founding affidavit, described what happened when the papers in this application were issued as follows: ‘I handed several copies of the notice of motion, the founding affidavit and the Rule 16A notice to an official in the Registrar’s office to be issued with a case number and stamped with the court stamp. The official returned the originals of all the documents to me. I then passed the original Rule 16A notice back to her, explained that it was a notice in terms of Rule 16A and asked her to exchange it for a copy because her office needed the original version of the Rule 16A notice. I do not recall the precise wording of her response, but she took back the original, handed me the copy and verbally acknowledged that she knew what a Rule 16A notice was and that her office was required to keep the original.’ [47] In the circumstances he was, in my view, perfectly entitled to assume that the registrar’s staff would do what the rule enjoined them to do with the notice. The court a quo’s finding that he was ‘lackadaisical’ is entirely unfounded. [48] I am satisfied that it can be accepted that the notice was datestamped by the registrar’s representative and placed on the notice board designated for the purpose and that it remained there for 20 days. The maxim omnia praesumuntur rite esse acta donec probetur in contrarium (all [official acts] are presumed to have been duly performed until the contrary is proved), on which the appellant’s counsel relied, applies, as it did, for example, in Cape Coast Exploration Ltd v Scholtz 1933 AD 56. In that case one of the issues was whether the defendant had been sent a letter from the Civil Commissioner for Namaqualand notifying him that his diamond prospecting certificate had been withdrawn. A copy of the letter had been found in the commissioner’s office but no evidence was led to the effect that the original had been posted. Wessels CJ said (at 76): ‘Absolute proof is well nigh impossible where the frail recollection of men is a factor, and especially is this the case when we have to deal with the recollection of officials who almost automatically do much of their routine work. Hence the importance of the maxim omnia praesumuntur rite esse acta. See Byers v Chinn and Another 1928 A.D. at p. 332. We must presume that an official will carry out the ordinary routine work of his office, for in our experience this is what usually occurs. Hence we must presume that it an official letter is written and a copy filed, that the former is dispatched in the ordinary course of business to the person concerned and that he has received it.’ [49] The placing of the notice on the notice board and seeing to it that it remained there for 20 days was part of the ordinary work of the registrar’s office: it must be presumed, until the contrary is proved, that that work was done. [50] It follows from what I have said thus far that the point taken by the first and second respondents was incorrect and should not have been upheld by the court a quo. It follows further that the appeal should be allowed and that the order of the court a quo relating to costs should be set aside and replaced with an order directing the first and second respondents jointly and severally to pay the wasted costs occasioned by the postponement, including those resulting from the employment of two counsel. The remaining issues argued by counsel accordingly fall away. But in view of the importance of two of them in future constitutional litigation and the fact that they were fully argued I propose setting out my views in order to provide guidance in future cases. (d) Did respondents act inappropriately by raising the Rule 16A point at a late stage? [51] The first of these issues was whether the first and second respondents, by raising the rule 16A(1) point at a stage when it was not possible to remedy it and by seeking to put the appellant to the choice of either abandoning his constitutional challenge or paying the costs of the necessary postponement (which it was common cause before us exceeded the amount which the appellant was seeking to recover from the first respondent), had acted inappropriately. [52] In the founding affidavit in the application to this court for leave to appeal, the appellant’s attorney referred to three previous cases where the first respondent had taken the same rule 16A point, and put the applicant concerned to the same election as in this case and at the same stage of the proceedings. In one of these cases the applicant abandoned his constitutional challenge in order to avoid the threat of a large costs order. This was not denied on behalf of the first respondent, whose attorney in his reply merely denied that the point had been taken belatedly. [53] In the appellant’s attorney’s founding affidavit to which I have referred, reference was made to other cases in which the rule 16A(1) point had been taken by other organs of state ‘with a view’, so contended the appellant’s attorney, ‘to having the relevant constitutional challenge postponed, dismissed or abandoned.’ He concluded this part of his affidavit as follows: ‘49. It is clear that various organs of state have adopted a strategy of complaining of non-compliance with Rule 16A in order to contend that an applicant in a constitutional challenge is non-suited and to dispose of the matter before the constitutional issue had been properly ventilated. I respectfully submit that this practice is entirely inappropriate: 49.1 Organs of state (including the First and Second Respondents) have a duty to respect, protect and promote the rights and valued contained in the Constitution, and to assist the Courts. Their conduct in litigation – and the decision whether or not to take a particular point and how to do so – must be informed by the values of the Constitution and must take into account all relevant circumstances, with a view to promoting (rather than frustrating) the determination of constitutional issues. 49.2 This Court has found that it is improper for an organ of state to obstruct the ventilation of constitutional disputes: “when an organ or government invokes legal processes to impede the rightful claims of its citizens, it not only defies the Constitution, which commands all organs of State to be loyal to the Constitution and requires that public administration be conducted on the basis that ‘people’s needs must be responded to’. It also misuses the mechanisms of the law, which it is the responsibility of the courts to safeguard.” (Permanent Secretary, Department of Welfare, Eastern Cape v Ngxuza 2001 (4) SA 1184 (SCA) at 1197D – E (para 15).) 49.3 I respectfully submit that a responsible organ of state involved in constitutional litigation should raise any concerns it has regarding Rule 16A as soon as a Rule 16A notice has been, or ought to have been, filed. It should not wait until the resolution of its concerns about Rule 16A will necessitate the postponement of a constitutional hearing; still less should it attempt to take advantage of this situation by using the threat of costs orders flowing from the postponement to persuade an applicant to abandon his/her constitutional issues. 50. The award of costs against the Applicant in the present matter provides the Respondents with a perverse incentive to continue to invoke Rule 16A in a manner which is calculated to suppress constitutional litigation. They have made clear that they regard their practice of doing so as, not only defensible, but constitutionally appropriate. 51. The only way to prevent the Respondents and other organs of state from acting in the way the Respondents have acted in relation to Rule 16A in the present case (and other organs of state have acted in the cases referred to above) is to make clear that organs of state will have to bear their own wasted costs if they raise Rule 16A points belatedly.’ [54] I do not think that a finding can be made on the material before this court that the first respondent and/or other organs of state have adopted a practice of deliberately raising complaints of non-compliance with rule 16A(1), at a time when the defect cannot be remedied and a postponement or the abandonment of the constitutional challenge is inevitable. (e) Suggested practice to be followed in the future [55] Regard being had, however, to the fact that it appears that problems (real or imagined) relating to compliance with rule 16A appear to arise not infrequently in constitutional cases, it is advisable that those responsible for drafting (and settling) founding affidavits in constitutional cases (and, where appropriate opposing affidavits in which constitutional issues are raised which are not previously raised in the proceedings), should make it a practice of inserting an allegation that a notice (a copy of which is annexed) has been prepared in terms of the rule, and is to be handed to the registrar for the necessary action when the founding (or opposing) affidavit is filed. It is also advisable that the notice, when removed from the notice board after the 20 day period has elapsed and put in the file, be included among the ‘necessary’ documents which go before the judge. The attorneys acting for departments or organs of state which are respondents in such cases should also follow the practice of checking as soon as the papers are received that the rule has been complied with and, if it appears not to have been, of bringing the omission to the attention of the applicant’s attorney. Constitutional litigation should not be a game of forfeit and State respondents should take timeous steps to assist applicants to have constitutional issues raised with a minimum of obstruction. (f) Applicability of general principle regarding costs in constitutional cases [56] The other question with which I wish to deal is whether it would have been appropriate to order the appellant to pay the first and second respondents’ wasted costs if there had not been compliance with the rule. In this regard it was argued by counsel that the general principle applicable in constitutional litigation that an unsuccessful litigant in proceedings against the State ought not to be ordered to pay costs should have been applied. [57] This principle is extensively considered in such cases as Affordable Medicines Trust v Minister of Health 2006 (3) SA 247 (CC), especially at 296H– 297H (para 138) and Biowatch Trust v Registrar, Genetic Resources 2009 (6) SA 232 (CC) at 245C – 249E (paras 21 to 28). The rationale therefor was stated in the Affordable Medicines case as being the possible ‘chilling effect’ that an award of costs may have on litigants wishing to vindicate their constitutional rights, where the litigation in question is not frivolous or vexatious. [58] It is clear in my view that this principle does not only apply to orders on the merits in constitutional cases but also to what may be described as ancillary points. That that must be so follows, inter alia, from the fact that a litigant wishing to vindicate a constitutional right might well be discouraged from going to court by the fear that some technical or procedural slip on the part of his legal representatives might result in a costs order with financially ruinous consequences for him or her. [59] Support for this approval may be found in the judgment of the Constitutional Court in the Biowatch case at 246E (para 23), where Sachs J in giving the judgment of the court said that: ‘people might be deterred from pursuing constitutional claims because of a concern that even if they succeed they will be deprived of their costs because of some inadvertent procedural or technical lapse.’ [60] It follows in my view that even if the court a quo’s finding that rule 16A(1) had not been complied with had been correct it would still have erred in ordering the appellant to pay the wasted costs of the postponement. What it should have done in the event was to make no order as to costs. Proposed Order [61] I propose that the following order be made: The appeal is allowed with costs, including those occasioned by the employment of two counsel. The costs order made in the court a quo is set aside and replaced with the following order: ‘The first and second respondents are ordered jointly and severally to pay the applicant’s wasted costs (including those resulting from the employment of two counsel) occasioned by the postponement.’ I G FARLAM JUDGE OF APPEAL MAJIEDT JA (PETSE AND NDITA AJJA concurring): [62] I have read the judgment of my colleague, Farlam JA. I am in agreement with all aspects of his judgment, save for the question concerning the appellant’s compliance with rule 16A(1)(b), ie the requirement that a notice must contain a clear and succinct description of the constitutional issue concerned. In view of my conclusion on this aspect, a different order in respect of the costs in the high court to the one proposed by Farlam JA must inevitably follow. [63] The factual matrix is sufficiently set out in the judgment of Farlam JA and does not need repetition. It bears emphasis at the outset that the appellant’s challenge to the exchange control regulations was in the main an attack on the constitutionality of the relevant regulations. The belated attempt by counsel for the first respondent during argument in this court to characterize the challenge as primarily an administrative review with the constitutional challenge as an alternative, was plainly a mere afterthought. The point was not raised at all in the high court or in the heads of argument in this court. That submission failed to get off the ground and the matter was further exacerbated by the fact that those portions of the papers dealing with the appellant’s administrative review challenge were omitted from the record, I assume designedly so. The case clearly concerned a constitutional challenge and the requirements of rule 16A therefore had to be complied with. [64] Farlam JA has already reproduced the rule. I think it is manifestly clear on a plain reading of rule 16A(1)(b) that it means what it says: a litigant raising a constitutional issue must furnish a brief description of the relevant constitutional issue. To simply give notice that the impugned regulations are ‘inconsistent with the Constitution and invalid’, begs the very question raised in rule 16A(1)(b). Such a description does not in my view provide an answer to the enquiry what the constitutional issue is. [65] It is indeed correct, as Farlam JA states in paras 30 and 31, that a purposive approach is to be adopted in the interpretation of the Constitution and other statutes. I am also in agreement that the purpose for which rule 16A has been enacted is to bring constitutional issues to the attention of persons affected by them or with a legitimate interest in them. I, however, differ with my colleague that what in my view is a terse, uninformative description is compliant with the requirements contained in rule 16A(1)(b). [66] In applying the purposive approach, as one is constrained to do, care must be taken not to violate the lawgiver’s language employed in the statute. As Innes CJ put it in Dadoo Ltd and others v Krugersdorp Municipal Council:1 ‘A Judge has authority to interpret, but not to legislate, and he cannot do violence to the language of the lawgiver by placing upon it a meaning of which it is not reasonably capable, in order to give effect to what he may think to be policy or object of the particular measure.’ [67] A second caveat is that the starting point in interpreting the statute ought, in my view, to be the language used in the statute. Harms JA put it thus 1 Dadoo Ltd and others v Krugersdorp Municipal Council 1920 AD 530 at 543. in Abrahamse v East London Municipality and another; East London Municipality v Abrahamse:2 ‘Interpretation concerns the meaning of the words used by the Legislature and it is therefore useful to approach the task by referring to the words used, and to leave extraneous considerations for later.’ The balance to be struck between the application of a purposive approach and the weight of the words employed in the statute is summarized as follows by Judge Learned Hand in Borella et al v Borden Co:3 ‘We can best reach the meaning here, as always, by recourse to the underlying purpose, and, with that as a guide, by trying to project upon the specific occasion how we think persons, actuated by such a purpose, would have dealt with it, if it had been presented to them at the time. To say that that is a hazardous process is indeed a truism, but we cannot escape it, once we abandon literal interpretation – a method far more unreliable . . . . We do not indeed mean that here, or in any other interpretation of the language, the words used are not far and away the most reliable source for learning the purpose of a document; the notion that the “policy of a statute” does not inhere as much in its limitations as in its affirmations, is untenable.’ (Emphasis added). [68] The dictum of Ackermann J in Shaik v Minister of Justice and Constitutional Development and others,4 referred to by Farlam JA at paras 31 to 33 above, must be understood in its context, namely a determination of whether the incorrect citing of impugned provisions of the particular statute renders the notice non-compliant or not. Ackermann J correctly says5 that ‘the minds of litigants (and in particular practitioners) in the High Courts are focused on the need for specificity by the provisions of Uniform Rule 16A(1)’ (emphasis supplied). In that matter the notice, although citing the incorrect statutory provision under challenge, contained a properly detailed description of the constitutional issue concerned. It read thus: ‘Whether s 28(6) of the National Prosecuting Authority Act is unconstitutional and invalid as a result of violating the rights entrenched in ss 14 (privacy), 16 (freedom of 2 Abrahamse v East London Municipality and another; East London Municipality v Abrahamse 1997 (4) SA 613 (SCA) at 632G-H. 3 Borella et al v Borden Co 145 F 2d 63 (1944) at 64-5. 4 Shaik v Minister of Justice and Constitutional Development and others 2004 (3) SA 599 (CC). 5 At para 24. expression), 33 (just administrative action), 34 (access to courts) and 35 (fair arrest, detention, trial) of the final Constitution.’6 The specificity required in the present matter concerns a brief description of the constitutional issue concerned. To the definition set out by Farlam JA in para 34 above can be added the following from the Concise Oxford English Dictionary 12 ed (2011): ‘an important topic for debate or resolution’. [69] A brief description of the constitutional issue concerned required, in the present matter, that the appellant had to set out the specific grounds on which the exchange control regulations were said to be constitutionally invalid, for example that they infringed the right to privacy (more particularly as contained in s 14(c) of the Constitution - the right not to have one’s possessions seized), the right to freedom and security of the person and the right not to be arbitrarily deprived of property. The notice in the present matter is a mere recital of the order sought by the appellant. It does not provide any information on what the issues are which the appellant intends to raise in his constitutional challenge. Any affected and interested party and any prospective amicus curiae would be none the wiser upon a perusal of the notice as to what the constitutional issues are. To borrow from the example cited by the second respondent’s counsel – a notice that an order would be sought to have the death penalty declared unconstitutional because it is constitutionally invalid, does not, without more, adequately describe the constitutional issue concerned and is thus not compliant with rule 16A(1)(b). A brief description of the basis upon which the order is sought is required, for example on the ground that it infringes the right to life. A prospective amicus curiae would then be in a position to advance new and further contentions,7 for example that it also infringes the right to dignity and the right not to be subjected to cruel, inhuman or degrading punishment. It is therefore not sufficient to merely identify the statutory provisions challenged. The rights under the Constitution which are the subject of the constitutional challenge must also be stipulated. 6 Shaik v Minister of Justice and Constitutional Development and others (note 4) para 9 7 As an amicus curiae is required to do – In re Certain Amicus Curiae Applications: Minister of Health v Treatment Action Campaign 2002 (5) SA 713 (CC) para 5. [70] It is of some significance that the same attorneys who act for the appellant in the present matter had, in an unrelated matter (referred to by the appellant’s attorney in his affidavit in the present proceedings in the high court), issued a notice some three months after the postponement before Makgoba J, which implicitly acknowledges the inadequacy of the notice in the present matter. That notice in the unrelated proceedings does not merely state that the relevant statutory provisions are inconsistent with the Constitution, but it goes further in clearly and succinctly describing the constitutional issue concerned. In that matter the constitutionality of s 310 of the Criminal Procedure Act 51 of 1977 (which provides that the State may appeal against the decision of a lower court on a point of law) was challenged. The original notice mirrored the brevity of the notice in this matter, namely ‘declaring that s 310 of the Criminal Procedure Act 51 of 1977. . . . is inconsistent with the Constitution and invalid’. The subsequent notice was eminently more descriptive. Its relevant part read as follows: ‘2. Whether, if s 310 . . . . does allow the State to appeal. . . , 2.1 it is inconsistent with s 35(3)(m) of the Constitution which includes as part of the fundamental right to a fair trial, the right “not to be tried for an offence in respect of any act or omission for which that person has previously been either acquitted or convicted”, 2.2 it irrationally distinguishes between accused persons who are acquitted on decisions of law (against whom the State would have a right of appeal) and accused persons who are acquitted on decisions of fact (against whom the State has no right of appeal and must accordingly content itself with the wrong decision by a court) and is, accordingly, inconsistent with the founding value of the rule of law in s 1(c) of the Constitution, alternatively, the guarantee of equality before the law in s 9(1) of the Constitution.’ [71] I respectfully disagree with my learned colleague in his observation in para 36 above that a prospective amicus needs only to know what legislative provision is being challenged and that, for the rest, he or she can then have regard to the court file to ascertain whether relevant matters of fact and law are contained in the applicant’s papers. I do not think the Legislature intended to burden affected and interested persons in this manner. To require of a prospective amicus to trawl through papers which are more often than not quite voluminous, is to defeat the very purpose of rule 16A(1)(b). The rule has, in my view, the objective of providing sufficient information to affected and interested persons of what the constitutional challenge is all about, thereby obviating the need of scouring through lengthy papers to obtain the relevant information. [72] The use of the word ‘succinct’ in rule 16A(1)(b) is in my view deliberate – it signifies the requirement of a ‘brief and clear expression’ (as defined in the Concise Oxford English Dictionary 12 ed (2011)) of the constitutional issue concerned. A description can only be ‘brief and clear’ when it has some particularity – a terse regurgitation of the orders sought hardly leaves any room for such a brief and clear description. While I would not, unlike Makgoba J, elevate the required particularity to that contained in a notice of appeal, it certainly denotes more than a mere repetition of the orders sought. [73] I also respectfully disagree with Farlam JA that the Nyathi decision8 lends support to his approach. The matter was unopposed before Davis AJ in the high court and the learned judge therefore did not have the benefit of argument for and against the proposition that a notice in those terse terms would suffice for the purposes of rule 16A(1)(b). This aspect was evidently not raised as an issue in the Constitutional Court, which would explain why there is no dictum on the matter in that judgment. A court is therefore, with respect, not entitled to rely on that decision as authority for the abovementioned proposition. Moreover, as appears from para 39 above, the notice in Nyathi contained more particularity than the notice in the present matter. [74] Rule 19(3)(b) of the Constitutional Court requires that an application for leave to appeal must contain ‘a statement setting out clearly and succinctly the constitutional matter raised in the decision, and any other issues including issues that are alleged to be connected with a decision on the constitutional 8 Nyathi v MEC Department of Health Gauteng 2008 (5) SA 94 (CC). matter’. That rule has a marked similarity to rule 16A(1)(b). It is inconceivable that, in purported compliance with the requirements laid down in Constitutional Court rule 19(3)(b), a statement which, for example, merely declares the constitutional matter and issues to be that of constitutional invalidity would, without more, pass muster. A brief and clear description of the constitutional matter and ancillary issues is required in my view. If anything, since rule 16A(1) concerns a notice, the need for particularity and detail is in all probability even more acute than in the case of a statement in terms of Constitutional Court rule 19(3)(b), but I express no firm view on the matter. [75] In summary therefore, I am of the view that the notice was inadequate and did not comply with rule 16A(1)(b). I concur with Farlam JA that, for the reasons enunciated by him, the high court erred in upholding in favour of the respondents the point that the appellant did not provide sufficient proof that the notice had been displayed on the notice board for the requisite 20 days. I agree, too, with his obiter remarks in para 59 above, that, even were a finding to be made against the appellant that there has been non-compliance with rule 16A(1), the high court should not have made an adverse costs order against the appellant. Farlam JA has fully motivated the reasons for that conclusion and I need not burden this judgment with anything further. Those obiter remarks of Farlam JA are of course apposite here, given my finding above. In the premises I would uphold the appeal on the costs aspect. [76] The following order is made: The appeal is upheld with costs, including the costs of two counsel. The costs order of the court below is set aside ___________ S A MAJIEDT JUDGE OF APPEAL APPEARANCES APPELLANT: M Chaskalson SC (with I A Goodman) Instructed by, Shannon Little Attorneys, Pretoria. Webbers, Bloemfontein FIRST RESPONDENT: M Maritz SC (with W Luderitz SC) Instructed by , Newtons Inc. Pretoria Symington & De Kok, Bloemfontein SECOND RESPONDENT: M R Madlanga SC (with N Maimela) Instructed by, State Attorney, Pretoria State Attorney, Boemfontein	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 2012 STATUS: Immediate Phillips v South African Reserve Bank (221/11) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (the SCA) today upheld an appeal with costs against a costs order made by the Gauteng North High Court. The appellant had launched a review and a constitutional challenge in respect of certain exchange control regulations in the high court. The appellant had to give notice of his constitutional challenge in terms of Uniform rule 16A(1). The notice had to contain a clear and succinct description of the constitutional issue concerned and had to be placed on the court’s notice board by the registrar for a period of 20 days. The high court held that there was no proof that the notice had been displayed for the requisite 20 days and that the description of the constitutional issue as being one of ‘constitutional invalidity’ was not sufficient. The high court held that, as a consequence of this non- compliance with Rule 16A(1), the appellant had the choice of either abandoning his constitutional challenge or of having the matter postponed at his costs in order to file a proper Rule 16A(1) notice. In view of the appellant’s refusal to abandon his constitutional challenge, the high court postponed the matter and ordered the appellant to pay the wasted costs occasioned by the postponement. On appeal the SCA held that the matter was appealable and that the high court had erred in finding that there had been inadequate proof of the display of the notice for the requisite 20 days. The majority held that the notice did not, however, comply with Rule 16A(1)(b) inasmuch as it had to provide particulars of the constitutional issue concerned. A mere description of ‘constitutional invalidity’ ‘was insufficient. The minority held that the notice did in fact comply with Rule 16A(1)(b) and that the aforementioned description was adequate. The SCA was unanimous in its finding that the general rule pertaining to costs orders in constitutional litigation, namely that unsuccessful litigants in proceedings against the State ought not to be ordered to pay costs, also apply in ancillary matters, such as the present one. The majority held that in view of its finding that there has not been compliance with Rule 16A(1)(b), it would uphold the appeal with costs and set aside the high courts costs order (with the effect that each party would bear its own costs in the high court). The minority held that, in view of its finding that there had been proper compliance with Rule 16A(1)(b), it would also uphold the appeal with costs, but order the respondents to pay the appellant’s costs in the high court. -- ends --
1449	non-electoral	2010	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 670/10 In the matter between: NATIONAL STADIUM SOUTH AFRICA (PTY) LIMITED First Appellant STADIUM MANAGEMENT SOUTH AFRICA (PTY) LIMITED Second Appellant CITY OF JOHANNESBURG Third Appellant and FIRSTRAND BANK LIMITED Respondent Neutral citation: National Stadium v Firstrand Bank (670/10) [2010] ZASCA 164 (1 December 2010) Coram: Harms DP, Maya JA and Bertelsmann AJA Heard: 23 November 2010 Delivered: 01 December 2010 Summary: Servitude ─ personal servitude ─ right to name stadium ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: South Gauteng High Court (Johannesburg) (Victor J sitting as court of first instance): The following order is made: (a) The appeal is upheld to the extent indicated below and is otherwise dismissed with costs, including the costs of two counsel to be borne by the appellants jointly and severally. (b) Paragraphs 2 and 3 of the order of the court below are amended to read as follows: ‘2 Until the lapse of the Applicant’s servitude rights as set out in the Notarial Deed of Servitude 2529/08 and registered by the Registrar of Deeds, Pretoria, the First, Second and Fourth Respondents are interdicted from:- 2.1 naming the soccer stadium on Portion 4 of the farm Randskou 324 (Reg Div IQ) Gauteng Province by means of naming boards or the like affixed in, on, or at all outer perimeter entrances and exits of the stadium, or elsewhere on the property by a name other that “FNB Stadium”; 2.2 purporting to sell or dispose of the right to name the stadium during the period; The following declaratory order is made:- 3.1 The Applicant has the sole right to name the stadium by means of naming boards and the like affixed in, on, or at all outer perimeter entrances and exits of the stadium, or elsewhere on the property during the life of the deed of servitude; 3.2 The Applicant has chosen the name “FNB Stadium”; 3.3 The First, Second and Fourth Respondents do not have the right to name the stadium during the period and the extension period.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ HARMS DP (MAYA JA and BERTELSMANN AJA concurring) HARMS DP: INTRODUCTION [1] One of the iconic stadiums used for the 2010 FIFA Football World Cup was known for the duration of the competition as ‘Soccer City’. The original stadium on the site in Soweto was financed by First National Bank, which is now a division of the respondent bank (Firstrand Bank Ltd), and was built in about 1988. It was since then called the ‘FNB Stadium’. During the period 2007 to 2010, the stadium, financed by the central government and the local authority, was virtually rebuilt for purposes of the World Cup. The Bank, relying on a naming right, holds the view that the name of the stadium has to revert to ‘FNB Stadium’. [2] The local authority and third appellant, the City of Johannesburg, as tenant of the stadium, and its appointed stadium manager, National Stadium SA (Pty) Ltd, the first appellant, together with an associated company, Stadium Management SA (Pty) Ltd, the second appellant, assert that the right to name the stadium no longer vests in the Bank and that they, instead, are entitled to ‘name’ the stadium or sell the naming rights to third parties. (For the sake of convenience I do not intend to draw any distinction between the first and second appellants and will simply refer to them as the managers.) [3] When the Bank became aware of attempts by the managers to market the naming rights it launched an urgent application for an interdict (in general terms) to prevent them from marketing the stadium by any other name than FNB Stadium. It joined the owner of the stadium, which is Government, as respondent without seeking any relief against it and Government consequently did not take part in the proceedings. The City, as head tenant and on whose behalf the managers manage the stadium, sought and obtained leave to intervene, and joined in opposing the relief sought. [4] The court below (Victor J) found in favour of the Bank and issued an order against the managers and the City in more expansive terms than originally sought. The order has two parts. The first is an interdict restraining the managers and the City from ‘referring’ to the stadium by any other name than ‘FNB Stadium’ or from disposing of the naming rights to the stadium. The second part is a declaratory order declaring that the Bank has the sole right to name the stadium and, accordingly, that the managers and the City do not have naming rights. There is a time limit attached to these orders. [5] The court below granted the necessary leave to appeal to this court and the matter was heard at the request of the parties as a matter of urgency. It is necessary for an understanding of the issues to set out the history of the football stadium with reference to a number of events beginning in 1988. THE LOAN FACILITY AGREEMENT OF 20 OCTOBER 1988 [6] The Bank is rather proud of the fact that it was prepared as early as 1988 to finance the erection of a football stadium in Soweto. The terms and conditions of the provision of this facility were set out in an agreement of 20 October 1988. There were four parties to the agreement: (a) the future owner of the land (a trust) that intended to purchase the property to establish a soccer complex (including a stadium) to be known as Soccer City thereon; (b) a company, also named Soccer City, that was to lease the property from the trust and that undertook to erect the complex; (c) the National Soccer League, the body that controlled the sport; and (d) the Bank as lender. [7] The Bank undertook to provide a funding facility of R15m for the erection of particularly a stadium on the property. It is not necessary to detail the funding arrangements save to refer to clause 7.1, which is the origin of the Bank’s naming rights. It provided as follows: ‘As additional consideration for First National providing the Facility, the main stadium at Soccer City shall be known as “First National Bank Stadium” or by such other name as may be chosen by First National from time to time. The Trust and the Company shall take all steps and do all things necessary to ensure and procure that First National acquires and retains such right in perpetuity or for such lesser period as First National may determine.’ [8] The other parties to the agreement undertook to comply with a number of obligations towards FNB such as to host at least 50 soccer matches per annum and to utilise part of the ticket sales to reduce the debt. FNB was also entitled to receive maximum positive publicity in respect of its involvement in Soccer City and to erect a number of signboards in the best possible places on or around Soccer City for which it had to pay R5m upfront as advertising revenue. THE WAIVER AGREEMENT OF 24 MARCH 2003 [9] It would appear that the trust and the Soccer City company were unable to service their obligations towards the Bank or to pay the building contractor in full with the available finances. This led to the conclusion of the waiver agreement of 24 March 2003. The building contractor, Grinaker-LTA Ltd, waived payment of a substantial amount subject to, inter alia, the right to execute future construction work on the stadium complex. [10] The Bank, in turn, agreed to waive its rights to payment of the outstanding amounts under the loan facility agreement. This waiver was subject to a number of conditions. They were (a) that the naming rights referred to in the loan facility agreement would endure for ten years; (b) that the Bank had an option to extend this right for a further two years upon payment of R10m; and (c) that the Bank had a renewal right for a further ten years for which it had to pay a market related price. The effect of this was that the Bank lost its right to repayment of the loan facility but retained a diluted naming right: it was no longer in perpetuity and the Bank had to pay for the right during any extended period. THE SERVITUDE AGREEMENT OF 31 JANUARY 2007 [11] Because of the anticipated FIFA World Cup event, which had been scheduled for 2010, it became necessary to rearrange the relationship between the parties with an interest in the stadium. The stadium had to be ‘reconstructed’. This required substantial funding from both Government and the City. And to enable FIFA to enjoy the exclusive merchandising rights for the event FNB had to relinquish its naming rights in favour of FIFA for a period preceding and during the event. [12] The servitude agreement (which was probably one of a series covering the World Cup) was concluded between the parties to the loan facility agreement and Government. Government was to become owner of the property by taking transfer from the trust. It undertook to honour and be bound by the FNB naming rights as set out above, and to secure them by means of a personal servitude in favour of the Bank. These rights were, however, to last for only ten years as from 7 July 2004 but FNB had a right of renewal for another two years subject to payment of a fair market value for those rights, meaning that if the right of renewal were to be exercised the naming rights will terminate on 6 July 2016 instead of on 6 July 2014. FNB, importantly, agreed to forego its naming right for the duration of the World Cup in favour of FIFA. [13] The exact terms of the relevant provisions are these: ‘4.2 For the sake of clarity, The State, the Trust and Soccer City hereby grant to FNB, the exclusive right to name the Stadium “First National Stadium”, or “FNB Stadium”, or by any other such name as may be chosen by FNB from time to time. The State, the Trust and Soccer City shall take steps and do all things necessary to ensure and procure that FNB acquires and retains such rights for the period set out above.’ ‘4.4.2 In keeping with the FNB Rights, the name “FNB Stadium” shall be prominently displayed at all outer perimeter entrances and exits of the Stadium and on not less than four prime skyboard sites in the Stadium. FNB accepts that during periods of reconstruction of the Stadium the skyboards may not be able to be displayed and that any re-design may require the skyboards to be relocated. In the latter event, FNB shall be granted a preferent right to choose the sites for its relocated skyboards. The Parties agree that any relocation of the said skyboards shall take place in consultation with FNB in an effort to facilitate the placement of the skyboards within the Stadium so as to afford to FNB similar exposure as previously provided to FNB prior to any relocation of the skyboards.’ ‘7.2 FNB shall be entitled, simultaneously with the cancellation with the FNB Bond and the transfer of the Property to The State, to register a personal servitude against the Property in respect of FNB’s rights under this Agreement in a form reasonably required by FNB’s attorneys and that is acceptable to the Registrar of Deeds at Johannesburg. All costs of registration of these rights shall be borne and paid by FNB.’ ‘7.3 The State, the Trust and Soccer City agree that the registration of the personal servitude referred to in clause 7.2 shall be binding on any successors in title to the Property and shall, to the extent required, disclose the details of such personal servitude to any successor in title to the Property.’ [14] The ‘reconstruction’ of the stadium to which the agreement referred commenced during 2007 and, according to the appellants, the original stadium was for all intents and purposes demolished and replaced by a new stadium. THE SERVITUDE [15] The property was transferred to Government on 17 April 2008, and on 29 April Government registered a personal servitude ‘for naming right purposes of the Stadium on the Property’ in favour of FNB. The executive portion states that Government thereby ‘grants as a personal servitude to FNB the right to name the Stadium and erect naming boards therein’ as set out in the servitude agreement, and provides that the ‘Stadium shall be known as “FNB Stadium” or such other name as may be designated by the Bank in agreement with the State’. It further provides for the same time limit and for termination as set out in the agreement, and it repeats in Deeds Office parlance the first two sentences of the quoted clause 4.2.2. THE STADIUM MANAGEMENT AGREEMENT OF 16 JANUARY 2009 [16] The City entered into a stadium management agreement with the first appellant on 16 January 2009. The agreement, significantly but prematurely, recorded that the City in its capacity as the lessee of the stadium had ‘a real right’ to the stadium. The manager was appointed as an independent contractor to render defined management services and received the exclusive and full use of the stadium. The agreement also mentioned that the stadium was under construction and it imposed certain limited obligations on the manager during the construction period. [17] The agreement further provided that the manager was entitled to conduct ‘NSSA Business’ (the business of the first appellant) on the premises and this was defined to include the business conducted by the manager in the field of operational and commercial management and administration of sport stadiums. This incorporated, in terms of clause 6.3.3.2.2, the right ‘to sell the Naming Rights and Commercial Rights in respect of the Stadium’ for the duration of the agreement. ‘Naming Rights’ was defined to mean ‘the right to name the Stadium, any of its facilities and/or any part thereof’. [18] The agreement contemplated the possibility that a third party might have had the naming rights because of a prior agreement entered into by either the City or someone else. In that event the parties undertook to renegotiate the terms of the naming rights so as to limit any loss of revenue. [19] The parties estimated the annual value of the naming rights for at least R8m, which would escalate. Apart from this agreed figure, the evidence confirms that naming rights of sport stadiums world-wide are extremely valuable. The managers anticipate that the annual revenue from the naming rights could be in the region of R15m to R20m. THE LONG-TERM LEASE OF 7 AUGUST 2009 [20] Government entered into a long-term notarial lease for 99 years with the City on 7 August 2009 in terms of which the property on which the stadium was erected was leased to the City for the purpose of promoting the sport of football in general and the 2010 FIFA World Cup in particular. Although the erection of the ‘new’ stadium was in already in progress it provided that the City was entitled to upgrade and renovate the stadium. [21] The lease was not registered when litigation began but nothing turns on this. The only other matter of any significance for present purposes is that the City was entitled to erect signage on the property and to affix or paint advertising signs. Nothing was said about naming rights. THE CONTENTIONS OF THE PARTIES ON THE PAPERS [22] The Bank’s case as set out in the founding affidavit was that it has naming rights over the stadium in terms of the servitude agreement. In addition, it alleged, it has a real right in terms of the servitude, which is enforceable against third parties, to name the stadium. Its cause of complaint was that the managers, shortly after the completion of the World Cup, claimed publicly that they had acquired from the City ‘all the rights to Advertising, Sponsorships, Naming Rights and Commercial Rights to Soccer City Stadium’ and that they had the right to sell the naming rights to Soccer City Stadium. Because the managers were third parties it meant that the Bank relied on its servitude. [23] The managers, in the answering affidavit, asserted that the right to name the stadium belonged to the City. This right, they said, followed from the fact that the City was the lessee and ‘as such possesses the right to name the Stadium’. They, as managers were entitled, in terms of the management agreement, to sell those rights. They added that the name ‘National Stadium’ was simply a holding or interim name used to neutralize the limiting consequences of the FIFA name ‘Soccer City’. If the naming rights were to be sold, they said, the purchaser would be entitled to use its brand name on its own or in conjunction with ‘National Stadium’. [24] Their defence against the claim was that the Bank’s naming rights, which had been conferred by agreement, were never capable of registration in the form of a servitude. In the alternative, they said, the servitude ‘expired’ when the original stadium was demolished during 2007, and that the servitude did not apply to the ‘new’ stadium. [25] The City, as mentioned, intervened as fourth respondent and asked that the Bank’s application be dismissed with costs. Apart from complaining about the extent of the relief sought by the Bank, the City alleged that it had the right to name the stadium by virtue of the terms of the long-term lease agreement with Government, that it could transfer those rights to the managers, and that its rights prevailed over whatever naming rights the Bank may have had. THE NATURE OF NAMING RIGHTS [26] As pointed out, it is common cause that the naming rights attached to a sport stadium are exceptionally valuable. But that does not tell one anything about their nature. During argument the Bank and, unexpectedly, the City argued that these rights are, in the particular circumstances of this case, real rights that flow from ownership of the stadium. The consequence of this acceptance by the City led to the recognition that its case as set out in its affidavit had no merit; that the servitude was valid and created real rights in favour of the Bank; that the City did not ‘receive’ any naming rights from Government by virtue of the lease; and that the clause in the management contract in which the City purported to grant naming rights to the managers was ineffectual. [27] This attitude of the City was in direct conflict with that of the managers. They insisted that naming rights cannot be real rights and can only arise by virtue of contract and that, accordingly, the servitude was void. Mr du Plessis SC, on behalf of the managers, referred in this regard to an article by Lionel Hogg and Franki Ganter where the authors, presumably writing about Australian law without quoting authority, stated as follows:1 ‘One cannot effectively acquire naming rights to an event or venue without having practical control of the event or the venue. Naming or title rights are contractual and not proprietary. Their protection and value is dependent almost entirely on market usage.’ [28] It is no doubt correct that some naming rights are purely contractual in the sense that they arise as a result of an agreement. This would for instance apply where someone wishes to stage a sporting or cultural event and enters into agreements with others relating to the event. Whether that is necessarily true about a product or a commercial building, such as a shopping centre, office block or sports stadium, is another matter. One would assume that the owner would be the person who could name the building by attaching naming boards to the property or to use its name for commercial purposes.2 As Mr Joseph SC for the City said, it is a common occurrence that the owner of a commercial building would let the building and give the head lessee the right to name the building. Although the grant of the right to name to the lessee is by contract, the owner must have had the right by virtue of its control over the building. This does not mean that others may not refer to the building by some other name but that use will not have commercial significance. [29] That naming rights vest in the owner was impliedly admitted by the managers when they sought to justify their entitlement to those rights. They said that the rights were derived from the City who had obtained them from the owner, albeit by contract. Although Mr du Plessis initially submitted that the naming rights of his clients flow from the control Government as owner had over the stadium, he retracted from this position and eventually submitted that the managers’ lawyerly evidence was based on a misconception of the legal position. His argument in this regard that naming rights come from nowhere, could (somewhat unkindly) be compared, according to Mr Louw SC for the Bank, to the Big Bang theory. 1 ‘Legal Issues in Sports Marketing’ (1997) 13 Queensland University of Technology Law Journal 92 at p 120. 2 The right to an exclusive name of one’s property does not exist unless the name has a commercial or financial significance. Compare Day v Brownrigg (1878) 10 ChD 294. [30] It is not necessary to get embroiled with a discussion about the nature of rights according to Bentham or Hohfeld and the like,3 or (for those who are not affected by cultural cringe)4 according to WA Joubert cum suis.5 It is also not necessary to delve into the history of real rights,6 to re-conceptualize ownership,7 or (as the court below did) to ‘dephysicalise’ property law.8 In any event, as the Digest 50.17.202 warns, ‘omnis definitio in iure civilis periculosa est; parum est enim, ut non subverti posset’. Instead, it should suffice to deal with some elementary propositions still taught, I hope, at law schools.9 [31] The first concerns the distinction between real and personal rights. Real rights have as their object a thing (Latin: res; Afrikaans: saak). Personal rights have as their object performance by another, and the duty to perform may (for present purposes) arise from a contract. Personal rights may give rise to real rights, for instance, a personal obligation to grant someone a servitude matures into a real right on registration.10 Real rights give rise to competencies: ownership of land entitles the owner to use the land or to give others rights in respect thereof. Others may say that ownership consists of a bundle of rights, including the right to use the land, but it does not really matter who is right on this point. [32] A servitude is a limited real right in respect of the property of another. There are two types, namely praedial and personal. In spite of the confusing nomenclature, a personal servitude is also a real right which imposes a burden on the property of 3 See F M Kamm ‘Rights’ in Jules Coleman & Scott Shapiro (eds) The Oxford Handbook of Jurisprudence & Philosophy of Law (Oxford 2002); P J Fitzgerald Salmond on Jurisprudence 12 ed (1966) para 41. 4 Prof Ricketson’s description of the inclination of Australian lawyers to follow English precedents blindly. Quoted by Kathy Bowrey in Catherine W Ng, Lionel Bently & Giuseppina D’Agostino eds The Common Law of Intellectual Property –Essays in honour of Professor David Vaver (Hart Publishing 2010) p 46. 5 Discussed for instance in Van Heerden & Neethling Unlawful Competition (Butterworths 1995) ch 4. 6 Robert Feenstra Ius in Re: Het Begrip Zakelijk Recht in Historisch Perspektief (Leiden 1979); R Feenstra Romeinschregtelijke Grondslagen van het Nederlands Privaatrecht (Leiden 1984). 7 J R L Milton ‘Ownership’ in Reinhard Zimmermann and Daniel Visser (eds) Southern Cross: Civil Law and Common Law in South Africa. 8 With special reference to Kenneth J Vandevelde ‘The New Property of the Nineteenth Century: The Development of the Modern Concept of Property’ (1980) 29 Buffalo Law Review 325. 9 For a full discussion of the topic reference may be made to the standard works such as C G van der Merwe Sakereg 2 ed (1989) and the same author’s chapters on ‘Things’ in Lawsa and in Francois du Bois (ed) Wille’s Principles of SA Law 9 ed (2009); Badenhorst, Pienaar & Mostert Silberberg and Schoeman’s The Law of Property 5 ed (2006). The judgment in Lorentz v Melle 1978 (3) SA 1044 (T) provides an encyclopaedic excursion on the subject. 10 Van Vuren v Registrar of Deeds 1907 TS 289 at 296. another. It is ‘personal’ because the right holder is a particular person whereas in the case of a real servitude the right adheres to a dominant property.11 [33] In this case we are concerned with an alleged personal servitude. The question is then whether these rights are real rights in respect of land or are personal (in the sense that they place obligations on others to perform).12 Unless the rights are real they do not bind third parties.13 This principle is embodied in the Deeds Registries Act 47 of 1937. Section 63(1) provides that no deed, or condition in a deed, purporting to create or embodying a personal right, and no condition which does not restrict the exercise of any right of ownership in respect of immovable property shall be capable of registration. This means that the servitude to be valid must carve out a portion, or take away something, of the dominium.14 Whether a deed of servitude embodies a personal right or restricts the exercise of ownership is a matter of interpretation.15 [34] The present servitude is in its terms said to be a personal servitude. According to its tenor Government, as owner of the property, granted the Bank the right to name the stadium the ‘FNB Stadium’. The Bank is in consequence entitled to erect naming boards displaying this name. These may be placed at all outer perimeter entrances and exits of the stadium and on not less than four prime sites in the stadium. The servitude does not purport to place any duties on Government, which means that Government has no obligations to perform which, in turn, means that the servitude did not create a personal right in favour of the Bank. The fact that the Bank has the rights mentioned means that Government, in its capacity as owner, is not entitled to place other naming boards on or around the stadium. It is not conceivable that the parties could have intended that conflicting naming boards could be erected at the stadium. This means that the right to name the stadium as 11 See e g M J de Waal ‘Servitudes’ in Southern Cross supra. 12 This is the basis of Lorentz v Melle 1978 (3) SA 1044 (T). See Hollins v Registrar of Deeds 1904 TS 603 at 605. 13 The Bank’s case as set out in the founding affidavit was not based on either the doctrine of notice or interference with contractual rights. The judgment of the court below occasionally dealt with the matter on one or other of these bases, as did the Bank’s written argument, but it would be inappropriate to decide the case on that basis. 14 Grant v Stonestreet 1968 (4) SA 1 (A) 24A-B. 15 Venter v Minister of Railways 1949 (2) SA 178 (E); Edelor Ltd v Champagne Castle Hotel (Pty) Ltd 1972 (3) SA 684 (N) at 689F-690C and the authorities there mentioned. owner was carved out from the owner’s full ownership right, thereby restricting the exercise of this particular right of ownership in respect of the immovable property. [35] The particular naming rights can be compared to a trading right. It is accepted, at least since Willoughby’s Consolidated Co Ltd v Copthall Stores Ltd 1913 AD 267, that the right to trade on the property of another amounts to the right to use and occupy that property or part of it for a specific purpose and can amount to a personal servitude. It should be borne in mind that there is not a closed list of personal servitudes and that the right of the Bank to advertise its business on and through the stadium does not differ in kind from a conventional trading right.16 Since a stadium cannot have more than one name the naming right is the sole right of the Bank and affixing any other name for the stadium on, in or around the stadium would infringe the Bank’s real right because the property is put to a use that belongs exclusively to the Bank. [36] It follows from this that the present stance of the City as expressed during Mr Joseph’s argument is correct and that the contrary submissions of the managers have to be rejected. THE BUSINESS EFFICACY ARGUMENT [37] The argument just disposed of was not the managers’ main argument but it had to be dealt with first because was the basis of the Bank’s claim. Their main argument was the so-called business efficacy argument which was directed at the terms of the servitude agreement and not the servitude itself. Although the written submissions stated that this agreement was void for vagueness the oral submission was that it lacked business efficacy because it did not oblige Government to use and promote the stadium. Without, at least, a contractual obligation on the owner or manager to acknowledge and use the name, said Mr du Plessis, the naming right is valueless. [38] I have serious difficulty in following the argument. Counsel relied in support of the argument on cases that say that a tacit term cannot be implied into a contract merely because the agreement lacks business efficacy. Lack of business efficacy may affect the value of the agreement but it does not affect its enforceability. If 16 Durban City Council v Woodhaven Ltd 1987 (3) SA 555 (A) at 559B-I. counsel’s argument was that there was nothing to enforce in the agreement, I have to disagree. The Bank is entitled to erect the naming boards and the owner has to respect that right as described above. [39] The problem with the argument is more fundamental. The Bank seeks to enforce a registered servitude right and not contractual rights under the servitude agreement. In addition, the purpose of the agreement was to create real rights and if were to create additional personal rights by imposing contractual obligations on the owner of the property it would have been self defeating. THE DESTRUCTION OF THE STADIUM [40] I have alluded to the fact that the original stadium, which was financed by the Bank, was substantially demolished and replaced by what the appellants call the ‘new’ stadium. They argue that the servitude was intended to cover the original stadium and since that has been destroyed the servitude was extinguished. For this they rely on Voet Commentarias ad Pandectas 8.6.4 where the author dealt with the effect of the destruction of the servient tenement: in principle it extinguishes the servitude. He added, however, that if in the case of a praedial servitude the property is restored the servitude revives, but not in the case of a personal servitude. If one follows the reasoning in Kidson v Jimspeed Enterprises CC 2009 (5) SA 246 (GNP) this might not necessarily be the case.17 However, there are two fundamental reasons why the argument cannot succeed. [41] In the first instance it is clear from the examples given by Voet that he was concerned with those cases where the subject of the servitude was destroyed as a result of casus fortuitous or vis maior. He did not deal with the case where the owner of the servient tenement (here, in conjunction with the lessee) intentionally destroyed the subject matter of the servitude within weeks after conclusion of the servitude agreement and even before its registration and then erects a similar structure in its stead. It is a general principle that one cannot rely on one’s own wrongdoing to evade any obligation. A party is not, for instance, relieved from a contractual obligation because of supervening impossibility where that party was responsible for 17 See also the case comment by C G van der Merwe ‘Extinction of Personal Servitude of Habitatio’ 2010 (73) THRHR 657. the impossibility.18 Another example would be the doctrine of fictional fulfillment of a condition.19 There is no reason why the underlying principle cannot be extended to a case such as this and why the right holder has to be satisfied with a damages claim which, in this case, would probably be met with a defence that the Bank had agreed in the servitude agreement to the destruction and why the servitude should not extend to the replacement structure. [42] There is, however, a more profound reason why the ‘destruction’ of the old stadium did not extinguish the servitude. It is because the servitude agreement and the servitude itself, on a proper interpretation, covered the ‘new’ stadium. It is in this regard necessary to have regard the circumstances against which the servitude was granted. [43] The Bank held a bond over the property and had naming rights. Government committed itself to finance, in conjunction with the City, the redevelopment of the stadium to the satisfaction of FIFA. The stadium was redesigned to be in the form of a calabash. The new design was approved before conclusion of the servitude agreement. When the agreement referred to the fact that the servitude would cover the stadium as ‘reconstructed’ it referred to the stadium as ‘reconstructed’ for purposes of the World Cup event. It was never intended that the old stadium would simply be rebuilt to be in the same form and with the same capacity as the old stadium. The fact that the costs estimate was way out and that the supposition that more of the old stadium could have been used – matters that did not concern the Bank – cannot affect the interpretation of the agreement and servitude. I therefore find that there is no merit in this submission. THE ORDER AGAINST THE CITY [44] As mentioned, the City became a party to the proceedings by its own volition. The Bank did not ask, either initially or subsequently, for any substantive relief against the City but the order of the court below was directed against not only the managers but also the City. It is customary, and also procedurally correct, that if a party joins proceedings as respondent and in the absence of a suitable and timely 18 Van der Merwe et al Contract: General Principles (1 ed) p 385-386. 19 Ibid p 206. amendment of the notice of motion in which substantive relief is sought against the joining party, the only order a court can grant against it is one for costs.20 [45] The court below justified its approach on the ground that in joining the managers in the proceedings and supporting them the City became a co-wrongdoer and had to be restrained. This, however, does not dispense with the required prayer for relief against the City. The court also relied on the prayer for alternative relief. It erred because this superfluous prayer does not entitle a court to grant relief that is inconsistent with the factual statements and the terms of the express claim,21 especially where, as in this case, the last affidavit of the Bank made it clear that the only relief sought against the City was one for costs. [46] In spite of these procedural problems it appears to me that the order should not be set aside because the City can suffer no prejudice as a result of the order. Because the City joined in the proceedings and made common cause with the managers the judgment of the court below would in any event bind the City in any future proceedings.22 THE TERMS OF THE ORDER [47] The appellants also object to the terms of the order. The objections of the managers depend largely on the correctness of their submissions on the nature and effect of the servitude and, because of my findings, need no further consideration. The remaining objections are formalistic and were not even raised during oral argument, and can be discounted. [48] The City’s first objection to the formulation of the interdict is that it prevents the appellants from ‘referring’ to the stadium by any name other than ‘FNB Stadium’. The argument was that this limits the City’s rights of free speech because if it wished to refer to it as ‘the stadium in Soweto’ or as ‘the stadium that looks like a calabash’ or the one ‘that was used during the World Cup’ it would be guilty of contempt of court. These examples are farfetched and although the word ‘refer’ could, if read out 20 Compare in the context of third party proceedings Geduld Lands Ltd v Uys 1980 (3) SA 335 (T). 21 Johannesburg City Council v Bruma Thirty-Two (Pty) Ltd [1984] 4 All SA 137 (T), 1984 (4) SA 87 (T); Combustion Technology (Pty) Ltd v Technoburn (Pty) Ltd 2003 (1) SA 265 (C). 22 Compare Le Roux v Le Roux [1967] 1 All SA 488 (A), 1967 (1) SA 446 (A) and Du Raan v Maritz 1973 (4) SA 39 (SWA). of context, give rise to difficulties it should be clear to all who read with a mind willing to understand that the order was directed to the protection of the Bank’s merchandising rights. But in order to state matters more clearly, I propose to amend the order to reflect the fact that the appellants are interdicted from ‘naming’ the stadium by means of naming boards on or around the stadium by a name other that ‘FNB Stadium’. [49] These formal changes do not justify any costs order in favour of the appellants. For sake of completion the substantive order as amended will be rendered in full. ORDER [50] The following order is made: (a) The appeal is upheld to the extent indicated below and is otherwise dismissed with costs, including the costs of two counsel to be borne by the appellants jointly and severally. (b) Paragraphs 2 and 3 of the order of the court below are amended to read as follows: ‘2 Until the lapse of the Applicant’s servitude rights as set out in the Notarial Deed of Servitude 2529/08 and registered by the Registrar of Deeds, Pretoria, the First, Second and Fourth Respondents are interdicted from:- 2.1 naming the soccer stadium on Portion 4 of the farm Randskou 324 (Reg Div IQ) Gauteng Province by means of naming boards or the like affixed in, on, or at all outer perimeter entrances and exits of the stadium, or elsewhere on the property by a name other that “FNB Stadium”; 2.2 purporting to sell or dispose of the right to name the stadium during the period; The following declaratory order is made:- 3.1 The Applicant has the sole right to name the stadium by means of naming boards and the like affixed in, on, or at all outer perimeter entrances and exits of the stadium, or elsewhere on the property during the life of the deed of servitude; 3.2 The Applicant has chosen the name “FNB Stadium”; 3.3 The First, Second and Fourth Respondents do not have the right to name the stadium during the period and the extension period.’ _____________________ L T C HARMS DEPUTY PRESIDENT APPEARANCES APPELLANT/S 1 & 2: S J du Plessis SC (with him T vd Walt) Instructed by Glyn Marais Inc in association with Denton Wilde Sapte, Johannesburg Matsepes Attorneys, Bloemfontein 3: S L Joseph SC (with him M Smit) Instructed by Cliffe Dekker Hofmeyr Inc, Sandton McIntyre & Van der Post, Bloemfontein RESPONDENT/S: P F Louw SC (with him G Amm) Deneys Reitz, Bloemfontein Webbers, 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: 01 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 National Stadium SA (Pty) Ltd v Firstrand Bank Limited The SCA today dismissed an appeal by the City of Johannesburg and the managers of the Soccer City Stadium in Soweto against an order that the naming rights of the stadium belonged exclusively to Randbank Ltd. The effect of the judgment is that the name of the stadium must revert to ‘FNB Stadium’ and that the City and the managers may not purport to sell the naming rights for the duration of a servitude registered in favour of Firstrand Bank. ---ends---
3168	non-electoral	2007	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Nie Rapporteerbaar Saak nr: 343/06 In die saak tussen: ABSA BANK BEPERK Appellant en PIETER HENDRIK DU PREEZ Eerste Respondent NWK BEPERK Tweede Respondent __________________________________________________________________________ EN: __________________________________________________________________________ Saak nr: 344/06 In die saak tussen: ABSA BANK BEPERK Appellant en BEYPLAS (Edms) BEPERK Eerste Respondent NWK BEPERK Tweede Respondent __________________________________________________________________________ Coram: Scott, Heher ARR et Hancke Wn AR Datum van verhoor: 2 Mei 2007 Datum van lewering: 29 Mei 2007 Opsomming: Aard en omvang van aansprake ten opsigte van silosertifikate onderhewig aan feitedispute ─ In geval van halfhartige ontkenning moet hof steeds tevrede wees dat aansoekdoener se eedsverklaring inherent geloofwaardig is inaggenome die waarskynlikhede ─ Bevinding dat viva voce getuienis nie oorwig van waarskynlikhede sal versteur, nie moontlik. Hof a quo fouteer om die aansoek op die stukke te besleg ─ Aansoek om oorplasing ingevolge art 9 van die Hooggeregshof slegs toegestaan indien oortuig dat oorwig van gerief ten gunste van oorplasing ─ Aansoek ingevolge art 22 van die Hooggeregshof toegestaan ─ Hof het inherente bevoegdheid om misbruik van hofproses te voorkom. Neutrale verwysing: Daar kan na hierdie uitspraak verwys word as ABSA Bank Bpk v Du Preez; Beyplas Edms Bpk [2007] SCA 67 (RSA). ______________________________________________________________ HANCKE Wn AR HANCKE Wn AR: INLEIDING [1] Hierdie is ‘n appèl gerig teen ‘n uitspraak wat die appellant verbied het om met sekere silosertifikate te handel en om dit slegs aan ‘n instansie bekend as AT Grain BK (hierinlater na verwys as ‘AT Grain’) te lewer nadat betaling van die volle koopprys aan sekere produsente geskied het. [2] Op Saterdag 26 Februarie 2005 het die eerste respondent in saak nr 343/06 (hierna ‘Du Preez’ genoem) ‘n dringende aansoek in die Bophuthatswana Provinsiale Afdeling geloods. Op dieselfde dag het ‘n groep van 57 boere, waaronder Beyplas (Edms) Beperk (eerste respondent in saak nr 344/06; hierna Beyplas genoem), ‘n aansoek in die Transvaalse Provinsiale Afdeling gebring. Op 27 Februarie 2005 is ‘n bevel nisi in die Du Preez-saak uitgereik en op 1 Maart 2005 ‘n soortgelyke bevel in die Beyplas-saak. Beide aansoeke is daarna geargumenteer en op 23 Junie 2005 het die Hof a quo die interim bevel bekragtig en bevind dat Du Preez en Beyplas aangetoon het dat dit ‘a clear right to the ownership of the silo certificates in dispute’ gehad het, en bygevolg ‘a right to vindicate their ownership to the silo certificates’. [3] In die lig van die feit dat die skuldoorsaak in beide sake dieselfde is, met sekere verskille ten opsigte van die feite, waarin hierinlater na verwys word, het die partye se regsverteenwoordigers soos in die Hof a quo, die aangeleentheid gelyktydig voor hierdie Hof beredeneer, en in die lig van die slotsom waartoe hierin gekom word, is dit ook dienstig, ten einde duplikasie te voorkom, dat slegs een uitspraak hierin gelewer word. WAT BESLIS MOET WORD [4] Die vrae wat hierin onstaan is (a) die aard en omvang van Du Preez en Beyplas se aansprake ten opsigte van die betrokke silosertifikate1 en of hulle geregtig is op die lewering daarvan; (b) is daar sodanige feitedispute ter beslegting van die voorgaande dat dit vir verhoor verwys moet word; en indien wel (c) of dit na die Transvaalse Provinsiale Afdeling van die Hooggeregshof ingevolge art 9 van die Wet op die Hooggeregshof, 1959 (Wet 59 van 1959), oorgeplaas moet word; en (d) of ABSA se aansoek om verdere getuienis ingevolge art 22 van die Wet op die Hooggeregshof, 1959 (Wet 59 van 1959) toegestaan behoort te word. AGTERGROND [5] Wat die feite betref, blyk dit dat Du Preez ‘n skriftelike ooreenkoms met AT Grain, verteenwoordig deur die enigste lid, Mnr Toerien, deur tussenkoms van Estelle Wessels (hierin later na verwys as ‘Wessels’), ingevolge waarvan AT Grain graan by Du Preez sou koop. Lewering van die graan sou geskied deur oorhandiging van die silosertifikate wat deur NWK uitgereik was en wat die besonderhede van die graan bevat het byvoorbeeld soort, hoeveelheid en plek van opberging daarvan. Daarna het Du Preez die silosertifikate in blanko onderteken en by ABSA se Lichtenburg tak ingehandig, waarna dit geëndosseer was op naam van Greater Grain BK (hierin later na verwys as ‘Greater Grain’) en daarna aan ABSA self. Laasgenoemde handelinge is deur Hantie Steenkamp, ‘n werknemer van die betrokke tak van ABSA verrig. 1 Vir doeleindes van hierdie uitspraak is dit onnodig om volledig met die betekenis en regsgevolge van ‘n silosertifikaat te handel. Sien die artikel van S F du Toit The legal nature of silo receipts used in the future’s market and bills of lading Tydskrif vir die Suid-Afrikaanse Reg (TSAR 2007.1) p 56 en verder. [6] In die Beyplas-saak het Mnr Beyers, ‘n direkteur van Beyplas, ‘n skriftelike ooreenkoms met AT Grain gesluit, waarna dieselfde plaasgevind het as in die Du Preez aangeleentheid. [7] Beide Du Preez en Beyplas beweer dat die silosertifikate ingevolge ‘n mondelinge ooreenkoms met Hantie Steenkamp aan ABSA in blanko geëndosseer en oorhandig was, wat ingehou het dat sy slegs die silosertifikate sou oorhandig aan AT Grain nadat betaling geskied het. In die lig van die feit dat betaling nie geskied het nie moes ABSA nie die silosertifikate oorgedra het nie en is Du Preez en Beyplas as die onderskeie eienaars daarvan geregtig op teruggawe daarvan. [8] Hierteenoor betwis ABSA die bestaan van die mondelinge ooreenkoms en beweer dat Du Preez en Beyplas elkeen aan ‘n skriftelike ooreenkoms met AT Grain gebonde is, ingevolge waarvan ‘n kredietkoop gesluit was. Hulle was verplig om die silosertifikate te onderteken en by ABSA tot voordeel van AT Grain in te handig. Beide sou eers later betaling ontvang en AT Grain het dus eienaar geword, omdat die silosertifikate met die nodige bedoeling aan AT Grain gelewer en aldus ontvang was.2 Die werklike rede vir die inhandiging van die silosertifikate by ABSA word dus in die skriftelike ooreenkoms tussen AT Grain aan die een kant en Du Preez en Beyplas aan die ander kant gevind. Verder beweer ABSA dat AT Grain die graan aan Greater Grain verkoop en gelewer het wat dit weer op hul beurt aan ABSA se korporatiewe- en aksepbank verkoop en gelewer het en wat betaling ten aansien daarvan aan Greater Grain gemaak het. ABSA het dus die eienaar van die silosertifikate, asook van die graan, geword. [9] Dit is Du Preez en Beyplas se saak dat die betrokke silosertifikate deur ABSA gehou moes word totdat betaling ontvang is. Beide se bewering in hierdie verband is die volgende: 2 ‘Transferring the silo receipt will effect the transfer of the right to delivery embodied in the silo receipt, and may lead to the delivery of the grain in the silo, and thus potentially also to the passing of ownership of the grain if all requirements for the passing of ownership are met. Acquisition of the silo receipt is necessary for the new holder to become owner of the document and to be able to enforce the rights embodied in it.’ (TSAR 2007.1 op. cit. p 64.) ‘Dit was egter nie vir my aanvaarbaar (om die sertifikate te onderteken) nie aangesien ek eers met my bank te Lichtenburg die aangeleentheid wou bespreek. Vir hierdie doel het ek na ABSA Lichtenburg gegaan en in gesprek met Steenkamp getree. Sy het my meegedeel dat ABSA inderdaad betrokke is by voormelde aangeleentheid. Sy het verder bevestig dat die silosertifikate by die Lichtenburg tak ingelewer word en deur ABSA in veilige bewaring gehou sal word totdat betaling ontvang is, daarna individueel na die onderskeie boere se rekening oorgeplaas word, waaropvolgend die sertifikate aan AT Grain gelewer sal word.’ [10] In antwoord hierop verklaar Knipe, ‘n Bestuurder van die appellant (en bevestig deur Steenkamp), die volgende: ‘Sy het geen herinnering van enige persoonlike gesprek met die applikant nie. In die algemeen gesproke ontken sy egter nie dat sy onder die indruk was dat die betrokke boere (en dus ook die applikant) moes toestemming gee vir die vrylating van die silosertifikate nie. Sy bevestig egter ook dat sy nie die silosertifikate uit haar besit sal laat gaan sonder goedkeuring van Korporatiewe Bank nie.’ [11] Dit behoef geen betoog dat bogemelde bewerings van Steenkamp ‘n halfhartige ontkenning is en nie werklik ‘n feitedispuut daarstel nie, indien in isolasie beoordeel word. [12] Indien die eedsverklaring van Knipe, ABSA se Bestuurder Globale Handels- en Kommoditeitsfinansiering in ag geneem word, blyk dit dat dit ABSA se praktyk is om nie betrokke te raak by die ooreenkoms tussen die produsent en die graanhandelaar nie. Die verhouding tussen graanhandelaar en produsent is iets wat nie deur ABSA gemonitor word nie. ABSA bemoei hom ook nie met die wyse waarop die graanhandelaar die silosertifikaat bekom nie en ook nie met die metode of tydstip van betaling waarop die graanhandelaar en produsent besluit nie. Dit blyk verder dat Steenkamp inelkgeval ontken dat die geld ‘individueel na die onderskeie boere se rekening oorgeplaas’ sou word aangesien talle van die boere al hier ter sprake nie rekeninge by ABSA gehad het nie. [13] Wat Du Preez se gesprek met Gert Nel van ABSA betref, is dit duidelik dat dit ‘n oppervlakkige gesprek was op ‘n stadium toe Nel nie volledig kennis gedra het van al die feite onderliggend tot die bewaring van die sertifikate nie. In die geheel gesien, word Du Preez en Beyplas se bewerings dus wel in geskil geplaas. REGSPOSISIE [14] Al sou daar in die guns van Du Preez en Beyplas aanvaar word dat daar nie ‘n werklike feitedispuut op die stukke is nie, moet die Hof, alvorens dit ‘n finale bevel sou verleen, steeds tevrede wees dat die bewerings in hul funderende eedsverklarings inherent geloofwaardig is. In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) verklaar Corbett AR op 634I-635B die volgende: ‘The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain instances the denial by respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact. . .If in such a case the respondent has not availed himself of his right to apply for the deponents concerned to be called for cross-examination under Rule 6(5)(g) of the Uniform Rules of Court. . .and the Court is satisfied as to the inherent credibility of the applicant’s factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks.’ (My beklemtoning). [15] Daar is ook sekere onwaarskynlikhede in Du Preez se weergawe wat ‘n skadu werp op sy geloofwaardigheid, indien bloot op die stukke beoordeel word. Hy beweer in sy funderende eedsverklaring dat die silosertifikate as ‘sekuriteit’ by ABSA ingehandig is. Op die stukke is dit duidelik dat hier nie sprake kan wees van sodanige sekuriteit nie en blyk dit ook nie ten opsigte waarvan dit as sekuriteit sou dien nie. In repliek poog hy om dit op te klaar deur die volgende te vermeld: ‘Die woord sekerheid sou dalk ‘n beter woordkeuse gewees het omdat die gegewe omstandighede. . .’ Dit volg dus dat daar nie bevind kan word dat viva voce getuienis nie die oorwig van waarskynlikhede, soos blyk uit die stukke, sal versteur nie.3 [16] Beide Du Preez en Beyplas se ooreenkoms met AT Grain is die standaard ooreenkoms wat gesluit word tussen AT Grain en hulle produsente. Gemelde ooreenkoms stipuleer optrede van die produsente wat moeilik versoenbaar is met die ooreenkoms wat hulle na bewering met ABSA gehad het, byvoorbeeld die produsent moet die silosertifikate aan AT Grain lewer sodra hulle in besit daarvan gekom het. Die belangrikste bepaling is die feit dat eiendomsreg nie voorbehou word in die AT Grain ooreenkoms totdat betaling van die graan geskied het nie. Du Preez en Beyplas se bewerings word verder weerspreek deur sekere van die bedinge vervat in die ‘silosertifikaat mandaat’.4 Wessels se weergawe is dat sy deur Steenkamp versoek was om sogenaamde kwitansies te teken as bewys van die silosertifikate wat ontvang is en dat sy in elkgeval nie magtiging gehad het om dit namens die betrokke kliënte te teken nie. Wat Wessels betref, onstaan die vraag wat haar rol in die hele debakel was en namens wie sy opgetree het. Aanduidings is dat òf sy òf Steenkamp vir Du Preez en Beyplas bedrieg het. Dit is egter aspekte wat deur middel van viva voce getuienis opgeklaar kan word. [17] In die geval van Beyplas is daar ‘n verontrustende aspek wat die geloofwaardigheid van deponent Beyers in gedrang bring. In antwoord op sy eedsverklaring het ABSA daarop gewys dat Beyers besig was om in die ipsissima verba van Du Preez getuienis te gee aangesien dit opmerklik was dat beide deponente se bewerings in dieselfde woorde weergegee is. Daar is ook gewys op verskillende botsende aspekte in hierdie eedsverklaring. In sy repliserende eedsverklaring beweer Beyers dat hy nie die funderende 3 Administrator Transvaal v Theletsane 1991 (2) SA 192 (A) te 197B; Trust Bank van Afrika Bpk v Western Bank Bpk 1978 (4) SA 281 (A) te 294C-E. 4 In Klousule 1.2 daarvan word magtiging aan ABSA verleen om die sertifikaat namens die kliënt te verhandel en oor te dra terwyl ‘n latere bepaling die bank se aanspreeklikheid uitsluit vir enige verlies of skade hoegenaamd wat dit mag ly met ‘n verdere bepaling dat alle handelinge op die produsent se eie risiko geskied. Insiggewend is die feit dat in beide sake betaling uitgestel was; in die Du Preez-saak sou betaling op 30 Maart 2005 en in die Beyplas- saak op 5 Maart 2005 geskied het. eedsverklaring ‘in besonderhede gelees’ het nie. Hy was ook nou genoodsaak om te erken dat Theart, ‘n ander lid van Beyplas, die getekende silosertifikate aan Steenkamp oorhandig het maar beweer hy dat hy daarna ‘geskakel’ en ‘telefonies’ Theart se reëling met haar bevestig het. Hierdie optrede van Beyers in die Beyplas-aangeleentheid is van sodanige aard, dat sy inherente geloofwaardigheid op die stukke onbevredigend is.5 [18] Dit volg dus uit die voorgaande dat, in die lig van die feite dispute tussen die partye tesame met die vraagteken wat hang oor die inherente geloofwaardigheid van die betrokke deponente, die Hof a quo fouteer het om die aangeleentheid op die stukke te besleg. Weens die omvang van die feite dispute is dit ook ‘n gepaste geval om te voldoen aan die versoek van die advokaat namens die appellant, naamlik om die aansoek vir verhoor te verwys.6 AANSOEK OM OORPLASING IN GEVOLGE ART VAN DIE HOOGGEREGSHOF WET, 1959 [19] Appellant het in die Hof a quo onsuksesvol aansoek gedoen dat die huidige aansoeke ooregeplaas word na die Transvaalse Provinsiale Afdeling van die Hooggeregshof, met die gedagte om dit te konsolideer met 57 ander soortgelyke sake. Dit is die appellant se saak dat die geskilpunte in al hierdie sake wesenlik dieselfde is en dat dus gerieflik gelyktydig aangehoor en afgehandel kan word. [20] ‘n Hof kan in gepaste gevalle ‘n oorplasing van verrigtinge van een afdeling na ‘n ander beveel.7 Alvorens dit sal geskied moet die applikant die 5 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd, supra, p 635. 6 Conradie v Kleingeld 1950 (2) SA 594 (O) te 597; Oblowitz v Oblowitz 1953 (4) SA 426 (K) te 434F-H. 7 Artikel 9(1) van die Wet op Hooggeregshof 59 van 1959 lui soos volg: ‘Indien ‘n siviele geding of verrigtinge of ‘n saak in ‘n provinsiale of plaaslike afdeling aanhangig gemaak is, en dit vir die betrokke Hof blyk dat dit met groter gerief of gepastheid in ‘n ander afdeling verhoor of beslis kan word, kan daardie Hof, op aansoek van ‘n party daarby en nadat al die ander partye daarby aangehoor is, gelas dat die geding, verrigtinge of saak na daardie ander afdeling oorgeplaas word.’ Hof oortuig dat daar ‘n oorwig van gerief ten gunste van die oorplasing is.8 Die gerief van die partye, die gerief van die Hof en die algemene afhandeling van die geding sal in ag geneem word.9 [21] Die advokate namens Du Preez en Beyplas onderskeidelik, het die aansoek geopponeer en aangevoer dat sodanige oorplasing, en moontlike gepaardgaande konsolidasie van sake, ongerieflik sal wees vir Du Preez en Beyplas, aangesien die feitedispute in verskeie opsigte verskil. In hul geval is dit baie eng wat binne ongeveer tien dae besleg sal kan word, teenoor etlike maande wat dit in die TPA sou duur, indien die huidige aansoek toegestaan sou word. [22] Dit blyk dat ‘n verhoordatum in die TPA-saak toegeken is vanaf Julie 2007 tot Desember 2007 om ononderbroke te loop. Dit is egter twyfelagtig om binne die bestek van een maand die voorgenome aansoek om konsolidasie af te handel èn behoorlik vir die verhoor voor te berei. Dit beteken dat gemelde verhoor uitgestel kan word, ten einde Du Preez en Beyplas te akkommodeer, met enorme koste-implikasies. ‘n Verdere faktor wat in ag geneem moet word is die feit dat Du Preez en Beyplas se regsspanne vir etlike maande betrek gaan word in ‘n verhoor waarin hulle ‘n baie beperkte belang het. [23] Dit volg dus dat die oorwig van gerief nie die oorplasing van die huidige sake begunstig nie. By gevolg kan die aansoek dus nie slaag nie. AANSOEK INGEVOLGE ART 22 VAN DIE HOOGGEREGSHOFWET 1959 [24] Na uitspraak van die Hof a quo was daar sekere verwikkelinge wat ABSA voor hierdie Hof wou plaas ingevolge gemelde aansoek, ten einde hulle regte te beskerm. Om die redes hierinlater vermeld, behoort gemelde aansoek toegestaan te word. 8 Kelly v Malherbe 1939 (2) PH F123; Swallow v Swallow 1947 (2) PH F91. 9 Smith v Wilson and Another 1949 (3) SA 537 (N); Mulder and another v Beacon Island Share Block Ltd 1999 (2) SA 274 (K) te 277B-C. [25] Dit blyk dat tydens die aanhoor van ABSA se aansoek om verlof om te appelleer daar twee verdere aansoeke ter sprake was. Du Preez het ingevolge Hofreël 49 (11) verlof gevra vir onmiddellike eksekusie indien verlof om te appelleer aan ABSA toegestaan sou word, terwyl ABSA gevra het vir ‘n interdik ingevolge waarvan Du Preez verbied sou word om met die silosertifikate te handel tot na afloop van ‘n verdere aansoek om verlof om te appelleer na hierdie Hof, indien die Hof a quo die aansoek om verlof van die hand sou wys. [26] Dieselfde het ook geskied in die Beyplas geleentheid. Alhoewel die Hof a quo ABSA se aansoek om verlof om te appelleer van die hand gewys het, het dit op daardie stadium geensins gehandel met laasgenoemde aansoeke nie. Nieteenstaande Du Preez en Beyplas se kennis van die hangende aansoek om ‘n interdik, en ABSA se aanduiding dat dit hierdie Hof vir verlof sou nader, het beide op dieselfde dag as wat die aansoek om verlof van die hand gewys was, naamlik 6 Oktober 2005, eksekusie gehef deur die silosertifikate te bekom, dit te verkoop en die opbrengs toegeëien. Die resultaat is dat beide Du Preez en Beyplas nie in staat is om die silosertifikate terug te gee indien die huidige appèl suksesvol sou wees nie. [27] Bogemelde optrede is onaanvaarbaar en behoort nie toegelaat te word nie aangesien die partye vir hulself ‘n onbillike prosedurele voordeel skep wat grens aan regsverydeling. In hierdie verband verklaar Cloete R die volgende in Fedsure Life Assurance v Worldwide African Investment Holdings 2003 (3) SA 268 (W) op 276B-C: ‘As a matter of principle, and save perhaps in exceptional cases (of which the present is not one, in my view), a successful litigant who knows that an appeal is pending should not be permitted to present an appeal Court with a fait accompli brought about by its own voluntary conduct subsequent to the judgment appealed against and which relates to the subject matter of the appeal, and seek to have the appeal determined on the basis of such conduct ─ particularly where such conduct is inimical to the interests of the appellant.’ [28] ‘n Hof het die inherente bevoegdheid om ‘n misbruik van die hofproses te voorkom deur die belange van die benadeelde litigant te beskerm.10 In die omstandighede is ABSA dus geregtig dat sekuriteit gestel word vir die verkoopprys van die betrokke silosertifikate. Mnr Wepener, namens ABSA, het aan die hand gedoen dat Du Preez en Beyplas gelas word om alle tersaaklike dokumente ten opsigte van die verkoop van die silosertifikate te verifieer en binne vyf dae aan die Griffier te lewer. Hy het verder versoek dat sekuriteit de restituendo tot bevrediging van die Griffier vir die waarde van die silosertifikate in geskil, verskaf word. Alhoewel dit gepas is, na my mening, dat Du Preez en Beyplas gelas word om sekuriteit te stel, soos versoek, het ek ‘n probleem om die Griffier te belas met die vasstelling van die omvang daarvan. Die enigste bevoegdheid van die Griffier in hierdie verband, is die bepaling van die bedrag ten opsigte van die sekuriteit vir koste, soos in die vooruitsig gestel deur Hofreël 47 (2) en (6). Indien Du Preez en Beyplas sou poog om para 3(b) van die bevel te ontduik, of versuim om daaraan te voldoen, sal ABSA geregtig wees om die Hof te nader vir die nodige regsverligting, met ‘n gepaste kostebevel. Die verkoopprys van graan op SAFEX op 6 Oktober 2005, synde datum van eksekusie, is openbare kennis, en behoort dit nie moeilik vir ABSA te wees om dit vas te stel nie. Indien Du Preez en Beyplas ‘n ander prys elders verkry het, staan dit hulle vry om hierdie inligting aan ABSA te openbaar. [29] Wat koste betref, is namens ABSA betoog dat ‘n bestraffende kostebevel verleen moet word ten opsigte van hierdie aansoek. Alhoewel hier sprake is van laakbare optrede aan Du Preez en Beyplas se kant, is dit, na my mening, nie van so ‘n ernstige aard om hulle met ‘n bestraffende kostebevel te penaliseer nie. Alhoewel hulle fouteer het, het hulle klaarblyklik die betrokke silosertifikate te gelde gemaak omdat hulle geglo het dat dit hulle s’n was. [30] In die lig van die slotsom waartoe geraak is, is dit onnodig om te handel met die ander argumente geopper deur ABSA se advokaat. 10 Western Assurance Company v Caldwell’s Trustee 1918 AD 262 veral te 271; Ecker v Dean 1937 AD 254 veral te 259. [31] Bygevolg word die volgende bevele verleen ten opsigte van beide saak nr 343/06 en saak nr 344/06: 1. Die appèl slaag met koste, welke koste sal insluit dié verbonde aan twee advokate. 2. Die bevel van die Hof a quo en die bevel nisi, met gepaardgaande kostebevele, word ter syde gestel en vervang met die volgende: ‘(a) Die aansoek word na verhoor verwys. (b) Die koste van die aansoek sal koste in die geding wees. (c) Die kennisgewing van mosie sal as enkelvoudige dagvaarding en die antwoordende eedsverklaring as ‘n kennisgewing van voorneme om te verdedig staan. (d) Die applikant word gelas om ‘n deklarasie te liasseer binne 30 dae vanaf datum van hierdie bevel. (e) Die teenaansoek ingevolge art 9 (1) van die Wet op Hooggeregshof, 1959 (Wet 59 van 1959) word afgewys met koste.’ 3. (a) Die aansoek ingevolge art 22 van die Wet op Hooggeregshof, 1959 (Wet 59 van 1959) slaag met koste. (b) Die deklarasie in 2(d) hierbo mag nie afgelewer word alvorens die eerste respondent sekuriteit de restituendo vir die verkoopprys van die sertifikate in geskil, verskaf het nie. (c) Indien die eerste respondent versuim om aan bevele 2(d) en 3(b) hierbo te voldoen, word verlof aan ABSA verleen om die saak op die rol te plaas en vonnis te neem vir die verkoopprys van gemelde silosertifikate. ___________________ S P B HANCKE Wn AR STEM SAAM: SCOTT AR HEHER AR	THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 May 2007 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Die huidige respondente Du Preez en Beyplas (Edms) Beperk (laasgenoemde verteenwoordig deur ‘n direkteur Mnr Beyers), het in die Bophuthatswana Hooggeregshof ‘n bevel teen ABSA Bank Beperk verkry, wat die bank verbied het om met sekere silosertifikate te handel. Gemelde silosertifikate is uitgereik deur NWK Beperk ten opsigte van graan wat gemelde respondente as produsente aan NWK gelewer het. Gemelde produsente het op hulle beurt hierdie sertifikate by die bank ingelewer. Die vrae wat hierin ontstaan is eerstens die aard en omvang van die onderskeie partye se aansprake ten opsigte van hierdie silosertifikate; tweedens die vraag of daar sodanige feitedispute bestaan as gevolg waarvan die aangeleentheid vir verhoor verwys behoort te word en derdens of dit na die Transvaalse Provinsiale Afdeling van die Hooggeregshof oorgeplaas moet word om gelyktydig saam met ‘n groep van 57 ander boere wat ‘n soortgelyke saak aldaar gehange gemaak het, verhoor te word. Op appèl is beslis dat die feitedispute van sodanige aard is dat die aansoek vir getuienis verwys behoort te word. Daar is ook verwys na aanduidings op die stukke dat sekere persone moontlik vir Du Preez en Beyplas bedrieg het, ‘n aspek wat deur middel van mondelinge getuienis opgeklaar kan word. Ten opsigte van ABSA se aansoek om die aangeleentheid oor te plaas na die Transvaalse Provinsiale Afdeling is gemelde aansoek op grond van geriefsoorwegings van die hand gewys. ABSA se aansoek om verdere getuienis voor die Hoogste Hof van Appèl te plaas is toegestaan. Gemelde getuienis het betrekking op eerste respondente se optrede ten opsigte van silosertifikate wat hulle verkry en daarna verkoop het. As gevolg hiervan het die Hoogste Hof van Appèl die eerste respondente gelas om sekuriteit te stel alvorens hulle met die saak kan voortgaan. --ends--
440	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20732/14 In the matter between Reportable RAYMOND DANIEL DE VILLIERS APPELLANT and THE STATE FIRST RESPONDENT REGIONAL MAGISTRATE D M SOOMAROO SECOND RESPONDENT Neutral Citation: De Villiers v The State & another (20732/14) [2016] ZASCA 38 (24 March 2016) Coram: Majiedt JA and Fourie and Baartman AJJA Heard: 9 March 2016 Delivered: 24 March 2016 Summary: Review – a high court of two judges sitting as a review court is a court of first instance as contemplated in s 16(1)(a) of the Superior Courts Act 10 of 2013 – that court is thus empowered to grant leave to appeal to the Supreme Court of Appeal in terms of s 16(1)(a)(ii) – duress allegedly exerted by legal representatives on appellant to plead guilty to theft not borne out by the facts. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Free State Division, Bloemfontein (Ebrahim J and Reinders AJ sitting as court of first instance): The appeal is dismissed. ______________________________________________________________ JUDGMENT ______________________________________________________________ Majiedt JA ( Fourie and Baartman AJJA concurring): [1] This is an appeal against the dismissal of a review application brought by the appellant, Mr Raymond Daniel de Villiers, in the Free State Division, Bloemfontein (Ebrahim J and Reinders AJ). The appellant had sought the review and setting aside of his conviction of theft (pursuant to a plea of guilty) and the sentence of seven years’ imprisonment with three years conditionally suspended imposed by the second respondent, Regional Magistrate D M Soomaroo. The State was cited as the first respondent. [2] Leave to appeal to this Court was granted by the court below. As the appellant’s attorneys were unsure of whether that court had the power to grant leave, they directed a written enquiry to the registrar of this Court concerning the correct procedure to be adopted. On the registrar’s advice, the appellant filed a petition to this Court for leave to appeal. That petition is standing over pending the hearing of this matter. As a result of the dual approach pursued by the appellant, the parties had been requested to address as a preliminary aspect whether the court below had ‘the requisite power to grant leave to appeal to this court, in view of the provisions contained in s 16(1)(b) of the Superior Courts Act’. Both counsel filed helpful supplementary heads of argument for which we are grateful. [3] It is plain that a division of the high court which sits on review with two judges presiding, is a court of first instance as contemplated in s 16(1)(a) of the Superior Courts Act (the Act) and that leave has therefore been properly granted in this instance in terms of s 16(1)(a)(ii). The relevant part of that section reads as follows: '16 Appeals generally (1) Subject to section 15(1), the Constitution and any other law- (a) An appeal against any decision of a Division as a court of first instance lies, upon leave having been granted – (i) . . . (ii) If the court consisted of more than one judge, to the Supreme Court of Appeal.’ The review before us is regulated by Uniform rule 53. It is not regulated by the Criminal Procedure Act 51 of 1977 (the CPA) or by any other criminal procedural law as envisaged in s 1 of the Act, and sections 16 and 17 of the Act therefore apply in this case. In the premises the matter is properly before us on appeal. The petition was therefore unnecessary and should be regarded as superfluous. I discuss next the merits. [4] The appellant, who is an accountant, was arraigned in the regional court initially with two other co-accused on the following charges – (a) count 1 – fraud in the sum of R950 000; (b) in the alternative, theft in the sum of R950 000; (c) as a second alternative to the main count, a contravention of the provisions contained in s 7, read with ss 1, 8 and 36 of the Financial Advisory and Intermediary Services Act 37 of 2002; (d) count 2 – a contravention of the provisions contained in s 2, read with ss 1 and 10 of the Financial Institutions (Protection of Funds) Act 28 of 2001 (the Funds Act); (e) count 3 – a contravention of the provisions contained in s 4(1), read with ss 1 and 10 of the Funds Act; (f) count 4 – a contravention of the provisions contained in s 4(4), read with ss 1 and 10 of the Funds Act. [5] The appellant pleaded guilty to theft, the first alternative charge to count 1. He was represented by an attorney, Mr Kramer, and an advocate, Mr Nel. After his written plea explanation in terms of s 112(2) of the CPA was read into the record by his counsel, the appellant confirmed to the regional magistrate that the plea and explanation were correct. In the plea explanation itself the appellant stated that the instruction given to his legal representatives to plead guilty to theft was given without anyone having unduly influenced him in that regard and was made freely and voluntarily with full knowledge of the implications thereof. After the imposition of sentence, the appellant sought leave to appeal against his sentence only, but this was refused by the regional magistrate. The appellant appointed a new legal team and, on their advice, he applied for leave to appeal against his conviction, but this too was unsuccessful in the regional court. A subsequent petition to the court below for leave to appeal against his conviction and sentence met with a similar fate. On petition to this Court the appellant was granted leave on 7 January 2013 to appeal against his sentence to the court below, but leave was refused in respect of his conviction. The appeal against sentence is still pending, awaiting the outcome of this review application, which was issued on 5 March 2013. [6] The review is sought on the basis of an alleged irregularity ex facie curiae which vitiated the entire proceedings in the regional court as, so it is contended, it infringed the appellant’s fair trial rights under the Constitution. In essence the main trust of the appellant’s argument was that he had pleaded guilty under duress, his previous legal team having cajoled him into tendering such a plea. He avers that he never intended to plead guilty, because he was not guilty of fraud or theft. A brief synopsis of the factual backdrop is necessary for a proper understanding of the issues. The common cause facts are as follows. [7] The appellant administered the deceased estate of a Mr P J Wiese at the request of the deceased’s spouse, Ms A Wiese. On his advice, Ms Wiese made out a cheque in the sum of R950 000 to the Taakmeesters Trust (the Trust), which was controlled by the appellant and which was described by him in his plea explanation as his ‘alter ego’. There is a dispute as to what exactly Ms Wiese’s mandate to the appellant was in respect of this money, an aspect to which I shall revert presently. The appellant utilised the money to provide bridging finance to various entities not connected at all to the estate, including some in which the appellant had an interest. Save for a payment of R50 000 made by the Trust to Ms Wiese, no repayment was made before the Trust was sequestrated. Criminal charges were laid against the appellant after Ms Wiese obtained legal advice from a firm of attorneys. [8] The appellant’s plea explanation is broadly consonant with these common cause facts. He admitted that: (a) the Trust had received a cheque in the amount of R950 000 from the estate late P J Wiese made out to the Trust; (b) these moneys had to be invested in a money market account by the Trust for the benefit of the estate; (c) the moneys had not been invested as agreed, but had been utilised to make payments to various entities and persons. [9] The appellant’s case is that in his own mind he had not committed any offence or, at least, the offences of fraud or theft (there is some vacillation on his part on this aspect) and he had never intended to plead guilty. Representations were made by his legal team to the Director of Public Prosecutions (the DPP) to accept a plea on a lesser charge, namely the statutory offence in count 3, and for a non-custodial sentence to be agreed upon. These representations were clearly made to secure a plea agreement with the State in terms of s 105A of the CPA. The DPP, however, declined to enter into a plea agreement on these terms and the plea of guilty on theft eventually followed. The record reflects that there were numerous adjournments in the matter, some of them for the purpose of the representations to the DPP to be finalised and at least one other for the finalisation of the plea of guilty. [10] According to the appellant, his counsel, Mr Nel, had requested him after their first consultation to carefully read through the police docket, particularly Ms Wiese’s statement, and to prepare a written memorandum in response thereto. The appellant complied and handed the memo to Mr Nel and a copy to Mr Kramer. In the answering papers inexplicably neither Mr Kramer nor Mr Nel (in a cryptic confirmatory affidavit) makes any mention at all of these written instructions, and its contents therefore stand uncontroverted. This is a lamentable state of affairs, particularly because the appellant’s case largely rests upon this memorandum furnished to his legal representatives. It was forcefully contended that the written instructions corroborated the appellant’s version regarding duress. This problem arose because Mr Kramer did not in his answering affidavit deal seriatim with the allegations made by the appellant in his founding affidavit. It seems to me that Mr Kramer’s affidavit, although filed as an answering affidavit by the first respondent, had not been drafted as an answer in response to each and every material allegation contained in the founding affidavit. Mr Kramer was in all likelihood simply asked to furnish an affidavit setting out his version of the events. I shall revert to this conundrum presently. [11] The crucial events underpinning the alleged duress occurred, on the appellant’s version, on the morning of 11 August 2011, just before he tendered his plea of guilty in court. He avers that Mr Nel had conveyed to him that in the event of a conviction of theft of more than R500 000, the regional magistrate was statutorily compelled to consider imposing a minimum sentence of 15 years’ imprisonment. This, the appellant said, was conveyed to him against the backdrop of the State having refused the offer made on his behalf in the course of the plea negotiations and of the prosecutor having insisted on a guilty plea on at least one of the counts. The offer, according to the appellant, was not the one alluded to in para 9 above, but a proposal made by his legal representatives to the State that the charges be withdrawn in exchange for which the appellant would reimburse Ms Wiese. To this end, he says, his legal team had requested him to draw up an amortisation table reflecting the proposed repayment terms. He claims that Ms Wiese had accepted the repayment terms reflected in the amortisation table which had been sent to her attorneys. His impression was that Mr Nel was concerned that the minimum sentence would be imposed upon conviction following a plea of not guilty. Mr Nel referred to the fact that the appellant was facing a sentence of 15 years’ imprisonment, that he had a wife and children and that it was not worth going on trial in the face of all these risks. Mr Kramer informed the appellant that he had an 80/20 per cent prospect of receiving a non-custodial sentence (‘‘n buite straf’). The appellant averred that as a consequence of these warnings by his legal representatives, he reluctantly mandated them to pursue further plea negotiations with the State. He says that he never stole any money and that he intended to reimburse Ms Wiese. [12] The first respondent’s case is that it had been presented with a written plea explanation which, on the face of it, appeared to be in order and in which the appellant admitted all the material elements of the crime of theft. And the factual matrix underpinning the plea as set out in the s 112(2) statement accorded with the State’s case. There was nothing in the preceding objective facts which suggested that the plea had not been made freely and voluntarily. The State also alluded to several aspects which contradicted the appellant’s claim of duress or which seriously impugned his credibility, amongst others the long delay in raising the duress, the proceedings in facie curiae, the underlying rationale for the representations to the DPP and the import of Ms Wiese’s statement. [13] The court below dismissed the review application on the following broad grounds: (a) there was no acceptable explanation for the unreasonable delay of 18 months between the plea of guilty and the launching of the review application; (b) in pursuing leave to appeal against conviction to its ultimate (unsuccessful) conclusion, the appellant had exhausted his remedies inasmuch as once a prospective appeal on the merits had been considered and dismissed, the proceedings could not be reopened by way of a review of the proceedings in the trial court; (c) on all the objective facts and surrounding circumstances the appellant had failed to establish that he had pleaded guilty to theft under duress. [14] It is expedient to discuss (a) and (b) above together since they are interlinked. It is trite that a review application must be brought within a reasonable time.1 While it is so that there has been a long delay here, given the outcome of this appeal I am prepared to accept, as was contended on behalf of the appellant, that the delay was largely caused by the change of the appellant’s legal team and by the bringing of the applications for leave to appeal against conviction. As far as the latter is concerned, I am of the view that the appellant had not, on the facts of this case, been precluded from bringing a review application after his unsuccessful pursuit of leave to appeal against his conviction. It is not as if he is seeking the proverbial second bite at the cherry. Or, in civil law parlance, it cannot be said that the matter is res judicata. [15] The court below placed reliance for its finding on this aspect on R v D,2 R v Parmanand3 and Coopers South Africa (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämfung MBH.4 But one must be careful in seeking support from these decisions. They are in my view distinguishable on the facts and in any event do not establish as law that there is an absolute bar against a review application being brought after unsuccessfully pursuing leave to appeal against conviction. In R v D, the provincial division had dismissed an appeal against convictions and sentences. Leave to appeal to this Court was thereafter sought, but before the provincial division could hear that application, the appellants applied in that court for the setting aside of their 1 Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13 (A) at 39A-D. 2 R v D & another 1953 (4) SA 384 (A). 3 R v Parmanand 1954 (3) SA 833 (A). 4 Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämfung MBH 1976 (3) SA 352 (A). convictions and sentences and for the remittal of the case to the magistrate to enable them to adduce further evidence. This Court held that the provincial division was correct to refuse the application for the setting aside and remittal. It held (per Centlivres CJ): ‘The decision of that Division in which it dismissed the appeal was a final decision and could not be re-opened, except, possibly, on the ground that it had been obtained by fraud.’5 The facts here are clearly different and this case concerns an alleged improperly obtained plea of guilty. [16] Parmanand concerned the exercise of a court’s review powers on appeal. This court held that ‘where there is only an appeal before the Court and it appears that there might be relief open to the appellant by way of review, it would not be proper for the Court to dismiss the appeal and consequently confirm the conviction, thus making it impossible for the appellant, in view of the law as laid down in R v D, to get relief thereafter by way of review’.6 As can be seen, Parmanand follows R v D which, as I have stated, is distinguishable. [17] This principle was confirmed in Coopers that a court ought ‘first to consider the appeal aimed at a review of the proceedings and, thereafter, in the event of its dismissal, to consider the appeal on the merits’.7 Importantly, Wessels JA cautioned that, absent any argument on the point, he was hesitant ‘to decide definitively that in law, in such a case as the present, that is the correct and only course to adopt’.8 (My emphasis.) The learned Judge was, however, satisfied that that was the correct course to follow in that particular case. The court thus declined to decide the appeal on the merits and instead exercised its power of remittal under s 22 of the now repealed Supreme Court Act 59 of 1959, after it had found that the Commissioner of Patents had in patent infringement proceedings misdirected itself in the 5 R v D, above, at 390E-F. 6 Per Greenberg JA in R v Parmanand, above, at 838D-E. 7 Per Wessels JA in Coopers South Africa (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämfung, above at 369E-F. 8 Ibid. exercise of its discretion in excluding certain expert evidence altogether. The reservation expressed by Wessels JA is to my mind indicative thereof that in our law there is no absolute bar against a review application being brought after an unsuccessful pursuit of leave to appeal against conviction. Every case must be decided on its own facts. [18] The present case differs in my view materially from the three cases above. In this instance there is an allegation that the guilty plea was improperly obtained, thus vitiating the proceedings in its entirety. There has been a gross violation of the appellant’s constitutional fair trial rights, so it is contended. As I have said, the appellant is not seeking a second bite at the cherry. No court has as yet considered the correctness of the proceedings as opposed to the correctness of the conviction. I am therefore of the view that the court below erred in holding that the pursuit of the leave to appeal against conviction precluded the appellant from seeking the review and setting aside of the proceedings in the regional court. But, as I will presently demonstrate, the appellant’s conduct of the case has other consequences adverse to his review application. I turn to the substantive merits of the review. [19] It is axiomatic that an accused person’s constitutional right to representation by a legal practitioner would be rendered meaningless by incompetent representation or, as is alleged in this case, a complete failure to execute the accused’s mandate and instead compelling the accused to act against his or her will in a criminal trial.9 It is equally well established that a legal representative never assumes total control of a case, to the complete exclusion of the accused. An accused person always retains a measure of control over his or her case and, to that end, furnishes the legal representatives with instructions. As Van Blerk JA expressed, it in a separate concurring judgment, in R v Matonsi: ‘. . . die klient dra nie volkome seggenskap oor sy saak onherroeplik aan sy advokaat oor nie’.10 While the 9 See generally: S v Tandwa & others (538/06) [2007] ZASCA 34; 2008 (1) SACR 613 (SCA) para 7 and S v Dalindyebo (090/2015) [2015] ZASCA 144; [2015] 4 All SA 689 (SCA) paras 22 and 23. 10‘… the client does not irrevocably hand over complete control over his case to his counsel.’ R v Matonsi 1958 (2) SA 450 (A) at 458A-B. (My translation.) legal representative assumes control over the conduct of the case, that control is always confined to the parameters of the client’s instructions. The other side of the coin is that, in the event of an irresolvable conflict between the execution of a client’s mandate and the legal representative’s control of the case, the legal representative must withdraw or the client must terminate his or her mandate where such an impasse arises. An accused person cannot simply remain supine until after conviction.11 [20] The ultimate choice of whether or not to plead guilty is that of the accused. In R v Turner12 the court of appeal had to consider a similar situation to the present one. There the appellant had changed his plea of not guilty to one of guilty to the theft of his own car from the owners of a garage who had a lien over it. His counsel had advised him in the course of the trial to change his plea to one of guilty as that might result in a non-custodial sentence. Counsel’s advice further was that a not guilty plea and an attack on the police officers which accused them of complete fabrications (as was the appellant’s instructions) might, on the other hand, have resulted in the appellant’s previous convictions being placed before the jury and the appellant then ran the risk of going to prison. The appellant was, however, repeatedly assured that the final choice whether to plead guilty was his. This advice was given by counsel after he had been to see the trial judge in chambers. In giving the advice, counsel did not say anything to disabuse the appellant of the impression, which the appellant later confirmed he had formed, that counsel was repeating the trial judge’s views. The court of appeal held that counsel had, on the evidence before the court not exceeded his duty in advising the appellant to plead guilty. The fact that the appellant might have thought that his counsel’s views were that of the judge, however, amounted to the appellant not truly having a free choice in retracting his plea of not guilty and the guilty plea should thus be treated as a nullity. In making these findings Lord Parker CJ said: 11 R v Matonsi, above, at 457E-F; S v Louw (70/88) [1990] ZASCA 43; 1990 (3) SA 116 (A) at 124G-H. 12 R v Turner [1970] 2 All ER 281 (CA). ‘It is perfectly right that counsel should be able to do it [present advice] in strong terms, provided always that it is made clear that the ultimate choice and a free choice is in the accused person.’13 [21] Appellant’s counsel placed strong reliance on this dictum in Turner. We were also referred to the practice direction of the Court of Appeal (Criminal Division) in England issued by the Chief Justice, Lord Woolf, which reads as follows: '45. DISCUSSIONS ABOUT SENTENCE 45.1 An advocate must be free to do what is his duty, namely to give the accused the best advice he can and, if need be, in strong terms. It will often include advice that a guilty plea, showing an element of remorse, is a mitigating factor which may well enable the Court to give a lesser sentence than would otherwise be the case. The advocate will, of course, emphasize that the accused must not plead guilty unless he has committed the acts constituting the offence(s) charged. 45.2 The accused, having considered the advocate’s advice, must have complete freedom of choice whether to plead guilty or not guilty… (own emphasis)’. [22] Courts in the United States of America require that an accused person’s awareness of the constitutional rights waived by a plea of guilty, the accused’s understanding of the nature of the charge as well as the consequences of the plea of guilty, have to appear on the trial record.14 The American Bar Association, Standards for Criminal Justice, requires that defence counsel ensure that the decision whether to enter a plea of guilty is ultimately made by the accused.15 A plea of guilty is only valid if made as a 13 R v Turner, above, at 284; see also: R v Hall [1968] 2 All ER 1009 at 1011 (QB); Pretorius v Director of Public Prosecutions & another 2011 (1) SACR 54 (KZP) paras 28 and 29. 14 R J Bacigal and M K Tate Criminal Law and Procedure: An Overview 4 ed (2013) at 296. 15 American Bar Association, Standards for Criminal Justice 4 - 5.2(a)(i) (2d ed 1980). free and informed choice ‘with sufficient awareness of the relevant circumstances and likely consequences.16 [23] It was contended on behalf of the appellant that Messrs Kramer and Nel failed in their duty to advise the appellant that he had the ultimate choice whether or not to plead guilty and that in the event of an impasse they should have withdrawn. The facts of this case, however, do not support these submissions. The various unsuccessful applications for leave to appeal against the conviction were all premised on the fact that the plea was freely and voluntarily made without any undue influence. The primary contention in those applications was that the plea explanation did not encompass all the material elements of the crime of theft. In particular, it was submitted that the appellant had not admitted that he had intended to permanently deprive Ms Wiese of her money. In these circumstances it does not behove the appellant to argue, as was done before us, that the admission as to voluntariness cannot be taken into account in these proceedings. The appellant’s pursuit of leave to appeal on this basis places him in an untenable position in this review application. It is self-evident that the same plea cannot be voluntary for purposes of one application but alleged to have been made under duress for purposes of another application. The ineluctable conclusion which follows that the plea was not made under duress is buttressed by other facts. [24] First, the plea explanation itself bears out that it had been made freely and voluntarily. The relevant parts read as follows: ‘3. Ek is op hoogte met die beweringe wat in die klagstaat ten aansien van die onderskeie aanklagtes my ten laste gelê word en na samesprekings tussen myself en my regsverteenwoordigers het ek opdrag aan hulle gegee om ten aansien van die eerste alternatief tot aanklag 1 [theft] ‘n pleit van skuldig aan die Hof te bied. 4. Hierdie opdrag is gegee sonder dat ek deur enigiemand daartoe onbehoorlik beïnvloed is en het dit vrywillig en ongedwonge geskied, met die volle besef van die gevolge daaraan verbonde.’17 16 Brady v United States 397 U.S. 742 (1970) at 748. The appellant confirmed to the court that the plea explanation, as read into the record, was true and correct in all respects. A period of approximately three and a half months elapsed before sentence was imposed and no mention whatsoever was made of the alleged duress. As stated, applications for leave to appeal in the regional court, the court below and in this Court followed which were all premised on a free and voluntary plea. It was only when these proceedings were launched on 5 March 2013, after the petition to this Court had succeeded only on leave to appeal against sentence, that the first allegation of duress saw the light of day. The conclusion is unavoidable that the appellant had hedged his bets on a successful appeal against conviction and, only once he had reached the end of that highly speculative road, he cried ‘duress’. This fallback position of claiming duress is, as I have said, completely at variance with and destructive of his earlier position in the leave to appeal applications. [25] Second, the unsuccessful representations to the DPP were aimed at securing a plea agreement on the following terms: the appellant would plead guilty on count three (a contravention of s 4(1), read with ss 1 and 10 of the Funds Act) in exchange for a non-custodial sentence. As counsel for the first respondent correctly pointed out, the actus reus in that statutory offence is exactly the same as the one underpinning the theft charge to which the appellant had pleaded guilty. It entails the unlawful investment of moneys entrusted to the appellant in a manner contrary to the mandate of the owner of that moneys. And the factual basis of the guilty plea on that aspect accorded with the allegations on oath made by the complainant, Ms Wiese. She stated in her affidavit to the police that she had agreed to the appellant’s proposal that the money be invested in a money market account with a higher interest rate. It had thus always been the appellant’s intention to plead guilty to an offence relating to the unlawful investment of trust moneys. 17 ‘3. I am conversant with the allegations in the charge sheet with regard to the various charges against me and after deliberations between myself and my legal representatives I have instructed them to tender a plea of guilty to the court on the first alternative to count 1. 4. This instruction has been given without me having been unduly influenced by anyone to do so and it has been done freely and voluntarily with full understanding of the consequences thereof.’ (my translation.) [26] While it is true that the appellant pertinently declared in his written instructions to counsel that he never had any intention to steal any money, that declared intent is at odds with the admission by the appellant that he had invested money contrary to his mandate from Ms Wiese. It can reasonably be inferred that, in the face of the State’s case, in particular the sworn statement of Ms Wiese, counsel had explained to the appellant that, ultimately, his actions constituted the crime of theft. And the inherent probabilities overwhelmingly favour the State’s version that the appellant had voluntarily furnished instructions for a plea of guilty on theft. As I have said, the inference is overwhelming that he only cried foul when he realised that he faced imprisonment notwithstanding his plea of guilty. The court below correctly preferred the version propounded mainly by Kramer and Nel on behalf of the first respondent over that of the appellant. [27] When one considers all these facts, coupled with the fact that the appellant is an accountant, the inevitable conclusion is that the appellant had, on the advice of his attorney and counsel, on his own volition and out of his own free will pleaded guilty to theft. I am satisfied on the facts before us that the appellant had taken an informed decision on the advice of his legal representatives, to plead guilty. In so doing he had waived his constitutional right to be presumed innocent and to remain silent, as well as the right to adduce and challenge evidence.18 The appeal is devoid of any merit. [28] The appeal is dismissed. ________________________ S A MAJIEDT JUDGE OF APPEAL 18 S 35(3)(h) and (i) of the Constitution. APPEARANCES For Appellant: D F Dörfling SC Instructed by: Du Plessis & Associates, Johannesburg Martins Attorneys, Bloemfontein For Respondent: J Swanepoel Instructed by: Director of Public Prosecutions, Bloemfontein	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL IA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 24 March 2016 STATUS: Immediate DE VILLIERS v THE STATE (20732/14) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (SCA) today dismissed on appeal against the dismissal of a review application by 2 Judges of the Free State Division of the High Court (Bloemfontein), sitting as a review court. The SCA held that such a court is a court of first instance as contemplated in s 16(a) of the Superior Courts Act and is thus competent to grant leave to appeal to the SCA in terms of s 16(1)(a)(ii). On the merits, the SCA held that the common cause and proved facts did not bear out the appellant’s claim that he had pleaded guilty under duress in the regional court to theft. It was the appellant’s case that his attorney and advocate had exerted pressure on him to plead guilty against his will. The appellant, a qualified accountant, acted as financial advisor to Ms A Wiese. In that capacity he administered the deceased estate of Ms Wiese’s late husband. On the appellant’s advice Ms Wiese had made out a cheque in the sum of R950 000 to a trust operated by the appellant, known as the Taakmeesters Trust. According to her, the appellant was mandated to invest this money in a money market account where, as the appellant had advised her, the money would accrue more interest. On the admitted facts the appellant had failed to execute his mandate and had instead advanced money as bridging finance to various entities, including some in which he had an interest. Save for an amount of R50 000, no money was ever repaid to Ms Wiese before the Trust was sequestrated. The SCA upheld the high court’s finding that on all the evidence the appellant had pleaded guilty of his own volition and without any undue influence. The appeal was consequently dismissed. -- ends --
3896	non-electoral	2022	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 526/2021 In the matter between: MAZARS RECOVERY & RESTRUCTURING (PTY) LTD FIRST APPELLANT FENWICK NEIL MILLER SECOND APPELLANT BYRON NORMAN CHEVALIER THIRD APPELLANT STUART DANIEL TERBLANCHE FOURTH APPELLANT and MONTIC DAIRY (PTY) LTD (IN LIQUIDATION) FIRST RESPONDENT [Registration No. 1949/035587/07] [Master’s reference T1185/16] PETER CHARLES BOTHOMLEY N O SECOND RESPONDENT SALIM ISMAIL GANIE N O THIRD RESPONDENT ETHNE MARY VAN WYK N O FOURTH RESPONDENT Neutral citation: Mazars Recovery & Restructuring (Pty) Ltd and Others v Montic Dairy (Pty) Ltd (in liquidation) and Others (526/2021) [2022] ZASCA 135 (13 October 2022) Coram: Ponnan, Makgoka, Gorven and Hughes JJA and Chetty AJA Heard: 12 September 2022 Delivered: 13 October 2022 Summary: Company Law – business rescue – whether payments made to the business rescue practitioners after the conversion of business rescue proceedings to liquidation proceedings are void in terms of s 341(2) read with s 348 of the Companies Act 61 of 1973. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Gamble J sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA: [1] This appeal addresses the remuneration and fees of business rescue practitioners, specifically when payments are made to the business rescue practitioners in respect of their fees and remuneration, after an application to convert rescue proceedings to liquidation proceedings, but before the final winding-up order are void in terms of s 341(2) read with s 348 of the Companies Act 61 of 1973 (the Companies Act 1973). [2] The Western Cape Division of the High Court, Cape Town (the high court) answered that question in the affirmative. It accordingly declared void the payments to the business rescue practitioners (BRPs), and ordered them to pay those amounts to the liquidators of the first respondent, Montic Dairy (Pty) Ltd. The high court subsequently granted the BRPs leave to appeal to this Court. [3] Montic Dairy (Pty) Ltd (in Liquidation) (the company) carried on business as a dairy. On 2 November 2015 the company was placed under business rescue proceedings and the second to fourth appellants were appointed as BRPs. The BRPs were employees and directors of the first appellant, Mazars Recovery & Restructuring (Pty) Ltd (Mazars). It was through Mazars that they conducted their business as BRPs and received remuneration for their services. [4] On 14 April 2016 and in the Gauteng Division of the High Court, Pretoria, Creighton Dairies (Pty) Ltd, a creditor of the company, together with eleven other creditors, commenced liquidation proceedings against the company (the Creighton liquidation application). Even though the BRPs had resolved on 28 April 2016 that there were no longer any reasonable prospects for the company to be rescued, they nonetheless, filed a notice of intention to oppose the Creighton liquidation application on 29 April 2016. Such opposition was later withdrawn on 12 May 2016 and the BRPs launched their application on an urgent basis on 16 May 2016. They sought an order to discontinue the business rescue proceedings and convert them to liquidation proceedings in terms of s 141(2)(a) of the Companies Act 71 of 2008 (the Companies Act 2008). The basis of their application was that there were no reasonable prospects for the company to be rescued. Their application for the winding-up of the company was granted by Tuchten J on 14 June 2016 and the second to fourth respondents were subsequently appointed as its liquidators (the liquidators). Meanwhile, on 23 May 2016 and 2 June 2016, while the conversion application was pending, the BRPs made two payments totalling R1,5 million in respect of their fees and expenses to Mazars. [5] After the liquidators assumed office, they sought, and obtained, an order in the high court declaring void the payments made to Mazars in terms of s 341(2) and s 348 of the Companies Act 1973. Despite the repeal of that Act, these two sections are amongst those which remain applicable under the Companies Act 2008 by virtue of item 9(1) of schedule 5 of the Act. [6] Section 341(2) provides: ‘Every disposition of its property (including rights of action) by any company being wound-up and unable to pay its debts made after the commencement of the winding-up, shall be void unless the Court otherwise orders.’ And s 348 provides that a winding-up is deemed to have commenced at the time of the presentation of the application for the winding-up to the court. [7] The payments made by the company to Mazars took place after 16 May 2016, after the application to liquidate the company was presented to court. They are, by default void in terms of s 341(2), as no court had ordered otherwise. Thus, the BRPs have to demonstrate why the payments fall outside the clutches of s 341(2). Before this Court, they relied on the following submissions. First, that although the payments were made within the prescribed period, they should not be treated as dispositions of the company because at that stage, business rescue proceedings had not terminated. Second, that the payments were not ‘made’ by the company and were therefore not dispositions of the company, as envisaged by the section. Third, that because the payments were made for the BRPs services to enable them to discharge their duties during business rescue proceedings, they should accordingly not be treated as dispositions for the purposes of s 341(2). [8] In support of these submissions, they sought that s 341(2) be read with Chapter 6 of the Companies Act 2008, as in a reading together of the provisions of the old and new Companies Act. A reading together is permissible in terms of s 5(4)(a) of the Companies Act 2008 in circumstances where there are inconsistencies between the new Companies Act 2008 and any other national legislation. They argued that such an interpretational exercise of s 341(2) is desirable, sensible and results in a business- like interpretation supported by judicial precedent. [9] The BRPs argued that as they are obliged to continue with their duties, even during this period after the commencement of liquidation proceedings but before a winding-up order, they were entitled to be paid for their services. The payments are thus ‘statutorily mandate[d]’,1 and as such fall outside the ambit of dispositions under s 341(2). In addition, to the aforesaid, the BRPs argued that these payments should not be considered as dispositions by the company because they had made the payments and not the company. [10] Plasket JA in Eravin Construction CC v Bekker N O pointed out that s 341(2) ‘. . . states expressly that a disposition in the terms contemplated by it “shall be void”’.2 (My emphasis.) Recently this Court adequately dealt with s 341(2) and dispositions 1 In terms of the Companies Act 2008, reliance was placed on s 143(1) which deals with charging an amount for remuneration and expenses of a practitioner; section 135(3) which deals with post-commencement finance situation specifically related to having paid the remuneration and expenses of the practitioner in terms of s 143; and section 143(5) which deals with the scenario where the practitioner’ remuneration and fees are not paid fully. 2 Eravin Construction CC v Bekker N O and Others [2016] ZASCA 30; 2016 (6) SA 589 (SCA) para 21. made by a company being wound-up in Pride Milling Company (Pty) Ltd v Bekker N O and Another3 (Pride Milling) holding that: ‘The provisions of s 341(2) could not be clearer. They, in unequivocal terms, decree that every disposition of its property by a company being wound-up is void. Thus, the default position ordained by this section is that all such dispositions have no force and effect in the eyes of the law ie the disposition is regarded as if it had never occurred. The mischief that s 341(2) seeks to obviate is plain enough. It is to prevent a company being wound-up from dissipating its assets and thereby frustrating the claims of its creditors.’4 [11] In my view, the BRPs conspicuous failure to refer to the recent decision of this Court is telling. Petse AP in Pride Milling could not have said it more explicitly that the ‘predominant purpose [of s 341(2)] is to decree that all dispositions made by a company being wound-up are void.’5 If that is the existing position then these payments are rendered invalid ex tunc at the time that they are made. Further, had they referred to Pride Milling they would have appreciated that they had the proviso in s 341(2) available to them. The BRPs did not dispute this and did not seek to make out such a case. They reasoned that not engaging the proviso was an issue of inconvenience, as they would have to go to court to seek such an order. By not engaging the proviso, they, in essence, sought that this Court grant them special preference without having a court exercise its discretion to endorse the payments sought, as is provided by s 341(2). [12] In Pride Milling, Petse AP went on to explain that persons such as the practitioners are not without a remedy : ‘As to the rider to s 341(2), its manifest purpose is to give a court an unfettered discretion to decide whether or not to direct otherwise and thus depart from the default position decreed by the legislature. As already discussed, this discretion is only exercisable in relation to payments made between the date of lodging of the application for winding-up and the grant of a provisional order. In exercising this discretion, a court will, amongst other relevant factors, naturally have regard to the underlying purpose of the provision in the context of winding-up a company unable to pay its debts, the interests of the creditors and those of the beneficiary of the disposition. It bears mentioning that the consequences of visiting dispositions of the kind 3 Pride Milling Company (Pty) Ltd v Bekker N O and Another [2021] ZASCA 127; [2021] 4 All SA 696 (SCA); 2022 (2) SA 410 (SCA). 4 Ibid para 30. 5 Ibid para 13. dealt with in s 341(2) with voidness, will not always be harsh. This is so especially when the potential countervailing harshness of allowing the disposition, which would invariably denude the company of its assets in proportion to the value of the disposition to the prejudice of its creditors, is borne in mind. . . ’. (References omitted)6 [13] This Court and the Constitutional Court had the opportunity to pronounce on the status of remuneration claims of BRPs. In Diener N O v Minister of Justice and Correctional Services and Others this Court dealt with the status of a claim for remuneration and expenses by a practitioner, when business rescue had failed and was converted into liquidation proceedings. Practitioners’ claims for remuneration were not given ‘super-preference’ and this Court stated that the preference conferred on a practitioner’s claim ‘after the conversion of business rescue proceedings into liquidation proceedings, [was] no more than a preference in respect of his or her remuneration to claim against the free residue after the costs of liquidation but before claims of employees for post-commencement wages, of those who have provided other post-commencement finance, whether those claims were secured or not, and of any other unsecured creditors.’7 The Constitutional Court confirmed this position8 and there is thus clear and direct authority on the point. [14] It must be pointed out that the case argued by the BRPs evolved and was in total contrast to that set out in their heads of argument. Either way, I am not persuaded that the BRPs made out a case that the disposition made are not void ex tunc. They had available to them the proviso in s 341(2) but did not make out a case for such order. As such, it follows that the high court correctly held that the dispositions were void and set them aside. [15] The BRPs, having failed to persuade this Court with their submissions, were forced to concede that the payments emanated from the company’s bank account and as with payments of other company expenses by the BRPs, the payments in question 6 Ibid paras 31 & 32. 7 Diener NO v Minister of Justice and Others [2017] ZASCA 180; [2018] 1 All SA 317 (SCA); 2018 (2) SA 399 (SCA) para 49. 8 Diener N O v Minister of Justice and Correctional Services and Others [2018] ZACC 48; 2019 (4) SA 374 (CC) paras 21, 44, 67 and 68. were made on behalf of the company and therefore amounted to dispositions of the company. [16] Consequently, for the reasons set out above, there is no basis to upset the high court’s finding and the appeal must fail. There is no reason to depart from the general rule that the losing party should pay the costs. [17] In the result the following order is made: The appeal is dismissed with costs, including the costs of two counsel. ___________________ W HUGHES JUDGE OF APPEAL Ponnan JA (Makgoka and Gorven JJA and Chetty AJA concurring): [18] I have had benefit of reading the judgment of Hughes JA and whilst I agree with her conclusion that the appeal must fail, I write separately because I see the case somewhat differently to my learned colleague. [19] The facts fall within a fairly narrow compass. In chronological sequence they are: Business rescue proceedings commenced in respect of the first respondent, Montic Dairy (Pty) Ltd (In Liquidation) (the company) on 2 November 2015. The business rescue practitioners (the BRPs) (the first, second and third appellants), all of whom were then in the employ of the first appellant, Mazars Recovery & Restructuring (Pty) Ltd (Mazars), were appointed with effect from that date. On 14 April 2016, a number of the company’s creditors commenced liquidation proceedings against the company. [20] Those proceedings were opposed by the BRPs, ostensibly because a certain Cesare Cremona (Cremona) had made an offer in January 2016 to purchase the business of the company for R10 million. However, nothing came of that offer. In February 2016, Cremona doubled his offer. Nothing came of that offer either. On 26 April 2016, the BRPs resolved that there was no longer any prospect of the company being rescued and on 16 May 2016, the BRPs made their own application to convert the business rescue proceedings into liquidation proceedings on the grounds that there was no reasonable prospect of the company being rescued. [21] Thereafter, on 23 May, and again on 2 June 2016, two payments to the tune of R1 500 000 were made to Mazars, by the BRPs in respect of their fees in the business rescue. On 14 June 2016, the high court ordered that the business rescue proceedings be discontinued and the company be placed in liquidation. The second to fourth respondents were appointed the liquidators of the company. In October 2018, the liquidators launched an application in the Western Cape Division of the High Court, Cape Town, challenging the payments made to Mazars. They sought a declaration that both payments were void in terms of s 341(2) of the Companies Act 61 of 1973 (the 1973 Act) and an order that the monies be repaid, together with interest, by Mazars, alternatively the BRPs. The application succeeded with costs before Gamble J. The appeal is with the leave of the learned judge. [22] In terms of Item 9(1) of Schedule 5 of the Companies Act 71 of 2008 (the 2008 Act) certain provisions of the 1973 Act are preserved and apply to the winding-up of commercially insolvent companies.9 These include s 341(2), which provides: ‘Every disposition of its property (including rights of action) by any company being wound-up and unable to pay its debts made after the commencement of the winding-up, shall be void unless the Court otherwise orders.’ In terms of s 348 of the 1973 Act: ‘A winding-up of a company by the Court shall be deemed to commence at the time of the presentation to the Court of the application for the winding-up.’ [23] It was not in dispute that: (i) in view of s 348 of the 1973 Act, the deemed commencement date of the winding-up of the company was 16 May 2016 (when the application to convert the business rescue into liquidation proceedings was lodged by the BRPs); and, (ii) the payments made by the BRPs to Mazars were accordingly made after the commencement of the winding-up of the company. It thus came to be accepted by the appellants that the provisions of ss 341(2) and 348, if applied according to their terms, would render the payments void. That ought to be the end of the matter because as this Court recently observed in Pride Milling ‘the provisions of s 341(2) could not be clearer’.10 The ‘predominant purpose [of s 341(2)] is to decree that all dispositions made by a company being wound-up are void’.11 It explained: 9 Item 9(1) provides: ‘Despite the repeal of the previous Act, until the date determined in terms of subitem (4), Chapter 14 of that Act continues to apply with respect to the winding-up and liquidation of companies under this Act, as if that Act had not been repealed subject to subitems (2) and (3).’ Subitems (2) and (3) provides: ‘(2) Despite subitem (1), sections 343, 344, 346, and 348 to 353 do not apply to the winding-up of a solvent company, except to the extent necessary to give full effect to the provisions of Part G of Chapter 2. (3) If there is a conflict between a provision of the previous Act that continues to apply in terms of subitem (1), and a provision of Part G of Chapter 2 of this Act with respect to a solvent company, the provision of this Act prevails’. 10 Pride Milling Company (Pty) Ltd v Bekker NO and Another [2021] ZASCA 127; [2021] 4 All SA 696 (SCA); 2022 (2) SA 410 (SCA). 11 Ibid para 13. ‘The effect is that the payments are potentially invalid at the moment they are made, because the grant of a winding up order will render s 341(2) operative. This is different from saying that they are rendered invalid retrospectively, or that they were initially lawful and valid. That suggests that the invalidation of all such payments is presumptively harsh or undesirable, which is not the case.’12 [24] However, the appellants contend that ‘the two payments do not constitute dispositions by the company of its property’ and that the interpretation of s 341(2) must be informed by the more recent provisions in the 2008 Act relating to business rescue, more particularly those ‘providing for the practitioners’ statutorily recognised preferential entitlement to be paid their remuneration and expenses during the business rescue proceedings’. Accordingly, so the contention goes, despite the clear and unambiguous language of s 341(2), three provisions of the 2008 Act, namely ss 143(1),13 135(3)14 and 143(5)15 entitle them to payment. What requires consideration in this matter therefore, is whether these three provisions constitute something in the nature of a statutory carve-out from the operation of s 341(2) for the payments in question. [25] None of the provisions relied upon by the appellants (ss 143(1), 135(3) or 143(5) of the 2008 Act) support the contention sought to be advanced by the appellants. Section 143(1) does no more than make provision for a fee, whilst s 143(5) merely deals with what is to occur if the fee is unpaid. Neither specifies that a BRP is entitled to payment, nor when. Section 135(3) is concerned with post-commencement finance 12 Ibid. 13 Section 143 is headed ‘Remuneration of Practitioner’. Subsection 1 provides: ‘The practitioner is entitled to charge an amount to the company for the remuneration and expenses of the practitioner in accordance with the tariff prescribed in terms of subsection (6).’ 14 Section 135 is headed ‘Post-commencement finance’. Subsection 3 provides: ‘After payment of the practitioner’s remuneration and costs referred to in section 143, and other claims arising out of the costs of the business rescue proceedings, all claims contemplated – (a) in subsection (1) will be treated equally, but will have preference over- (i) all claims contemplated in subsection (2), irrespective of whether or not they are secured; and (ii) all unsecured claims against the company; or (b) in subsection (2) will have preference in the order in which they were incurred over all unsecured claims against the company.’ 15 Section 143(5) provides; ‘To the extent that the practitioner’s remuneration and expenses are not fully paid, the practitioner’s claim for those amounts will rank in priority before the claims of all other secured and unsecured creditors.’ (that is in attempting to rescue the business). It too does not state that a BRP is entitled to payment. It seems to me that to get out of the starting stalls, the appellants had to contend that it is additionally implicit in ss 143 and 135 that BRPs have a right to be paid the fee post the commencement of the liquidation. The wording of the sections plainly do not confer any such right. In short, the argument advanced by the appellants that ss 143(1), 135(3) and 143(5) continue to apply after the business rescue had terminated, is inconsistent with the judgments of this Court and the Constitutional Court in Diener N O v Minister of Justice and Others (Diener).16 [26] As this Court made plain in Diener (para 43): ‘Section 143 is not concerned with liquidation. Instead, it regulates the BRP’s right to remuneration during business rescue proceedings: it concerns the tariff in terms of which BRP’s are remunerated; the additional contingency-based remuneration that the BRP may negotiate, and safeguards in that respect; and the BRP’s claim for unpaid remuneration, which ranks ‘in priority before the claims of all other secured and unsecured creditors’. The reference to secured and unsecured creditors in the section must, in my view, be understood to be a reference back to s 135: to those persons who have, or have been deemed to have, provided the company with post-commencement finance, both secured and unsecured, and not to the company’s pre-business rescue creditors. Simply put, the preference operates within this limited context. . .’. Similarly, in relation to s 135, this Court noted (para 42) that the section concerned itself with post-commencement finance, and that it is only in that context – whilst business rescue proceedings are in place – that it creates a set of preferences. [27] Payments made to a BRP before the presentation of the application for the winding-up are unaffected by s 341(2). But, thereafter a BRP is in the same position as all other creditors. In this Court, counsel for the appellants had some difficulty in addressing why a BRP’s fees fell to be treated as a special category. What of other payments made by a BRP in the relevant period? As they stood on a similar footing to a BRP’s fees, it is unclear why they likewise did not fall to be excluded from the operation of s 341(2). Counsel was driven to accept that no warrant existed for any 16 Diener N.O. v Minister of Justice and Others [2017] ZASCA 180; 2018 (2) SA 399 (SCA); Diener N.O. v Minister of Justice and Others [2018] ZACC 48; 2019 (4) SA 374 (CC). such differentiation. Undaunted, however, he did not shrink from the logical consequence of his submission; he proceeded to argue that on that footing all payments made by the BRPs in the relevant period should be excluded. But, in the acceptance of the unavoidability of excluding all payments, lay the seeds for the destruction of counsel’s argument. [28] Section 341(2) dictates that every disposition made after the commencement of the winding-up is void, unless the court orders otherwise. Thus unless a creditor avails him or herself of the remedy provided in the proviso in s 341(2) (which the appellants chose not to do in this case), payments made after the commencement of the winding- up are void. However, a BRP is not remediless: First, and most obviously, a BRP may approach a court in terms of the proviso to s 341(2) to validate a payment. A court hearing such an application has a wide discretion. Second, and naturally, the BRP enjoys a preference in the ranking of creditors in the winding-up. That preference was considered in Diener - a BRP ranks after the costs of the liquidation, but before all other creditors. A BRP thus enjoys a substantial preference. [29] These remedies cater entirely for any undue hardship (if such exists) that the appellants rely upon. The exercise of the court’s discretion under the proviso in s 341(2) serves to balance all relevant interests. Thus, in a situation where a BRP may have raised excessive fees, a court can either refuse to validate the payments or may validate them in part. In either event, the BRP still has the remedy of a preference in the liquidation itself. This approach accords with that of this Court - as also the Constitutional Court - in Diener, in particular, once a BRP decides that a company can no longer be saved, the purpose of the business rescue comes to an end. At that point, all relevant interests need to be considered in the light of the applicable provisions of the 1973 and 2008 Acts and the Insolvency Act 24 of 1936. [30] Accepting the argument advanced on behalf of the BRPs, would not only render nugatory the discretion conferred upon a court by the proviso in s 341(2), but also place all payments made by BRPs in the relevant period beyond judicial scrutiny. That could hardly have been the intention of the Legislature. On the other hand, the case of the respondents is simple and relatively straightforward. It accords with the unambiguous provisions of the 1973 Act - that the payments are void and must be repaid. [31] In view of the common cause facts, as well as the clear wording and object of s 341(2) of the 1973 Act, the high court cannot be faulted for having declared the payments void in terms of that section and ordering Mazars and the BRPs to make repayment. There is accordingly no merit in the appeal. _________________ V M Ponnan Judge of Appeal APPEARANCES For the Appellants: BM Gilbert Instructed by: Cox Yeats Attorneys, Johannesburg Symington Kok Attorneys, Bloemfontein For the First to Fourth Respondents: JC Butler SC (with him M Maddison) Instructed by: Reitz Attorneys, Johannesburg Phatshoane 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: 13 October 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 Mazars Recovery & Restructuring (Pty) Ltd and Others v Montic Dairy (Pty) Ltd (in liquidation) and Others (526/2021) [2022] ZASCA 135 (13 October 2022) The Supreme Court of Appeal (SCA) today dismissed an appeal against an order by the Gauteng Division of the High Court, Pretoria (high court). The appeal addressed the remuneration of fees of business rescue practitioners in respect of work performed after an application to convert business rescue proceedings to liquidation proceedings, but before the final winding-up order. Business rescue proceedings commenced in respect of the first respondent, Montic Dairy (Pty) Ltd (In Liquidation) (the company) on 2 November 2015. The business rescue practitioners (the BRPs) (the first, second and third appellants), all of whom were then in the employ of the first appellant, Mazars Recovery & Restructuring (Pty) Ltd (Mazars), were appointed with effect from that date. On 14 April 2016, a number of the company’s creditors commenced liquidation proceedings against the company. The proceedings were opposed by the BRPs, and on 26 April 2016, the BRPs resolved that there was no longer any prospect of the company being rescued. On 16 May 2016, the BRPs made their own application to convert the business rescue proceedings into liquidation proceedings on the grounds that there was no reasonable prospect of the company being rescued. On 23 May, and again on 2 June 2016, two payments to the tune of R1 500 000 were made to Mazars, by the BRPs in respect of their fees in the business rescue. On 14 June 2016, the high court ordered that the business rescue proceedings be discontinued and the company be placed in liquidation while the BRPs were appointed the liquidators of the company. In October 2018, the liquidators approached the high court, challenging the payments made to Mazars and sought a declaration that both payments were void in terms of s 341(2) of the Companies Act 61 of 1973 (the 1973 Act). In terms of Item 9(1) of Schedule 5 of the Companies Act 71 of 2008 (the 2008 Act) certain provisions of the 1973 Act remained preserved and applied to the winding- up of commercially insolvent companies. In view of s 348 of the 1973 Act, the deemed commencement date of the winding-up of the company was 16 May 2016. The payments made by the BRPs to Mazars were accordingly made after the commencement of the winding-up of the company. It thus came to be accepted by the appellants that the provisions of ss 341(2) and 348, if applied according to their terms, would have rendered the payments void. The appellants contended that the payments did not constitute dispositions by the company and that the interpretation of s 341(2) was underpinned by the more recent provisions in the 2008 Act related to business rescue, particularly those that made provision for practitioners’ statutorily recognised preferential entitlement to be paid their remuneration and expenses during the business rescue proceedings. The appellants relied on ss 143(1), 135(3) and 143(5) as the provisions that entitled them to payment. Additionally, the appellants had to prove that ss 143 and 135 conferred a right to be paid a fee post commencement of the litigation. This Court, however, found that none of the provisions relied upon supported such reliance and the sections concerned did not confer such rights. Payments made to a BRP before the presentation of the application for the winding-up were unaffected by s 341(2). Thereafter, a BRP was in the same position as all other creditors. Section 341(2) dictated that every disposition made after the commencement of the winding-up was void, unless the court had ordered otherwise. The Court, therefore, confirmed that unless a creditor availed him- or herself of the remedy provided in the proviso in s 341(2), payments made after the commencement of the winding-up were void. However, a BRP was not left without a remedy. A BRP could have approached a court in terms of the proviso to s 341(2) to have a payment validated and a court that heard such an application would have had a wide discretion. A BRP ranked after the costs of liquidation and would have enjoyed a preference in the ranking of creditors in the winding- up. These remedies catered entirely for any undue hardship that the appellants could have relied upon. The exercise of the court’s discretion under the proviso in s 341(2) served to balance all relevant interests. The argument that the appellants had advanced would not only have rendered nugatory the discretion conferred upon a court by the proviso in s 341(2), but would also have placed all payments made by BRPs in the relevant period beyond judicial scrutiny. This Court found that that could hardly have been the intention of the Legislature. The case of the respondents was simple and relatively straightforward. It complied with the unambiguous provisions of the 1973 Act - the payments were void and should have been repaid. The appeal accordingly had no merit and was dismissed. --------oOo--------
3054	non-electoral	2015	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20556/2014 In the matter between: THE SOUTH AFRICAN DENTAL ASSOCIATION NPC APPELLANT And THE MINISTER OF HEALTH FIRST RESPONDENT THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA SECOND RESPONDENT THE CHAIRPERSON OF THE PROFESSIONAL BOARD FOR DENTAL THERAPY AND ORAL HYGIENE THIRD RESPONDENT THE DENTAL ASSISTANTS ASSOCIATION OF SOUTH AFRICA FOURTH RESPONDENT Neutral citation: South African Dental Association v Minister of Health (20556/2014) [2015] ZASCA 163 (24 November 2015) Coram: Navsa, Shongwe, Willis, Swain and Zondi JJA Heard: 2 November 2015 Delivered: 24 November 2015 Summary: Health Professions Act 56 of 1974 – discussion of steps required to establish a new regulated health profession in terms of that Act – challenge to Regulations by Minister setting up regulatory regime in respect of dental assistants – challenge time-barred in terms of s 7(1) of the Promotion of Administrative Justice Act 3 of 2000 in respect of most of the regulations – challenge in respect of remaining regulations defining scope of the profession as contemplated in s 33 of that Act rejected – exception to general rule relating to costs in constitutional matters applied due to the manner in which litigation conducted. _ ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Ismail J sitting as court of first instance). The following order is made: The appeal is dismissed with costs, including the costs of two counsel where employed by each of the respondents. ___ JUDGMENT Navsa and Swain JJA (Shongwe and Zondi JJA concurring): [1] In this appeal, as in the court below, the appellant, the South African Dental Association (SADA), an association incorporated in terms of section 21 of the Companies Act 61 of 1973 read with the Companies Act 71 of 2008 and which represents a sizeable majority of dentists in South Africa, sought to set aside regulations promulgated by the first respondent, the Minister of Health (the Minister), purportedly made under the Health Professions Act 56 of 1974 (the Act), in terms of which he recognised dental assistants as professionals, set qualifications to enable their registration, and defined the scope of the profession. The appeal will deal with the power of the Minister in terms of the Act to make regulations establishing and regulating a profession, more particularly in relation to the recognition of dental assistants as health professionals and represents, in juxtaposition, the interests of dentists and those of dental assistants and involves the role of the Minister in regulating health-related professions. [2] If the fourth respondent, the Dental Assistants Association of South Africa (DAASA), an advocate for the protection and promotion of the rights of dental assistants, is to be believed, the appellant has been nothing but obstructive and has steadfastly resisted their struggle, since 1995, to be recognised as professionals in terms of the Act. Furthermore, DAASA contended that the real and underlying objection of SADA to the recognition and regulation by the Minister of dental assistants as professionals is the economic impact it might have on individual dentists who are accustomed to their dental assistants‟ low wages. In short, DAASA adopted the attitude that SADA is motivated purely by self-interest. Conversely, if SADA, which represents a sizeable majority of the country‟s dentists, is to be believed, they are particularly concerned about the welfare of dental assistants and the interests of the public and were motivated in the litigation leading up to the present appeal by their concerns that the requirement of registration for dental assistants coupled with prescribed minimum qualifications would result, on pain of criminal sanction, to a gross shortage of dental assistants. In addition it was contended before us that SADA was intent on ensuring that the Minister adhered to the principle of legality and that in its view, the Minister, in promulgating the regulations in question, had acted beyond his powers. SADA complained that years of representations made by it had not been taken into account by the Minister and that in promulgating the regulations the Minister acted irrationally in that he did not consider the consequences, particularly criminal sanctions that would attend upon dentists and dental assistants who failed to meet the criteria for the recognition and registration set out in the regulations. They were emphatic that the existing long established practice of on-the-job-training conducted by dentists for dental assistants, had adequately served the dental profession. [3] The second respondent, the Health Professions Council of South Africa (HPCSA) was established in terms of s 2 of the Act and has among its objectives the coordination of the activities of professional boards and the promotion and regulation of inter-professional liaisons between health professions, in the interest of the public and the promotion of the health of the citizens of the country.1 The third respondent is the Chairperson of the Professional Board for Dental Therapy & Oral Hygiene (the Chairperson of the Board), established in terms of s 15 the Act. [4] SADA applied to the Gauteng Division of the High Court, Pretoria, for an order setting aside a series of regulations made by the first respondent, the Minister of Health, in terms of which he purported to establish a professional board for dental assistants, set qualifications to enable their registration, and defined the scope of the profession. The court below (Ismail J), dismissed the application and granted leave to appeal to this court. As in the court below, the respondents are united in their opposition to SADA. Even though this appeal is to be decided within a narrow compass it is nevertheless necessary, for reasons that will become apparent, to set out the detailed background which follows. [5] It is common cause that over the years dental assistants have assisted dentists with dental procedures that require contact with patients. DAASA was founded in 1983 with the stated objective of protecting and advancing the interests of dental assistants nationally. DAASA‟s membership is comprised almost entirely of women, a large percentage of whom are also Black. It is clear that dental assistants is a group representative mostly of people who have been previously disadvantaged and discriminated against. Since 1995, as stated above, DAASA has been advocating for the statutory recognition and regulation of the work of dental assistants. It contended that this was to be achieved, inter alia, by formal and on- going job training to ensure a minimum quality of service by dental assistants. In its 1 See especially ss 3(a), (b) and (e) of the Act. opposition to the relief sought by SADA, DAASA stated that statutory professional recognition would have the following results: first, it would provide dental assistants with recognition for the value of their work and it would protect them in the workplace; second, quality minimum training and regulation would ensure the best possible service to the public and create a mechanism for redress. The parameters within which they were to be recognised would be determined by the scope of their work which the Minister would define. [6] For approximately two decades DAASA has been in communication with the HPSCA and the Boards for Dental Therapy and Oral Hygiene regarding the professional recognition of dental assistants and in that regard submissions were made to the Minister. DAASA was emphatic in its support for the Minister in his attempts to recognise and regulate dental assistants within professional boundaries. Before us it became apparent, for reasons that will be discussed in due course, that the only regulations that remained in dispute were those relating to the scope of work of dental assistants. DAASA described the type of work that they are accustomed to doing which includes: (i) Preparation and clinical maintenance of the dental surgery; (ii) Application, adherence and observance of universal infection control procedures; (iii) Assisting dental practitioners in clinical procedures where appropriate; (iv) Mixing and handling of dental materials; (v) Performance of administrative functions in practice management; (vi) Application of knowledge of radiographic examinations and processing of radiographs; (vii) Application of the necessary measures to assist during emergencies in the dental surgery; (viii) Implementation of occupational health and safety procedures; (ix) The promotion of oral health; and (x) Understanding and application of judicial and ethical aspects associated with dentistry in South African including patient confidentiality. [7] It appears to us, to be incontrovertible that dental treatment is invasive and involves body fluids such as saliva and blood and that individuals living with blood- borne diseases will on occasion be patients and/or dental health care practitioners. This would mean that both patients and dental health care practitioners may be exposed to a variety of microorganisms which include:  Cytomegalovirus;  Hepatitis B Virus (HBV);  Hepatitis C Virus (HCV);  Herpes Simplex Virus Types 1 and 2;  Human Immunodeficiency Virus (HIV);  Mycobacterium Tuberculosis;  Streptococci; and  Other viruses and bacteria: specifically, those that infect the upper respiratory tract. [8] It cannot be contested that in a dental practice infections may be transmitted in a number of ways, including the following: (i) direct contact with blood; (ii) oral fluids; or (iii) other secretions; (iv) indirect contact with contaminated instruments; (v) operatory equipment, or environmental surfaces; or (vi) contact with airborne contaminants present either in droplet spatter or aerosols of oral and respiratory fluids. [9] The assertion by SADA that it is the dentist, and not dental assistant who is at the forefront of infection control in a dental practice, is not the whole truth. If regard is had to the type of work they do, set out in para 6 above, it is clear that, working alongside dentists, they too are exposed to the dangers of communicable diseases and, more importantly, they play a significant role in the prevention of such diseases. [10] It is necessary to record that DAASA, was not originally a party to the litigation initiated by SADA. It only later became a party after the Minister had taken the point that DAASA‟s exclusion was a material non-joinder, and DAASA then sought leave to intervene, which SADA opposed, on the basis that the former did not have locus standi because it lacked the power to sue or be sued. DAASA sought its own relief in the form of a provisional counter claim, in the event that SADA was successful in its application. The order sought was as follows: „6.1 The First Respondent (The Minister of Health) must formally prescribe a professional category or additional professional category for dental assistants in terms of section 35(2) of the Health Professions Act 59 of 1974 (the Act), or in terms of such other section/s as may be found to be applicable. 6.2 The First, Second (HPCSA) and Third Respondents are ordered to comply with all legal prerequisites in order to give lawful effect to paragraph 6.1, more particularly to comply with the provisions of sections 15(1) to 15(5), section 24, section 33 and all such other provisions of the Act required to normalise the profession of dental assistants. 6.3 It is declared that regulations made for the profession of Dental Assistant in terms of the Act shall be deemed to have been made regularly.‟ [11] According to the Minister, his department had over the years identified the need to ensure a higher standard of assistance in dental care and was intent on ensuring that dental assistants, who played a vital role in preparing and sanitising a patient, and assisting a dentist in providing efficient dental care, were properly trained. This, according to the Minister, prompted various consultative processes over an extended period of time, which led to the promulgation of the regulations that are the subject of the present litigation. [12] As stated earlier, SADA challenged the adequacy of the consultation processes, insisting that its many written representations over a number of years, stretching from 2001, were ignored and not considered by the Minister and contended that, in any event, he had no statutory power to promulgate the regulations at the heart of the present dispute. In short, the basis of SADA‟s case was first, that the Minister had no statutory power to make the regulations in question. Second, he failed to have regard to the representations by SADA. Third, that his actions in promulgating the impugned regulations were irrational in that he failed to take into account that while there are currently 4 200 practicing dentists in South Africa, there are only approximately 2 500 dental assistant who meet the qualification and registration requirements and are registered. The consequence of the impugned regulations would thus be, so the argument went, that around half of all persons currently employed as dental assistants could no longer practise as such and that the disproportion between dentists and dental assistants would be maintained or worsen. In addition, dental assistants as well as the dentists employing them would be liable to criminal prosecution since their employment would be unlawful. We will, in due course, deal with the Minister‟s statutory powers and the nature and extent of the representations by SADA and consider whether they were taken into account by the Minister. We will also deal with the contention that dental assistants and dentists would be liable to criminal sanctions in the event of the remaining regulations remaining extant. [13] The affidavits filed by the HPCSA and the Chairperson of the Board, in opposition to the relief sought by SADA, provide a comprehensive account of the fifteen year history leading to the formulation and promulgation of the regulations in question 2 and set out the details of what they considered to be an extensive consultative process. A description is also provided of the statutory structure of regulation of health related services during the pre-democracy era and of the evolution of the statutory regime since then, culminating in the Act in its present form. During the apartheid years and the existence of the then South African Medical and Dental Council (SAMDC), the Professional Board for Dental Therapy and the Professional Board for Oral Hygiene were two distinct professional boards. According to the HPCSA and the Chairperson of the Board the struggle to establish the Professional Board for Dental Therapy as part of the erstwhile SAMDC was a 2 This appears to be borne out by the plethora of underlying regulations. long and bruising one. Simply put, it appears that dental therapists faced a struggle similar to the one alleged by DAASA. During the existence of the SAMDC the „Council‟ was constituted overwhelmingly or solely of medical and dental professionals.3 During that period the SAMDC consisted of 34 counsellors4, all of whom came from medical and dental professions [14] A sea change occurred with the advent of democracy in South Africa. As part of the general transformation process an interim SAMDC was created with a transformative agenda. As a result, ultimately, the Act in its present form came into being following a number of significant amendments. It transformed the Council and the professional boards making them more representative, transparent, accessible and accountable to the greater interest of public health and safety. We will, in due course, deal in some detail with the legislative evolution. [15] At this stage it is necessary to consider more closely SADA‟s case, as presented in its founding affidavit, and to explore more fully several representations it made to the Minister. At the outset, in attacking the regulations made by the Minister, SADA categorised the promulgation of those regulations as administrative action and sought to have them set aside on the basis that, inter alia, the Minister had acted beyond his powers in making them. It is necessary to set out verbatim their assertion in this regard: „[T]he actions of the HPCSA, the Minister and the Board are susceptible to review in terms of section 33 of the Constitution and provisions of sections 6(2)(a)(i), (b), (c), (d), (e)(i), (e)(iii), (e)(v), (e)(vi), (f), (h) and (i) of the PAJA [Promotion of Administrative Justice Act 3 of 2000].‟ [16] The series of regulations that were challenged by SADA is set out hereafter: 3 See s 5(1) of the Act in un-amended form. Note that at the time, the short title of the Act was the „Medical, Dental and Supplementary Health Service Professions Act'. It was later changed to the current „Health Professions Act‟. 4 See the title on „The Medical Profession and Medical Practice‟ by D J McQuoid-Mason and S A Strauss in 17 Lawsa 1 ed (1983) para 176. (a) Regulations relating to the qualifications for registration of dental assistants, GN R338, GG 27464, as amended by GN R580, GG 31084, 30 May 2008 (the Original Qualification Regulations). These regulations make provision for the qualifications required for registration as a dental assistant. Regulation 2(2) provides that any person who has worked as a dental assistant for a minimum period of five years prior to 31 March 2002 may apply to the Professional Board for Dental Therapy and Oral Hygiene (the Board) for registration as a dental assistant and the board in its discretion may exempt such person from the qualification requirements. These regulations were then amended on 30 May 2008, to extend the registration period for those who had previously worked as dental assistants, for a further three month period from the date of publication of the amendment. (b) Regulations relating to the constitution of the Professional Board for Dental Therapy and Oral Hygiene, GN R1255, GG 31633, 28 November 2008 (the Board Regulations). These regulations established the Board consisting of 13 members, two of whom were dental assistants appointed by the Minister. (c) Regulations relating to the qualifications for registration of dental assistants: Amendment, GN R120, GG 35045, 14 February 2012 (the Revised Qualification Regulations). These regulations again provided that any person who had worked as a dental assistant for a period of five years prior to the date of these regulations, without being registered as such, may apply to the board for registration as a dental assistant and the board could exempt such person from the qualification requirements. These amended regulations simply extended the period within which practising dental assistants could be exempted from the qualification requirements. (d) Regulations relating to the registration of student dental assistants: Amendment, GN R395, GG 35363, 21 May 2012 (the Student Qualification Regulations). These regulations amended previously promulgated regulations concerning student dental assistants (GN R581, GG 31084, 30 May 2008) with the effect that persons who had worked as dental assistants for a period of less than five years, prior to the publication of this amendment, could apply for registration as student dental assistants within four months of the date of the publication of this amendment. (e) Regulations defining the scope of the profession of dental assistants, GN R396, GG 35364, 21 May 2012 (the Scope Regulations). These regulations specified the acts which would be deemed to be acts pertaining to the profession of dental assistants and thereby defined the scope of work of the profession. While largely in line with the work DAASA ascribed to dental assistants they are more extensive and detailed.5 [17] A careful examination of the founding affidavit on behalf of SADA and a consideration alongside it, of the heads of argument as well as the oral submissions before us, demonstrates confused thinking on its part. In the affidavit of the principal deponent on behalf of SADA it sets out what it considers to be the architecture of the Act. It asserts that in terms of s 17(1) a prerequisite for practising as a health professional is registration with the HPCSA. In paragraph 20 of the affidavit of the principle deponent of SADA, the following appears: „20. Therefore, the [Act] creates a legislative system in terms of which – 5 The acts specified in the Regulations are as follows: (1) Preparing and managing the dental clinical environment before, during and after patient care; (2) Sterilising instruments, and disinfecting surfaces and equipment in the dental environment; (3) Monitoring infection control, sterilisation processes, biological, medical and/or bio hazardous waste management within the dental environment; (4) Preparing dental materials and instruments (including dental hand pieces) for use in clinical procedures performed by the oral health practitioner; (5) Assisting with the patient‟s needs and comfort during dental treatment; (6) Providing clinical assistance using four handed dentistry which includes instrument transfer, high speed suctioning and debridement techniques in procedures that are performed by an oral health practitioner; (7) Recording patient data gathered during patient interview, oral assessment of the hard and soft tissues and oral assessment of other oral structures and during the treatment of the patient; (8) Processing dental radiographs; (9) Caring for and maintaining equipment used in the dental clinical environment; and (10) Assisting the oral health practitioner in the event of a medical emergency in the dental environment and applying the necessary measures during clinical emergencies. 20.1 a person may only practice certain professions if he or she is registered with the HPCSA in terms of the [Act] to practice such a profession; 20.2 only those professions recognised in terms of the HPA by the Minister, pursuant to a decision in terms of section 15(1), attract the obligation of registration by persons intending to practice those professions; and 20.3 a professional board may only be established in respect of a health profession which is registrable.‟ In this paragraph SADA has sketched a chicken and egg situation, namely, a situation in which it is impossible to say which of the two things have to exist first and which causes the other.6 However, in SADA‟s heads of argument and in submissions before us, the following was stated: „The primary challenge to the impugned regulations in this case is a legality one. The appellant contends that the regulations are ultra vires the [Act] because that Act provides for a logical sequence in which the creation of a new health profession must proceed. To the extent that the [Act] permitted of the establishment of a new profession at all, a register for the new profession must first be created, then a board must be constituted and finally qualifications must be prescribed. The regulations challenged in this application did not follow that order and are consequently invalid.‟ As can be seen, the latter contention is that the first step for the recognition and regulation of a profession is the establishment of a register. As best as can be discerned, the argument on behalf of SADA from there developed along the following lines: Although the register for the new profession must be opened as the first step in the process, there is no express provision in the Act in terms of which a register for any profession must be opened. Thus, it was argued, there is a lacuna in the Act and, following on the principle of legality, because of the absence of a provision in the Act of the first step of registration, the Minister, was precluded from establishing a profession, setting qualification parameters and otherwise regulating the profession. Thus, according to SADA, the Minister, in promulgating the series of 6 Defined as „a situation in which it is impossible to say which of two things existed first and which caused the other‟. „A chicken and egg situation‟ The Free Dictionary at http://idioms.thefreedictionary.com/a+chicken+and+egg+situation, accessed on 4 November 2015. regulations referred to above, acted beyond his powers. The logical consequence of this contention is that, as things presently stand, no new health profession may be established at all. [18] At this stage the chronology of events is important. It is necessary to record that in March 2000 the Board resolved and recommended to the HPCSA that a register for dental assistants be established in terms of s 18 of the Act to fall under the auspices of the Board. In April 2000 the HPCSA resolved that recommendations by the Board be agreed to. The decision by the council was published in a newsletter during August 2000 in which the following appears: „The Professional Board for Dental Therapy and Oral Hygiene recommended and Council resolved to establish a register for dental assistants in terms of section 18 of the Act, to fall under the auspices of the Professional Board for Dental Therapy and Oral Hygiene. The said Professional Board believes that registering dental assistants would in the interest of the patient, because dental assistants do perform professional dental acts and should therefore be properly regulated.‟ [19] Before us, counsel on behalf of SADA submitted that although its primary contention was that there was no statutory power to establish a register, there was in any event no evidence provided by the respondents that a register had in fact been established and that the best that they could show was that there was an „in principle‟ decision to initiate a register for dental assistants. That submission is fallacious. Counsel on behalf of the Minister, the HPCSA and SADA all pointed to the statement in the answering affidavit by the National President of DAASA that the registration of dental assistants began formally in 2006 and that a register continues to exist. She stated further that there were approximately 2522 dental assistants registered with the HPCSA and that at least that many dental assistants were complying with and benefiting from the statutory regime created by the Minister. Furthermore, in a supplementary replying affidavit, in response to supplementary answering affidavits, the following two paragraphs on behalf of SADA are relevant: „86. However, no register for dental assistants was, in fact, created prior to the promulgation of the Qualification Regulations. In terms of paragraph 22 of the Minister‟s further affidavit, the [HPCSA and the Board] allegedly resolved to establish a register for dental assistants in April 2000. On the second and third respondents‟ own version, however, in terms of annexure “TEM7” to the HPCSA affidavit, as at 9 April 2001, the establishment of a register for dental assistants had been approved only in principle and only by the Council. 87. There is no evidence in the Minister‟s further affidavit or any other affidavit filed by the respondents and DAASA in this matter, that, prior to the promulgation of the impugned Regulations – 87.1 dental assisting was a registrable profession; 87.2 a professional board regulating dental assistants had been constituted; or 87.3 registration in respect of dental assisting was a requirement.‟ [20] From what is set out immediately preceding this paragraph, it is clear that there is an acceptance on behalf of SADA that in fact registration of dental assistants took place from the time alleged by DAASA, namely 2006. There is in any event no substantiated challenge by SADA to the assertion on behalf of DAASA in respect of the dental assistants, that they were in fact being registered from 2006. SADA, however, maintained its position that any registration that might have taken place was unlawful, particularly because a register could not be established in terms of the Act as an empowering provision was lacking. [21] For completeness, we record that it is clear from an information leaflet, issued by the Professional Board for Dental Therapy and Oral Hygiene, dated 22 January 2007, encouraging dental assistants to register, that at that time a register was in existence. The minutes of a meeting of a task team set up to facilitate the registration and regulation of dental assistants dated 16 April 2007 records that the actual registration of dental assistants was on-going. The task team was initially set up as an ad hoc committee during the latter part of 2005 and was initiated by the Board. It comprised Professor Chikte, Dr Campbell who was at the time the Chief Executive Officer of SADA, Ms Majake from the Department of Health, Ms Dlamini and Ms Rhapiri, the President of SADA. The following appears from the minutes of a meeting of the task team, dated 11 November 2005: „Noted that the Senior Manager Mr J H Coetzer advised that the Professional Board for Dental Therapy and Oral Hygiene was approached by the Dental Assistants Association of South African (DAASA) to initiate the establishment of a register for Dental Assistants. The Board then started a process of consultation with the relevant stakeholders including DAASA, the South African Dental Association (SADA) and the Medical and Dental Professions Board whereafter the regulations relating to the registration of Dental Assistants were compiled and forwarded to the Minister of Health for promulgation. These regulations were promulgated on 15 April 2015.‟ [22] In the answering affidavit of the HPCSA and the Chairperson of the Board the following appears: „17.7 In appointing this Task Team that was not only led by members of Medical and Dental Board, but had as one of its members the erstwhile Executive Director of the Applicant, SADA, the Board hoped to avert any perception that it was not taking the concerns of dentistry and the private sector employers seriously. Furthermore, the Board was hopeful that this would minimise any unnecessary delays to the process. 17.[8] SADA was actively involved in the activities of the Task Team and immediately, when the unavailability of its Executive Director Dr Campbell begun to slow the progress of the Task Team, SADA immediately ensured its representation by replacing Dr Campbell with Dr Tsiu, a qualified dentist and the Vice President of SADA. A copy of the minutes of the Task Team meeting of 25 November 2005 is attached hereto and marked Annexure “TEM13”.‟ [23] SADA‟s response, in its replying affidavit, was to deny its active involvement in the task team. Furthermore, it stated that Dr Campbell and Dr Tsiu did not serve as representatives of SADA and did not act on its behalf. [24] The principal deponent on behalf of the Minister was Dr Thamizhanban Pillay who was the Deputy Director General: Health Regulations and Compliance Management of the Department of Health. According to him the Minister did have regard to SADA‟s representations before he finalised the regulations in question. The Minister was rightly criticised by SADA for not having himself attested to that fact. However, the Minister subsequently filed an affidavit in which he stated that he confirmed Dr Pillay‟s assertions. At this stage it is necessary to consider that the Minister and his department were regrettably slow in providing SADA with the full record of decision for the purposes of their review application. SADA adopted the position that the paucity of the record and the absence of any direct written proof that the Minister had regard to their representations ought to be held against him. [25] It is also necessary to record that the HPCSA has as one of its professional boards the Board for the Medical and Dental Profession, which represents the interests of those two professions. It is axiomatic that a decision of the HPCSA comprises the view of its constituent boards. This would mean it would comprise the views of the medical and dental professions. [26] The chronology in respect of the promulgation of the regulations set out in paragraph 16 above, spanning the period 15 April 2005 to 21 May 2012, is significant and ought to be borne in mind not only when the legal issues are discussed later in this judgment, but when the chronology and nature of submissions made by SADA to the Minister are dealt with. [27] We turn now to deal with the representations by SADA and the responses, or lack thereof. During 2003, 2007 and 2009 a number of proposed regulations by the Minister were published for general comment. They related to the qualification for registration of dental assistants and of persons who qualify outside of the Republic as well as the registration of student dental assistants. SADA participated actively in commenting on the proposed legislative regime that the Minister intended applying to dental assistants. SADA was strident in its objections to the creation of such a legislative regime. It adopted that attitude because of its perspective related to the task performed by the dental assistants within the scope and ambit of their employment by dentists. It made its first written representations to the HPCSA on 25 April 2001. We pause to consider the nature and tenor of those representations. In its first set of representations SADA recorded that although it appreciated the opportunity to submit comments it placed on record its „disappointment at the fact that the Board did not see fit to consult with [SADA] as an important stakeholder as employers of dental assistants . . . prior to circulating the proposals.‟ Significantly – particularly as SADA has not always been consistent in this – it noted that it „supports in principle the establishment of a register of dental assistants.‟ SADA then proceeded to comment on the precision, or otherwise, of the language used in the proposed regulations. SADA also commented on the substance of the provisions. The representations consisted of just over three pages and at the end they record a concern that there may not be sufficient training institutions to train the number of dental assistants. [28] SADA is adamant that it received no response to those representations. The HPCSA, on the other hand, contends that on 11 July 2001 the registrar on behalf of the Board sent the proposal for the regulation of the profession of dental assistants to all stakeholders, including SADA. The Board‟s proposed regulations were an amendment of an earlier draft and incorporated all the comments that had been received from the stakeholders that had responded. According to the HPCSA and the Board the letter thanked all stakeholders, including SADA, for the constructive comments which, according to the Board, served to confirm to the Education Committee that it was still on the right track with regard to regulating the profession. SADA denies that it received a response from the HPCSA and points out that no proof of dispatch or receipt was provided by the HPCSA. [29] On 10 July 2003 further representations were made by SADA. It recorded, once again, that it was disappointing that the dental profession had not been adequately consulted. For the first time SADA records that the Board was not the correct vehicle to consider applications for registration and conduct examinations of dental assistants. The following was stated: „The reconstitution in the name of the proposed Board would be a misnomer in that this professional board has hitherto been primarily responsible for those auxiliary professions that carry out limited clinical work which dental assistants do not.‟ SADA records that in its view dental patients are not unduly prejudiced by the conduct of dental assistants „presently employed‟. It goes on to state that in the absence of registration requirements and accountability the dentist as employer has assumed responsibility for the conduct of dental assistants employed by them. [30] In the representations currently under discussion, SADA reversed its earlier stance in terms of which it welcomed registration in principle. This time it stated the following: „It is not clear whether a dental assistants register is entirely in the interests of the patient. There is insufficient evidence to suggest that “unregistered” dental assistants have in any way prejudiced the interests of patients.‟ In these representations SADA adopted a seemingly altruistic stance and submitted that registration requirements might adversely affect the ability of dental assistants to find gainful employment „if too many dental assistants are trained at technikons and enter the marketplace‟. This is in stark contrast to the submissions before us that there were insufficient training and distance learning institutions to supply the required number of qualified dental assistants to meet demand. Concern was also expressed that some dental assistants may leave their employment rather than comply with registration requirements. SADA submitted that registration would make dental assistants liable in their own capacity to patients and that insufficient thought appears to have been given to the implications of vicarious liability for dentists. The latter representation is difficult to comprehend since it appears self-evident that presently dentists might in any event be liable vicariously for acts or omissions of the dental assistants they employ. The following recommendation made at the end of the representations by SADA also deserves attention: „Sufficient provision must be made to accommodate the presently employed dental assistants who are trained by dentists. We suggest a “grandfather clause” be included to allow trained dental assistants who do not possess “approved qualifications”, to register within a period of time. This will ensure continuity of employment and retention of acquired skills, experience and training.‟ SADA received no written response to these representations. [31] On 19 August 2005 SADA made yet further written representations to the then Minister of Health, Dr M Tshabalala-Msimang. Right at the outset, SADA reiterated that the Board had not seen fit to consult with it knowing full well that dentists were the main employers of dental assistants. It recorded that although the Board requested its views in 2001 on proposed regulations it had received no further communications or requests for input until the publication of the regulations in their final form. It accused the Board of failing to conduct an impartial and analytical assessment and failing to use objective criteria to develop the proposed registration regulations. It noted the provisions for compulsory registration of dental assistants and submitted that: „[T]hose parts of the regulations that provided for exemption from the qualification requirements for dental assistants and in particular the minimum period of in-service [on the job] training of 5 years would cause unintended and undue hardship to both dentists and dental assistants as employees.‟ SADA proceeded to note that there were limited training institutions for dental assistants. It also had regard to the provision made: „for any person who worked as a dental assistant for a minimum period of 5 (five) years prior to 31 March 2005 to apply for exemption from the qualification requirements and that the Board may exempt such persons from having to obtain formal qualifications and in its discretion require applicants to write an examination to test their knowledge.‟ The Board was criticised for its imposition of a five year in-service training period. SADA submitted that it was arbitrary and capricious. It considered the former qualification period of one year at training institutions to be excessive, if regard were to be had to the nature of the work of a dental assistant. No doubt that view would be seen by DAASA as being patronising and condescending. Once again, SADA stated that in its view mandatory registration would not lessen the risk of harm to a patient and stated that it feared for the loss of jobs by dental assistants. In SADA‟s own representations it recommended that no further mandatory registration be required until all the implications and consequences were properly considered and a review of the extent of a grandfather-clause7 in the regulations is undertaken. SADA states that it received no response on these representations. 7 As noted above, in this context, the grandfather clause refers to recognition being given in the case of currently practising dental assistants to time spent during on-the-job training in qualifying for registration as an alternative to acquiring a formal academic qualification. [32] SADA continued making representations and engaged the HPCSA and the Minister. On 18 January 2008 SADA made written representations to the Department of Health regarding regulations relating to the registration of dental assistants and the qualifications for their registration. Confusingly, this time the following was recorded: „We wish to place on record that we accept and support the principle of registering dental assistants . . . . We have problems however in the detail of how this is to be achieved without crippling the dental profession.‟ In its replying affidavit SADA was adamant that it „objects to the regulation of dental assisting at all‟. (My emphasis) Counsel on behalf of SADA‟s attempts, to explain why SADA should not be considered to be historically schizoid on the basis that the quotation should be viewed contextually, is without substance. What is demonstrated above is that SADA vacillated between seemingly expressing support for and resisting the official registration of dental assistants. In the January 2008 representations, SADA accused the HSCPA of demonstrating „a lack of understanding of the many practical and logistical problems that have arisen since the introduction of compulsory registration of dental assistants.‟ It reiterated its concerns about the paucity of training institutions. SADA recorded its recognition of the „important role that dental assistants play in increasing the efficiency of a dentist in delivering quality oral health care‟. It warned, yet again, of the danger of job losses that would redound in the event of compulsory registration and regulation of dental assistants. It went on to further accuse the HPCSA of failing to recognise that dental assistants perform „no clinical services‟ on patients. SADA suggested that the training time for dental assistants could be severely reduced or compacted. SADA contended that frequent extensions of grandfather clauses was not the solution. It was particularly concerned about „the plight of dentists especially in smaller towns who are unable to find qualified assistants or even assistants with five years or more training.‟ Lastly, SADA recorded that once proper distance learning opportunities exist SADA‟s members would be glad to support the grandfather clause. [33] All, but two, of the written representations referred to above were signed by Dr N Campbell, mostly in his capacity as Chief Executive Officer of SADA. [34] SADA insisted that none of their representations referred to were taken into account by the Minister, the Department of Health or the Board in the drafting and/or finalisation of the regulations in question. Further representations were made by SADA on 2 April 2008 and 16 March 2009. The first of these appears to deal in the main with the auxiliary dental services of dental therapists and oral hygienists, and displays a resistance to the increasing scope of their professional status. The last, in the main, contained submissions already made. On 29 November 2010 representations were made to the present Minister of Health in relation to the registration of dental assistants with the HPCSA. These representations repeat much of what was contained in prior representations. SADA recorded what it considered to be problems with the registration process and the problems that might arise upon the termination of employment contracts of those who were unregistered and stated that this placed many dentists in an untenable condition in that they would be breaking the law in that they would be employing unregistered dental assistants. It urged as an option, retaining the status quo and for a repeal of the regulation regime in its entirety. As an alternative, it submitted that if the registration for dental assistants were to be retained, it should be subject to a full review. According to SADA no response was received to these further representations. [35] It is necessary at this stage to refer to a letter dated 11 March 2004, by the Department of Health, addressed to the Board. It dealt with the contemplated registration of dental assistants, in which the issue of training institutions was raised, together with hands-on training, and registration compliance being extended by twelve months. In that letter it was noted that most of these issues „have been covered in SADA inputs‟. Furthermore, in a letter to the HPCSA dated 24 March 2004, entitled „Regulations relating to the qualifications for registration of dental assistants and registration of persons qualified outside the republic‟, the Director- General of the Department of Health enclosed comments received, apparently from interested parties. The contents of the letter bear repeating: „Please find enclosed comments. The major concern raised is that should the regulations be promulgated as they are, most experienced Dental Assistants would be disadvantaged as the regulations only recognize formal training. There is no provision made for professionals who received in service training or who qualified through Distant Learning Institutions. The Department supports the SAQA policy of Recognition of Prior Learning (RPL) and would like to draw the Council‟s attention to the fact that the Regulations do not cover this aspect as far as Dental Assistants with experience but no recognized qualification are concerned.‟ [36] Having sketched the necessary detailed background, we now turn to the issues for adjudication. [37] In resisting SADA‟s application, DAASA took a point in limine, namely, that it was not competent as it had not been brought within the time period prescribed for review applications under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Section 7(1)(b) of PAJA provides: „(1) Any proceedings for judicial review in terms of section 6(1) shall be instituted without unreasonable delay and not later than 180 days after the date – . . . (b) where no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons.‟ [38] PAJA, does, of course, provide for an application for condonation to extend the 180 day period. However, despite being alerted by DAASA to the restrictive provisions of s 7, SADA deliberately chose not to pursue an application for condonation. It will be recalled that the principal basis for an attack on all the regulations was that the Minister had acted beyond his power in making them. SADA classified its review application as one brought in terms of the provisions of PAJA. It contended that the Minister, in making the regulations, was engaged in administrative action and it relied expressly on the provisions of s 6(2) which includes a challenge on the basis that the administrator whose act is being challenged had acted beyond his or her powers. From the chronology set out in para 16 above, all of the regulations set out in that paragraph, save the Scope Regulations, are struck by the restrictive provisions of s 7. [39] In the court below, Ismail J rejected the submission by counsel on behalf of SADA that the 180 day restrictive period did not apply when the challenge was based on the principle of legality as a distinct ground of challenge and as an alternative to a review brought in terms of s 6 of PAJA. Counsel had submitted that, properly construed, the challenge was based on that Constitutional principle rather than on the provisions of PAJA. There is, with respect, no consistent thread in the judgment of the court below. The following is stated in the four concluding paragraphs of the judgment of the court below: „[44] The time delay aspect has been dealt with above, see Oudekraal Estates (Pty) Ltd v City of Cape Town and others [par 31] and the New Clicks matter, supra. [45] I am of the considered view that the prejudice dental assistants would suffer if the regulations were set aside far outweighs any defects which might exists in the promulgation of the regulations. [46] I would recommend that the Minister continues with his regulations in furtherance of the legislation regarding dental assistants, however, the Minister should afford the parties a two year moratorium period before the failure to register as dental assistants would be met with criminal sanctions. This recommendation would equally apply to hiring dental assistants, by dentists, who are not registered during the moratorium period. [47] Accordingly I make the following order: (1) The application is dismissed. (2) The fourth respondent is joined to this proceedings and its application for condonation is granted. (3) The applicant is ordered to pay the costs of the respondents.‟ It appears then that the application was dismissed on the basis that it was not brought within the time limits provided for in s 7. However, the court did not deal with the challenge to the Scope Regulations which was within the time limits provided for in s 7 of PAJA. [40] In SADA‟s written heads of argument in this court, it made the following submissions: (a) Although the court a quo dismissed the challenge to the regulations promulgated in 2008, being the Original Qualifications Regulations and the Board Regulations, on the delay principle, it is unclear whether the court a quo also dismissed the challenge to the 2012 regulations, being the Scope Regulations, on the same basis. If this was the case, it was submitted that the court a quo erred because the 2012 regulations were promulgated on 21 May 2012 and the application for their review was instituted on 6 December 2011, within the 180 day period stipulated in s 7 of PAJA. (b) The court a quo ought to have considered the Dental Association‟s challenge to the 2008 regulations by extending the period in terms of s 9(2) of PAJA as it was in the interests of justice to do so. It was submitted that there are three reasons for this proposition: (i) The challenge to the 2012 regulations was brought in time and because these regulations depended in part upon the validity of the 2008 regulations, it was appropriate for the court to also consider the challenge to the 2008 regulations, despite the delay. (ii) The regulations are „qualitatively equivalent to primary legislation‟ to which the delay rule in PAJA does not apply. (iii) Although s 9(2) of PAJA refers to an „application‟ for condonation no formal application supported by an affidavit is required. It is sufficient that the request is made informally in the course of the proceedings. [41] Regarding the argument that the application was brought in terms of the principle of legality and not PAJA, in oral argument before us, counsel on behalf of SADA was faced with the decision of this court in City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd [2009] ZASCA 87; 2010 (3) SA 589 (SCA), in which the following was stated (para 10): „I agree with the appellant‟s contention that the making of regulations by a Minister constitutes administrative action within the meaning of the Promotion of Administrative Justice Act 3 of 2000, which must comply with the requirements of this Act in accordance with the doctrine of legality‟.(footnotes omitted.) In City of Tshwane, this court followed the decision of the Constitutional Court in Minister of Health & another NO v New Clicks SA (Pty) Ltd & others (Treatment Action Campaign & another as Amici Curiae) [2005] ZACC 14; 2006 (2) SA 311 (CC) para 135, where the following was said: „It follows that the making of the regulations in the present case by the Minister on the recommendation of the Pricing Committee was “a decision of an administrative nature”. The regulations were made “under an empowering provision”. They had a “direct, external legal effect” and they “adversely” affected the rights of pharmacists and persons in the pharmaceutical industry. They accordingly constitute administrative action within the meaning of PAJA.‟ (footnotes omitted.) [42] Before us, counsel on behalf of SADA was belatedly constrained to concede that the challenge against the regulations it had brought in the court below fell properly within the provisions of PAJA and that the application in respect of all the regulations, save the Scope Regulations, was time-barred. The submission in written heads of argument that an application for condonation in terms of PAJA did not have to follow the conventional route was not persisted in. Even though counsel on behalf of SADA conceded that the only regulations that fell for adjudication were the Scope Regulations he suggested that without them the remaining structure of the regime would be unworkable. It appeared that what SADA was intent on doing was to use its remaining challenge in respect of the Scope Regulations to revisit the challenge it accepted was time-barred. The primary problem for SADA was that all the regulations, other than the Scope Regulations, have been in existence since 2008 and continue to exist as a fact until they are set aside.8 Many dentists, dental assistants and the State must have conducted themselves over many years on the 8 See Oudekraal Estates (Pty) Ltd v City of Cape Town &others [2004] ZASCA 48; 2004 (6) SA 222 (SCA) para 26; and Opposition to Urban Tolling Alliance v South African National roads Agency Limited [2013] ZASCA 148; [2013] 4 All SA 639 (SCA) para 42. basis that there was no challenge to the statutory regime9 and would suffer prejudice if it were now, many years later, to be set aside. However, in dealing with the challenge to the Scope Regulations, it is necessary to deal with the architecture of the Act for the purposes of adjudicating the legality of the Scope Regulations, not for revisiting the regulation in terms of which SADA was time-barred. It is to that task that we now turn. [43] In oral argument before us the submission on behalf of SADA was that the Minister was precluded from putting into effect the Scope Regulations because there was no provision in the Act that provided for the creation of a register for any profession. According to SADA, since it must be accepted that one cannot practice a profession without registration in terms of the Act, dental assistants could not have their scope of work defined because the Act has no mechanism for a register to be opened to enable them to be registered. This stance represented a significant shift from the position adopted in SADA‟s written heads of argument in which it was contended that no professional board for dental assistants had been lawfully established and consequently the scope of work of dental assistants could not be defined. Simply put, the argument now appeared to be that there was no point in defining the scope of work for a non-existent profession. This shift in tack was probably prompted because of the time-bar problem faced by SADA. [44] The long title to the Act reads as follows: „To establish the Health Professions Council of South Africa and professional boards; to provide for control over the education, training and registration for and practising of health professions registered under this Act; and to provide for matter incidental thereto.‟ 9 See Harnaker v Minister of the Interior 1965 (1) SA 372 (CPD) at 380B-E dealing with the rationale for the delay rule at common law in relation to review proceedings. See also Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaaptstad 1678 (1) SA 13 (A) at 41A- F. „Health profession‟ is defined in s 1 of the Act as „any profession for which a professional board has been established in terms of section 15 and includes any category or group of persons provided for by such a board‟. [45] Section 2 established the HPCSA as a juristic person. In terms of s 3 of the Act the HPCSA has, among its objectives and functions, to „advise the Minister on any matter falling within the scope of the Act in order to support the universal norms and values of health professions, with greater emphasis on professional practice, democracy, transparency, equity, accessibility and community involvement‟. As stated above, it also has as one of its functions, to co-ordinate the activities of professional boards in terms of the Act and to act as an advisory and communicatory body for such professional boards.10 Importantly s 3(c) of the Act provides: „The objects and functions of the council are – . . . (c) to determine strategic policy in accordance with national health policy as determined by the Minister, and to make decisions in terms thereof, with regard to the professional decisions in terms thereof, with regard to the professional boards and the health professions, for matters such as boards and the health professions, for matters such as finance, education, training, registration, ethics and professional conduct, disciplinary procedure, scope of the professions, inter-professional matters and maintenance of professional competence.‟ [46] Section 4 of the Act sets out the powers of the HPCSA and includes the power, after consultation with the relevant professional board, to „consider any matter affecting the health professions registrable under [the] Act and, consistent with national health policy determined by the Minister, make representations or take such action in connection therewith as [it] deems necessary.11 It also has the power to „delegate to any professional board or committee or any person such of its powers 10 See ss 3(a) and (h) of the Act. 11 Section 4(c). as it may determine‟.12 It also has the wider power to „perform such other functions as may be prescribed, and do all such things as [it] deems necessary or expedient to achieve the objects of [the] Act within the framework of national health policy determined by the Minister‟.13 The HPCSA consists of, inter alia, not more than 16 persons designated by the professional boards.14 [47] Sections 15(1) and (2) of the Act read as follows: „(1) The Minster shall, on the recommendation of the council, establish a professional board with regard to any health profession in respect of which a register is kept in terms of this Act, or with regard to two or more such health professions. (2) The Minister may, on the recommendation of the council, reconstitute the professional boards with regard to the health professions for which the boards have been established, and establish other boards.‟ [48] Section 15A sets out the objects of a professional board. They are, amongst others, to consult and liaise with other professional boards on matters affecting them and to assist in the promotion of the health of the population of the country on a national basis. It is envisaged that they are enabled to make representations to the HPCSA, to advise the Minister „on any matter falling within the scope of this Act as it relates to any health profession falling within the ambit of the professional board in order to support the universal norms and values of such professional professions with greater emphasis on professional practice, democracy, transparency, equity, accessibility and community involvement‟.15 A notable power of a professional board in performing its regulatory power is set out in s 15B(1)(a), which states: „A professional board may – 12 Section 4(e). 13 Section 4(f). 14 Section 5(1)(a). 15 Section 15A(e). (a) in such circumstances as may be prescribed, or where otherwise authorised by this Act, remove any name from a register or, upon payment of the prescribed fee, restore thereto, or suspend a registered person from practising his or her profession pending the institution of a formal inquiry in terms of section 41; . . . .‟ [49] Section 18 of the Act provides for the keeping of a register. Section 18(1) provides: „(1) The registrar shall keep registers in respect of persons registered in terms of this Act, and must enter in the appropriate register the name, relevant contact details, qualifications, date of initial registration and such other particulars (including the registration category in which they hold registration and the name of their speciality, subspeciality, professional category or categories, if any) as the relevant professional board may determine, of every person whose application for registration in terms of s 17(2) has been granted.‟ [50] Section 24 of the Act provides that the Minister may on the recommendation of the HPCSA make provisions for the requisite qualification that entitles a person to be registered. [51] Section 33(1), which is particularly pertinent to the issues in dispute, reads: „(1) The Minister may, on the recommendation of the council and the relevant professional board, by regulation define the scope of any health profession registerable in terms of this Act by specifying the acts which shall for the purposes of the application of this Act be deemed to be acts pertaining to that profession: Provided that such regulations shall not be made unless any professional board established in terms of section 15 in respect of any profession which may in the opinion of the Minister be affected by such regulation, has been given an opportunity of submitting, through the council, representations as to the definition of the scope of the profession in question: Provided further that if there is a difference of opinion between the council and such professional board as to the definition of the scope of the profession concerned, the council shall mention this fact in its recommendation.‟ [52] The long title of an Act can serve the purpose of showing the object or purpose of the Act.16 It is clear from the long title that the object of the Act is to provide for the regulation of a health profession through the HPCSA and Professional Boards and to make provision, amongst others, for the registration of health professionals. [53] The scheme of the Act is such that the Minister is advised by the HPCSA on whether to establish a Professional Board with regard to any health profession.17 The provisions of s 15(1) appear in paragraph 47 above. SADA submitted that a reading of that subsection leads to the ineluctable conclusion that the establishment of a register for that profession is a prerequisite to the establishment of a professional board. We disagree. There would, as a matter of logic, be no point to establish a register for a profession that has not yet come into being. It is sequentially incongruent. At best for SADA the decisions could be made simultaneously and the Board and its register could come into existence at the same time. Section 12, the provisions of which are referred to above, envisages that a registrar is appointed by the Minister. In prior incarnations the Act provided for the HPCSA to appoint a registrar. In terms of s 12(2) the registrar is the accounting officer and secretary of the HPCSA and of each professional board and is obliged to carry out the functions and duties imposed by the Act. Section 18, the provisions of which have already been referred to, obliges the registrar to keep registers in respect of persons registered in terms of this Act and to enter the name and other relevant details, including the registration category. [54] These provisions, all read together purposively, when practically applied, must mean that a register shall be kept either consequent to or attendant upon a 16 Bhyat v Commissioner for Immigration 1932 AD 125 at 129. See also SA Railways and Harbours v Edwards 1930 AD 3 and G E Devenish Interpretation of Statutes 1 ed (1992) at 105. 17 Section 15 of the Act. decision to establish a professional board. In the present case, the Minister reconstituted the Board to include dental assistants within its ambit and as demonstrated above a register was kept, certainly at a time before the Scope Regulations were promulgated. We also know that more than 2000 dental assistants have already been registered. [55] There is thus in our view no substance to the submission by SADA that no provision is made in terms of the Act for the opening of a register for any profession. In any event, if one were to follow the submission on behalf of SADA, the Act would be unworkable and no new health profession could be established. This would have the effect of rendering the Act nugatory. As already alluded to, the establishment of the board and all the other regulations are beyond review. [56] The heading of s 33 of the Act, which deals with the powers of the Minister to create regulations that define the scope of dental assistants, bears the following title: „Definition of scope of other health professions registrable in terms of this Act and registration of certain persons.‟ This might have been an additional prompt for the stance adopted by SADA. However, sequentially it makes sense to first establish a board for a particular profession and then, if the Minister were to elect to exercise the powers referred to in s 33, to first define the scope of the profession before the obligation to register kicks in. The unassailable logic must be that one would have to first consider whether one falls within the scope of that health profession in order to decide whether one is obliged to register or not. Put differently, regulation cannot occur and compliance cannot be ensured until and unless the scope of the profession has been defined. What now requires to be addressed are two further submissions on behalf of SADA: that the Minister failed to take into account its written representations which warned about the possibility of large scale unemployment amongst dental assistants, as well as the real threat of criminal prosecutions faced by dentists and dental assistants. [57] As set out in para 35, the inputs of SADA were considered in the draft regulations. In addition, on 5 April 2005, as SADA expressed its concerns regarding the draft qualification regulations, the HPCSA in a letter dated 13 June 2005 that individual dental assistants who had not obtained their qualification from a University of Technology, will be subjected to an examination set by the Board, alternatively they would be exempted from sub-regulation (2). In terms of the draft qualification regulations, it was stipulated that the HPCSA would be an examining authority for the formal qualification in dental assisting. In addition, in terms of s 25(2) of the Act, provision was made for a person who applied for registration to pass to the satisfaction of the Board an evaluation to determine whether such person possessed adequate professional knowledge, skill and competence to be admitted to registration as a dental assistant. It is therefore clear that from the outset the Minister as well as the HPCSA were well aware of the dangers of unemployment and potential criminal sanctions to be imposed upon unregistered dental assistants and made adequate provisions in the qualification regulations as well as the Act to cater for any such eventuality. The fact that solutions were provided for the potential problem clearly indicates that the Minister considered the issue right from the outset. Moreover, what should not be lost sight of is that dentists‟ interests nationally are advanced within the HPCSA, through the Medical and Dental Board. Furthermore, we take a dim view of the nondisclosure in SADA‟s founding affidavit, of Dr Campbell and Dr Tsiu‟s involvement in the task team in which the matters currently up for discussion were debated and supported. In these circumstances to suggest that SADA‟s views were not considered is disingenuous. As demonstrated above the threat of criminal sanctions is more imagined than real. Finally, from the evolution of the statutory regime created by the regulations it is palpably clear that SADA‟s views had been taken into account. The steps taken by the Minister, the HPCSA and SADA is in line with a world-wide trend to regulate health related professions in the public‟s interest.18 18 For example, the World Health Organisation made the following recommendations in 2013: „The regulation of health professions education must therefore ensure that physicians, nurses, midwives and other allied health providers receive a quality education that prepares them to provide safe, competent and ethical care, are certified or licensed upon entry to professional practice and maintain competency throughout their active clinical careers.‟ See, for example, World Health Organisation [58] For all the reasons set out above, the appeal must fail. It was submitted on behalf of SADA that in the event of its failure in this appeal, it was in any event protected against an adverse costs order in terms of the order by the Constitutional Court in Biowatch Trust v The Registrar, Genetic Resources & others [2009] ZACC 14; (2009) 6 SA 232 (CC) para 21, where it was noted that „as a general rule in constitutional litigation, an unsuccessful litigant in proceedings against the State ought not to be ordered to pay costs‟. However, in that case the Constitutional Court said the following at para 20: ‟20. Nevertheless, even allowing for the invaluable role played by public interest groups in our constitutional democracy, courts should not use costs awards to indicate their approval or disapproval of the specific work done by or on behalf of particular parties claiming their constitutional rights. It bears repeating that what matters is not the nature of the parties or the causes they advance but the character of the litigation and their conduct in pursuit of it. This means paying due regard to whether it has been undertaken to assert constitutional rights and whether there has been impropriety in the manner in which the litigation has been undertaken. Thus, a party seeking to protect its rights should not be treated unfavourably as a litigant simply because it is armed with a large litigation war-chest, or asserting commercial, property or privacy rights against poor people or the State. At the same time public-interest groups should not be tempted to lower their ethical or professional standards in pursuit of a cause. As the judicial oath of office affirms, judges must administer justice to all alike, without fear, favour or prejudice.‟ (footnote omitted.) And further, para 24: (2013) Transforming and Scaling up Health Professional Education and Training – Policy Brief on Regulation of Health Professions Education at iv, available at http://www.who.int/hrh/resources/ transf_scaling_hpet/en/, accessed 11 November 2015. With regard to dental assistants specifically, it is worth noting that in a number of comparable jurisdictions, registration is required and/or the profession is regulated to a greater or lesser degree. Some examples are as follows. In certain Australian states, dental assistants who operate dental radiography equipment are required to obtain a certificate and be registered. In the United Kingdom, a dental nurse (which is comparable to a dental assistant in South Africa) must be in possession of an approved certificate or diploma and be registered. In certain American states, dental assistants must be registered and/or must graduate from an accredited program and pass a state exam. In certain countries within the European Union, dental assistants are required to complete an accredited training course, thought there is no registration requirement (eg Austria, the Czech Republic, and Poland). ‟24. At the same time, however, the general approach of this court to costs in litigation between private parties and the State, is not unqualified. If an application is frivolous or vexatious, or in any other way manifestly inappropriate, the applicant should not expect that the worthiness of its cause will immunise it against an adverse costs award.‟ (footnote omitted.) [59] We will bear in mind what was referred to immediately above in dealing with the facts of this case. As set out earlier in this judgment, SADA adopted an inconsistent attitude towards the professional regulation of dental assistants. First, it was equivocal about the envisaged statutory regulation of dental assistants; then committed in principle to the recognition of dental assistants as professionals; and, finally, after many years, it assumed an adamant and resistant attitude to the regulation of dental assistants as professionals. As stated in paras 22 and 23 above, SADA failed to disclose that high ranking officials within its ranks engaged as members of the task team with the issues they were concerned about and apparently in support of a statutory regime. In addition, when alerted to the time-bar provision of PAJA, SADA nevertheless elected not to pursue an application for condonation. Faced with the time-bar, SADA contrived an argument in an effort to revisit decisions that were beyond review. In our view, this conduct in the litigation leading up to the present appeal should count against it. Throughout the litigation, SADA also maintained a condescending and patronising attitude with regard to dental assistants, even adopting the contradictory, if not disingenuous, stance of claiming to act in their best interests while at the same time failing to cite the largest organisation representing that profession, and ultimately in fact going so far as to oppose their intervention as a party in the litigation on the basis that they lacked locus standi. It is not insignificant that of all the litigant parties, DAASA‟s members are without doubt the most financially vulnerable. All of these factors have to be seen against the emphatic assertion by counsel on SADA‟s behalf that it was committed to democratic principles and against the allegations in its founding affidavit of its concern for the welfare of dental assistants. SADA‟s attitude to DAASA‟s intervention is ironic and deplorable. Before us, right at the outset, counsel for SADA was asked to consider whether the attitude adopted by it did not have the potential for a public relations disaster. SADA‟s attitude was to reiterate that it was an adherent to the principle of legality and should be lauded for its efforts rather than criticised. For the reasons set out earlier in this paragraph, we disagree. [60] The following order is made: 1. The appeal is dismissed with costs, including the costs of two counsel where employed by each of the respondents. M S Navsa Judge of Appeal K G B Swain Judge of Appeal WILLIS JA: [61] I have had the privilege of reading the draft judgment prepared my brothers Navsa and Swain. I agree with the order that they have proposed as well as their reasoning, except for what appears in paragraph 59. The stance of SADA may have been unfortunate. Its attitude towards the registration and regulation of dental assistants may also have been less than astute and even unwise. This does not entail that its attitude has been „condescending‟, or „patronising‟ or „disingenuous‟ or „deplorable‟ to the extent that it deserves moralistic censure from this court. [62] It needs to be clear that the appellant has failed in this case because the law is against it and not because judges are, necessarily, inherently enthusiastic „regulators‟. Our personal views should, ordinarily, be irrelevant. It is not, however, entirely irrelevant or undeserving of judicial comprehension that the dental profession has functioned fairly well for decades, if not centuries, without the benefit of the regulation of the occupation of dental assistants. Teeth have, by and large, successfully been extracted, drilled, filled, replaced with implants and crowns and so on, without there being a register of dental assistants. We have survived the discomforts of the dentist‟s chair with some grins and plenty of forbearance, unassisted by the regulation of dental assistants. [63] The notion that SADA should be excused from an award of costs if it lost the appeal seems to have been an afterthought: it was not even raised in its heads of argument. When confronted with this by the court, Mr Leech, SADA‟s counsel, demurely replied that he had never even considered that SADA might lose. [64] The award of costs in this case requires no judicial fulmination. The principles relating to the strict application of the 180 day guillotine in respect of bringing applications for review in terms of PAJA are now trite. The late bringing of the application has been the unanswerable reason why the SADA cannot succeed, even though there are other substantive issues that operate against it. It cannot be said, in the words of Biowatch, that this application was „fresh constitutional terrain for all‟ or that „all the parties have had to feel their way‟ or that the State has been shown „to have failed to fulfil its constitutional and statutory obligations‟.19 For this reason, the ordinary principles relating to the award of costs in litigation should apply. _____________________ N P Willis Judge of Appeal 19See paragraphs 56 to 59 of Biowatch. APPEARANCES: For Appellant: B Leech SC (with K Hofmeyr) Instructed by: Werksmans Attorneys, Pretoria Symington & de Kok, Bloemfontein For First Respondent: N H Maenetje SC (with R Tulk) Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For Second and Third Respondents: M Sikhakhane Instructed by: Moduka Attorneys, Pretoria Matsepes Inc., Bloemfontein For Fourth Respondent: C R Jansen SC (with G Snyman) Instructed by: Lawyers for Human Rights, 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 24 November 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. South African Dental Association v Minister of Health (20556/2014) [2015] ZASCA 163 MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) dismissed an appeal by the South African Dental Association (SADA) and upheld the order of the Gauteng Division of the High Court, Pretoria. In the result, the SCA confirmed the validity of regulations made by the first respondent, the Minister of Health, in terms of the Health Professions Act 56 of 1974, inter alia recognising dental assistants as a profession, and defining the scope of that profession. SADA challenged the validity of the regulations on a number of grounds, being (i) that the Minister had no statutory power to make the regulations in question; (ii) the Minister failed to take into account written representations by SADA; and (iii) the Minister’s actions in promulgating the regulations were irrational. SADA’s challenge was opposed by the Health Professions Council of South Africa (the second respondent), the Professional Board for Dental Therapy and Oral Hygiene (the third respondent) and the Dental Assistants Association of South Africa (the fourth respondent, DAASA). SADA’s challenges were all based on the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). However, in respect of all but one of the regulations challenged, its application was instituted significantly outside of the time period required in terms of s 7(1) of PAJA. As SADA had not applied for condonation for this failure to comply with the requirements of PAJA, it was time- barred, and the SCA rejected the challenges to these regulations. The remaining regulation defined the scope of the profession of dental assistants. SADA argued that the Minister was not empowered to make such a regulation, because the Act did not empower him to open a register for a new health profession, and there could be no definition of the scope of a profession for which there was no register. The SCA rejected this argument, as it would make the Act unworkable and no new health profession could be established. This would have the effect of rendering the Act nugatory. The SCA accordingly rejected SADA’s challenges to the regulations promulgated by the Minister, and dismissed the appeal. In ordering that SADA pay the costs of the respondents, the SCA explained that the manner in which SADA had conducted the litigation was open to criticism. For example, although claiming to represent the interests of dental assistants, SADA initially failed to join DAASA, the largest dental assistants’ organisation, and then when DAASA sought leave to intervene, SADA opposed that application. --- ends ---
3414	non-electoral	2020	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no:232/2019 In the matter between: GAVIN ANTHONY BREETZKE NO FIRST APPELLANT MICHAEL JOHN BREETZKE NO SECOND APPELLANT MARGARET ANN BREETZKE NO THIRD APPELLANT and ROBERT EDWARD ALEXANDER FIRST RESPONDENT ZININGI PROPERTIES (PTY) LTD SECOND RESPONDENT RODNEY JOHN TROTTER NO THIRD RESPONDENT BRETT DENNIS BERRIMAN NO FOURTH RESPONDENT ANGELA CLAIRE ALEXANDER NO FIFTH RESPONDENT Neutral citation: Breetzke and Others NNO v Alexander NO and Others (232/2019) [2020] ZASCA 97 (2 September 2020) Coram: WALLIS, MBHA, MOCUMIE, MOLEMELA and DLODLO JJA Heard: 19 August 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 2 September 2020. Summary: Breach of fiduciary duty by trustee – trustee acquiring property from trust – concealing from other trustees existence of an opportunity to sell property to third party at a profit – trustee nominating company owned or controlled by him to acquire property – company reselling property at a profit – allegation that company knowingly participated in trustee's breach of trust is an allegation that company acted wrongfully – pleading not excipiable ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Vahed J, sitting as court of first instance): The appeal is upheld with costs, such costs to include the costs consequent upon the employment of two counsel. The order of the high court is altered to read as follows: 'The exception is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel.' JUDGMENT Wallis JA (Mbha, Mocumie, Molemela and Dlodlo JJA concurring) [1] The Sleepy Hollow Trust (the Trust) owned a number of commercially lettable properties in Pietermaritzburg, including one known as the SARS property, presumably because of the identity of its tenant. In September 2012 the Trust decided to dispose of this property portfolio. In February 2013 the first respondent, Mr Alexander, one of the trustees of the Trust, offered to purchase the properties. On 17 May 2013 the Trust concluded a sale agreement for the sale of the properties to the second respondent, Ziningi Properties (Pty) Ltd (Ziningi), a company nominated by Mr Alexander and owned and controlled by him. The total purchase price was slightly more than R179.5 million. In determining that price it was alleged that some R90 million related to the SARS property. [2] The purchase price was duly paid in terms of the sale agreement and the properties were transferred to Ziningi. Thereafter, on 6 November 2013, Ziningi sold the SARS property to Delta Property Fund Limited (Delta) for R110 million. Based on the figure included in the gross sales price of all the properties by the Trust to Ziningi, that represented a gross profit of over R19 million in the space of six months. This profit gives rise to the present claim, brought by one of the beneficiaries of the Trust, the St Francis Trust (the SF Trust), represented by its trustees, the four appellants, two of whom, the first and second appellants were also trustees of the Trust. The other beneficiary of the Trust was the June Alexander Family Trust (the JA Trust), which is represented by its trustees, the first, third, fourth and fifth respondents. The first and third respondents were its nominated trustees on the Trust. Only Mr Alexander has played an active role in this litigation. [3] The particulars of claim originally filed on behalf of the SF Trust were successfully attacked by way of exception and have since undergone substantial amendment. In their current form a further exception was taken by both Mr Alexander and Ziningi and upheld by Vahed J in the KwaZulu-Natal Division of the High Court, Pietermaritzburg. He struck out the claim against Ziningi and granted leave to amend. The appeal is with his leave. During the pendency of the appeal the appellants amended the particulars of claim, but retained the disputed paragraph that occasioned the exception. This caused an argument on peremption to be raised, but it transpired in the course of the hearing that the parties have agreed that this paragraph will be removed or retained depending on the outcome of the appeal. That disposed of the argument on peremption. THE CLAIM AGAINST ZININGI [4] The following facts are pleaded as the background to the claims against Mr Alexander and Ziningi. When the Trust first sought purchasers for the property portfolio, Delta expressed interest in acquiring the properties. Its offer to do so was rejected by the Trust on the grounds that the price offered was too low. In February 2013 another entity, SA Corporate Real Estate Fund, made an offer to purchase the properties at a price acceptable to the Trust. Negotiations for it to do so were already far advanced, when Mr Alexander opposed the sale and offered to purchase the property portfolio himself through a company to be nominated by him. [5] The plaintiffs plead that when Mr Alexander offered to purchase the properties on 18 February 2013, alternatively when the agreement between the Trust and Ziningi was signed, alternatively when the suspensive conditions to which it was subject were fulfilled, Mr Alexander knew that Delta remained eager to purchase the SARS property. Paragraph 27(b) of the particulars of claim alleges that: ‘An opportunity had, accordingly presented itself for the first defendant, either personally or through the second defendant, to sell the SARS property to Delta, at a profit, and, at the same time, to dispose of certain other properties (in which he had a controlling financial interest) which the first defendant was keen to offload.’ [6] The plaintiffs allege that Mr Alexander was under a fiduciary duty to disclose these facts to his fellow trustees (the first and second appellants and the third respondent) and to obtain their informed consent to his proceeding with the sale agreement to Ziningi at the prices offered for the properties. In failing to make that disclosure it is alleged that Mr Alexander breached his fiduciary duty to the Trust and its beneficiaries, more particularly the SF Trust, by not acting with the utmost good faith towards them; putting his own interests first; alternatively, allowing his interests or those of the second defendant to conflict with the interests of the beneficiaries. It is alleged that he ought not to have purchased the property portfolio for himself; alternatively, ought not to have done so without disclosure of the opportunity presented to dispose of the SARS property at a profit. On that basis the appellants contend that he is obliged to account to the St Francis Trust for its interest in the benefit received from the sale, being half of the profit accruing to Ziningi from the sale of the SARS property to Delta. [7] The claim against Mr Alexander is not the subject of the exception. Its target is the claim against Ziningi. That being so it is curious that Mr Alexander has joined Ziningi in raising the exception, but nothing seems to turn on this, save that it reflects an identity of interest between him and Ziningi. The claim against Ziningi is founded upon the allegations made in relation to the claim against Mr Alexander. Its starting point is the allegation that Ziningi is a company owned and controlled by Mr Alexander and in which he has a financial interest. The only additional allegation is contained in para 32 of the amended particulars of claim, which provides that in the alternative to the claim against Mr Alexander: ‘The second defendant (the latter having knowingly participated in the first defendant’s aforesaid breach of trust in the circumstances pleaded above) … is obliged to pay to the St Francis Trust one half of the benefit accruing to it from the sale of the SARS building to Delta.’ [8] As can be seen, the key allegation is that enclosed in parentheses, namely that Ziningi knowingly participated in the alleged breach of trust by Mr Alexander in circumstances where it, a company owned and controlled by Mr Alexander, was nominated as the purchaser of the property portfolio, and benefited from that breach of trust through the profit it earned on the sale of the SARS property to Delta. [9] Vahed J held that this was a conventional delictual claim to recover pure economic loss and that it was for the appellants to plead, and at a trial prove, wrongfulness. The heart of the judge's reasoning in upholding the exception is to be found in the following paragraphs from his judgment: ‘[22] The second defendant’s knowing participation in the sale of the SARS property does not, in and of itself, suggest that its act was wrongful. The second defendant must be judged to be a separate, at arm’s length, corporate entity and its commercial activity, prima facie, is not wrongful in the ordinary course. [23] Mr Acker has pertinently said that this case is not about piercing the corporate veil and that the knowledge imputed to the first defendant is not to be imputed to the second defendant. The second defendant could just as well have been a remote third party sitting at a coffee shop and overhearing a conversation unfolding at a table nearby. [24] That being the case the plaintiffs must make out a separate and independent case, properly grounded in delict, in order for it so succeed against the second defendant. There are no allegations to sustain this and in my view the exception is well taken.’ The essential question before us is whether this is correct. DISCUSSION [10] A helpful starting point is to consider the basis of the claim against Mr Alexander. It is founded on the following passage from the judgment of Innes CJ in Robinson v Randfontein Estates:1 ‘Where one man stands to another in a position of confidence involving a duty to protect the interests of that other, he is not allowed to make a secret profit at the 1 Robinson v Randfontein Estates Gold Mining Company Limited 1921 AD 168 at 177-178. other’s expense or place himself in a position where his interests conflict with his duty … There is only one way by which such transactions can be validated, and that is by the free consent of the principal following upon a full disclosure by the agent … Whether a fiduciary relationship is established will depend upon the circumstances of each case.’ While the existence of a fiduciary duty in any given situation can only be determined after a close examination of the facts2 there are certain situations, such as, a trustee dealing with the trust of which they are trustee, where the existence of a fiduciary duty will ordinarily arise. [11] A breach of fiduciary duty in relation to a trust may give rise to two different actions, one on behalf of the trust to which the duty is owed, such as the Trust in the present case, the other by a beneficiary of the trust claiming in their own right. Corbett CJ explained the difference between the two in Gross v Pentz,3 where he said the following: '… I should stress that a distinction must be drawn between actions brought on behalf of a trust to, for instance, recover trust assets or to nullify transactions entered into by the trust or to recover damages from a third party, on the one hand, and, on the other hand, actions brought by trust beneficiaries in their own right against the trustee for maladministration of the trust estate, or for failing to pay or transfer to beneficiaries what is due to them under the trust, or transferring to one beneficiary what is not due to him … for convenience of reference, I shall call the former type of action the "representative action" and the latter "the direct action".' [12] The action by the SF Trust against Mr Alexander is a direct action. It presupposes that any profit that would have accrued to the Trust if it had sold the SARS property to Delta would have been distributed to the 2 Bellairs v Hodnett and another 1978 (1) SA 1109 (AD) at 1128. See also Phillips v Fieldstone Africa (Pty) Ltd and Another 2004 (3) SA 465 (SCA) para 31. 3 Gross and Others v Pentz 1996 (4) SA 617 (A) at 625E-H. beneficiaries of the Trust in equal shares once it had been received and seeks recovery of the portion that would have accrued to the SF Trust. [13] Accepting that the SF Trust had a direct claim as a beneficiary against Mr Alexander, either to disgorge a secret profit that he had received, or to compensate the Trust for the loss occasioned by the diversion of the opportunity to sell the SARS property to Delta, on what basis can a separate claim for the same amount be advanced against Ziningi? The appellants contend that, in view of the relationship between Mr Alexander and Ziningi, the allegation that Ziningi knowingly participated in Mr Alexander's breach of trust, by first acquiring and then disposing of the SARS property, while short of corroborating detail that might in due course prompt a request for particulars for trial, suffices to constitute an actionable claim. This wording, of knowing participation in Mr Alexander's breach of trust, was taken from the description in the particulars of claim in Gross v Pentz4 of the claims against the parties to the impugned transaction. That was also a case where the breach of trust by the trustee (Gross) in causing a property to be disposed of at an undervalue had redounded to the benefit of third parties and they were claimed to be liable to the trust because of their knowing participation in Gross' breach of trust. [14] The exception by the first and second respondents is framed in the following terms: '1 Ex facie the claim: 1.1 It is against the [First Respondent] upon the basis of his breach of fiduciary duty to the Sleepy Hollow Trust and its beneficiaries; 4 Gross v Pentz at 622H-I. 1.2 The claim is against him in his personal capacity and in his representative capacity …; 1.3 It is averred that the [First Respondent] is the sole director and a shareholder of [Second Respondent]; 1.4 The [Second Respondent] is a duly incorporated company which carries on business in real estate activities; 1.5 [Second Respondent] is not alleged to be anything but a company; 1.6 [Second Respondent] was nominated as the purchaser of the 50% of the shares from the Sleepy Hollow Trust and in respect of which it was averred:- "a Company nominated by the [First Respondent] which was owned and/or controlled by him and/or in which he had a financial interest"; 1.7 [Second respondent] benefited by the increased price [paid by Delta]; 1.8 [Second Respondent] is required to disgorge the benefit to the Sleepy Hollow Trust; 1.9 The prayer indicated a claim against [Second Respondent]; 1.10 [Second Respondent] knowingly participated in First Defendant's breach of trust. Consequently there are no averments of wrongdoing by or in respect of [Second Respondent]. The averment is of knowledge of First Defendant's breach of trust. [Second Respondent] is a separate legal entity from [First Respondent]. … It is not averred that [Second Respondent] has any duties to Plaintiffs. In the premises the averments in the claim are insufficient to sustain a claim against [Second Respondent].' (I have substituted references to the first and second defendants in the high court with references to the first and second respondents in this appeal.) [15] The crisp issue posed by the exception was whether Ziningi's knowing participation in the alleged breach of trust by Mr Alexander gave rise to a cause of action against it at the instance of the SF Trust as a beneficiary of the Trust. In more general terms, if an independent third party knows of a trustee's breach of the fiduciary duty owed to a trust and acts in a manner that aids the trustee's wrongful conduct, or enables or facilitates the breach of trust to occur, is it liable to either the trust or the beneficiaries of a trust for the losses they have suffered arising from the breach of trust? [16] The respondents' argument that found favour with the high court was that the particulars in this form lacked an essential allegation that Ziningi's actions were wrongful in the sense that this expression is used in our law of delict. The argument commenced with the truism that a company is a separate legal entity from its shareholders and directors. It was not a trustee of the Trust and accordingly owed no fiduciary duty to the Trust, its trustees or its beneficiaries. Mere knowledge on its part that Mr Alexander was engaged in breaching the fiduciary duties that he owed to the Trust, his fellow trustees and the beneficiaries of the Trust, did not impose upon Ziningi the same or similar fiduciary duties. Nor did its participation in Mr Alexander's breach of trust, by acquiring the properties, in conjunction with its knowledge that Mr Alexander was acting in breach of his fiduciary obligations, suffice to constitute wrongfulness on the part of Ziningi. Its position, so counsel submitted, was no different from the hypothetical passer-by who ignores the drowning child's cries for help. [17] The first obstacle facing this argument was that it was contrary to authority that held, in the pithy summary in Lawsa5 that: 'A person assisting a trustee in the perpetration of a breach of trust is jointly liable with him or her.’ A brief review of the authorities is called for. 5 LAWSA, Vol 31 (2 ed) para 585. [18] The starting point is the decision of the Appellate Division in Standard Bank v Van Rhyn.6 The executor of a deceased estate drew a cheque on his personal account that would, if met, have exceeded his overdraft limit. When told this by his bank manager, he proceeded to draw a cheque in a matching amount on the estate bank account, explaining that the estate owed him more than this amount for advances made to the estate. The bank manager accepted this explanation and deposited the cheque to the trustee's account. The trial judge found that he could not say that the bank manager knew that the executor was committing a breach of trust, but he was put on enquiry and should have refused to honour the cheque drawn on the estate account. Had he done so the estate would not have suffered the loss in question. Accordingly, the bank was held liable for the loss. [19] On appeal it was necessary to identify when a bank would be obliged to refuse to honour a cheque drawn by the executor on the estate account and, as a necessary corollary, when a bank that honoured such a cheque would be liable for any loss suffered as a result. In giving the judgment of the court, Solomon JA cited7 with approval the following passage from Lord Cairns LC:8 '… in order to hold a banker justified in refusing to pay a demand of his customer, the customer being an executor, and drawing a cheque as an executor, there must, in the first place, be some misapplication, some breach of trust intended by the executor, and there must, in the second place, … be proof that the bankers are privy to the intent to make this misapplication of the trust funds. And to that I think I may safely add, that if it be shown that any personal benefit to the bankers themselves is designed or stipulated for, that circumstance, above all others, will most readily establish the fact that the bankers are in privity with the breach of trust which is about to be committed.' 6 Standard Bank v Estate Van Rhyn 1925 AD 266. 7 At 278. 8 Gray v Johnston 3 LRHL 1. [20] The bank's obligation to refuse to honour the cheque, and the correlative liability to compensate for any loss flowing from it being honoured, depended upon two things. The first was that the cheque was drawn in breach of a fiduciary duty. The second was that the bank was privy to the intent to misapply the estate's funds. The trial court's finding that the bank manager did not know that the executor was committing a breach of trust resulted in the appeal succeeding. [21] A similar issue arose in Yorkshire Insurance v Barclays Bank.9 A professional trustee and liquidator, one Harris, paid a number of cheques in respect of estates under his administration into his personal banking account with Barclays Bank and stole the money. Yorkshire Insurance had furnished him with bonds of security which were called up to meet his defalcations. It took cession from the replacement executors, trustees and liquidators of the affected estates of their claims against the bank. It then sued the bank in a delictual action based on the Lex Aquilia.10 The particulars of claim alleged that in paying the cheques unlawfully drawn by Harris the bank ‘well knew that Harris had drawn the cheques wrongfully, unlawfully and in breach of his trust, but nevertheless honoured them; thereby the … bank had caused loss and damage to the estates and companies in liquidation concerned’. Exception was taken to that claim. [22] Greenberg J dismissed the exception. He said:11 '. . . Harris’ actions in drawing cheques for purposes not authorised was the first stage in the process of misappropriation, which misappropriation could not be effected 9 Yorkshire Insurance Co Limited v Barclays Bank (Dominion, Colonial & Overseas) 1928 WLD 199. 10 Matthews and Others v Young 1922 AD 492. 11 At 207. unless the bank honoured the cheques. And if the bank honoured these cheques, knowing that Harris had no right to draw them, then . . . it was a party to Harris’ unlawful conduct. Harris and the bank in such a case would be joint tort feasors. As soon as Harris withdrew the money and before he had used it for any other purpose, the cestui que trust could compel him to replace it or pay damages, and the same rights would lie against any other person who with full knowledge assisted him in withdrawing the money. The alternative declaration therefore alleges facts which constitute an intentional infringement by Harris of the legal rights of the estates and companies concerned, and which make the . . . bank a joint tort feasor with Harris, and states that the bank’s conduct caused the plaintiff monetary loss. Prima facie, therefore, the case is covered by the Lex Aquilia.' [23] The judgment went on to discuss12 whether a personal benefit was required in order to render the bank liable as privy to the breach of trust and concluded that it was not. It said that being privy to the breach of trust 'means no more than assisting in carrying out the intent, with knowledge of such intent'. Although the existence of a personal benefit might justify an inference of knowledge of the intent to breach the trustee's fiduciary duty, where actual knowledge of the breach of trust is proven the absence of proof of personal benefit is irrelevant. On the facts of this case, of course, personal benefit to Ziningi is alleged. [24] Yorkshire Insurance had also issued a summons against the Standard Bank of SA Limited on a similar basis in relation to accounts kept at that bank by Harris.13 The action was tried by Tindall J and the claims were advanced on two bases, of which only the first is relevant for present purposes. It was alleged in regard to certain of the cheques that the bank knew that Harris had received them in his representative capacity and was not entitled to the proceeds thereof, or in the case of 12 At 208-209. 13 Yorkshire Insurance Co Limited v Standard Bank of SA Limited 1928 WLD 251. certain other cheques that Harris had no authority to draw them and had no right to the proceeds. Tindall J said14 that: ' To succeed on this cause of action in the case of either claim it seems clear that the plaintiffs must establish that the defendants were privy to an intent on the part of Harris to misapply trust funds, that is, that the defendants knew that Harris intended misapplying the proceeds of the cheques and therefore were parties to the misapplication of trust funds; for this part of the plaintiff’s case must be based on the contention that the defendants knowledge made them parties to the tortious acts of Harris.' [25] So far as I could establish, neither of these judgments, by two highly regarded judges both of whom served in this court, has ever been questioned. In the passage from Gross v Pentz quoted in para 11, Corbett CJ cited Yorkshire Insurance v Barclays Bank as an example of a direct action by a beneficiary arising from a breach of fiduciary duty by a trustee. While the issue was the narrow one of whether the beneficiary of a trust could sue on behalf of the trust in a representative action, Corbett CJ said that in order to answer that question it was necessary to determine the nature of the cause of action. The facts were very similar to those alleged in this case. It was said that in breach of his fiduciary duty the trustee, Gross, had caused the trust to sell property at an undervalue to the second and third defendants and that they had 'knowingly participated in this breach of trust'. [26] The conclusion reached in Gross v Pentz was that the case against Gross was one of maladministration of the trust, while the case against the second and third defendants was 'knowing participation in this breach of trust'. In respect of these two causes of action Corbett CJ said:15 14 At 271. 15 At 626D-E. ' The legal foundations for the liability of a trustee for maladministration of the trust are established and expounded in Sackville West v Nourse and Another 1925 AD 516 …; and for the liability of others as joint wrongdoers in Yorkshire Insurance Co Ltd v Barclays Bank (Dominion, Colonial & Overseas (supra)).' It is clear that the Chief Justice regarded the judgment of Greenberg J as being a correct exposition of our law in this area. [27] Counsel submitted that Gross v Pentz did not address the merits of a claim formulated in the manner of the claim against the second and third defendants in that case (respectively a shareholder in the purchasing company and the purchasing company). This proposition was accepted by the high court in distinguishing the authorities discussed above. Counsel relied on a statement by Corbett JA that: 'The merits of the plaintiff's cause of action are not, however, relevant for present purposes.' That appeared in the same paragraph as the passage quoted in para 26, which was followed by a comment that the claim was unusual because it was not based on actions taken or omitted to be taken in the administration of the trust, but on actions taken in regard to a company in which the trust held a 35% interest. Read in context the remark about the merits arose from the unusual factual basis for the claim, not the legal merits of the pleaded cause of action. It was not a basis for distinguishing the law as stated in these judgments. [28] No direct attack was directed at the correctness of these decisions. Gross v Pentz was distinguished on incorrect grounds and the heads of argument dismissed Yorkshire Insurance v Barclays Bank rather airily in the following terms: 'There is no need to revert to 1929 law (where an identification with English Law is made) or foreign law. The law is now clear from the decisions of our courts.' [29] I do not accept that these authorities can be disregarded so easily. It is true that Greenberg J used some expressions, such as tort feasor instead of wrongdoer and cestui que trust instead of beneficiary, but such usage was common at the time because of the perceived resemblance between the principles of our law and those of English law on questions of this type. However, Greenberg J commenced his discussion of this claim with a reference to the judgment in Mathews v Young.16 That is an important case because the oral argument printed in the report shows that the plaintiff based his claim on English principles of tort, while the respondent contended that the claim could only be brought under either the actio injuriarum or the Lex Aquilia of the Roman-Dutch law in regard to liability for civil wrongs. Greenberg J concluded that a claim as described by him fell within the principles of the Aquilian action. There is no reason to believe that he was applying English law and disregarding the principles of our own. [30] Counsel submitted that the need to allege wrongfulness on the part of the alleged wrongdoer has been reinforced by a series of decisions in this court and the Constitutional Court. He emphasised the decision of the Constitutional Court in Country Cloud17 and that of this court in Za v Smith18 as the culmination of this trend in our jurisprudence and submitted that this requirement meant that a plaintiff pleading a claim for economic loss in delict was obliged to plead (and prove at trial) that the conduct of the defendant was wrongful in the sense described in these cases. 16 Fn 9 supra. 17 Country Cloud Trading CC v MEC, Department of Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1 (CC) paras 20-26. 18 Za v Smith [2014] ZASCA 75; 2015 (4) SA 574 (SCA) paras 14-21. [31] In Country Cloud19 Khampepe J, giving the judgment of the court, summarised the approach our law takes to wrongfulness in saying: '… the wrongfulness enquiry focuses on— "the [harm-causing] conduct and goes to whether the policy and legal convictions of the community, constitutionally understood, regard it as acceptable. It is based on the duty not to cause harm – indeed to respect rights – and questions the reasonableness of imposing liability." The statement that harm-causing conduct is wrongful expresses the conclusion that public or legal policy considerations require that the conduct, if paired with fault, is actionable. And if conduct is not wrongful, the intention is to convey the converse: "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", notwithstanding his or her fault.' Wrongfulness must be established (and the grounds therefor pleaded) in all cases, although there are some instances where the facts alone illustrate why the conduct is wrongful, of which physical injury to a person or property are the most obvious. In any doubtful case the court must balance identifiable norms to determine whether it is right to hold that liability should follow upon the defendant's fault, whether intentional or negligent. [32] Za v Smith stresses that wrongfulness should not be conflated with negligence, because to do so results in the separate enquiries as to wrongfulness and negligence receiving the same answer. The primary purpose of wrongfulness is to act as a safety valve against over-extensive liability in that it results in a defendant not being held liable even where 19 Para 21. they have acted negligently.20 In many cases a negative answer to the wrongfulness enquiry forestalls the need for any investigation into negligence.21 [33] Counsel presented this judicial learning as if it were novel and dispositive of the jurisprudence of earlier years. It is not. Our courts have long since recognised that wrongfulness is an essential element of our law of delict. As Professor Lee put it in his An Introduction to Roman-Dutch Law:22 'It is common to both heads of liability that there must have been an antecedent duty owed by the defendant to the plaintiff, for where there is no duty there is not right, and there can be no invasion of a right.' In Whitaker v Roos and Bateman23 De Villiers CJ said: 'The broad principle is that a delict is committed where a person is illegally harmed contrary to his rights …' Innes J described the defendant's actions as a 'wrongful and unlawful' interference with the plaintiffs' rights.24 Solomon J cited Melius de Villiers' Roman and Roman-Dutch Law of Injuries for the proposition that an injuria required 'an aggression on the right of another'.25 Wrongfulness is concerned with whether conduct by the alleged wrongdoer infringed the rights of another and the determination of that question always has involved the question of the duties owed by the alleged wrongdoer to the injured party. The basis for determining 20 Za v Smith para 19. Illustrations of this are provided by cases such as Telematrix (Pty) Ltd v Advertising Standards Authority [2005] ZASCA 73; 2006 (1) SA 461 (SCA). 21 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 27F-G; Premier Western Cape v Faircape Property Developers (Pty) Ltd 2003 (6) SA 13 (SCA) para 33; Olitzki Property Holdings v State Tender Board and Another 2001 (3) SA 1247 (SCA); Steenkamp NO v Provincial Tender Board of the Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); Government of the Western Cape: Department of Social Development v Barley and Others [2018] ZASCA 166; 2019 (3) SA 235 (SCA). 22 R W Lee An Introduction to Roman-Dutch Law 5 ed (1953) at 323. Wille Principles of South African Law 5 ed (1961) at 483 said: 'A delict, injuria in the wide sense, is an act committed or omitted by one person unlawfully, which infringes the legal rights of another …' 23 Whitaker v Roos and Bateman; Morant v Roos and Bateman 1912 AD 92 at 113. 24 At 122. 25 At 131. wrongfulness has been refined in the recent jurisprudence of this court and the Constitutional Court, especially in the light of the Bill of Rights, but the requirement of wrongfulness has always been present. [34] In Matthews v Young26 De Villiers JA said that there is no onus upon a defendant 'until the plaintiff has proved that a legal right of his has been infringed'. The case concerned the expulsion of the plaintiff from his trade union and, as a result, his employment. The court said: 'In the absence of special legal restrictions a person is without doubt entitled to the free exercise of his trade, profession or calling, unless he has bound himself to the contrary. But he cannot claim an absolute right to do so without interference from another. Competition often brings about interference in one way or another about which rivals cannot legitimately complain. But the competition and indeed all activity must itself remain within lawful bounds. All a person can, therefore, claim is the right to exercise his calling without unlawful interference from others. Such an interference would constitute an injuria for which an action under the lex Aquilia lies if it has directly resulted in loss.' Botha JA in Knop27 said that it was plain from these passages that De Villiers JA was emphasising wrongfulness as an element of delictual liability. In Phumelela Gaming and Leisure Ltd v Grundlingh28 the Constitutional Court cited this passage from Matthews v Young as authority for the proposition that any form of competition is potentially harmful to a rival business, but not all competition is unlawful. It is only 'where competition is wrongful that it becomes actionable'. And competition becomes wrongful when, according to the legal convictions 26 Fn 9 supra at 507. 27 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 24D-F. 28 Phumelela Gaming and Leisure Ltd v Grundlingh and Others 2006 ZACC 6; 2007 (6) SA 350 (CC) para 32. of the community it is not viewed as reasonable and fair when viewed through the prism of the spirit, purport and objects of the Bill of Rights.29 [35] Applying that approach in this case, there can be no quarrel with the finding of Greenberg J that a person who knows that a person owing fiduciary duties to others is acting in breach of those duties nonetheless aids or facilitates the execution of the breach of trust, acts wrongfully and attracts liability under the Aquilian action. [36] Our law has always imposed fiduciary duties on certain persons requiring them to act in good faith when dealing with the affairs of other people that have been entrusted to them. Examples are a trustee, executor, guardian or director of a company. The principle is discussed earlier in para 10 of this judgment. The fiduciary must place the interests of the other party to whom the duty is owed before their own. While many breaches of fiduciary duty involve dishonesty, that is not always the case. Nonetheless, any departure from the path of rectitude that such a duty imposes will be visited with personal liability. The importance of such duties is emphasised by the fact that several statutes concerned with financial issues impose duties of good faith.30 [37] Where the execution of a breach of fiduciary duty involves or requires the involvement or participation of a third party, and that third party has knowledge that the transaction in question involves a breach of a fiduciary duty, it seems to me clear that the legal convictions of the 29 Cases such as Dun & Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cape) (Pty) Ltd 1968 (1) SA 209 (C) at 216F-H; Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd and Another 1981 (2) SA 173 (T) at 188-189 and Schultz v Butt 1986 (3) SA 667 (A) provide examples of how courts addressed the issue of wrongfulness in this context in accordance with the legal convictions of the community. 30 Companies Act 71 of 2008, ss 75-77; Financial Institutions (Protection of Funds) Act 28 of 2001, s 2. community demand that the third party share the liability of the person breaching the fiduciary duty. That is not because they owe a similar duty to the injured party, but because by aiding, enabling or facilitating the breach they are themselves equally responsible for the injury caused to, or the loss suffered by, the injured party. I can think of no good reason why the principal perpetrator would be liable, but the enabler should escape liability, any more than I can see any reason why a criminal should be subject to the rigours of the criminal law, but their accomplice, or an accessory after the fact, should not. As we know that is not the case in the criminal law because the legal convictions of the community would regard it as intolerable. No reason was advanced and none occurs to me why a breach of fiduciary duty would be viewed any differently. [38] The reason for the law imposing fiduciary duties in certain circumstances is to protect those who might otherwise be vulnerable to exploitation by the person on whom the duty is imposed. The community requires that the vulnerable should not be deprived of such protection and it can make no difference that the deprivation involves not only the person owing the primary obligation, but those who knowingly aid, enable or facilitate the deprivation. Knowledge of the breach of fiduciary duty is central to the liability of the third party. It is their guilty knowledge that attracts liability and, as the two Yorkshire Insurance cases demonstrate, that may not be easy to establish. However, where it is established, the requirement of honesty and fairness in dealing with the property and property interests of others demands that liability should follow. [39] It follows that knowledge that one is engaged in aiding, enabling or facilitating a breach of fiduciary duty suffices to attract legal liability for loss or damage occasioned by that breach of duty. As such, a pleading that alleges knowledge of and participation in a breach of fiduciary duty discloses a cause of action to recover loss or damage flowing from that breach. The adequacy of the pleading can be tested by a question posed to respondents' counsel. He was asked by several members of the bench what more would need to be pleaded to disclose a cause of action. Insofar as there was an answer, it was that there must be an allegation or averment of the legal duty obliging the defendant not to assist the breach of fiduciary duty. But no reason was advanced why knowledge that a breach of fiduciary duty was being perpetrated did not suffice to establish that duty. [40] Counsel raised the spectre of limitless liability, but it was a chimera. Only those with knowledge that a breach of fiduciary duty was involved in the transaction in question would be liable. Innocent participants – the bank that honoured a cheque; the conveyancer who attended to the transfer – would not be liable. The threshold for liability is high. Mere negligence does not suffice. A failure to make enquiries that would, if pressed, lead to the conclusion that a breach of fiduciary duty was involved would not attract liability. Nothing but actual knowledge is required. [41] One final point is relevant and it is well illustrated by the present case. If a person who aids, enables or facilitates the execution of a breach of trust with knowledge that the transaction involves a breach of fiduciary duty can escape liability for their involvement it will render it relatively easy for those who owe fiduciary duties to escape the consequences of their wrongdoing. The use of corporate vehicles to execute business transactions is commonplace. Here Mr Alexander is alleged to have offered to purchase the properties through a nominee. Ziningi, a company owned or controlled by him and in which he is alleged to have a financial interest, was the nominee. In the passage from the high court's judgment quoted in para 9 it was said that Ziningi was in effect an innocent bystander – a person overhearing something in a coffee shop. That was incorrect. It was Mr Alexander's chosen corporate vehicle to purchase the properties. If the allegations regarding his connection to Ziningi are established, I fail to see on what basis it can be said that Ziningi was in the position of an innocent bystander. His knowledge would clearly be attributed to Ziningi. It is against the legal convictions of the community for people to assist others to breach their fiduciary duty. The law should not make it easier for them to do so. [42] The necessary conclusion is that the allegation of knowing participation in Mr Alexander's alleged breach of fiduciary duty was a sufficient allegation of wrongfulness to constitute a cause of action against Ziningi, in the same way as it was sufficient to constitute a cause of action against the banks in the Yorkshire Insurance cases, and against the second and third defendants in Gross v Pentz. There was no reason for Greenberg J to have expanded upon this in his judgment, because, in my opinion, the conclusion that such allegations suffice to attract legal liability in accordance with the legal convictions of the community is obvious. Accordingly, the exception should not have been upheld. [43] I grant the following order: The appeal is upheld with costs, such costs to include the costs consequent upon the employment of two counsel. The order of the high court is altered to read as follows: 'The exception is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel.' _________________________ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: B A Acker SC (with him A J Boulle) Instructed by: Barkers Attorneys, Durban; Matsepes, Bloemfontein For respondent: A J Dickson SC Instructed by: J Leslie Smith & Company Inc, Pietermaritzburg; McIntyre & Van der Post, Bloemfontein.	Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 2 September 2020 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. Breetzke and Others NNO v Alexander NO and others (232/2019) [2020] ZASCA 97 (2 September 2020) The SCA today upheld an appeal against a decision of the KwaZulu-Natal Division of the High Court, Pietermaritzburg upholding an exception to particulars of claim on the basis that they did not disclose a cause of action. The case arose from the sale of a number of properties by the Sleepy Hollow Trust (the Trust) to Zinzingi, a company nominated by the first respondent, one of the trustees of the Trust. Within six months of transfer one of these properties was re-sold at a profit in excess of R19 million. The plaintiffs, representing another family trust, that was one of two beneficiaries of the Trust, claimed that in arranging the purchase of the properties the first respondent breached his fiduciary duties as trustee in that he was aware of, and did not disclose to his co-trustees, the fact that the party who purchased the one property from Zinzingi was a prospective purchaser at the time when Zinzingi bought it. They claimed that the first respondent was obliged to account to the Trust's beneficiaries for their share of the secret profit earned in this way. The exception related to the claim against Zinzingi. It was alleged that it had knowingly participated in the first respondent's alleged breach of his fiduciary duty. The high court held that this was insufficient to show that its conduct as a separate legal entity was wrongful in relation to the Sleepy Hollow Trust to which it did not owe any fiduciary duty. The SCA reversed this decision on the basis that conduct that aided, enabled or facilitated a breach of fiduciary duty by another was wrongful and gave rise to a claim for damages. The order of the high court was altered to one dismissing the exception with costs.
404	non-electoral	2016	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20844/2014 In the matter between: THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE APPELLANT and CAPSTONE 556 (PTY) LTD RESPONDENT Neutral citation: CSARS v Capstone 556 (Pty) Ltd (20844/2014) [2016] ZASCA 2 (9 February 2016). Coram: Ponnan, Bosielo, Wallis and Mbha JJA and Van der Merwe AJA Heard: 13 November 2015 Delivered: 9 February 2016 Summary: Income tax ─ whether proceeds of sale of shares revenue or a receipt of a capital nature ─ dominant purpose of acquisition of shares long term capital investment to rescue a distressed business ─ at time of acquisition sale of shares at a profit contemplated only as one of several possibilities to be explored at the appropriate time in future ─ subsequent sale of shares unsolicited and fortuitous ─ proceeds a receipt of a capital nature ─ cross-appeal ─ calculation of base cost for capital gains tax purposes ─ inclusion of indemnity payment. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Griesel, Yekiso and Baartman JJ sitting as court of appeal): 1 The appeal is dismissed with costs, including the costs of two counsel. 2.1 The cross-appeal is upheld with costs, including the costs of two counsel. 2.2 It is declared that the liability undertaken by the taxpayer during July 2004 to pay the amount of R55 million to Daun et Cie Aktiengesellschaft, formed part of the base cost of the acquisition of the shares in JD Group Ltd. ______________________________________________________________ JUDGMENT ______________________________________________________________ Van der Merwe AJA (Ponnan, Bosielo, Wallis and Mbha concurring): [1] During April 2004 the respondent, Capstone 556 (Pty) Ltd (Capstone), disposed of approximately 17 million shares in J D Group Ltd (JDG) and made a profit of nearly R400 million. The principal question in this appeal is whether Capstone is liable for tax on the amount of the profit on the basis that it constituted income (as the appellant, the Commissioner for the South African Revenue Service (the Commissioner) contends) or a receipt of a capital nature (as Capstone contends). The Tax Court, Cape Town (Davis J presiding) found for the Commissioner on this issue, but that finding was overturned by the full court of the Western Cape Division of the High Court, Cape Town (Griesel, Yekiso and Baartman JJ) on appeal to it. This court granted leave to the Commissioner to appeal against the order of the full court. Background [2] In the tax court, Capstone presented the evidence of several witnesses, whom I shall identify in due course. The Commissioner called no witnesses. The picture that emerged from the evidence was set out in the reported judgments of the tax court (ITC 1867 (2013) 75 SATC 273) and that of the full court (Capstone 556 (Pty) Ltd v Commissioner for the South African Revenue Service 2014 (6) SA 195 (WCC); 77 SATC 1). In the result I will restrict myself to those facts that I consider material and necessary for a proper understanding of this judgment. [3] By the end of 2001, Profurn Ltd (Profurn), a JSE listed company in the retail furniture industry, had run into serious financial difficulties. It owed FirstRand Bank Ltd (FirstRand) in excess of R900 million. Profurn also owed between R70 and R90 million to Steinhoff International Holdings Ltd (Steinhoff). Steinhoff was then a major manufacturer and supplier of furniture to the retail industry. Its chief executive officer was Mr Markus Jooste, who was also a major shareholder in Steinhoff. Dr Theunie Lategan, head of the corporate division of FirstRand, was responsible for Profurn‟s account. FirstRand also had exposure to other furniture retailers. Profurn risked imminent liquidation in view of its critical financial position. This represented a serious financial risk to FirstRand and Steinhoff, as well as a major threat to the stability of the retail furniture industry in South Africa as such. [4] Dr Lategan, who was under immense pressure to come up with a solution to the Profurn problem, discussed it with Mr Jooste. Mr Jooste referred him to Mr Claas Daun, a wealthy German businessman and director and shareholder of Steinhoff. Mr Daun also indirectly held a 13 per cent shareholding in Profurn so stood to suffer financially if Profurn was liquidated. FirstRand had determined that for Profurn to survive, it needed to reduce its debt to FirstRand to some R300 million. Hence Profurn needed a capital injection of approximately R600 million. For this purpose Dr Lategan entered into discussions with Mr Daun early in 2002. Mr Daun was interested but held a firm view that what was required to save Profurn, was both an injection of capital and sound management. He held the managerial skills of Mr David Sussman, executive chairman of JDG, in high regard. He made it clear that he would only be prepared to invest if the management of Profurn was taken over by Mr Sussman. FirstRand therefore approached Mr Sussman. Mr Sussman was agreeable but in turn insisted that the investor should be committed to remain on board as a shareholder for as long as it would take to turn the business of Profurn around. Mr Sussman discussed the matter with Mr Daun, who gave the required undertaking. [5] These developments were followed by a series of discussions between mainly Dr Lategan, Mr Jooste, Mr Daun and Mr Sussman. They resulted in a plan to rescue Profurn and stabilise the retail furniture industry. All concerned were ad idem, however, that the attempt to rescue Profurn would be a difficult operation, would involve high risks and would probably require a period of three to five years. [6] In essence, the solution agreed upon was the following. FirstRand would underwrite a R600 million rights issue by Profurn, thereby converting R600 million of the debt owed to FirstRand into equity. This would be followed by a merger between Profurn and JDG, whereby the Profurn shares would be exchanged for JDG shares. FirstRand would then sell the JDG shares so acquired by it for R600 million to a South African special purpose vehicle, to be created in due course when needed (Capstone). Daun et Cie Aktiengesellschaft (Daun et Cie), a German private holding company controlled by Mr Daun, would invest R300 million in Capstone, which would be used to pay half of the purchase price. R200 million of the purchase price would be settled by the issue by Capstone to FirstRand of redeemable preference shares and the balance by a participating loan by FirstRand to Capstone. In this manner the required capital injection and management would be achieved. [7] Most of this was reflected in a memorandum of understanding (MOU) signed by Mr Daun on 26 June 2002 at Rastede in Germany. In terms of the MOU it was naturally envisaged that final written agreements would be entered into and that the requisite regulatory approval be obtained. It was nevertheless accepted by all relevant parties that the MOU gave rise to a binding commitment by Mr Daun and his associates via the proposed special purpose vehicle to purchase the JDG shares from FirstRand and that the risk and reward in respect of the shares passed with effect from 26 June 2002, which was the express effective date of the MOU. [8] Despite some efforts by FirstRand to encourage existing shareholders of Profurn to take up the rights offer, only a handful did so, raising less than R1 million. This was an indication of the desperate position of Profurn, as was the fact that after the MOU was signed, Profurn‟s share price fell even further. As a consequence FirstRand acquired a 78,8 per cent shareholding in Profurn. Thereafter JDG and Profurn merged and FirstRand acquired approximately 42 million JDG shares. [9] In the agreements and amended agreements entered into following on the MOU, the rescue plan was varied in two material respects. First, FirstRand determined to retain one-sixth of its JDG shares. In the result five- sixths of the JDG shares would be transferred to Capstone. This translated to approximately 35 million JDG shares and a 20,9 per cent interest in JDG. Second, Mr Daun invited Mr Jooste to participate in the transaction, which required some restructuring of the special purpose vehicle to keep Mr Daun‟s financial interests separate from those of Mr Jooste. As a result, half of the 35 million shares were sold to Daun et Cie for R250 million and the other half to Capstone for the same purchase price. In terms of these agreements the purchase price of the shares was fixed as at 26 June 2002 and the purchasers had to pay interest on the purchase price calculated from that date. Daun et Cie eventually paid R262 725 131 (R250 million plus interest) to FirstRand in cash. This constituted a significant foreign investment in South Africa. The funding of the purchase price payable by Capstone was of course the responsibility of Mr Jooste. Daun et Cie and Capstone thereby committed themselves to a significant investment of indefinite duration, the ultimate profitability of which depended upon the ability of Mr Sussman to turn around the operations of Profurn and integrate them profitably into those of JDG. [10] Capstone was incorporated on 2 April 2003. It was wholly owned by another special purpose vehicle, Business Ventures Investments No 687 (Pty) Ltd (BVI). The financial interest in BVI was held by Mr Jooste and his associates. Genbel Securities Ltd (Gensec) advanced the amount of R150 million to BVI on condition that it be utilized to enable Capstone to acquire the JDG shares. BVI thereafter made a shareholder‟s loan to Capstone in the amount of R150 million on the same terms and conditions as those contained in the loan agreement between Gensec and BVI. The balance of the purchase price was settled by the issue by Capstone of three year and one day redeemable preference shares to FirstRand. For this reason Capstone was required to comply with FirstRand‟s standard terms and conditions in respect of preference shares. In the result Capstone took a number of registered special resolutions. One of these inter alia provided that a special condition be inserted in Capstone‟s memorandum of association that until the date on which the preference shares have been redeemed in full, Capstone shall not: „. . . be entitled to conduct any business whatsoever, enter into any contract or undertake any obligation whatsoever, other than in respect of the sale and subscription agreement and a voting pool agreement relating to its shares in JD Group Limited, provided however that this shall not prevent the company from acquiring any additional shares in the share capital of the JD Group Limited from time to time . . . without the express prior written consent of FirstRand.‟ The effect of this and other terms and conditions was that for the period of three years and a day from 30 May 2003, Capstone was prohibited from disposing of its JDG shares without the consent of FirstRand. [11] Two additional liabilities were attached to the acquisition of the JDG shares by Capstone. First, a due diligence investigation performed in respect of Profurn at the instance of JDG, revealed contingent liabilities of Profurn in respect of tax. FirstRand indemnified JDG in respect of these liabilities in the amount of R150 million. FirstRand required the purchasers of the shares to carry proportionate shares of its liability in terms of the indemnity to JDG. As a result, as part of the consideration for the shares, Daun et Cie and Capstone each indemnified FirstRand in the amount of R62,5 million. The indemnities were given for a period of five years commencing in early 2003. Second, the loan agreement between Gensec and BVI provided, in addition to interest on the loan, for payment of what was referred to as an „equity kicker‟. The equity kicker was a portion of any gain in the market value of the JDG shares as on date of repayment of the loan, calculated in accordance with an agreed formula. It was payable by BVI to Gensec upon repayment of the loan, irrespective of whether or not the JDG shares had been sold. As the BVI- Capstone loan duplicated the terms of the Gensec-BVI loan, Capstone in turn was obliged to pay the equity kicker to BVI. [12] When Mr Daun invited Mr Jooste to participate, he made it clear that he would retain sole control over the 35 million JDG shares, which would at all times be dealt with as one package by Mr Daun. This was understood and accepted by Mr Jooste. He felt honoured by the invitation and was content that Mr Daun would be the „captain of the boat‟ in which he would be the „passenger‟. For this reason Mr Daun and the manager of his South African interests, Mr Schouten, were directors of Capstone at all times material to the appeal, whilst Mr Jooste was not. The other directors of Capstone were Dr Lategan and Mr Steve Müller, who represented the interests of FirstRand and Gensec respectively. The shares in BVI were held by Daun et Cie as nominee for companies controlled by Mr Jooste and his associates. Mr Daun was also the only director of BVI and thus at all times relevant hereto also in control of BVI. [13] In terms of an agreement entered into on 20 June 2002, Profurn was placed under the interim management of JDG pending the final authorisation of the merger application by the Competition Tribunal. However, substantial delays occurred due to the need to obtain approval from the Competition Tribunal and on appeal, the Competition Appeal Court, as well as the South African Reserve Bank. The Tribunal approved the merger on 12 December 2002, subject to conditions which were set aside by the Competition Appeal Court on 28 May 2003. The JDG shares were ultimately paid for and transferred to Daun et Cie and Capstone only on 5 December 2003. By that date, the share price had risen considerably from the levels at which it stood when the transaction was originally devised. [14] In November 2003, when Steinhoff undertook an international „book building‟ exercise with the assistance of Citigroup Global Markets Ltd (Citigroup), Mr Jooste was having coffee with Mr Nicholas Pagden of Citigroup in San Francisco and enquired whether a similar exercise could be done in respect of the JDG shares that Daun et Cie and Capstone were in the course of acquiring. A book building exercise is a means of determining a price and acquiring institutional investors through either the issue and acquisition of new shares, or the sale of an existing block of shares in circumstances where the disposal of such a large block of shares in the market would detrimentally affect the price of the shares on a stock exchange. The institution undertaking the book building approaches institutional investors to ascertain how many shares they might buy and at what price. Once the price is determined the shares are disposed of other than through the exchange on which they are, or are to be, listed. As a result, in March 2004, Citigroup, represented by Mr Pagden, made a presentation to Mr Daun concerning a book building. The proposed book building entailed disposal of the full block of JDG shares controlled by Mr Daun. Mr Daun accepted the proposal in respect of the approximately 14 million shares held by each of Daun et Cie and Capstone. Each retained approximately 3,5 million shares. The sale by book building by Citigroup took place on 29 April 2004. It realised the price of R42.50 per share. More or less at the same time Capstone sold its remaining 3,5 million JDG shares to Mayfair Speculators (Pty) Ltd, a company holding the interests of Mr Jooste and his family, for R45 per share. The shares had been purchased as at 26 June 2002 for R14.17 per share. [15] On 30 April 2004 Mr Daun, Mr Schouten and Dr Lategan resigned as directors of Capstone. On the same date Gensec and BVI entered into a further written agreement to settle the loan. In terms of this agreement the liability in respect of the equity kicker amounted to R45 123 050, calculated on the actual proceeds realised. Although BVI (and therefore Capstone) were entitled to temporarily retain a portion of the equity kicker, the liability for the full equity kicker arose on 30 April 2004. Mr Müller resigned as director of Capstone on 5 July 2004 and shortly afterwards Mr Jooste and an associate were appointed as its directors. [16] What remained was Capstone‟s contingent liability in terms of the indemnity to FirstRand. However, during July 2004 Daun et Cie and Capstone, represented by Mr Daun and Mr Jooste respectively, agreed that Daun et Cie would accept the full contingent liability of Capstone towards FirstRand in return for payment of the amount of R55 million. Capstone thus incurred liability for payment of R55 million to Daun et Cie in the 2005 year of assessment in substitution of its contingent liability towards FirstRand. This debt was settled much later, by operation of set-off. [17] Capstone calculated and paid capital gains tax on the proceeds of the sale of its JDG shares (the proceeds). The Commissioner, however, issued an additional assessment in respect of the 2005 year in terms of which the proceeds were taxed as revenue. In addition, the Commissioner disallowed deductions from gross income of R45 123 050 in respect of the equity kicker and R55 million in respect of the settlement of the indemnity obligation (the indemnity settlement). Capstone‟s objection to the additional assessment was dismissed and it appealed to the tax court. As I have said, the tax court held that the proceeds constituted revenue. However, it revised the assessment to allow for the deduction of the equity kicker and the indemnity settlement from gross income in terms of s 11(a) read with s 23(g) of the Income Tax Act 58 of 1962 (the Act). Because Capstone‟s contention that the proceeds were of a capital nature was upheld on appeal to the full court, the question arose whether the equity kicker and the indemnity settlement formed part of the base cost of the acquisition of the JDG shares in terms of paragraph 20 of the Eighth Schedule to the Act. The base cost is deducted from the proceeds to determine the taxable capital gain. [18] Subject to an exception, paragraph 20(2) of the Eighth Schedule provides that the base cost does not include „borrowing costs, including any interest as contemplated in s 24J or raising fees‟. The exception is that one- third of the interest as contemplated in s 24J of the Act on money borrowed to finance the acquisition of listed shares, does form part of the base cost. Section 24J defines „interest‟ to inter alia include: „the gross amount of any interest or related finance charges, discount or premium payable or receivable in terms of or in respect of a financial arrangement‟. The full court found that the equity kicker constituted interest as defined. On this basis it concluded that R30 082 033, that is two-thirds of the amount of R45 123 050, fell to be included in the capital gain. Before us the parties were ad idem that this conclusion was correct. However, the full court found that the indemnity settlement in the amount of R55 million did not constitute part of the base cost. Capstone noted a cross-appeal against this finding. It also noted a conditional cross-appeal in the event of a finding that the proceeds were not of a capital nature. Test on appeal [19] Prior to its repeal by the Tax Administration Act 28 of 2011 with effect from 1 October 2012, s 86A of the Act dealt with appeals from a tax court. In Commissioner for Inland Revenue v Da Costa [1985] ZASCA 32; 1985 (3) SA 768 (A) at 775B-F, this court characterised the nature of an appeal in terms of s 86A as follows: „Section 86A now provides for a full right of appeal against any decision of a Special Court on issues of fact or law. As was pointed out by Trollip JA in Hicklin v Secretary for Inland Revenue 1980 (1) SA 481 (A) at 485, such an appeal “is therefore a re-hearing of the case in the ordinary well-known way in which this Court, while paying due regard to the findings of the Special Court on the facts and credibility of witnesses, is not necessarily bound by them”. Having pointed out that the section is silent about the powers of this Court in such an appeal, Trollip JA went on to say that it was manifestly the intention of the Legislature that this Court was to have those general powers that are conferred upon it by s 22 of the Supreme Court Act 59 of 1959. In my view it is implicit in these dicta that in an appeal from a Special Court those powers should be exercised according to the principles and subject to the restrictions applicable to appeals in general. And, there is indeed no reason to differentiate between an appeal from a Special Court and an appeal from a Local or Provincial Division. Unlike the position obtaining in a Special Court where a decision is given on facts which may not have been considered by the Commissioner, this Court hears an appeal from a Special Court on the record of the proceedings in that Court.‟ [20] Capstone lodged an objection to the additional assessment on 17 May 2010 and lodged the appeal to the tax court on 2 August 2010. The parties are nevertheless rightly agreed that the appeal from the tax court was governed by the provisions of Part E of Chapter 9 of the Tax Administration Act (ss 133-141). This is provided for in s 270 of the Tax Administration Act. Section 270(2)(d), in particular, provides: „The following actions or proceedings taken or instituted under the provisions of a tax Act repealed by this Act but not completed by the commencement date of the comparable provisions of this Act, must be continued and concluded under the provisions of this Act as if taken or instituted under this Act: . . . (d) an objection, appeal to the tax board, tax court or higher court, alternative dispute resolution, settlement discussions or related High Court application; . . .‟ [21] The provisions of s 86A of the Act and of Part E of Chapter 9 of the Tax Administration Act are substantially the same. In terms of s 134(2)(b) of the Tax Administration Act, a notice of intention to appeal against the decision of a tax court must indicate the findings of fact or rulings of law appealed against. Section 139(3)(b) requires the same of a notice of cross-appeal. In my judgment the principles set out in Da Costa are equally applicable to appeals from a tax court in terms of the Tax Administration Act. Such appeal is on the same footing as an appeal from a division of the High Court. It follows that the full court was bound by the factual findings of the tax court, unless they were affected by material misdirection or the full court was convinced that they were wrong. And in exercising its powers on appeal in terms of s 19 of the Superior Courts Act 10 of 2013, this court essentially has to consider what order the full court should have made on application of these principles. Revenue or capital [22] In terms of s 82 of the Act (now s 102 of the Tax Administration Act) the burden of proving that the decision of the Commissioner subject to appeal was incorrect, rested on Capstone. In line with its predecessors, s 1 of the Act defines „gross income‟ in essence as the total amount received by or accrued to a person, excluding receipts or accruals of a capital nature. Our courts have therefore taken the view that any receipt or accrual must be either income or capital, and „there is no third category or halfway house‟ (see Crowe v Commissioner for Inland Revenue 1930 AD 122 at 129; 22(1) Lawsa, 2 ed, para 46). It follows that Capstone could only discharge the onus by showing, on a balance of probabilities, that the proceeds were capital. That is a question of law to be decided on the particular facts of each case, for which there is no single infallible test. (See Commissioner for Inland Revenue v Pick ‘n Pay Employee Share Purchase Trust [1992] ZASCA 84; 1992 (4) SA 39 (A) at 56G). [23] In Overseas Trust Corporation Ltd v Commissioner for Inland Revenue 1926 AD 444 at 452-3, Innes CJ said the following: „It was pointed out in Commissioner of Taxes v Booysen’s Estate (1918, A.D., p. 576) that the profit resulting from the sale of an asset might be either capital or income, according to the circumstances. If the transaction were a mere realisation of capital at an enhanced value, the entire proceeds would remain capital; but if it were an act done in the ordinary cause of the vendor‟s business, then the resulting gain would be income. The reason for the distinction is clear. Where an asset is realised at a profit as a mere change of investment there is no difference in character between the amount of enhancement and the balance of the proceeds. But where the profit is, in the words of an eminent Scotch Judge, see Californian Copper Syndicate v Inland Revenue (41 Sc.L.R, p.684), “a gain made by an operation of business in carrying out a scheme for profit making,” then it is revenue derived from capital productively employed, and must be income.‟ [24] Whilst recognising that it is not universally valid, our courts have in circumstances such as the present consistently applied the test that a gain made by an operation of a business in carrying out a scheme of profit-making, is income and vice versa. In Commissioner for Inland Revenue v Stott 1928 AD 252 at 259-260 the passage from Overseas Trust at 452-3 was quoted with approval. Wessels JA added (at 261): „It is not sufficient that the cutting up of the land and its sale in lots should in its result prove to be a profit- making matter so as to stamp the proceeds as gross income. The gain must be acquired by an operation of business in carrying out a scheme for profit- making‟. In Commissioner for Inland Revenue v Leydenberg Platinum Ltd 1929 AD 137 at 145, Stratford JA referred to this passage in Overseas Trust and said that the principles applicable to the question whether profits are taxable as income or are accruals of a capital nature, „are now well settled‟. He made clear that the profit in respect of a single transaction of a company may on application of this test constitute income. [25] It is true that in Natal Estates Ltd v Secretary for Inland Revenue 1975 (4) SA 177 (A) at 198F-H, Holmes JA made reference to „selling an asset in the course of carrying on a business or embarking on a scheme of profit‟ (my emphasis). However, reading the case as a whole, it is clear that Holmes JA was not attempting to propound alternative tests. In my view it is clear that Holmes JA did not intend to deviate from the established principles. The court pointed out that in Stott the remarks of Innes CJ in Overseas Trust were adopted and said that Stott had long been recognised as a leading case. This is also apparent from the result of the application of the principles to the facts in Natal Estates. The court found (at 204F-H) that the taxpayer „had crossed the Rubicon and committed itself on a grand scale to the course and business of selling land for profit, using the land as its stock-in-trade‟. (See also the majority judgment of Smalberger JA in Pick ‘n Pay at 56J-57E.) [26] Hefer AP, in Samril Investments (Pty) Ltd v Commissioner, South African Revenue Service [2003] ZASCA 118; 2003 (1) SA 658 (SCA) para 2, confirmed that the „usual test for determining the true nature of a receipt or accrual for income tax purposes is whether it constituted a gain made by an operation of business in carrying out a scheme for profit-making‟. He pointed out that profit-making is also an element of capital accumulation. He said that: „Every receipt or accrual arising from the sale of a capital asset and designedly sought for with a view to the making of a profit can therefore not be regarded as revenue. Each case must be decided on its own facts . . .‟ Thus the mere intention to profit is not conclusive. There must be „an operation of business in carrying out a scheme for profit-making‟ for a receipt to be income. That expression refers to the use of the taxpayer‟s resources and skills to generate profits, usually, but not always, of an on-going nature. In Pick ‘n Pay at 58B-C, the majority similarly found for the taxpayer on the grounds that it was not carrying on a business by trading in shares and that even if it was, it was not a business carried on as part of a scheme for profit- making. [27] Where a profit is the result of the sale of an asset, the intention with which the taxpayer had acquired and held the asset is of great importance and may be decisive. In essence, the question is whether the asset was acquired for the purpose of reselling it at a profit and assumed the character of trading stock (see Matla Coal Ltd v Commissioner for Inland Revenue 1987 (1) SA 108 (A) at 129B-D). [28] In this regard Wessels JA said the following in Stott at 264: „It is unnecessary to go so far as to say that the intention with which an article or land is bought is conclusive as to whether the proceeds derived on the sale are taxable or not. It is sufficient to say that the intention is an important factor and unless some other factor intervenes to show that when the article was sold it was sold in pursuance of a scheme of profit-making, it is conclusive in determining whether it is capital or gross income.‟ In determining this intention the court „is not concerned with that kind of subjective state of mind required for the purposes of the criminal law, but rather with the purpose for which the transaction was entered into‟. (See Secretary for Inland Revenue v Trust Bank of Africa Ltd 1975 (2) SA 652 (A) at 669E-G.) This was formulated as follows in Pick ‘n Pay at 58F-G: „Contemplation is not to be confused with intention in the above sense. In a tax case one is not concerned with what possibilities, apart from his actual purpose, the taxpayer foresaw and with which he reconciled himself. One is solely concerned with his object, his aim, his actual purpose.‟ [29] And in Commissioner of Taxes v Levy 1952 (2) SA 413 (A) at 421, Schreiner JA said that „where the purposes of an individual taxpayer are mixed the only course, on principle as well as for practical reasons, is to seek and give effect to the dominant factor operating to induce him to effect the purchase‟. (See also Trust Bank at 670H-671A). This is a matter of degree depending on the circumstances of the case. (See African Life Investment Corporation (Pty) Ltd v Secretary for Inland Revenue 1969 (4) SA 259 (A) at 269E.) [30] The purpose or dominant purpose of the acquisition of an asset is a question of fact. (See Trust Bank at 666B-C.) It must be determined objectively in the same manner that any fact is determined by a court of law. The credibility and reliability of the evidence of the witnesses for the taxpayer must be determined in the light of the objective facts and inferences drawn therefrom, the probabilities and any evidence put up in contradiction thereto. (See Commissioner, South African Revenue Service v Pretoria East Motors (Pty) Ltd [2014] ZASCA 91; 2014 (5) SA 231 (SCA) at para 8.) [31] Apart from the intention of the taxpayer, a number of factors must be considered. First, the nature of the business activities of the taxpayer must be scrutinised. As Stott and Samril Investments demonstrate the line of demarcation between the realisation of an asset at a capital gain (Stott) and turning an existing asset to the purpose of generating revenue (Samril Investments) may be a fine one. So close regard must be paid to the nature of the business activities in which the taxpayer is ordinarily engaged. In Stott the sale of land acquired with the surplus from the taxpayer‟s profession as a land surveyor was reasonably remote from his main business activity. In Samril Investments the sale of sand was closely connected to the farming business already conducted on the property. [32] Second, the period for which the asset is held and the period for which it was anticipated it would be held at the time of acquisition will be relevant. In general the longer that period the more likely it is that the disposal is a realisation of capital rather than a receipt of income. Third, when dealing with an investment, the nature of the risk undertaken has a bearing on whether the exercise is one directed at building up the value of the taxpayer‟s capital or directed at generating revenue and profit. Finally, it must be recognised that in many commercial situations there may be no clear intention at the outset and any endeavour to discern one or select one as more prominent than another, rather than accepting that the taxpayer‟s future intentions were indeterminate, may be artificial and unhelpful. In such circumstances a better approach is to accept the indeterminacy and factor that into the enquiry. Other relevant factors are set out in Natal Estate, at 202 in fine, but the list is not exhaustive. Effective date [33] The tax court rightly noted that it had been accepted by all the relevant parties that the MOU gave rise to a binding commitment to acquire the JDG shares at the purchase price to be determined as at 26 June 2002 and bearing interest from that date. The full court found that the effective date of the transaction as a whole dated back to 26 June 2002, that „it is accordingly at that date that one must look when considering the period for which the asset was held‟ and that the shares were effectively acquired during June 2002, not December 2003. [34] I agree with what was said by McCreath J on behalf of the full court in Commissioner for Inland Revenue v General Motors SA (Pty) Ltd 1982 (1) SA 196 (T) at 204A, namely: „Finally, I consider that the correct approach in a matter of this nature is not that of a narrow legalistic nature. What has to be considered is the commercial operation as such and the character of the expenditure arising therefrom. This is perhaps but another way of expressing the concept that it is the substance and reality of the original loan transaction that is the decisive factor.‟ (See also Commissioner for Inland Revenue v Conhage (Pty) Ltd (formerly Tycon (Pty) Ltd) [1999] ZASCA 64; 1999 (4) SA 1149 (SCA) at para 1.) In this regard I find the following remarks of Lord Hoffman in MacNiven (Inspector of Taxes) v Westmoreland Investments Ltd [2001] 1 All ER 865 at para 32, instructive: „The innovation in the Ramsay case was to give the statutory concepts of “disposal” and “loss” a commercial meaning. The new principle of construction was a recognition that the statutory language was intended to refer to commercial concepts, so that in a case of a concept such as a “disposal”, the court was required to take a view of the facts which transcended the juristic individuality of the various parts of a preplanned series of transactions.‟ If the receipt or accrual arises from a detailed commercial transaction the transaction must be considered in its entirety from a commercial perspective and not be broken into component parts or subjected to narrow legalistic scrutiny. [35] In substance and in commercial reality the purpose of the acquisition of the shares must in my judgment be determined as at 26 June 2002, in the context of events leading to the MOU. Directing mind [36] The tax court found that Mr Jooste was the „brain‟ and the „mind‟ of Capstone. On the view that it took of the matter, the full court found it unnecessary to decide this issue. I am convinced, however, that this finding of the tax court was wrong. [37] Generally the intention of a company must be determined by ascertaining what its directors acting as such intended. (See Commissioner for Inland Revenue v Richmond Estates (Pty) Ltd 1956 (1) SA 602 (AD) at 606G-H.) But in Trust Bank Botha JA explained at 669A-D: „Just as there cannot in a case of a one-man company be any reason in principle why it should be incompetent for him to give evidence as to what the intention of his company at any given time was, Commissioner for Inland Revenue v Richmond Estates (Pty) Ltd, supra at p.606, so I can see no reason in principle why the persons who are in effective control of a company cannot give evidence as to what was the intention or purpose of a company in relation to any matter at any given time. That the management committee was for practical purposes in effective control of the affairs of the respondent bank is clear from the evidence. It was under its leadership that the respondent‟s business activities had been diversified to such an extent that, in addition to ordinary commercial banking, it had become engaged in a number of other incidental business activities as indicated above. I cannot find any reason in principle why the intention of the members of the management committee in regard to any matter in which it was concerned on behalf of the respondent cannot be taken to indicate the intention of the respondent.‟ [38] Mr Daun was de facto in control of the shares from their effective acquisition to their disposal. Mr Daun therefore determined the purpose of their acquisition. At the time of their disposal, he, aided by Mr Schouten, was in any event the controlling director of Capstone. Whether or not the shares should be sold, was solely the decision of Mr Daun. Mr Daun’s intention [39] Thus Mr Daun‟s intention at the time of effective acquisition of the shares had to be determined. As the full court indicated, the findings of the tax court in this regard were somewhat ambivalent. The following would, however, appear to be its central findings, irrespective of who had determined the intention (paras 77-78): „The evidence concerning the intention of acquisition is thus not definitively in appellant‟s favour; it does no more than show that there was always an intention to realise the shares for a significant profit. The question was not if but when a sale would occur. Hence, a profit making intention was always a dominant purpose within the mind of those who controlled appellant; . . . [T]he evidence does not provide an answer, on the probabilities, that this was to be a long term investment. There may have been a purpose to so hold, but there is no clear proof of it being the dominant purpose . . . When both the purpose at the time of acquisition and sale are considered, it cannot be concluded, on the probabilities, that a long term investment was realised to best advantage. To the contrary, the mixed intention had converted into a clear purpose of selling to “cash” in on the profit.‟ The full court disagreed and summarised its findings as follows (para 24): „In summary, the appellant‟s intention when it first decided to acquire the JDG shares was to make a strategic investment in a leading company in the furniture industry and to hold those shares for however long it took to turn around the Profurn ship, which was anticipated to take in excess of three years.‟ [40] In my view both approaches are flawed. In the tax court the fact that, if the turnaround strategy involved in the takeover of Profurn by JDG was successful, Mr Daun, as an investor and entrepreneur, wanted to recover his investment together with an increase in its value, did not mean that a profit- making intention was his purpose in making the investment, much less the predominant purpose. Nor was it correct to say that this was not a long term investment. The duration of the investment was dependent on Mr Sussman‟s skills in merging the two businesses as well as factors beyond the control of either Mr Daun or Mr Sussman, such as the general economic climate. On the other hand the full court stopped its enquiry at the first stage, without exploring further the implications of the strategic investment made by Mr Daun. A more rounded and complete consideration of the whole transaction was called for. [41] Before us, counsel for the Commissioner disavowed reliance on a change of intention after the effective acquisition of the shares. The essential submission for the Commissioner was that from the outset, that is when the transaction was first contemplated in early to mid-2002, the intention was to acquire the shares for resale at a profit, that that intention never changed and that the shares were acquired as trading stock. The argument for the Commissioner therefore correctly recognised that if this were shown not to be the case, the proceeds would be capital. [42] The witnesses for Capstone were Mr Daun, Mr Jooste, Mr J P Burger, the chief financial officer of FirstRand, Dr Lategan, Mr Sussman, Mr Müller and Mr Pagden. The tax court did not comment on the credibility of the witnesses. No doubt that is because no adverse comment was called for. The evidence reads well. It portrays Mr Daun as a straight forward, no-nonsense businessman who regarded a handshake agreement as binding and more important than hundreds of pages of legal documents. There can be no criticism of any of the other witnesses. Mr Daun‟s evidence was materially corroborated by all the other witnesses. His evidence was not detracted from by objective facts or the probabilities and, importantly, was not contradicted. It follows that there was no reason not to accept the evidence of Mr Daun as to the aim with which the shares were acquired or the circumstances in which they were sold. [43] Mr Sussman said that because of past experience he expected the turnaround of the business of Profurn to take a long time and that „what was of paramount importance was to have a shareholder that would be behind us through these difficult times‟. Mr Burger said that FirstRand needed somebody that was prepared to put long term capital into the business. Both therefore required a long term investment for the purpose of rescuing the business. Both found what they had required in Mr Daun when he made the commitment in terms of the MOU. He in turn said that what he did was „not like buying shares‟. He explained that he made an entrepreneurial long term investment aimed at rescuing Profurn‟s ailing business. He inter alia said: „But at that time it was an investment in uncertain surroundings with huge risks. You didn‟t know what happens, and therefore it was not suitable to make a quick buck, but first you had to re-organise, to restructure this new business which has got huge problems. . . . For me it was a difficult rescue operation which, in the end, with the help of David Sussman‟s management, went successful.‟ [44] If after three to five years the rescue operation was successful, several options would be available. I refer to the following evidence of Mr Daun: „And I was thinking at that time, my personal thinking, that we need perhaps four to five years when we ─ until we could see real results out of this effort to rescue this business. MR SHOLTO-DOUGLAS: And what would you do after the three to four years, or four to five years? MR DAUN: This on that time was fully open, but for me was quite interesting, I have known out of other shares deals in South Africa, when you‟re a 20% shareholder in a quoted company, you have a lot of options and possibilities. You could increase your shares. I could ─ I didn‟t know where the share price was going. I was prepared, perhaps, when the public was negative, that I buy further shares on the market perhaps to go to maturity or to control it. . . . MR SHOLTO-DOUGLAS: Your original intention was to hold these shares until such time as the transaction had bedded down, although you may not have excluded other options as well, is that right? MR DAUN: No, I had the full theoretically possible options when I have ─ I told you before, when I have of the South African quoted company more than 20% of the shares and in case it develops in a certain direction I got a good base as a strong shareholder to control, to get control of this business. I could buy further shares on the market, you know this option created for me as well huge traction, it was nothing in stone, so I could have been ─ it could have been, I‟m looking back I should have done it, it could have been that I bought more shares, more shares, and get control solely of the operation including Profurn. . . . But I must be clear I was long term original, I had all options open, and I had a good management, therefore I felt positive. . . . MR SHOLTO-DOUGLAS: Yes, no I understand, I think we understand each other there now, I mean essentially your share in the benefit of the transaction with what you were going to get on resale of the shares, not what you were going to get in the form of a dividend cheque if JD Group declared a dividend? MR DAUN: One option was the sale of the share, other option is utilise 20% to form another merger, and I get other shares, you know it‟s not only selling, when you have only 1000 shares you have only one option to sell the shares. When you have 20% you have so many options, of this I can talk about one hour. MR SHOLTO-DOUGLAS: I understand that, I understand you had many options, one of them was to sell the shares at an increased price and take the profit. MR DAUN: Yes, yes.‟ Mr Jooste confirmed this in the following terms: „Claas and I never discussed, and I think I tried to explain it this morning, how we would exit JD. We spoke about what we would do if it goes wrong. We spoke about a long term investment in the industry.‟ [45] Mr Daun obviously made the investment because he was of the opinion that the rescue operation could be successful. And it was naturally anticipated that a turnaround of the business would result in an increased share price. But this is neutral, it says nothing about the aim of the acquisition. Virtually every capital asset is purchased in the hope and anticipation that it will increase in value and in contemplation of the possibility that it may in future be sold at a profit. Mr Daun contemplated a resale of the shares at a profit as one of several possibilities. These possibilities were to be explored at the appropriate time in future. [46] At the time of the effective acquisition of the shares their disposal at a profit was by no means inevitable. First, the prospects of the rescue operation succeeding were uncertain. An investment of a very large sum of money ─ originally R300 million ─ was made in the anticipation that Mr Sussman‟s managerial skills would not only make a success of the rescue but, over an indeterminate period, provide some return in the form of growth in the value of the investment. The risks involved were substantial bearing in mind that Profurn was staring insolvency in the face. The element of salvaging something from Mr Daun‟s existing investment in Profurn could not have been absent. And when he committed himself to the deal Mr Daun had no idea of how long his commitment would have to last. Second, if the rescue operation was successful, all options were open. Finally, in regard to a possible sale Mr Daun testified that the tradability of a block of shares of this magnitude was low. His undisputed evidence was that he would never have been able to trade these shares in the market. [47] Counsel for the Commissioner placed considerable stress upon the conversation between Mr Jooste and Mr Pagden and Mr Jooste‟s knowledge in November 2003 of the possibility of disposing of the shares through a book building exercise. But Mr Daun had no knowledge of the concept of book building at all before he was informed thereof by Mr Jooste during January or February 2004 when the latter was in Germany to attend a furniture fair. The conversation between Mr Pagden and Mr Jooste at the coffee shop in San Francisco during November 2003 therefore pales into insignificance. What transpired is in any event clear from the evidence of both Mr Pagden and Mr Jooste. Only a brief discussion („a minute or two‟) took place to the effect that it would be possible to do a book building transaction in respect of the JDG shares. No decision was taken and Mr Jooste said that it was not his decision in any case. But Mr Pagden sensed an opportunity to make a deal and pursued it. This led to the presentation for a book building transaction made by Mr Pagden to Mr Daun in March 2004 when Mr Daun was in Johannesburg for a Steinhoff board meeting. [48] Because of his commitment to Mr Sussman, Mr Daun could only consider this opportunity if it had the blessing of Mr Sussman. When he spoke to Mr Sussman, this is what transpired: „And obviously I didn‟t know book building. He didn‟t know it. He says, yes, this is ─ ja, I said, David, but I have to go back to Germany to think about the whole thing, if it is worthwhile. My plan was long term. I have to discuss this with my supervisory board at home, that‟s my wife and family. But in case, David, I asked him, when we would consider to sell, it‟s against our understanding. What would you say, I asked David. I said would you have any complaints, because I never would consider this thing when you would say no. And then I was quite surprised, and David was laughing, he said, the whole thing, this restructuring of Profurn and this new group works far quicker or better than I thought. If you really decide ─ I would not recommend that you move, but if you decide to go out, I would not complain about it because then I get new, it might be exciting, partners or shareholders, but it‟s your decision, he said to me.‟ [49] Mr Jooste was in fact opposed to selling the shares. He attempted to persuade Mr Daun not to do so by saying that the share price might rise further (as it did) and that there might be other restructuring possibilities in future. Eventually he only managed to persuade Mr Daun to withdraw the seven million shares from the book building exercise, half of which was obtained by Mr Jooste through Mayfair Speculators (Pty) Ltd. [50] Back in Germany, Mr Daun‟s wife (and financial confidante) urged him to sell on the ground that he was overexposed in South Africa. And so it happened that after much consideration Mr Daun decided to sell the shares. It is abundantly clear that from the perspective of Mr Daun, this decision was the result of the unsolicited and fortuitous offer of book building. [51] The Commissioner argued and the tax court accepted that the short term of the Gensec loan and the nature of the equity kicker indicated an intention to fund the loan repayments by way of the sale of the shares. But the loan agreement was entered into on 5 December 2003, long after the MOU. In any event, the equity kicker was payable irrespective of whether the shares were sold or not, the short term of the loan was fully explained and it is common cause that refinancing of the transaction would have presented no difficulty. [52] In my judgment it is clear from the evidence that the first and primary purpose of the acquisition of the shares was to rescue a major business in the retail furniture industry by long term investment of capital. This involved a commitment of capital for an indeterminate period involving considerable risk and only a very uncertain prospect of a return. Assuming the rescue was successful, it was uncertain what would happen next. In effect all options were open. All of this was consistent with an investment of a capital nature that was realised sooner than initially expected because of skilled management and favourable economic circumstances. It was not a purchase of shares as trading stock for resale at a profit. The factual findings of the tax court in respect of the intention with which the shares had been purchased, were therefore clearly wrong. Although the full court did not say so in so many words, I am satisfied that it was convinced on appeal that the findings were wrong. It did say that (para 27) „these findings are contrary to the weight of the evidence‟ and continued to make its own factual findings to the contrary. At any rate, this is what the full court should have found. I find that Capstone proved on a balance of probabilities that the proceeds were of a capital nature. The appeal must therefore be dismissed. Cross-appeal [53] In the result the conditional cross-appeal falls away. It remains to consider the cross-appeal. It raises the question whether the indemnity settlement formed part of the base cost of the shares for purposes of capital gains tax. [54] In terms of paragraph 20(1)(a) of the Eight Schedule to the Act, the base cost includes „expenditure actually incurred in respect of the costs of acquisition‟ of an asset. It is trite that „expenditure actually incurred‟ refers to an unconditional legal obligation to pay. The words „in respect of‟ connote a causal relationship. (See Stevens v Commissioner, South African Revenue Service [2006] ZASCA 117; 2007 (2) SA 554 (SCA) para 20.) [55] It is beyond question that the contingent liability of Capstone in terms of the indemnity to FirstRand formed part of the consideration for the acquisition of the shares. Had payment in terms thereof taken place during the 2005 year of assessment, it would have constituted part of the base cost of the shares. The unconditional obligation in terms of the indemnity settlement to pay R55 million to Daun et Cie was undertaken in substitution of the contingent obligation to FirstRand. The full court rightly said that the liability to FirstRand was „converted‟ into liability to Daun et Cie. Whether this was financially a wise step is immaterial, as is the fact that it was taken after the sale of the shares. The causal link with acquisition of the shares was not broken. The acquisition of the shares remained the causa causans of the indemnity settlement. I am therefore unable to agree with the conclusion of the full court that (para 59) the indemnity settlement was „entirely separate from the acquisition of the JDG shares‟ and therefore a novus actus interveniens. It was the mechanism by which the contingent liability incurred as part of the acquisition of the shares was monetised and rendered a quantifiable component of the cost of the shares. [56] The Commissioner accepted that the liability in terms of the indemnity settlement was incurred during July 2004, that is, in the 2005 year of assessment. In my judgment the liability incurred by Capstone to pay the amount of R55 million to Daun et Cie was an „expenditure actually incurred‟ in respect of the acquisition of the shares. It follows that the cross-appeal must succeed. [57] The following order is issued: 1 The appeal is dismissed with costs, including the costs of two counsel. 2.1 The cross-appeal is upheld with costs, including the costs of two counsel. 2.2 It is declared that the liability undertaken by the taxpayer during July 2004 to pay the amount of R55 million to Daun et Cie Aktiengesellschaft, formed part of the base cost of the acquisition of the shares in JD Group Ltd. ___________________ C H G van der Merwe Acting Judge of Appeal APPEARANCES: For Appellant: A R Sholto-Douglas SC (with M W Janisch SC and H Cassim) Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For Respondent: L Kuschke SC (with T Emslie SC) Instructed by: Werksman Attorneys, Cape Town 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 9 February 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. CSARS v Capstone 556 (Pty) Ltd (20844/2015) [2016] ZASCA 2 (9 February 2016) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) dismissed the appeal of the Commissioner for the South African Revenue Service (SARS), and upheld the cross-appeal of Capstone 556 (Pty) Ltd (Capstone), against an order of the Western Cape Division of the High Court, Cape Town. In the result, the SCA (i) confirmed that the profit of almost R400 million made by Capstone from the sale of approximately 17 million shares in a company, JD Group Ltd (JDG), was of a capital nature and not of a revenue nature, even though Capstone had paid for and obtained transfer of the shares less than a year before; and (ii) held that the amount of R55 million in respect of a tax liability flowing from the original acquisition transaction formed part of the base cost of the shares. The issues before the SCA where (i) whether the profit from the sale of the shares was of a revenue or capital nature; and (ii) whether a contingent liability incurred by Capstone as part of the share purchase transaction, which was later converted into an unconditional liability to a third party, formed part of the base cost of the shares. The shares that formed the subject of the dispute were acquired by Capstone as a result of a corporate restructuring of a JSE-listed furniture business, Profurn Limited (Profurn), which was in severe financial difficulty. The turnaround strategy that was adopted involved the merger of Profurn with another more financially sound furniture business, JD Group Limited (JDG), in return for JDG shares. The shares would initially be issued to First Rand Bank Ltd (FirstRand), who would then on- sell them in various quantities to, amongst others, Capstone. The shares were eventually paid for and transferred by FirstRand to Capstone in December 2003, and were sold less than a year later, in April 2004, for a profit of almost R400 million. With regard to the first issue, SARS argued that this profit must be taxed as being of a revenue nature, while Capstone argued that it was of a capital nature. The SCA reaffirmed that the applicable test for determining whether a profit must be treated as revenue is whether it is a gain made by operation of a business in carrying out a scheme of profit-making. If so, it is of a revenue nature. If not, it is of a capital nature. And where a profit is the result of the sale of an asset, the intention with which the taxpayer had acquired and held the asset is of great importance and may be decisive. The court held that this was the case here. Although the shares in question were sold less than a year after Capstone acquired ownership over them, which would ordinarily suggest a short-term transaction, the SCA held that in substance, risk and reward was acquired by Capstone at a much earlier date, in June 2002. This is the date on which a binding memorandum of understanding was signed by the various parties laying out the turnaround strategy, and fixing the price at which Capstone was to acquire the shares. This is the relevant date to assess the intention with which the acquisition was made. And at that date, it was clear that Capstone and its controllers expected the turnaround to take between three and five years, and they viewed the enterprise as an investment to rescue the business of Profurn. Capstone’s controllers did contemplate the potential sale of the shares at some point in the future, but this was merely one of many options, after a significant period, and not the dominant purpose behind the acquisition. Accordingly, the nature of the profit fell to be treated as capital. With regards to the second issue, part of the acquisition price for the shares that Capstone agreed to pay to FirstRand was an indemnity in respect of certain tax liabilities incurred by Profurn. Capstone subsequently wanted to finalise the entire transaction and so wished to replace its contingent liability to FirstRand with a quantified and unconditional liability. Accordingly, in the 2005 year of assessment, it was agreed between Capstone and another company involved in the restructuring transaction, Daun et Cie, that Capstone would pay Daun et Cie R55 million if Daun et Cie took over Capstone’s contingent liability to FirstRand. The SCA held that it was clear that the initial contingent liability was part of the base cost. The SCA held that it was also clear that the obligation to pay R55 million was undertaken in substitution of the contingent obligation to FirstRand, and accordingly that the liability to FirstRand was ‘converted’ into liability to Daun et Cie. Overturning the ruling of the court a quo, the SCA held that there was no break in the chain of causation, and the acquisition of the shares remained the causa causans of the indemnity settlement. It therefore formed part of the base cost of the acquisition of the shares. Accordingly, the SCA dismissed SARS’ appeal, and upheld Capstone’s cross-appeal. --- ends ---
1414	non-electoral	2010	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 373/09 In the matter between: GARY WALTER VAN DER MERWE Appellant and NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS 1st Respondent THE HEAD OF THE DIRECTORATE OF SPECIAL OPERATIONS 2nd Respondent THE MINISTER OF SAFETY AND SECURITY 3rd Respondent SENIOR SPECIAL INVESTIGATOR PHILLIPUS DU TOIT HAYWOOD 4th Respondent INSPECTOR LIONEL TAYLOR 5th Respondent THE MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT 6th Respondent Neutral citation: Van der Merwe v NDPP (373/09) [2010] ZASCA 129 (30 September 2010) Coram: HARMS DP, NUGENT, SHONGWE and TSHIQI JJA and BERTELSMANN AJA Heard: 20 AUGUST 2010 Delivered: 30 SEPTEMBER 2010 Summary: Fair trial – appellant charged with transgressing Exchange Control Regulations and defeating ends of justice – appellant alleging that investigation against him conducted by the Directorate of Special Operations (DSO) (Scorpions) acting outside their mandate – appellant before pleading launching application in terms of section 172(1) of the Constitution to have consequences of DSO's alleged conduct declared unlawful, invalid and unconstitutional – whether court obliged by s 172(1) to issue a declaratory order if consequences of alleged conduct are found to be such – application amounting to preliminary litigation which must be discouraged – court not obliged to issue declarator, even if appellant could have established a case on the facts – issues arising from DSO's alleged conduct to be resolved by trial court – dismissal of application by High Court confirmed on appeal. __________________________________________________________________ ORDER _______________________________________________________________________ On appeal from: Western Cape High Court (Cape Town) (Olivier AJ sitting as court of first instance). The following orders are made: 1. The appeal is dismissed with costs which include the costs of two counsel. 2. The cross-appeal is dismissed. 3. The appellant is to pay the costs of the application for condonation and of the application for a postponement. ________________________________________________________________ JUDGMENT ________________________________________________________________ BERTELSMANN AJA (Harms DP, Nugent, Shongwe and Tshiqi JJA concurring) INTRODUCTION [1] The appellant – Mr Gary Van der Merwe – is a businessman who faces two criminal charges of having contravened the Exchange Control Regulations and of defeating the ends of justice respectively. The offences are alleged to have been committed during July 2004 when the appellant was arrested at the Cape Town International Airport. Foreign currency found in his possession was attached in terms of s 20 of the Criminal Procedure Act 51 of 1977. An application to have the currency released was dismissed by the Cape High Court. An appeal to the full court of that division was unsuccessful.1 An appeal to the Constitutional Court also failed.2 [2] After several postponements the appellant’s trial was set down for 9 June 2008 in the Regional Court Bellville. The appellant has not yet pleaded to the charges and indeed on 9 June 2008 he launched an urgent application for a declaratory order that the Directorate of Special Operations (DSO) (known before the unit’s disbandment as the Scorpions) and one of its members, Inspector Haywood, had acted outside the legislative and operational mandate of the Scorpions by investigating the offences the appellant is alleged to have committed. Such offences, it is common cause, did not fall within the definition of serious and organised crime the Scorpions were mandated to investigate and combat. Such conduct, the appellant argued, was in conflict with the Constitution and invalid and should be declared to be such. [3] Needless to say, conduct cannot be declared to be invalid, but only the legal consequences of that conduct. During the hearing of the appeal the order the appellant sought was amended to read: ‘It is declared that the Second and Fourth Respondents acted outside of the legislative and operational mandate of the DSO and the consequences of their conduct are accordingly unlawful, inconsistent with the Constitution and invalid’. 1 Reported as Van der Merwe & another v Nel & others 2006 (2) SACR 487 (C). 2 Reported as Van der Merwe & another v Taylor N O & others 2008 (1) SA 1 (CC). [4] A further declarator was sought in the notice of motion that the charges brought against the appellant were unlawful, unconstitutional and invalid. This relief was not persisted with. [5] The court below dismissed the application on the ground that the issues raised by the appellant should best be decided by the trial court. It made no order as to costs. The appellant was granted leave to appeal to this court. The first and second respondents – the National Director of Public Prosecutions and the Head of the DSO respectively – were granted leave to cross-appeal against the costs order. [6] The Ministers of Safety and Security and of Justice and Constitutional Development were cited in the proceedings in the court below but they played no active role and abided the decision of the court. Inspector Lionel Taylor, an inspector in the service of the South African Police Service, who was the investigating officer responsible for the appellant’s case docket, was also cited, and similarly abided the decision of the court. The application was opposed only by the first, second and fourth respondents, the last-mentioned being Mr Phillipus Haywood, the fourth – a senior special investigator of the DSO. He was joined in his personal capacity because of his alleged transgression of the DSO’s mandate by investigating the appellant. THE RELEVANT FACTS [7] The DSO was created by s 7 of the National Prosecuting Authority Act 32 of 1998 ('the NPA Act') and commenced operations in 2001. It was created to deal with national priority crimes, in particular organised crime and other specified serious offences. It was disbanded during 2009 after the amendment of s 7 of the NPA Act by s 3 of the National Prosecuting Authority Amendment Act 56 of 2008. [8] At the time that is relevant to this appeal the appellant was under investigation by the DSO. The investigation was authorised in terms of s 28(1) prior to the amendment referred to above. Various charges of fraud, theft and contraventions of the Company Act were preferred against the appellant and others allegedly acting in concert with him. [9] Mr Haywood was the lead investigator in the DSO investigation. He received information on 7 July 2004 that the appellant intended to take more than R 1 million in foreign currency out of South Africa on 11 July 2004. [10] After discussing the matter with his superiors it was decided to inform the relevant law enforcement agencies; the Commercial Crime Unit of the SAPS, the SAPS Border Unit and SARS. [11] It is common cause that the conduct or the anticipated conduct of the appellant – if it constituted an offence – did not fall within the definition of serious and organised crime that the Scorpions were mandated to investigate. That notwithstanding, Mr Haywood took an interest in the matter and he travelled to the airport on 11 July 2004 in the company of Mr Louw of SARS. There he learnt that the appellant had changed his flight to 13 July 2004. [12] On that day Mr Haywood returned to the airport with another DSO member, Mr Koekemoer. There they met Captain Koegelenberg and Inspector Gululu of the Border Unit and Mr Guerreiro of Customs. Mr Haywood pointed the appellant out to the Border Unit. [13] Mr Nico Maree of the SARS was requested by Mr Guerreiro to assist by obtaining a customs declaration from the appellant. The appellant agreed to a search of his luggage in which the foreign currency was discovered. [14] The matter was handed to the Border Unit. Captain Koegelenberg and Inspector Gululu allowed the appellant to board the plane as they were uncertain which regulation of the Exchange Control Regulations the appellant might have transgressed. Enquiries from the Commercial Branch and from Mr Haywood elicited the information that regulation 3(1)(a) was contravened. Inspector Gululu then had the appellant removed from the aircraft. He was arrested and the currency confiscated. The appellant was handed over to the Commercial Branch. [15] The next morning Inspector Taylor was assigned to investigate the matter and he interviewed the appellant on 14 July 2004. At the subsequent bail application on the same day, Adv Van Vuuren of the DSO appeared, duly authorised by a written delegation by the Director of Public Prosecutions; Western Cape. Another member of the DSO, Adv Bunguzana, received a similar delegation. Inspector Taylor consulted with Adv Van Vuuren on the bail application and the bail amount. Mr Haywood was present at the bail hearing. [16] On 28 October 2004 the appellant was arrested on the fraud charges that were being investigated by the DSO. According to Mr Haywood he approached Inspector Taylor with an eye to a joinder of the fraud and exchange control charges, but met with a negative response. Nonetheless, it is common cause that from that date until the end of 2007 the matters were dealt with on the basis that the appellant would be tried in the High court on all the charges. [17] According to the appellant, all postponements of the matter, of which there were several, were, with one exception, attended to by members of the DSO. On 22 April 2005, Adv Bunguzana informed the court at one such postponement that the case was investigated by the Scorpions after initially having been the responsibility of the SAPS. Correspondence on behalf of the prosecution and the investigators was sent on the DSO letterhead. One potential witness to the exchange control charges, Ms Rohr, informed the appellant that Mr Haywood had told her that he was the investigating officer when he subpoenaed her. [18] As it turned out, the appellant was arraigned for trial in the regional court. The trial was postponed when the present application was launched and has still not commenced. THE ARGUMENT IN THE COURT A QUO [19] The appellant’s case is that the entire investigation against him was conducted surreptitiously by the DSO, using other agencies as puppets, and the process of identifying witnesses, collecting evidence and preparing the prosecution was orchestrated by the department because of an improper intention on the part of the DSO to persecute the appellant. [20] The appellant submitted that in doing so the DSO – and in particular Mr Haywood – acted outside its statutory authority by becoming engaged in the case against him. It was submitted that the investigation was not and could not be authorised in terms of s 28 of the NPA Act, which restricted the DSO mandate to organised crime and other specified offences. Exchange control violations admittedly did not resort under the DSO. Mr Haywood and the other members of the DSO, so it was submitted, therefore acted unconstitutionally, irregularly and unlawfully by orchestrating the investigation against him. [21] The appellant argued that s 172(1) of the Constitution obliged the court to issue a declaration that the investigation conducted in the manner alleged was unlawful. That section provides, amongst other things, that when deciding a constitutional matter within its power, a court ’must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency’. The appellant sought no consequent relief. [22] It was not entirely clear from the appellant’s papers why a declaratory order was sought in vacuo, without any consequent relief. In the course of argument before us, however, counsel for the appellant informed us quite frankly that a declaratory order would bind the trial court when it was called upon to decide what evidence might be admitted. [23] The respondents denied any suggestion that the DSO had played any part in the investigation against the appellant, other than to pass information of the possible commission of an offence on to other law enforcement agencies. The DSO had co-operated with the prosecution services while it was intended to prosecute all charges in one trial. [24] The respondents furthermore submitted that the issue raised by the appellant was one that ought not to be decided piecemeal, but that the trial court was the appropriate forum to deal with questions relating to the admissibility of evidence, the authorisation of the public prosecutor to prefer the charges against the appellant and the appellant’s right to a fair trial. [25] The court a quo found in a meticulous and closely reasoned judgment that the appellant had failed to establish that the DSO had driven the investigation against him. It also held that the respondents’ version was neither so unreliable nor so far-fetched that it would justify a referral to oral evidence. [26] That notwithstanding, the court below considered the question whether the declaratory relief in terms of section 172(1) of the Constitution should be granted in the event of its findings on the merits being incorrect. After a careful consideration of relevant authorities the court concluded that it had the discretion to consider whether an order of this nature should be issued or not. Weighing the facts of the matter the learned judge concluded that it would be inappropriate to decide the constitutional issue raised by the appellant, which should best be left to be decided by the trial court. The application was therefore dismissed. No costs order was made. THE ARGUMENTS BEFORE US [27] The court below held against the appellant on the merits and found that the allegedly, unlawful and unconstitutional conduct of the DSO and Haywood had not been established. Although it would be difficult to fault the court below on this finding, I will assume for present purposes that the appellant indeed made out a case that the DSO exceeded its statutory mandate and that its conduct was thus inconsistent with the Constitution. The question that remains is whether a court is obliged in the circumstances to issue a declaratory order, notwithstanding that no consequent relief is claimed. [28] It was argued on behalf of the appellant that s 172(1) of the Constitution allows no room for the exercise of a discretion once conduct is found to be unconstitutional. But that argument does not find support in the decided cases. On the contrary, the following was said in Islamic Unity Convention v Independent Broadcasting Authority & others:3 ‘A Court's power under s 172 of the Constitution is a unique remedy created by the Constitution. The section is the constitutional source of the power to declare law or conduct that is inconsistent with the Constitution invalid. It provides that when a Court 3 2002 (4) SA 294 (CC) paras 10-11. decides a constitutional matter, it must declare invalid any law or conduct inconsistent with the Constitution. It does not, however, expressly regulate the circumstances in which a Court should decide a constitutional matter. As Didcott J stated in J T Publishing (Pty) Ltd and Another v Minister of Safety and Security and Others: "Section 98(5) admittedly enjoins us to declare that a law is invalid once we have found it to be inconsistent with the Constitution. But the requirement does not mean that we are compelled to determine the anterior issue of inconsistency when, owing to its wholly abstract, academic or hypothetical nature should it have such in a given case, our going into it can produce no concrete or tangible result, indeed none whatsoever beyond the bare declaration." . . . In determining when a Court should decide a constitutional matter, the jurisprudence developed under s 19(1)(a)(iii) will have relevance, as Didcott J pointed out in the J T Publishing case. It is, however, also clear from that judgment that the constitutional setting may well introduce considerations different from those that are relevant to the exercise of a Judge's discretion in terms of s 19(1)(a)(iii).’ [29] The appellant’s counsel relied for the proposition that a court before whom a constitutional issue is raised has no alternative but to rule on the matter on Dawood & Minister of Home Affairs & others,4 and Matatiele Municipality & others v President of the RSA & others (No 2).5 Neither decision supports the argument. In both matters the court was faced with constitutional issues that needed to be decided in the interests of justice. 4 2000 (3) SA 936 (CC). 5 2007 (6) SA 477 (CC). [30] The very wording of section 172 (1) imposes a duty upon a court that is approached to decide a matter said to be constitutional in nature to consider whether an order should be granted or not: ‘When deciding a constitutional matter . . .’ [31] In its context the word ‘when’ means ‘in the, or any, case or circumstances in which’ (The Shorter Oxford English Dictionary on Historical Principles Oxford University Press 1988 reprint p 2534). A court faced with an unmeritorious forensic finesse, clothed in constitutional garb, designed to delay or avoid the necessity of having to plead in a criminal trial, or to pre- empt a consideration by the trial court of the admissibility of evidence in terms of s 35(5) of the Constitution, has a duty to refuse an order that would encourage preliminary litigation. In National Director of Public Prosecutions v King6 Harms DP said: 'Fairness is not a one-way street conferring an unlimited right on an accused to demand the most favourable possible treatment, but also requires fairness to the public as represented by the State. This does not mean that the accused's right should be subordinated to the public's interest in the protection and suppression of crime; however, the purpose of the fair trial provision is not to make it impracticable to conduct a prosecution. The fair trial right does not mean a predilection for technical niceties and ingenious legal stratagems, or to encourage preliminary litigation - a pervasive feature of white collar crime cases in this country. To the contrary: courts should within the confines of fairness actively discourage preliminary litigation. Courts should further be aware that persons facing serious charges - and especially minimum sentences - have little inclination to co-operate in a process that may lead 6 2010 (2) SACR 146 (SCA) para 5. to their conviction and 'any new procedure can offer opportunities capable of exploitation to obstruct and delay'.7 One can add the tendency of such accused, instead of confronting the charge, of attacking the prosecution.’ And in Thint (Pty) Ltd v National Director of Public Prosecutions & others; Zuma & another v National Director of Public Prosecutions & others8 Langa CJ said: ‘I nevertheless do agree with the prosecution that this court should discourage preliminary litigation that appears to have no purpose other than to circumvent the application of s 35(5). Allowing such litigation will often place prosecutors between a rock and a hard place. They must, on the one hand, resist preliminary challenges to their investigations and to the institution of proceedings against accused persons; on the other hand, they are simultaneously obliged to ensure the prompt commencement of trials. Generally disallowing such litigation would ensure that the trial court decides the pertinent issues, which it is best placed to do, and would ensure that trials start sooner rather than later. There can be no absolute rule in this regard, however. The courts' doors should never be completely closed to litigants.’ In Key v Attorney-General, Cape Provincial Division, & another9 Kriegler J emphasized that, if evidence is tendered to which the accused objects, it is for the trial court to decide in the light of all the circumstances of the case whether fairness requires the evidence to be led or to be excluded. 7 R v H; R v C [2004] UKHL 3 ([2004 2 AC 134; [2004] 1 All ER 1269; [2004] 2 WLR 335; [2004] HRLR 20; [2004] 2 Cr App R 10; 16 BHRC 332 para 22 per Lord Bingham of Cornhill. 8 2009 (1) SA 1 (CC) (also reported at 2008 (2) SACR 421 (CC)) para 65. 9 1996 (4) SA 187 (CC) para 13-14. [32] The same considerations must apply in this case. It was well- established before the present constitutional era that a criminal trial is not to be conducted piecemeal, and that continues to apply today. An accused is not entitled to have the trial interrupted – or to have it not even begin – so as to have alleged irregularities reviewed by another court in the course of the trial. It is important to bear in mind that while the Constitution guarantees to an accused a fair trial that does not mean that the prosecution must satisfy the accused in advance that the trial will indeed be fair. It is the duty of the trial court to try a charge, and to ensure that the trial is fair, and if it turns out that it was not, then any conviction that followed might be set aside. It might even turn out that the accused is acquitted, in which case the alleged irregularities will be irrelevant. Litigation of the kind that is before us falls squarely into the category of preliminary litigation that ought to be avoided and discouraged. As Davis J said in Sapat & others v The Director: Directorate for Organised Crime and Public Safety & others:10 ‘For these reasons, I find that the essential purpose of applicants' notice of motion was directed to the constitutionality and hence admissibility of certain evidence which has been extracted by way of blood, semen and other samples. I consider that these questions should be determined by the trial court when appraised of the full factual context within which this evidence is sought to be admitted. In this way a correct balance between the right to due process and the imperative of crime control can be struck.' [33] No grave injustice would result were the issues raised by applicants to be determined by the trial court. It was said on behalf of the appellant that a 10 1999 (2) SACR 435 (C) 443 c-f. regional court has no jurisdiction to decide constitutional issues, but that is only partly correct. A regional court, as with any criminal court, has the duty to ensure that a trial is fair, and that duty necessarily requires it to determine at times whether the accused’s constitutional rights have been breached. [34] I have pointed out above that a court is not obliged to entertain a constitutional claim in a vacuum and thus declaratory relief is not there for the asking. At this stage the appellant asks for a declaration to be made in vacuo. No good reason commends itself why a court should consider such a claim. The court below was correct in dismissing the claim and the appeal must fail. THE CROSS-APPEAL [35] The trial court made no costs order in the light of what it regarded as serious constitutional issues that the appellant raised. [36] The first and second respondents submit that the application was vexatious and purely intended to delay the criminal proceedings. For this reason, it was submitted that the costs of the proceedings a quo should be awarded to the respondents. [37] Had this court sat as court of first instance, I would have been strongly minded to grant a costs order against the appellant. However, it cannot be said that the trial court exercised its discretion not to award costs to the successful respondents capriciously or injudiciously. There are no exceptional circumstances that might justify interference with the order. [38] The cross-appeal must therefore be dismissed. [39] As the hearing of the cross-appeal only occupied a short period of the hearing of this appeal no costs order will be made in respect thereof. THE CONDONATION AND POSTPONEMENT APPLICATION [40] While the appeal was pending, the appellant failed to adhere to the time limits laid down for the prosecution thereof. The record was filed late. The appellant launched an application for condonation of the late filing of the appeal and for a postponement thereof, but arranged an extension for the filing of the record with the office of the Registrar of this court. The respondents opposed the application for condonation and the application for a postponement. [41] The application for a postponement was not persisted with, nor was the opposition to the application for condonation. The respondents are nonetheless entitled to the costs of those applications as neither was withdrawn and remained live issues until the matter was called. The respondents are entitled to have this aspect disposed of in their favour. [42] The following orders are made: 1. The appeal is dismissed with costs which include the costs of two counsel. 2. The cross-appeal is dismissed. 3. The appellant is to pay the costs of the application for condonation and of the application for a postponement. __________________ E BERTELSMANN ACTING JUDGE OF APPEAL APPEARANCES: For appellant: A Katsz SC D Simonsz Instructed by: Carl van der Merwe Attorneys c/o Cornel Stander Attorneys, Cape Town Webbers Attorneys, Bloemfontein For respondent: A de V la Grange SC A Erasmus Instructed by: The State Attorney, Cape Town The State Attorney, 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: 2010 STATUS: Immediate Van der Merwe v National Director of Public Prosecutions Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. The Supreme Court of Appeal (SCA) today dismissed the appeal against the refusal by the high court of a declaratory order to pronounce the consequences of an allegedly unauthorised investigation of the case against the appellant by the former DSO (‘the Scorpions') unconstitutional, invalid and unlawful. The appellant faces charges of transgressing the Exchange Control Regulations and defeating the ends of justice in the regional court. He alleged that the Scorpions had investigated the case against him. Such investigation would have fallen outside the mandate of the Scorpions. Before pleading to the charges, he launched an urgent application in the high court for a declaratory order that the consequences of the Scorpions’ alleged actions were unconstitutional, invalid and unlawful. The high court dismissed the application, holding that the issues raised by the appellant should be decided by the trial court. The SCA described the application as pre-trial litigation designed to avoid the necessity of having to plead to the charges and aimed at pre-empting the trial court’s ruling on the admissibility of evidence tendered in support of the State’s case. The appeal was dismissed.
3699	non-electoral	2021	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No. 725/2020 In the matter between: CASPER JACOBUS LÖTTER N O FIRST APPELLANT JACOBUS ANDREAS DU PLESSIS N O SECOND APPELLANT JOHANNES CORNELIUS HEUNIS N O THIRD APPELLANT and MINISTER OF WATER AND SANITATION FIRST RESPONDENT MINISTER OF ENVIRONMENTAL AFFAIRS SECOND RESPONDENT DIRECTOR-GENERAL: DEPARTMENT OF WATER AND SANITATION THIRD RESPONDENT BRITZKRAAL (PTY) LTD FOURTH RESPONDENT and in the matter between: FRANCOIS GERHARDUS JOHANNES WIID FIRST APPELLANT TORQHOFF BOERDERY (PTY) LTD SECOND APPELLANT FRANCOIS GERHARDUS JOHANNES WIID N O THIRD APPELLANT REINETTE JEPPE WIID N O FOURTH APPELLANT CAREL JACOBUS VAN PLETZEN N O FIFTH APPELLANT and MINISTER OF WATER AND SANITATION FIRST RESPONDENT MINISTER OF ENVIRONMENTAL AFFAIRS SECOND RESPONDENT DIRECTOR-GENERAL: DEPARTMENT OF WATER AND SANITATION THIRD RESPONDENT GABRIEL PETRUS VILJOEN N O FOURTH RESPONDENT ANTON ANDRE STRYDOM N O FIFTH RESPONDENT ANTON STEPHANUS VILJOEN N O SIXTH RESPONDENT and in the matter between: SOUTH AFRICAN ASSOCIATION FOR WATER USER ASSOCIATIONS FIRST APPELLANT EAGLE NEST INVESTMENTS 3 CC SECOND APPELLANT THUSANO EMPOWERMENT FARM (PTY) LTD THIRD APPELLANT and MINISTER OF WATER AND SANITATION FIRST RESPONDENT DIRECTOR-GENERAL: DEPARTMENT OF WATER AND SANITATION SECOND RESPONDENT SIFISO MKHIZE N O THIRD RESPONDENT DEPUTY DIRECTOR-GENERAL: WATER SECTOR REGULATION, DEPARTMENT OF WATER AND SANITATION FOURTH RESPONDENT DEPUTY DIRECTOR-GENERAL: SPECIAL PROJECTS, DEPARTMENT OF WATER AND SANITATION FIFTH RESPONDENT Neutral citation: Lötter N O and Others v Minister of Water and Sanitation and Others (725/2020) [2021] ZASCA 159 (8 November 2021) Coram: Makgoka, Plasket, Gorven and Hughes JJA and Kgoele AJA Heard: 20 August 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email. It has also 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 8 November 2021. Summary: National Water Act 36 of 1998– interpretation of s 25 thereof – whether s 25 permits transfers of water use entitlements, with the approval of the regulatory authority, from the holder thereof to a third party – such transfers contemplated by s 25 – trading in water use entitlements – such not prohibited in the Act, and therefore, not unlawful. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mavundla, Ranchod and Mothle JJ sitting as court of first instance) 1. The appeal in each case is upheld with costs, including the costs of two counsel, to be paid by the Minister of Water and Sanitation and the Director-General of the Department of Water and Sanitation. 2. The order of the full bench in respect of each case is set aside and replaced with the following order. ‘1. It is declared that, in terms of s 25(1) of the National Water Act 36 of 1998 (the NWA), a water management institution is empowered, at the request of a person authorized in terms of the NWA to use water for irrigation: (a) to allow that person on a temporary basis, and on such conditions as the water management institution determines, to use some or all of that water for a different purpose; or (b) to allow that person to allow a third party the use of some or all of that water on another property in the same vicinity, for the same or a similar purpose. 2. It is declared that, in terms of s 25(2) of the NWA, a person holding an entitlement to use water from a water resource in respect of any land may surrender that entitlement in whole or in part: (a) in order to facilitate a licence application by the holder of the entitlement or of a third party in terms of s 41 of the NWA for the use of that water in respect of other land owned or controlled either by the holder of the entitlement or the third party; (b) that the surrender of the entitlement by the holder of the entitlement only becomes effective in the event of the licence application, in terms of s 41 of the NWA, of the holder of the entitlement or of the third party being approved by the responsible authority; (c) an agreement between the holder of an entitlement to use water and a third party, in respect of the surrender of the entitlement by the former to facilitate an application for a licence in respect thereof by the latter, in return for payment of compensation, is not prohibited. 3. In the Lötter and Wiid cases: (a) the applicants are exempted, in terms of s 7(2)(c) of the Promotion of Administrative Justice Act 3 of 2000 from having to exhaust their internal remedies; and (b) the decisions taken by the Director-General, Department of Water and Sanitation to refuse the applications of the applicants for licences in terms of s 41 of the NWA are reviewed and set aside. 4. The Minister of Water and Sanitation and the Director-General of the Department of Water and Sanitation are ordered to pay the costs of the applicants, including the costs of two counsel.’ ___________________________________________________________________ JUDGMENT Plasket JA (Gorven and Hughes JJA and Kgoele AJA concurring) [1] This appeal concerns three cases, heard together by a full bench of the Gauteng Division of the High Court, Pretoria, in which the same issues were dealt with. They are whether water use entitlements in terms of the National Water Act 36 of 1998 (the NWA) may be transferred temporarily or permanently from an entitlement-holder to another person, and whether trading in water use entitlements is permitted.1 These issues involve the interpretation of s 25 of the NWA within the broader context of the statute. [2] Section 25 of the NWA is headed ‘Transfer of water user authorisations’. It reads: ‘(1) A water management institution may, at the request of a person authorised to use water for irrigation under this Act, allow that person on a temporary basis and on such conditions as the water management institution may determine, to use some or all of that water for a different 1 An entitlement is defined in s 1 of the NWA as ‘a right to use water in terms of any provision of this Act or in terms of an instrument issued under this Act’. purpose, or to allow the use of some or all of that water on another property in the same vicinity for the same or a similar purpose. (2) A person holding an entitlement to use water from a water resource in respect of any land may surrender that entitlement or part of that entitlement – (a) in order to facilitate a particular licence application under section 41 for the use of water from the same resource in respect of other land; and (b) on condition that the surrender only becomes effective if and when such application is granted. (3) The annual report of a water management institution or a responsible authority, as the case may be, must, in addition to any other information required under this Act, contain details in respect of every permission granted under subsection (1) or every application granted under subsection (2).’ [3] In what follows, I shall first set out the facts of each of the three cases. I will then consider the judgment of the full bench and its reasoning. Thereafter I will discuss the terms of the NWA in general. When that has been done, I will turn to the core issues that arise in this appeal: I will interpret s 25(1) and s 25(2) of the NWA and answer the question whether trading in water use entitlements is prohibited. Finally, I will make the orders that flow from my findings on the issues that I have identified. The cases [4] In the Lötter matter, the Doornkraal Business Trust (Doornkraal), the owner of farms in the Somerset East district of the Eastern Cape, had concluded an agreement with Britzkraal Properties (Pty) Ltd (Britzkraal) in terms of which Doornkraal purchased 30 hectares of Britzkraal’s water use entitlement for a price of R1 950 000. The parties declared in their agreement that they were aware that the approval of the regulatory authority was necessary and made that approval a suspensive condition. [5] Pursuant to the agreement, and in terms of s 25(2) of the NWA, Britzkraal surrendered its water use entitlement and Doornkraal applied for a licence in respect of that water use entitlement in terms of s 41 of the NWA. To this end, Doornkraal furnished a detailed motivation that dealt with each of the relevant considerations for the grant of a licence listed in s 27(1) of the NWA. [6] The motivation explained that while the property concerned had existing water use entitlements, Doornkraal required more water because it wished to expand its dairy farming operation. It stated that its proposed water use would thus form part of its ‘integrated farming concern’. In respect of the likely effect of the water use on the water resource and other water users, Doornkraal said that no other authorized water user would be affected if the licence was granted. [7] The Director-General of the Department of Water and Sanitation – the responsible authority for purposes of s 41 – refused Doornkraal’s application. He did so, according to his letter to Doornkraal of 16 January 2018, for the following reason: ‘Kindly note that Section 25(2) of the National Water Act (Act 36 of 1998) does not make provision for the transfer of a water use entitlement from one person to another. A person who holds an entitlement may only surrender part or all of his/her entitlement to facilitate a water use licence application to use of water from the same resource in respect of other land that belongs to that person. The National Water Act therefore does not make provision for the trading or transferring of water use entitlements between two separate legal entities.’ [8] Doornkraal’s trustees then launched an application in the Gauteng Division of the High Court, Pretoria for a declarator as to the meaning and effect of s 25(2) of the NWA and for the review and setting aside of the Director-General’s decision to refuse the licence application. [9] The Wiid matter was similar. It concerned three agreements between Mr Wiid, Torqhoff Boerdery (Pty) Ltd and the trustees of the De Kalk Trust, on the one hand, and the GP Viljoen Trust, on the other. In terms of these agreements, the GP Viljoen Trust undertook to surrender its water use entitlements so that the other contracting parties could apply for licences in respect of those entitlements. The purpose of the transfer was to enhance the combined crop farming operation of Mr Wiid, Torqhoff Boerdery and the De Kalk Trust in the Hopetown District of the Northern Cape. [10] In the first agreement, the GP Viljoen Trust agreed to surrender its entitlement to 888 999m3 of water use to Mr Wiid for a consideration of R5 920 000; in the second, it agreed to surrender its entitlement to 2 312 000m3 of water use to Torqhoff Boerdery for a consideration of R15 413 333; and in the third, it agreed to surrender its entitlement to 222 000m3 of water use to the De Kalk Trust for a consideration of R2 666 667. [11] Pursuant to these agreements, the GP Viljoen Trust surrendered its water use entitlements in terms of s 25(2) of the NWA and Mr Wiid, Torqhoff Boerdery and the De Kalk Trust applied for licences in respect of those entitlements in terms of s 41 of the NWA. They furnished a detailed motivation that dealt with each of the relevant considerations for the grant of a licence in terms of s 27(1) of the NWA. [12] In his founding affidavit, Mr Wiid explained that the three applicants had previously leased the water use for which they had applied for licences. As with the Lötter matter, the motivation stated that the granting of the licence applications would have no effect on other authorized water users. [13] As with the Lötter matter, the Director-General refused all three applications. He did so for the same reason: s 25(2) of the NWA did not allow for the transfer of water use entitlements from one person to another, and that trading in water rights was not permitted. As a result, Mr Wiid, in his personal capacity, Torqhoff Boerdery and the trustees of De Kalk Trust applied to the Gauteng Division of the High Court, Pretoria for a declarator in respect of the meaning and effect of s 25(2) and for the review and setting aside of the decisions to refuse the licence applications. [14] The third case – the South African Association for Water User Associations matter (the SAAWUA matter) – differs to an extent from Lötter and Wiid. SAAWUA, a voluntary association of 77 Water User Associations and Irrigation Boards, as well as Eagle’s Nest Investments 3 CC and Thusano Empowerment Farm (Pty) Ltd, applied to the Gauteng Division of the High Court, Pretoria, for a declarator in respect of the meaning and effect of both s 25(1) and s 25(2) of the NWA. SAAWUA applied for this relief in its own interest, on behalf of its members and in the public interest. Eagle’s Nest and Thusano did so after applications that they had made for transfers of water use entitlements had been refused on the same basis as in Lötter and Wiid. [15] In its founding affidavit, SAAWUA explained the background to, and the purpose of, the case, and that of the other two applicants, as follows: ’16 The purpose of this application is to bring clarity and certainty, by way of declaratory orders, with regard to the proper scope, ambit, meaning and interpretation of section 25(1) and of section 25(2) of the NWA. In a nutshell the legal issue between the Applicants and the State Respondents is simply whether the provisions of section 25 of the NWA can be used by a person already holding a water use entitlement under or in terms of the NWA for a transfer of that water use entitlement only to him- or herself but not to another person or a third party. (Underlining in the original text.) Before 19 January 2016 there was no dispute or question concerning the scope and ambit of section 25 of the NWA and the permissibility of a transfer of water use entitlement . . . to another person or a third party in terms of the provisions thereof, and section 25 of the NWA was regularly and constantly used and implemented in practice over the period from 1 October 1998 (the date of commencement of the NWA) up to 19 January 2018 (the date of issue of the Legal Services Circular No 1 of 2017 . . .) to effect such transfers of water use entitlements. However, on 19 January 2018 and by way of the issue of the Legal Services Circular No 1 of 2017 . . . the State Respondents adopted the stance that, upon their interpretation, section 25 of the NWA does not make provision for the transfer of a water use entitlement from one person to another and that the NWA does not contemplate a “trading of water” between private parties or the transfer of water use entitlements between private individuals.’ [16] The full bench dismissed all three applications but granted leave to appeal to this court. It is to the judgment of the full bench that I now turn. The judgment of the court below [17] The full bench identified the issues for decision as being the interpretation of s 25 of the NWA, particularly whether it permitted transfers of water use entitlements from a holder to a third party, and whether ‘the Act permits the sale of, or trade in the water use entitlement, through the transfer or surrender thereof to a third party’. [18] It held that while s 25 made no express mention of a third party to whom a water use entitlement could be transferred, the section was capable of either a wide or a narrow meaning: either that it permitted transfers of water use entitlements from one person to another; or that it limited transfers to the transfer of water use entitlements from one property owned or controlled by a holder of a water use entitlement to another property owned or controlled by the same person. [19] This debate, the full bench held, was in truth of ‘no moment’ because the real issue in dispute between the parties was ‘the question of water trading’. The dispute concerning the interpretation of s 25 was ‘a collateral issue that is merely the means to justify the real dispute, which is whether or not it is still permissible for a holder of a water use entitlement to trade in or sell it, as previously authorised by Circular no 18 of 2001’.2 [20] The full bench proceeded to say that the contention advanced by the appellants concerning the meaning of s 25 was ‘intended to justify water trading’ but ‘water trading is no longer permissible, for a variety of reasons based on the purposes outlined in section 2 of the Act’. It then proceeded to set out three reasons why it came to that conclusion. [21] The first reason given for why the transfer of water use entitlements was no longer permitted was that their transfer would enable holders of water use entitlements to ‘continue to identify and choose who the recipients of the transferred or surrendered entitlement should be’. The NWA does not make provision for that but instead it ‘empowers the water institutions to receive the request for transfers and surrender of the water use entitlements’. [22] The second reason given was that ‘there is no authority in the Act, permitting holders of the entitlements to sell their entitlements’. Allowing that to take place would result in the ‘privatisation of a national resource to which all persons must have access’. With reference to the Minister’s obligations in terms of s 3 of the NWA to ensure that ‘water is allocated equitably and used beneficially in the public (not private) 2 Circular no. 18 of 2001, issued by the Director-General of the Department contained his interpretation of s 25 at the time. That interpretation in respect of s 25(2) was to the effect that water use rights could be ‘traded to a willing buyer on the same scheme or even outside the scheme if such trading can be facilitated in terms of section 25 of the NWA’. The full bench was not correct when it said that the circular authorised trading in water use entitlements. It is no more than the Director-General’s understanding, at the time, of what s 25 meant. As explained above in the SAAWUA matter, the Director-General now takes the view, expressed in Circular No 1 of 2017, that s 25 means something else. interest’, the full bench said that the courts ‘cannot accept a construction of s 25 of the Act which impedes the Minister from discharging this obligation’. [23] The third reason given was that the ‘sale of water use entitlements by the holders thereof in private agreements, discriminates against those who cannot afford the prices of compensation unilaterally determined by the holder’. Such a system maintains a ‘monopoly of access to water resources only to established farmers who are financially well resourced’; and the sale of water use entitlements would ‘frustrate equal access and keep historically disadvantaged persons out of the agricultural industry’. [24] The full bench concluded: ‘For reasons stated above, I find that on a proper construction of section 25 of the Act, the words ‘another property in the vicinity’ and ‘other land’ could mean either as owned by the holder of the water use entitlement, or by another person or third party. I further find that water trade or sale of water use entitlements is unlawful as it offends s 2 of the Act, and is inconsistent with the spirit, purport and objects of the Bill of Rights in the Constitution.’ [25] In the result, the full bench dismissed the appellants’ applications for declarators as to the meaning of s 25 of the NWA, without even interpreting it, because the objective of the applications was, it held, ‘to justify water trade’. The applications to review and set aside the decisions to refuse transfers of water use entitlements in Lötter and Wiid were also dismissed. The NWA [26] Given South Africa’s generally arid nature and susceptibility to droughts, it is not surprising that from prior to Union in 1910, successive governments have recognised the public interest in the proper and efficient use of water, and have regulated its use. The NWA repealed and replaced the Water Act 54 of 1956. In so doing, Leach JA observed in S v Mostert and Another,3 it ‘fundamentally reformed South African water law’. It did so by abolishing the common-law distinction between public and private water as a basis for use entitlements. Instead, the national 3 S v Mostert and Another [2009] ZASCA 171; 2010 (2) SA 586 (SCA) para 10. government ‘was granted the overall responsibility for and authority over the country’s water resources and their use’. In this framework, the Minister of Water and Sanitation acts on behalf of the national government as the ‘public trustee of the nation’s water resources’. [27] The long title of the NWA gives notice of its transformatory aims. It provides that the NWA is to ‘provide for fundamental reform of the law relating to water resources; to repeal certain laws; and to provide for matters connected therewith’. [28] The preamble recognizes a number of fundamentals. They are that: water is a ‘scarce and unevenly distributed national resource’ occurring in ‘many different forms which are all part of a unitary, inter-dependent cycle’; while the resource ‘belongs to all people, the discriminatory laws and practices of the past have prevented equal access to water, and use of water resources’; the aim of managing this resource ‘is to achieve the sustainable use of water for the benefit of all users’; the protection of the quality of this resource is ‘necessary to ensure sustainability of the nation’s water resources in the interests of all water users’; and the need for ‘the integrated management of all aspects of water resources’. The preamble acknowledges that the national government should have ‘overall responsibility for and authority over the nation’s water resources and their use, including the equitable allocation of water for beneficial use, the redistribution of water, and international water matters’. [29] Section 2 sets out the purposes of the NWA. It provides: ‘The purpose of this Act is to ensure that the nation's water resources are protected, used, developed, conserved, managed and controlled in ways which take into account amongst other factors- (a) meeting the basic human needs of present and future generations; (b) promoting equitable access to water; (c) redressing the results of past racial and gender discrimination; (d) promoting the efficient, sustainable and beneficial use of water in the public interest; (e) facilitating social and economic development; (f) providing for growing demand for water use; (g) protecting aquatic and associated ecosystems and their biological diversity; (h) reducing and preventing pollution and degradation of water resources; (i) meeting international obligations; (j) promoting dam safety; (k) managing floods and droughts, and for achieving this purpose, to establish suitable institutions and to ensure that they have appropriate community, racial and gender representation.’ [30] Section 3 creates the public trusteeship of water resources. It does so in the following terms: ‘(1) As the public trustee of the nation's water resources the National Government, acting through the Minister, must ensure that water is protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all persons and in accordance with its constitutional mandate. (2) Without limiting subsection (1), the Minister is ultimately responsible to ensure that water is allocated equitably and used beneficially in the public interest, while promoting environmental values. (3) The National Government, acting through the Minister, has the power to regulate the use, flow and control of all water in the Republic.’ [31] Section 4 is headed ‘Entitlement to water use’. It provides: ‘(1) A person may use water in or from a water resource for purposes such as reasonable domestic use, domestic gardening, animal watering, fire fighting and recreational use, as set out in Schedule 1. (2) A person may continue with an existing lawful water use in accordance with section 34. (3) A person may use water in terms of a general authorisation or licence under this Act. (4) Any entitlement granted to a person by or under this Act replaces any right to use water which that person might otherwise have been able to enjoy or enforce under any other law- (a) to take or use water; (b) to obstruct or divert a flow of water; (c) to affect the quality of any water; (d) to receive any particular flow of water; (e) to receive a flow of water of any particular quality; or (f) to construct, operate or maintain any waterwork.’ [32] The NWA contemplates lawful water use either with or without a licence. A licence is not necessary if the use is for a purpose set out in Schedule 1,4 if the user enjoys an existing lawful water use in terms of s 34,5 if a general authorization is issued in terms of s 396 or if the responsible authority has otherwise dispensed with a licence requirement.7 In any other instance, a person who wishes to use water must have a licence to do so in terms of the NWA.8 [33] Section 26 grants to the Minister the power to make regulations on a wide range of topics such as, for example, ‘limiting or restricting the purpose, manner or extent of water use’9 and ‘requiring that the use of water from a water resource be monitored, measured and recorded’.10 Section 26(1)(l) empowers the Minister to make regulations: ‘relating to transactions in respect of authorisations to use water, including but not limited to – (i) the circumstances under which a transaction may be permitted; (ii) the conditions subject to which a transaction may take place; and (iii) the procedure to deal with a transaction.’ [34] Section 27(1) sets out factors that are relevant when considering general authorisations under s 39 and licences under s 40. The section provides: ‘In issuing a general authorisation or licence a responsible authority must take into account all relevant factors, including – (a) existing lawful water uses; (b) the need to redress the results of past racial and gender discrimination; (c) efficient and beneficial use of water in the public interest; (d) the socio-economic impact- (i) of the water use or uses if authorised; or 4 Schedule 1 allows, for instance, for reasonable domestic use of water in a person’s household, for small gardening not for commercial purposes and in cases of emergency, either for human consumption or fire-fighting. 5 Section 32 defines an existing lawful water use as a water use that had been in existence for at least two years before the NWA came into operation and which, inter alia, was authorized by a law in force immediately before the commencement of the NWA. 6 Section 39 allows for the issuing of a general authorisation for a specific geographical area either generally, in relation to a specific water resource or within a specified area. 7 It may do so, in terms of s 22(1)(c) read with s 22(3) ‘if it is satisfied that the purpose of the Act will be met by the grant of a licence, permit or other authorization under any other law’. 8 Section 22(1)(b). 9 Section 26(1)(a). 10 Section 26(1)(b). (ii) of the failure to authorise the water use or uses; (e) any catchment management strategy applicable to the relevant water resource; (f) the likely effect of the water use to be authorised on the water resource and on other water users; (g) the class and the resource quality objectives of the water resource; (h) investments already made and to be made by the water user in respect of the water use in question; (i) the strategic importance of the water use to be authorised; (j) the quality of water in the water resource which may be required for the Reserve and for meeting international obligations; and (k) the probable duration of any undertaking for which a water use is to be authorised.’ [35] The effect of s 27(1) on decision-making in terms of the NWA was discussed by this court in Makhanya NO and Another v Goede Wellington Boerdery (Pty) Ltd.11 The court stated: ‘The Constitutional Court has previously had occasion to address administrative decision- making where the official is faced with a number of considerations of which racial redress is one. Much like the situation facing the court in Bato Star, s 27(1)(b) contains a wide number of objectives and principles. Some of them may be in conflict with one another, as they cannot all be fully achieved simultaneously. There may also be many different ways in which each of the objectives stand to be achieved. The section does not give clear guidance on how the balance an official must strike is to be achieved in doing the counterweighing exercise that is required. As opposed to the legislative scheme before the court in Bato Star, there is no indication in the Act that s 27(1)(b) is to be regarded as in any way more important than the other factors.’ 12 [36] Section 28(1) lists the essential requirements that a licence must specify. They are: ‘(a) the water use or uses for which it is issued; (b) the property or area in respect of which it is issued; 11 Makhanya NO and Another v Goede Wellington Boerdery (Pty) Ltd [2012] ZASCA 205; [2012] 1 All SA 526 (SCA). See too Guguletto Family Trust v Chief Director, Water Use, Department of Water Affairs and Forestry and Another, North Gauteng, Pretoria (case no. A566/10) 25 October 2011 (unreported) para 22. 12 Para 33. (c) the person to whom it is issued; (d) the conditions subject to which it is issued; (e) the licence period, which may not exceed forty years; and (f) the review periods during which the licence may be reviewed under section 49, which must be at intervals of not more than five years.’ [37] Section 29 allows for conditions to be attached to licences. In terms of s 29(1), these conditions may relate to such matters as: the protection of the water source concerned, the stream flow regime and other existing or potential users;13 water management, specifically in respect of management practices and requirements for water use, as well as monitoring, analysis and reporting requirements;14 and return flow and discharge or disposal of waste.15 Section 29(2) provides that if ‘a licensee has agreed to pay compensation to another person in terms of any arrangement to use water, the responsible authority may make the obligation to pay compensation a condition of the licence’. [38] Section 40 concerns applications for water-use licences. Section 40(1) states that a person ‘who is required or wishes to obtain a licence to use water must apply to the relevant responsible authority for a licence’. Section 41 sets out detailed procedures relating to applications for licences. Section 41(1) requires applications to be made on the prescribed form, contain information determined by the responsible authority and be accompanied by the prescribed fee. The remainder of the section deals with the extensive powers granted to the responsible authority to obtain additional information and investigate relevant issues. For instance, s 41(2) provides: ‘A responsible authority – (a) may, to the extent that it is reasonable to do so, require the applicant, at the applicant's expense, to obtain and provide it by a given date with- (i) other information, in addition to the information contained in the application; (ii) an assessment by a competent person of the likely effect of the proposed licence on the resource quality; and 13 Section 29(1)(a). 14 Section 29(1)(b). 15 Section 29(1)(c). (iii) an independent review of the assessment furnished in terms of subparagraph (ii), by a person acceptable to the responsible authority; (b) may conduct its own investigation on the likely effect of the proposed licence on the protection, use, development, conservation, management and control of the water resource; (c) may invite written comments from any organ of state which or person who has an interest in the matter; and (d) must afford the applicant an opportunity to make representations on any aspect of the licence application.’ [39] Section 41(4) ensures that applications for licences are not concluded in secret. It provides: ‘A responsible authority may, at any stage of the application process, require the applicant – (a) to give suitable notice in newspapers and other media – (i) describing the licence applied for; (ii) stating that written objections may be lodged against the application before a specified date, which must be not less than 60 days after the last publication of the notice; (iii) giving an address where written objections must be lodged; and (iv) containing such other particulars as the responsible authority may require; (b) to take such other steps as it may direct to bring the application to the attention of relevant organs of state, interested persons and the general public; and (c) to satisfy the responsible authority that the interests of any other person having an interest in the land will not be adversely affected.’ [40] Section 42 places an obligation on a responsible authority who has taken a decision on a licence application to notify the applicant and any objectors of the decision taken and, on the request of either the applicant or an objector, to furnish written reasons for the decision. [41] I have endeavoured to provide both an outline of the regulatory system that is created by the NWA, as it applies in this case, and an overview of its most important provisions relevant to the issues before us. I turn now to the interpretation of s 25. The interpretation of s 25 of the NWA [42] The full bench appears to have dismissed the applications for the declarators on the basis of some or other unexplained abuse of process on the part of the appellants. It ought not to have done so and misdirected itself as a result. More importantly, in so doing, it failed to answer the first question that was before it, namely whether s 25 of the NWA allowed for the transfer of water use entitlements from one person to another. It is only when that question has been answered that the second question can be answered, namely whether, if transfers of water use entitlements are envisaged by the NWA, contractual arrangements may be put in place by parties for the effectual sale or leasing of water use entitlements. [43] The correct approach to the interpretation of written documents, be they statutes or contracts, was set out authoritatively by this court in Natal Joint Municipal Pension Fund v Endumeni Municipality.16 Essentially, what is required is an objective, unitary exercise that takes into account the language used, the context in which it is used and the purpose of the document concerned. Unterhalter AJA, in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others,17 added the following:18 ‘I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined. As Endumeni emphasized, citing well-known cases, “[t]he inevitable point of departure is the language of the provision itself”.’ [44] I commence with the words used. Section 25(1) envisages two separate situations. The first does not involve a transfer of the entitlement but the second does. In the first part of s 25(1), a water management institution is empowered, at the request 16 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. 17 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] (3) All SA 647 (SCA). 18 Para 25. of a person entitled to use water for irrigation, to allow that person to use that water, temporarily, for a different purpose. No third party involvement arises in this instance. [45] In the second part of s 25(1), however, a water management institution is empowered to allow the entitlement-holder, on a temporary basis, ‘to allow the use of some or all of that water on another property in the same vicinity for the same or a similar purpose’. This contemplates a transfer from the entitlement-holder to a third party. If the intention had been only to allow the entitlement-holder to temporarily use their own water on a second property owned or controlled by them, the section would not have spoken of the water management institution allowing the entitlement-holder to allow that use. The section would simply have said that the water management institution ‘may allow a person authorised to use water for irrigation to use some or all of that water on another property in the same vicinity for the same or a similar purpose’. [46] The first use of the word ‘allow’ in s 25(1) has reference to who the water management institution may ‘allow’, or authorise, namely the entitlement-holder. The second use of the word refers to what the entitlement-holder may allow, namely the use of the water on another property in the vicinity of their own property. That second use of the word ‘allow’ cannot refer to a temporary transfer of water use from one property to another owned or controlled by the entitlement holder. It makes no sense to seek the water management institution’s approval for the entitlement-holder to allow themself to use the water on another of their own properties. [47] Section 25 deals, according to its heading, with transfers of water use authorisations. If, in s 25(1), the temporary transfer of water use entitlements includes transfers to third parties, I cannot see any basis for the same not applying to the mechanism for permanent transfers created by s 25(2), namely surrender and application. It would be incongruous if the transfer of water use entitlements bore such divergent meanings in s 25(1) and s 25(2), particularly in the light of the assumption that when a word is used in legislation, it bears the same meaning wherever it appears.19 Section 25(2) creates the mechanism for a permanent transfer of water use 19 S v Dlamini; S v Dladla and Others; S v Joubert; S v Schietekat [1999] ZACC 8; 1999 (4) SA 623 (CC); 1999 (7) BCLR 771 (CC) para 47. See too L C Steyn Die Uitleg van Wette (5 ed) (1981) at 126. entitlements. One party – the entitlement-holder – conditionally surrenders their entitlement, while the other party – the prospective entitlement-holder – applies for the licence. And if the licence application is not approved by the responsible authority, the surrender ceases to have effect. The effect of s 25(2) was described thus by Pretorius J in Trustees for the Time Being of the Lucas Scheepers Trust and Others v MEC for the Department of Water Affairs, Gauteng and Others:20 ‘Although parties can agree that the water entitlement of one user may be used by another farmer on another farm, section 25(2)(b) sets out clearly that where one party surrenders his entitlement for use of water from the same source in respect of other land, it only becomes effective if and when an application is granted. A mere agreement between the parties, as in this instance, does not suffice.’ [48] Section 25 does not stand alone. It must be viewed within the broader context of the statute of which it is part. There are two strong indications, in s 26 and s 29, that support the meaning that I have given above. Section 26(1)(l) empowers the Minister to make regulations ‘relating to transactions in respect of authorisations to use water’, the precise subject-matter of s 25. The Concise Oxford English Dictionary defines ‘transaction’ to mean ‘an instance of buying or selling’; ‘the action of conducting business’; ‘an exchange or interaction between people’. Each of these meanings contemplates two parties at least being involved. One does not transact with oneself. (Where the word ‘transfer’ is used in other sections, albeit in different contexts from the transfer of water use entitlements, a transfer from one person to another is clearly contemplated.21) [49] Secondly, s 29 authorises the attaching of conditions to licences. Section 29(2) provides that one such condition may be the payment of compensation, where there has been an agreement to this effect ‘in terms of any arrangements to use water’. The payment of compensation must envisage a quid pro quo payable by one person to another in respect of a water use transaction; and that in turn can only refer to a transaction involving the transfer of water use entitlements pursuant to s 25. In Ramah 20 Trustees for the Time Being of the Lucas Scheepers Trust and Others v MEC for the Department of Water Affairs, Gauteng and Others [2015] ZAGPPHC 211 para 22. 21 See s 89 (transfer of assets and liabilities of catchment management agencies); s 115 (transfer, sale or other disposal of government waterworks); s 135 (transfer by a water management institution of rights held in respect of improvements on land belonging to another person); and s 136 (transfer of personal servitudes held by the Minister or a water management institution). Farming v Great Fish River Water Users Association and Others22 Griffiths J said the following with regard to the effect of s 29(2) on the meaning of s 25(2): ‘This subsection appears to acknowledge that it is lawful in terms of the Act to enter into a private law transaction relating to the use of water with another person and that, when this is done, it is in order for such an arrangement to include the payment of compensation. It seems to me that the provisions of subsection 29(2) dovetail with those of subsection 25(2). The “licensee” mentioned in subsection 29(2) can only refer to a party who has been successful in obtaining a licence, who would typically be the applicant in the licence application referred to in subsection 25(2)(a). The “another” referred to in subsection 29(2) can only be the holder of a water use entitlement which qualified to form the basis of an arrangement which entailed that the successful licensee could use the water in return for payment of compensation. Typically, this would be the surrendering party referred to in subsection 25(2).’ I agree with Griffiths J’s analysis. On its own, s 29(2) is a compellingly strong indication that the transfer of water use entitlements from one person to another is contemplated by s 25(2). [50] I turn now to consider whether the interpretation that has emerged so far is consistent with the purposes of the NWA. One of the purposes of the NWA set out in s 2 is that of ‘promoting the efficient, sustainable and beneficial use of water in the public interest’;23 while another is facilitating economic development.24 In terms of s 3(2), the Minister is placed under a duty to ensure that water is used beneficially. And, in terms of s 27(1), when a decision is taken on whether to grant or refuse a licence, the responsible authority must give consideration to ‘the efficient and beneficial use of water in the public interest’. The interpretation of s 25 that allows for transfers of water use entitlements from one person to another is, it seems to me, in harmony with these provisions, speaking to the efficient and beneficial use of water, in particular, and of economic development. When a water use entitlement has been made, the person to whom it was granted should use it optimally. If they cannot or no longer wish to, or have excess water to their needs, rather than that water going to waste, as it were, a transfer to someone else who is going to use it beneficially contributes to the attainment of the purposes of the NWA. 22 Ramah Farming v Great Fish River Water Users Association 2021 (2) SA 547 (ECG) para 30. 23 Section 2(d). 24 Section 2(e). [51] Two final points need to be made. The first is that the 1997 White Paper on a National Water Policy that preceded and informed the content of the NWA had stated that while, in the new legislation, water use allocations would no longer be permanent as in the past,25 provision would be made to ‘enable transfer or trade of these rights between users, with Ministerial consent’. The second point is connected. It is that the transfer of rights similar to water use entitlements, where the regulation of those rights involves the public interest, is common-place and has been for years. Mining rights,26 commercial fishing rights,27 the right to trade in liquor28 and rights to engage in road transportation,29 to name a few, are all transferable from one party to another with the consent of the regulatory authority. There is, in other words, nothing jarring about an interpretation that s 25 of the NWA allows for the transfer of water use entitlements with the approval of the responsible authority. Such an interpretation is consistent with comparable regulatory schemes. [52] It is evident from the above that both s 25(1) and s 25(2) contemplate and allow for the transfer of water use entitlements, temporarily and permanently respectively, from a holder to a third party. I shall, at the conclusion of this judgment make declaratory orders to this effect. I turn now to the closely related issue of whether the trade in water use entitlements is lawful or not. May people trade in water? [53] In considering whether people could trade water use entitlements, the full bench’s starting point was to pose the question whether the NWA ‘permits the sale of, or transfer in the water use entitlements’. It then answered this question by holding that ‘there is no authority in the Act permitting holders of entitlements to sell their entitlements’. 25 See s 28(1)(e) which provides that a licence must specify ‘the licence period, which may not exceed 40 years’. 26 Mineral and Petroleum Resources Development Act 28 of 2002, s 11. Note that the scheme of this legislation is strikingly similar to the NWA in the following senses. First, s 3 vests custodianship of the country’s minerals and petroleum products in the State. Secondly, the transformatory objects of this legislation, also set out in s 2, are similar to those of the NWA. 27 Marine Living Resources Act 18 of 1998, s 52. Once again, s 2 of this Act contains transformatory objects that are similar to those of the NWA. 28 Liquor Act 27 of 1989, s 113; Liquor Act 59 of 2003, s 15. 29 National Land Transport Act 5 of 2009, s 58. For a discussion of the transferability of road transportation permits in terms of previous legislation, the Road Transportation Act 74 of 1977, see Plasket ‘The Proprietary Nature of Road Transportation Permits’ 1985 De Rebus 619. [54] The full bench’s approach was erroneous. It asked itself the wrong question and appears to have conflated the way in which the law regulates the conduct of public bodies, on the one hand, and private individuals, on the other. The true distinction was drawn thus by Laws J in R v Somerset County Council, ex parte Fewings and Others:30 ‘Public bodies and private persons are both subject to the rule of law; nothing could be more elementary. But the principles which govern their relationships with the law are wholly different. For private persons, the rule is that you may do anything you choose which the law does not prohibit. It means that the freedoms of private citizens are not conditional upon some distinct and affirmative justification for which he must burrow in the law books. Such a notion would be anathema to our English legal traditions. But for public bodies the rule is opposite, and so of another character altogether. It is that any action to be taken must be justified by positive law.’ [55] The idea that a private individual may do anything that the law does not forbid fits with another important freedom. It is the freedom of contract, which ‘entails a general freedom to choose whether or not to contract, with whom to contract, and on what terms to contract’.31 Public policy ‘generally favours the utmost freedom of contract’.32 [56] In Fick v Woolcott and Ohlsson’s Cape Breweries Ltd,33 the nature of a liquor licence and its transferability was in issue. Innes J described a liquor licence as a ‘privilege granted to a particular person to sell liquor at a particular place’; and that this ‘privilege’ is personal to the licensee in the sense that ‘it involves the exercise by the authorities of a delectus personae, so that he would have no power to assign his licence, were there no statutory provision for its transfer’.34 He proceeded to consider 30 R v Somerset County Council, ex parte Fewings and Others [1995] 1 All ER 513 (QB) at 524e-g. See too Clur v Keil and Others 2012 (3) SA 50 (ECG) para 15; John Dugard Human Rights and the South African Legal Order (1978) at 107-108; Lord Lester of Herne Hill QC and Lydia Clapinska ‘Human Rights and the British Constitution’ in Jeffrey Jowell and Dawn Oliver (eds) The Changing Constitution (5 ed) (2004) 62 at 63; Stanley De Smith and Rodney Brazier Constitutional and Administrative Law (7 ed) (1994) at 457. 31 Francois du Bois (ed) Wille’s Principles of South African Law (9 ed) (2007) at 737. 32 Botha (now Griessel) and Another v Finanscredit (Pty) Ltd 1989 (3) SA 773 (A) at 783A. 33 Fick v Woolcott and Ohlsson’s Cape Breweries Ltd 1911 AD 214. 34 At 230. It is now accepted that such a licence, and the water use entitlements with which this case is concerned, are regarded by the law as rights, not privileges; and that these types of authorisations are regarded as a form of property, having a commercial value. See generally, C A Reich ‘The New Property’ (1964) 73 Yale Law Journal 733; Plasket (note 29) at 619-620. the transfer of the licence and the nature of agreement between the licensee and a third party. He held:35 ‘And the law provides that the transfer of a licence can only be effected by the authority which sanctioned its issue. Contractual undertakings on the part of a holder to transfer his licence to some other person on the happening of certain contingencies are of frequent occurrence. But the expression, though convenient, is inaccurate. No holder can transfer his licence; that is the sole prerogative of the Licensing Court. So that the only way to give any effect to such an undertaking is to treat it as an agreement by the promisor to exercise in favour of the promisee such right to apply for a transfer as the statute gives him, and to do all things necessary on his part to enable the Licensing Court to deal with the application. And that is what, in my opinion, an agreement to transfer a licence amounts to.’ [57] The full bench appears to have decided that all agreements in which water use entitlements are transferred are contrary to public policy. I am of the view that it erred in this respect, for the following reasons. [58] It held that trading in water use entitlements was contrary to s 2 – the purposes of the NWA. Quite what those purposes were that were in conflict with trading in water use entitlements were not specified, and neither was any reference made to any evidence in this regard. It assumed that trading in water use entitlements was discriminatory but did not support this conclusion with any evidence. This assertion appeared to be based on the idea that many people could not afford to pay the commercial value of water use. I do not understand how this economic reality can amount to discrimination. [59] The full bench ignored the regulatory framework that the NWA put in place to ensure that transfers of water use entitlements did not have such effects. That is precisely why no transfer of a water use entitlement may occur without the approval of the responsible authority, after they have considered and weighed all the considerations relevant to the decision in terms of s 27(1). In this way, the purposes of the NWA are safeguarded and the public interest is furthered. Put otherwise, if a particular application for transfer is indeed offensive to one or more of the purposes of 35 At 230. See too Aquatur (Pty) Ltd v Sacks 1989 (1) SA 56 (A) at 64G-65D; Shoprite Checkers (Pty) Ltd v MEC for Economic Development, Eastern Cape and Others [2015] ZACC 23; 2015 (6) SA 125 (CC); 2015 (9) BCLR 1052 (CC) paras 67-68. the NWA, the responsible authority will not grant its approval for the transfer. That, it seems to me, is a complete answer to the full bench’s objections to people trading in water use entitlements. [60] The full bench also appeared to labour under a misapprehension as to the effect of water use transactions. Those transactions do not have the exclusionary effect suggested by it because the water in issue has been allocated in terms of the NWA. The right to use that particular water was granted to the entitlement-holder in terms of the NWA, after the responsible authority applied their mind to the criteria listed in s 27(1). When the entitlement-holder surrenders the entitlement to facilitate a transfer application, the entitlement goes to the transferee, if the transfer is approved by the responsible authority, or remains with the entitlement-holder if the transfer is not approved. At no stage in the process is the water use entitlement available for allocation to anyone else. No water becomes available for re-distribution. As a result, the transaction, whether successful or not, deprives no-one of access to water. [61] For the above reasons, I conclude that the full bench erred in finding that trading in water use entitlements is unlawful. Exhaustion of internal remedies [62] A decision to grant or refuse a licence is an administrative action as defined in the Promotion of Administrative Justice Act 3 of 2000 (the PAJA).36 Section 7(2)(a) of the PAJA requires the exhaustion of any internal remedy that is provided for prior to a person applying to court for the review of an administrative action. In terms of s 7(2)(c), however, a court may exempt a person from the obligation to exhaust an internal remedy in exceptional circumstances in the interest of justice. [63] Both the Lötter and the Wiid cases involved applications for the review and setting aside of refusals by the Director-General to grant the transfer of licences, in addition to the declarators that were sought as to the meaning of s 25 of the NWA. In neither case was the internal remedy of an appeal to a Water Tribunal exhausted. In both cases, exemption from that obligation was sought. 36 Makhanya NO and Another v Goede Wellington Boerdery (Pty) Ltd (note 11). [64] The full bench only granted exemption in respect of the applications for declaratory orders, and not in respect of the review and setting aside of the decisions made, on the version of the applicants in Lötter and Wiid, on the basis of the incorrect interpretation of s 25 of the NWA. The reason for the full bench to draw this distinction is, with respect, opaque. [65] All of the parties were of the view that the issues involved, being quintessentially legal in nature, and that what was required was a definitive, binding interpretation of s 25 of the NWA by a court. It was equally clear that dealing with these issues in a Water Tribunal would only waste time and would not produce a definitive, binding determination of the meaning of the section. It is evident that when a long-standing, universally accepted interpretation of a statutory provision is suddenly interpreted differently, 20 years into the life of the statute, with far-reaching social and economic consequences for a large number of people throughout the country, exceptional circumstances arise; and the interests of justice require a court to be engaged as soon as reasonably possible to resolve the dispute. In the light of the close connection between the declaratory relief sought and the setting aside of the impugned decisions, the full bench erred in failing to grant unconditional exemptions from the obligation to exhaust internal remedies. Conclusion [66] In the result, all three appeals must succeed. The orders made by the full bench will have to be set aside. In their place, a declarator in respect of the meaning of s 25 of the NWA will be made in all three cases, and the decisions made by the Director- General on the basis of his erroneous interpretation of s 25 will be reviewed and set aside as those decisions were materially influenced by an error of law. The full bench’s orders granting partial exemptions in terms of s 7(2) of the PAJA will be replaced with orders granting exemptions in unrestricted terms. [67] With regard to costs, only the Minister of Water and Sanitation and the Director- General of the Department of Water and Sanitation opposed the applications in the high court and this appeal. They should be ordered to pay the appellants’ costs in both courts. [68] In the light of the similarities in the three cases, I shall make a composite order which will refer to specific cases when necessary. I accordingly make the following order: 1. The appeal in each case is upheld with costs, including the costs of two counsel, to be paid by the Minister of Water and Sanitation and the Director-General of the Department of Water and Sanitation. 2. The order of the full bench in respect of each case is set aside and replaced with the following order. ‘1. It is declared that, in terms of s 25(1) of the National Water Act 36 of 1998 (the NWA), a water management institution is empowered, at the request of a person authorized in terms of the NWA to use water for irrigation: (a) to allow that person on a temporary basis, and on such conditions as the water management institution determines, to use some or all of that water for a different purpose; or (b) to allow that person to allow a third party the use of some or all of that water on another property in the same vicinity, for the same or a similar purpose. 2. It is declared that, in terms of s 25(2) of the NWA, a person holding an entitlement to use water from a water resource in respect of any land may surrender that entitlement in whole or in part: (a) in order to facilitate a licence application by the holder of the entitlement or of a third party in terms of s 41 of the NWA for the use of that water in respect of other land owned or controlled either by the holder of the entitlement or the third party; (b) that the surrender of the entitlement by the holder of the entitlement only becomes effective in the event of the licence application, in terms of s 41 of the NWA, of the holder of the entitlement or of the third party being approved by the responsible authority; (c) an agreement between the holder of an entitlement to use water and a third party, in respect of the surrender of the entitlement by the former to facilitate an application for a licence in respect thereof by the latter, in return for payment of compensation, is not prohibited. 3. In the Lötter and Wiid cases: (a) the applicants are exempted, in terms of s 7(2)(c) of the Promotion of Administrative Justice Act 3 of 2000 from having to exhaust their internal remedies; and (b) the decisions taken by the Director-General, Department of Water and Sanitation to refuse the applications of the applicants for licences in terms of s 41 of the NWA are reviewed and set aside. 4. The Minister of Water and Sanitation and the Director-General of the Department of Water and Sanitation are ordered to pay the costs of the applicants, including the costs of two counsel.’ ____________________ C PLASKET JUDGE OF APPEAL Makgoka JA (dissenting) [69] I have read the majority judgment prepared by my Colleague Plasket JA, which has set out the essential facts which gave rise to the three appeals before us. For context to this judgment, I summarise them as follows. In the Lötter and Wiid appeals, holders of water use entitlement certificates, Britzkraal (Pty) Ltd (Britzkraal) and GP Viljoen Trust, are the holders of licences to use water, styled water use entitlements in the Act, in accordance with the registration certificates issued by the Department of Water and Sanitation (the department). They concluded sale agreements with the appellants in those appeals, in terms of which the holders of water use entitlements, surrendered their entitlements to the department, represented by a ‘responsible authority’,37 in return for compensation. [70] In the Lötter appeal, the purchase price was R1 950 000 (One Million Nine Hundred and Fifty Thousand Rand). In the Wiid matter, there were three agreements 37 The ‘responsible authority’ is defined in s 1(xx) as follows: ‘responsible authority’, in relation to a specific power or specific duty in respect of’ water uses mean- (a) if that power or duty has been assigned by the Minister to a catchment management agency, that catchment agency; or (b) if that power or duty has not been so assigned, the Minister.’ of sale in terms of which the water use entitlements were sold, respectively for R5 920 000 (Five Million Nine Hundred and Twenty Thousand Rands); R15 413 333 (Fifteen Million Four Hundred and Thirteen Thousand Three Hundred and Thirty-Three Rand); and R2 666 667 (Two Million Six Hundred and Sixty-Six Thousand and Six Hundred and Sixty-Seven Rand). All the applications were rejected by the Director- General on the basis that s 25(2) of the National Water Act 38 of 1998 (the Act) did not ‘make provision for the trading or transferring of water use entitlements between two separate legal entities’. [71] In the SAAFWUA matter the agreements between the holders of water use entitlements, Eagle’s Nest Investment 3 CC and Thusano Empowerment Farm (Pty) Ltd, and the third parties to whom they sought to surrender their entitlements, met the same fate. All of the appellants’ applications for declaratory orders to the effect that s 25(2) authorises trading in water use entitlements were dismissed by the full bench of the Gauteng Division of the High Court, Pretoria (the full bench), but which subsequently granted leave to this Court. [72] I agree with the order of the majority judgment, except for paragraphs 2(c) and 3(b) thereof. In terms of paragraph 2(c) of the order, the majority declares that an agreement between the holder of an entitlement to use water and a third party, in respect of the surrender of the entitlement by the former to facilitate an application for a licence in respect thereof by the latter, in return for payment of compensation, is not prohibited by s 25(2) of the Act. In paragraph 3(b) of the order, the decisions taken by the Director-General to refuse the applications of the applicants for licences in terms of s 41 of the Act, are reviewed and set aside. [73] These paragraphs of the order of the majority judgment rest on an interpretation of s 25(2) of the Act with which I do not agree. I write separately to explain my disagreement. Our difference regarding that subsection is a narrow one. For present purposes, I am prepared to accept an interpretation of s 25 of the Act that allows for the involvement of third parties. That is, s 25(1) permits the holder of a water use entitlement to allow a third party the use of water for a purpose different from that stated in the water use entitlement, or to use it on another property, for the same or a similar purpose. [74] Similarly, I am prepared to accept that the surrender of a water use entitlement envisaged in s 25(2) may be made to a third party. This, however, is not the end of the enquiry, and this is where I part ways with the majority. It does not follow, in my view, that a holder of a water use entitlement and a third party are entitled to conclude a private commercial agreement in terms of which they trade in water for compensation, and to have such agreement authorised by a water management institution. [75] Accordingly, I take the view that the decisions taken by the Director-General to refuse each of the applications in terms of s 41 of the Act in the Lötter and Wiid appeals, were correct and should not be disturbed. I would thus not allow those appeals insofar as these two aspects are concerned. [76] Shorn of legal technicalities, at the heart of the appeals is whether the Act permits a person holding a water use entitlement from a water resource in respect of any land, to sell such an entitlement. In other words, whether the Act permits trading in water use entitlements. The appellants have identified s 25 of the Act as the empowering provision for that purpose. This involves the interpretation of that section. The principles which should inform that exercise are settled. The provision must be construed by a conventional process of statutory interpretation, which is that the words in a statute must be given their ordinary grammatical meaning, unless to do so would result in an absurdity. In Cool Ideas38 the Constitutional Court put three interrelated riders to this general principle, namely that: (a) statutory provisions should always be interpreted purposively; (b) the relevant statutory provision must be properly contextualised; and (c) all statutes must be construed consistently with the Constitution.39 38 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC) para 28. 39 Constitution of the Republic of South Africa Act, 1996. [77] Consideration should also 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 they are directed and the material known to those responsible for enactment of the Act.40 Section 39(2) of the Constitution enjoins courts, when interpreting any legislation, to promote the spirit, purport and objects of the Bill of Rights. Where the court is faced with two interpretations, one constitutionally valid and the other not, the court must adopt the constitutionally valid interpretation provided that to do so would not unduly strain the language of the statute.41 On the other hand, where a provision is reasonably capable of two interpretations, the one that better promotes the spirit, purport and objects of the Bill of Rights should be adopted.42 Courts must also adopt a generous and purposive approach.43 [78] The historical context within which a particular provision operated, or in response to which it was enacted, is also an important interpretative tool.44 Thus, where applicable, our history may not be ignored in that process. As explained by Moseneke DCJ in Goedgelegen ‘[i]t is helpful, where appropriate, to pay due attention to the social and historical background of the legislation.’45 In the present case, it is useful, therefore, to state the obvious point from the onset. Access to water has historically been the privilege of predominantly white people with access to land and to economic power. It seems to be common cause that the appellants in the three appeals fall into that category. The policy considerations underpinning the Act sought to, among others, address the racial imbalances brought about by colonialism and apartheid. [79] The Act was preceded by a White Paper on a National Water Policy for South Africa (1997) (the White Paper). Outlining the fundamental principles and objectives 40Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262; 2012 (4) SA 593 (SCA) para 18. 41 Investigating Directorate: Serious Economic Offences v Hyundai Motor Distributors (Pty) Ltd: in re Hyundai Motor Distributors (Pty) v Smit NO 2001 (1) SA 545 (CC) paras 23-25. 42 Wary Holdings (Pty) Ltd v Stalwo (Pty) and Another 2009 (1) SA 337 (CC) paras 46, 84, 107. 43 Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others 1996 (1) SA 984 (CC) para 46. 44 Executive Council, Western Cape v Minister of Provincial Affairs and Constitutional Development; Executive Council, KwaZulu-Natal v President of the Republic of South Africa [1999] ZACC 13; 2000 (1) SA 661 (CC) para 44. 45 Department of Land Affairs v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (6) SA 199 (CC) para 53. for a new water law for South Africa in the White Paper, the then Minister of Water Affairs and Forestry, Professor Kader Asmal, said: ‘South Africa’s water law comes out of a history of conquest and expansion. The colonial lawmakers tried to use the rules of the well-watered colonising countries of Europe in the dry and variable climate of Southern Africa. They harnessed the law, and the water, in the interests of a dominant class and group which had privileged access to land and economic power.’ In para 2.1.4 titled ‘The Right to Equality’ the White Paper points out: ‘[A]partheid was an inefficient racial spoils system under which the distribution of water-use was racially biased, and access to water and the benefits from its use a privilege of those with access to land and political and economic power. In the context of the reform of the water law, the right to equality requires equitable access by all South Africans to, and benefit from the nation’s water resources, and an end to discrimination with regard to access to water on the basis of race, class or gender.’ [80] The Act repealed its predecessor, the Water Act 54 of 1956. Section 2 of the 1956 Act provided: ‘A person who is, as contemplated in subsection (1), entitled to the use and enjoyment of private water found on any land of which he is the owner, shall not, except under the authority of a permit from the Minister and on such conditions as may be specified in that permit, sell, give or otherwise dispose of such water to any other person for use on any other land, or convey such water for his own use beyond the boundaries of the land on which such water is found.’ [81] With this historical context in mind, I turn to the aspirational provisions of the Act. The Act is a progressive piece of legislation. Discernable in it is a clear intention on the part of the Legislature to break with the racist water allocation and use of the colonial and apartheid past. Thus, the policy considerations reflected in the White Paper referred to earlier, later found expression in the Act. For example, the preamble to the Act recognises, among many fundamentals, that water is a ‘scarce and unevenly distributed national resource’, which while it ‘belongs to all people, the discriminatory laws and practices of the past have prevented equal access to water, and use of water resources’. [82] The purpose of the Act is set out in s 2 as being to ‘ensure that the nation’s water resources are protected, used, developed, conserved, managed and controlled’ in ways which take into account certain factors, among which is to redress the results of past racial and gender discrimination (s 2(c)). To achieve this purpose, the Act envisages the establishment of suitable institutions and to ensure that they have appropriate community, racial and gender representation. [83] I turn now to s 25, which reads as follows: ‘Transfer of water use authorisations. (1) A water management institution may, at the request of a person authorised to use water for irrigation under this Act, allow that person on a temporary basis and on such conditions as the water management institution may determine, to use some or all of that water for a different purpose, or to allow the use of some or all that water on another property in the same vicinity for the same or a similar purpose. (2) A person holding an entitlement to use water from a water resource in respect of any land may surrender that entitlement or part of that entitlement— (a) in order to facilitate a particular license application under section 41 for the use of water from the same resource in respect of other land; and (b) On condition that the surrender only becomes effective if and when such application is granted.’ [84] This section concerns only two aspects. First, in subsection (1), the temporary use of irrigation water for a different purpose or on a different land, other than that stated in the licence. Second, in subsection (2), the surrender of a water use entitlement, subject to two provisos, namely that an application in terms thereof must be ‘in order to facilitate a particular license application under s 41’, and that the surrender ‘only becomes effective if and when such application is granted’. [85] On its plain reading, s 25 does not provide for compensation when a holder of a water use entitlement surrenders such entitlement. Its provisions are clear and unambiguous. However, even if that is so, one must pay due regard to the Act as a whole, especially the other relevant sections, to discern whether compensation is authorised when a water use entitlement is surrendered. Section 25(2) is directly linked to s 41, which, in turn, sets out the procedure for Iicence applications. Section 41(1) reads: ‘An application for a Iicence for water use must— (a) be made in the form; (b) contain the information; and (c) be accompanied by the processing fee, determined by the responsible authority. [86] Section 41(2) empowers a responsible authority, among others, to call for further information, conduct its own investigations on the likely effect of the proposed licence, invite written comments from any organ of state which, or person who, has an interest in the matter. It is instructive that the selling price in respect of a water use entitlement, or compensation is not specified or foreshadowed in any of the subsections of s 41. Thus, both s 25(2) and s 41, which are expressly interlinked, bear no reference to water trading. [87] Section 27(1) sets out considerations which a responsible authority must take into account when issuing general authorisations and licences. This section has been quoted in full in the majority judgment, but to recap, the factors which a responsible authority must take into account include the following: ‘(a) existing lawful water uses; (b) the need to redress the results of past racial and gender discrimination; (c) efficient and beneficial use of water in the public interest; (d) the socio-economic impact— (i) of the water use or uses if authorised; (ii) of the failure to authorise the water use or uses; (e) any catchment management strategy applicable to the relevant water resource; (f) the likely effect of the water use to be authorised on the water resource and on other water users; (g) the class and the resource quality objectives of the water resource; (h) investments already made and to be made, by the water user in respect of the water use in question; (i) the strategic importance of the water use to be authorised; (j) the quality of water in the water resource which may be required for the Reserve and for meeting international obligations; and (k) the probable duration of any undertaking which a water use is to be authorised.’ [88] Of course, the list is not exhaustive, as the wording of s 27(1) suggests that the responsible authority may take into account other factors. As is clear, compensation for surrender of a water use entitlement is not one of the specified factors, and none of the specified factors in terms of s 27(1) comes even remotely close to it. Being such an important factor, if it was its intention that it be considered, the legislature would certainly have included compensation for surrender of water use entitlements as one of the specified factors in the section. [89] Two other provisions which, according to the appellants, provide further indication that trading in water use entitlements is authorised in the Act, are subsections 26(l)(i)-(iii) and 29(2). I make this broad observation regarding these two subsections. These sub-sections are of a procedural, rather than a substantive, nature. They do not have a ‘life of their own’, and do not confer rights in respect of water authorisations, like s 25(2) does. Viewed in this light, the authority to allow for compensation in respect of surrender of water use entitlement must be located within s 25(2) as the empowering provision. It follows that the role of these subsections in the interpretive exercise of s 25(2) should not be overstated. If the appellants are not correct on their interpretation of s 25(2) as an empowering provision, these subsections would not be of any assistance to them. The converse is also true. For this reason, I shall consider them pithily. [90] Section 26(l)(i)-(iii) empowers the Minister to make regulations relating to ‘transactions’ in respect of authorisations to use water. These include (a) the circumstances under which a transaction may be permitted; (b) the conditions subject to which a transaction may take place; and (c) the procedure to deal with a transaction. I have no qualm with the conclusion of the majority that the ‘transaction’ in this subsection refers to the subject matter of s 25(2). But, consistent with the view I take of s 25(2), the subject-matter of that subsection does not include compensation when water use entitlements are surrendered or transferred. [91] On my interpretation of s 25(2), the word ‘transaction’ in s 26(l)(i)-(iii) refers to the surrender of water use entitlements between the holders of such entitlements and third parties, but does not include compensation for such surrender. I am therefore unable to agree that the word ‘transaction’ should be determined by recourse to a dictionary definition. Its meaning should be found in the semantic context in which it is used in the subsection. I have already indicated that this provision is a procedural one, and does not authorise compensation when a water use entitlement is surrendered in s 25(2) read with s 41. Viewed in this light, it could be that, in the absence of an empowering provision in the Act, the Minister could well act ultra vires her powers should she publish the regulations envisaged in this subsection. [92] The appellants set much store by s 29(2), which provides that if ‘a licensee has agreed to pay compensation to another person in terms of any arrangement to use water, the responsible authority may make the obligation to pay compensation a condition of the licence’. The appellants draw a link between this subsection and s 25(2), which construction the majority agrees with. I see it differently. Rather than a confluence between the two subsections, instead, I see a gulf between them, for the following reasons. [93] The word ‘compensation’ does not appear in s 25(2) or in any of the other sections dealing with water use authorisations. Section 25(2) concerns the ‘surrender’ of a water use entitlement, which is a clear and narrow concept. On the other hand, s 29(2) refers to an ‘arrangement to use water’ which, on a generous construction, could possibly be relevant to s 25(1), rather than s 25(2). I say so because as explained already, s 25(1) allows a holder of a water entitlement, on a temporary basis, to use the allocated water, either for a different purpose, or on a different property for the same or similar purpose. To my mind, that fits neatly into the concept of ‘an arrangement’, which is essentially what the scheme of s 25(1) is all about, as opposed to a ‘surrender’, or ‘the giving away of an entitlement’, which is the subject-matter of s 25(2). [94] The language of s 25(2) and s 29(2) is so different as to suggest that the Legislature intended them to address totally distinct situations. If it had intended for the two subsections to dovetail, the Legislature would have used consistent language in both of them. Furthermore, a provision such as this would ordinarily, and in express terms, be linked to an empowering provision elsewhere in a statute, or vice versa, as is the case with s 25(2) and s 41, as alluded to already. In this case, there is no such reference between s 25(2) as the empowering provision, and s 29(2) as a complementary provision. [95] It was also submitted on behalf of the Lötter appellants that the prohibition against receiving compensation for surrendering water use entitlements, was contrary to the provisions of s 25 of the Constitution, which guarantees property rights and prohibits arbitrary deprivation of property.46 This submission is misconceived. The applicants are not being deprived of any property. A holder of a water use entitlement voluntarily surrenders his or her entitlement in terms of the legislative framework of s 25(2). That section does not make provision for him or her to receive compensation for such surrender. There is no attack against the constitutionality of s 25(2). [96] The fact remains that the holder of such right obtains a statutory personal privilege to use a scarce national resource. This is what distinguishes water use entitlements from other licenses such as liquor and taxi licenses. The holders of those licenses essentially purchase them at a premium, whereas the holder of a water use entitlement obtains it for free, only having to pay a licence fee of R114. Furthermore, the holders of the other licenses do not acquire them in respect of a scarce national resource. All these explain why there is nothing objectionable when the holders of such licences decide to ‘sell’ them at whatever market related prices they decide on. [97] As I see it, the insurmountable difficulty for the appellants is that there is no empowering provision in the Act that expressly authorises payment of compensation when water use entitlements are surrendered. To find that there is, one has to imply it. It must be assumed that trading in water use entitlements was upper-most in the minds of those responsible for the drafting of the Act, given that in the repealed 1956 46 Section 25(1) provides that: ‘No one may be deprived of property except in terms of law of general application, and no law may be permit deprivation of property.’ Act, there was express reference to it. Furthermore, the White Paper noted that provision would be made in the Act to enable transfer or trade of water rights between users, with Ministerial consent. However, when the Bill was finally enacted, express provision was made only for transfer or surrender of water use entitlements in s 25(2), but not for trading in water use entitlements. Had it been the Legislature’s intention that such a provision be included, it would expressly have done so, and s 25(2) would have been a good place for it. Given the historical context referred to earlier, and its undoubted prominence, it would be surprising if as important a matter as trade in water rights were to be left to be implied. [98] What is more, the appellants’ interpretation offends one of the key stated purposes of the Act – s 2(c), in that it perpetuates the results of past racial discrimination, contrary to the commitment in that subsection to redress those injustices. Although this is not the only purpose of the Act, considering the Act as a whole, including its historical context, this purpose is of some significant importance. This is acutely demonstrated in the present case, in which the water use entitlements were sold for vast sums of money: in the Lötter matter, R1 950 000; and R5 920 000; R15 413 333; and R2 666 667, respectively, in the Wiid matter. It must be borne in mind that to acquire a water use entitlement, an applicant is required to pay an administration fee of about R114. How that right suddenly becomes capable of being sold for R15 000 000, is neither clear, nor explained. [99] The appellants take issue with the full bench’s reasoning that the sale of water use entitlements in private agreements, results in discrimination. They say there is no evidence of such discrimination. I will explain why there is. Only historically advantaged farmers (overwhelmingly white) would be in a position to afford the unilaterally determined prices, to the exclusion of everyone else. On the facts of these appeals, I agree with the reasoning of the full bench. The trade in water use entitlements would perpetuate colonial and apartheid water allocation enclaves and patterns. That is discrimination, and it is glaring. Given the transformational nature of the Act, this could never have been the intention of the Legislature. [100] The appellants’ interpretation also offends s 3 of the Act. In terms of s 3(1) the National Government, through the Minister, is the nation’s public trustee of water resources. The applicants have not shown any provision of the Act which entitles them to privately set prices to sell an entitlement to use a national resource, without the Minister’s involvement or consent. Nor have the appellants explained to the responsible authority, who is the Minister’s designee, how these purchase prices were arrived at. This certainly emasculates the Minister’s role to regulate the use, flow and control of all water in the Republic. It reduces the role of national government, represented by the Minister, to that of a rubber-stamp. Furthermore, in terms of s 3(2) the Minister is responsible to ensure that water is allocated equitably and used beneficially in the public interest. None of the appellants has asserted public interest in respect of their respective applications. These entitlements were sold solely for private farming purposes and for profit. [101] Section 1(3) provides that when interpreting a provision of this Act, any reasonable interpretation which is consistent with the purpose of this Act as stated in section 2 must be preferred over any alternate interpretation which is inconsistent with this purpose. I find, in the final analysis, that the interpretation propounded by the appellants is totally inimical to the constitutional values and the policy considerations underlying the Act. For all these reasons, I would disallow the appellants’ appeal to the extent they sought a declaratory order that s 25(2) allows trading in water use entitlements and for the setting aside of the Director-General’s decisions in respect thereof. ____________________ T MAKGOKA JUDGE OF APPEAL APPEARANCES: For the appellants in the SAAWUA appeal: M M Oosthuizen SC (with J Rust) Instructed by: Fasken Attorneys, Johannesburg Spangenberg, Zietsman and Bloem Attorneys, Bloemfontein For the appellants in the Lötter and Wiid appeals: G L Grobler SC (with J L Gildenhuys SC) Instructed by: Groenewald Attorneys, Humansdorp Couzyn, Hertzog & Horak, Pretoria Spangenberg, Zietsman and Bloem Attorneys, Bloemfontein For the respondents: R Ramawele SC (with K Magano and P Loselo) Instructed by: State Attorney, Pretoria 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 8 November 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Lötter NO and Others v Minister of Water and Sanitation and Others (725/2020) [2021] ZASCA 159 (8 November 2021) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today upheld the appeals of Casper Lötter and others, Francois Wiid and others and the South African Association for Water User Associations against the Minister of Water and Sanitation and others. These three matters had been heard together by a full court of the Gauteng Division of the High Court, Pretoria and were heard together by the SCA on appeal. The central issues in these matters were whether s 25 of the National Water Act 36 of 1998 (the NWA) permitted the transfer of water use entitlements from one person to another and whether the purchase and sale of water use entitlements was prohibited. A majority of the SCA found that s 25 of the NWA allowed for the transfer of water use entitlements in two circumstances. First, s 25(1) empowered a water management institution to allow a holder of a water use entitlement for irrigation to use it temporarily for another purpose or to allow it to be used on another property by another person. Secondly, s 25(2) created a mechanism for permanent transfers of water use entitlements. It did so by means of a system in terms of which a water use entitlement holder surrenders their entitlement and a third party applies for a licence in respect of the surrendered water use entitlement. If the licence is granted by the responsible authority, the surrender of the water use entitlement becomes effective and the transfer occurs. On the second aspect – whether people may buy and sell their water use entitlements – the starting point of the majority was that private persons are free to do anything that the law does not prohibit, unlike public bodies that may only do what the law authorises them to do. As the NWA does not prohibit trading in water use entitlements, people are free to engage in this practice. This freedom is subject to an important control: the transfer of water use entitlements in terms of s 25 requires the approval of the regulatory authority created by the NWA to ensure that its objects are attained and that the public interest is furthered. The minority agreed with the majority that water use entitlements could be transferred but held that trading in water use entitlements was not permitted because the NWA did not authorise the practice. It also held that trading in water was contrary to the purposes of the NWA.
3027	non-electoral	2015	THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 451/2013 In the matter between: RANDBURG MANAGEMENT DISTRICT APPELLANT and WEST DUNES PROPERTIES 141 (PTY) LIMITED FIRST RESPONDENT CITY OF JOHANNESBURG SECOND RESPONDENT Neutral citation: Randburg Management District v West Dunes Properties (451/2013) [2015] ZASCA 135 (30 September 2015) Coram: Leach, Tshiqi, Theron, Willis and Mathopo JJA Heard: 02 September 2015 Delivered: 30 September 2015 Summary: Local government – formation of a city improvement district under the Gauteng City Improvement Districts Act 12 of 1997 – municipal council may not delegate authority to approve a city improvement district to mayoral committee by reason of s 59(2) of the Local Government: Municipal Systems Act 32 of 2000 read with s 160(2)(c) of the Constitution – levies imposed by a city improvement district not validly formed not recoverable – such levies in any event offending s 229 of the Constitution as imposed by provincial and not national legislation. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Sutherland J sitting as court of first instance): The appeal is dismissed. __________________________________________________________________ JUDGMENT ___________________________________________________________________ Leach JA (Tshiqi, Theron, Willis and Mathopo JJA concurring) [1] At issue in this appeal is the legality of certain levies imposed upon the first respondent under the Gauteng City Improvement Districts Act 12 of 1997 (the CID Act) which provides for the imposition of levies on rateable properties1 situated within a „city improvement district‟2 (for convenience I intend to use the acronym CID in place of this phrase). These levies are then paid over to a management body charged with the implementation of a „city improvement district plan‟ to finance various services that, in terms of s 6(4) of the CID Act, „. . . must be in addition to or an enhancement of those provided by the municipality‟. [2] The first respondent is the owner of two immovable properties known as erven 1768 and 1978 Ferndale. Both properties are situated within the municipal area of the City of Johannesburg (the City), a municipality envisaged by the CID 1 „[R]ateable property‟ is defined in the CID Act as immovable property on which a rate or rates may be levied in accordance with the Local Authorities Rating Ordinance (Ordinance No 11 of 1977). 2 Defined in s 1 of the CID Act as meaning „a geographic district approved in terms of s 3 of this Act‟. Act. The properties also fall within the geographical area of what is known as the Randburg CID, purportedly established under the CID Act in or about 2004. [3] The appellant, an association incorporated under s 21 of the Companies Act 61 of 1973, is the „management body‟ of the Randburg CID established in compliance with s 4(2) of the CID Act (to which further reference will be made in due course). As such, under s 5(3) the appellant may sue for and recover unpaid levies as a debt due to it. [4] After the formation of the Randburg CID, levies under the CID Act were imposed on properties within its geographical area. The first respondent refused to pay certain of these levies imposed on its erven in Ferndale. In due course the appellant, purporting to exercise its rights under s 5(3), instituted two separate actions in the court a quo seeking payment of the amounts it contended the first respondent owed. In its first action (case number 53025/09) it claimed unpaid levies in respect of erf 1768 for the periods 1 October 2005 to 1 May 2006 and 1 July 2009 to 1 December 2009, and in respect of erf 1978 over the period 1 July 2008 to 1 December 2009. In the second action (case number 11637/2011) its claim for both properties was calculated over the period 1 January 2010 to 1 March 2011. Both actions were defended and were subsequently consolidated for hearing. The City was joined as a second defendant before the trial, but declined the invitation to appear or take part in the hearing – although counsel for the appellant informed the court that it had cooperated with the appellant in making available witnesses and documents. (I should mention that the City was also cited as the second respondent in this appeal but, again, took no part in the proceedings.) [5] In any event, when the matter came to trial the parties agreed to separate certain of the issues under the provisions of Uniform rule 33(4). The statement of issues separated in terms of this rule, and which the court ordered were to be determined separately with the remaining issues being stayed until they had been resolved, were the following: ‘1. Whether or not the [appellant] was duly established under and in terms of the [CID Act] for the area which included Erf 1978 Ferndale . . . and Erf 1768 Ferndale . . . ? 2. If question [1] is answered in favour of the plaintiff, whether or not: 2.1 the first property; and/or 2.2 the second property are “rateable property” as defined in the CID Act, as read with the Local Authorities Rating Ordinance, 11 of 1977 . . . and the Local Government Municipal Property Rates Act 6 of 2004 . . . for the periods claimed in the summonses . . . . ? 3. If questions 1 and 2 are answered in favour of the [appellant], whether or not the amounts claimed in these actions were duly levied under and in terms of the CID Act?‟ [6] Having heard evidence and argument, the court a quo held in regard to the first of these issues that the appellant had failed to show that it had been duly established. Although for that reason alone, the appellant‟s claim fell to be dismissed, the court went on to decide a number of further legal issues in order to resolve the controversies that had been the subject of the debate. Its ultimate conclusions relevant to the issues raised in this appeal were the following: „77.1 It has not been proven that the Randburg CID was formed in compliance with Sections 2 and 4 of the CID Act. 77.2 It has not been proven that the imposition of increased levies, from 2004 onwards [was valid]. 77.3 The decisions of the [Randburg CID management board], from 11 September 2008 to increase levies are ultra vires its powers and invalid, regardless of whatever status the levies imposed prior thereto might have enjoyed. 77.4 [Erf 1978] was at all times throughout the era of the Rating Ordinance until 1 July 2008, exempt from rates because it qualified in terms of section 5(1)(d), and accordingly, could not lawfully have been subjected to any levy in respect of the CID.‟ [7] Pursuant to these findings, the appellant‟s claims were dismissed with costs. The appeal to this court is with leave of the court a quo. The first respondent did not appear on appeal. [8] In the light of the stated case and the findings made in regard thereto, the first issue that falls to be decided is whether the court a quo was correct in concluding that the appellant had failed to prove that it had been duly established under the CID Act. The appellant conceded that should the finding of the court a quo on this point be upheld, an element essential to its claims would not have been established and its appeal should fail. [9] In considering this question, it is necessary to take account of the process that has to be followed to form a CID as laid down in the CID Act and the regulations promulgated thereunder.3 In brief: (a) Under s 2(1) of the CID Act, a municipal council is obliged to consider the formation of a CID on receipt of a petition indicating the support of 25 per cent of owners of rateable properties within the boundaries of such a proposed district. (b) Section 2(4) requires the petition to take the form of a CID plan „covering a three year period . . . and must include the prescribed requirements and be in the prescribed form‟. (c) Such prescribed requirements and the prescribed form are set out in the regulations which require, inter alia, that the CID plan is to set out the services and level of services being provided by the municipality and the proposed services and levels thereof to be provided under the CID plan. (d) Sections 2(5) to (10) of the CID Act and regs 10-15 prescribe certain procedures for public participation in the consideration of the approval of the CID plan, including a public hearing, and both written and oral objections and comments. (e) Under reg 11 notifications and advertisements are to be given to ratepayers and the public and are to contain details of the date, time and place at which a public hearing is to be held, a place at which the proposed CID plan will be available for inspection, the location of boundaries of the proposed CID plan, the additional 3 Regulations in terms of the Gauteng City Improvement Districts Act 12 of 1997, GNR 1145, Provincial Gazette 491, 11 May 1998. services which are proposed to be provided thereunder. Importantly, these advertisements and notices must detail the proposed levy to be imposed.4 (f) Once this public meeting has been held and the associated consultative process followed, the municipal council is called upon to take a decision on a petition. In that regard s 3(2) provides: „A municipal council may ─ (a) approve the formation of a city improvement district and a city improvement district plan; (b) approve the formation of a city improvement district and a city improvement district plan with amendments or conditions as the municipal council considers in the public interest; and (c) refer the petition back to the petitioners with written reasons for not approving the formation of a city improvement district or city improvement district plan indicating that the petition may be resubmitted to the municipal council in the time period prescribed: provided that if the resubmitted petition proposes an increased levy for any owner of rateable property, the petitioner must notify such owner by registered mail. (g) It is only after the establishment of a CID has been approved under s 3(2) that it and its management board may be formed. In this regard s 4 of the CID Act provides, inter alia: „(1) After a petition is approved in terms of section 3, the city improvement district may be formed only after written proof in the prescribed form is provided to the municipal council by the petitioner indicating that more than 50 (fifty) percent of the owners of rateable property who represent more than 50 (fifty) percent of the rate base in value of the property in the city improvement district, approve the formation of the city improvement district and city improvement district plan as approved by the municipal council. (2) After the written proof mentioned in subsection (1) is acknowledged by the municipal council, a city improvement district management body must be formed and incorporated in terms of section 21 of the Companies Act (Act No 61 of 1973) or as any other legal entity approved by the MEC.‟ [10] The appellant was thus obliged to prove that a petition relating to the formation of the Randburg CID under s 3(2) had been properly approved in terms of 4 Regulation 11(e). these provisions. For present purposes it can be accepted that the necessary preliminary requirements of public consultation were fulfilled, and one would have expected it would then have been a straightforward matter to show that the plan was thereafter properly approved. However, despite the assistance of the City that I have already mentioned, the appellant was unable to call any direct evidence of such approval. The high-water mark of its case was a letter dated 18 October 2004 addressed by a Ms Tau, then an employee of the City, to Kagiso Urban Management (the company that had lodged the petition for the establishment of the Randburg CID and, after its alleged formation, provided management services to the appellant). The letter reads as follows „THE RANDBURG IMPROVEMENT DISTRICT Your application for the establishment of a City Improvement District in the Randburg area to be called The Randburg Improvement District was approved by the Mayoral Committee on Thursday 14 October 2004, item No 98 on the minutes of the meeting. This letter also serves as confirmation that all the requirements in terms of the Gauteng City Improvement District Act, 1997 (Act No 12 of 1997) has been complied with. We further acknowledge the receipt of a schedule and copies of voting forms summarising 54.76% of number of rateable erven representing 55.36% of the rates value in favour of establishing a City Improvement District in the abovementioned area.‟ [11] Ms Tau, when called to testify, had no real recall of the circumstances under which she had come to write this letter, something which is understandable given that a period of some eight years had since elapsed. However, she stated that she assumed that the City‟s mayoral committee on whose behalf she had written had been delegated authority by the City‟s municipal council to consider the approval of the Randburg CID, although she could not say whether that had in fact been the case. [12] It is truly startling that neither the City nor the appellant was able to produce any further direct or documentary proof relating to the approval and formation of the Randburg CID. The learned judge in the court a quo was fully justified in remarking that in this respect both had been „guilty of dereliction of their duty towards the public, to safeguard and keep accessible public records, and have been poor stewards of the trust reposed in them‟. Be that as it may, counsel for the appellant was constrained to concede that the decision to approve the establishment of the Randburg CID had probably been made by the mayoral committee and not by the municipal council itself. He submitted, however, that Ms Tau‟s assumption had been correct and that the municipal council must have duly delegated the mayoral committee to deal with the petition. Accordingly, so the argument went, the latter‟s approval of the petition was valid and binding. [13] The first obstacle to this argument is, of course, that there is no proof, documentary or otherwise, that the municipal council had in fact delegated authority to the mayoral committee to deal with the approval of the Randburg CID petition. But, assuming for present purposes that such a delegation did take place, a second and insurmountable hurdle facing the appellant is that, for the reasons set out below, that delegation was unlawful. [14] Section 60(1)(a) of the Local Government: Municipal Structures Act 117 of 1998 provides that if a municipal council has more than nine members, its executive mayor may appoint a mayoral committee from amongst the municipal councillors (in the present case one must presume that this was properly done). However, although s 59(1)(a) of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) provides that a municipal council may delegate certain of its powers, s 59(2)(a) goes on to provide that any such delegation „must not conflict with the Constitution‟. Section 160(2) of the Constitution, in turn, provides that a municipal council may not delegate „the imposition of rates and other taxes, levies and duties‟. Consequently the imposition of a levy is a function that the City was not permitted to delegate to its mayoral committee. If what was imposed under the CID Act indeed constitutes such a levy, then the delegation upon which the appellant relies would be invalid. [15] The appellant sought to overcome this hurdle by arguing, first, that levies under the CID Act are not imposed by a municipality and, second, that such levies are in any event not levies envisaged by s 160(2)(c) of the Constitution. I shall deal with each of these contentions in turn. [16] In regard to the first, at first blush the argument that a municipality does not impose the levies flies in the face of s 6 of the CID Act which, inter alia, provides: „(1) Once a city improvement district has been formed, a municipality must levy an amount on behalf of the management body from the owners of rateable property in the city improvement district in accordance with the approved plan. (2) Such amount must be levied together with other amounts which the municipality may levy from the owners of rateable property in respect of rates and taxes but the purpose of the amount must be indicated as a separate item from other rates and taxes levied by the municipality. (3) The levies collected by the municipality for the city improvement district must be paid on a monthly basis to the management body free of any deductions or set-off for the purpose of implementing the city improvement district plan.‟ However, relying upon the decision of Kerkstreet City Improvements District v Johnbuild Properties (Pty) Ltd & another 2005 JDR 0501 (T), the appellant argued that the use of the word „levy‟ in ss 6(1) and (2) meant no more than the municipality is to „collect‟ the levies as provided in s 6(3), rather than to determine and impose them. [17] The issue in Kerkstreet was whether it had been lawful for the municipality concerned to have appointed an agent to collect the levies imposed under the CID Act on its behalf. In concluding that the agency agreement was not unlawful, and that the second respondent was doing nothing but collecting the taxes and not levying them, the court accepted an argument that „levy‟ in ss 6(1) and (2) connoted the collection of levies as specifically provided for in s 6(3). However it had not been called on to decide whether or not the municipality had „levied‟ the monthly CID levies in the sense that it had determined and imposed them. [18] In any event, it is clear from the structure of the prescribed process that the levies are imposed by the municipality under the CID Act. As I mentioned earlier, s 2(4) requires the petition to take the form of a CID plan that complies with the requirements prescribed by the regulations. Part D of the schedule to the regulations requires details of the proposed monthly levy to be given. Moreover, Part E prescribes that there be attached a „Schedule of Appointment of monthly Levy to each Erf‟. Consequently, the proposed levy forms part of the CID plan that lies at the heart of the public consultative process, that is debated at the necessary public hearing, and is thereafter considered by a municipal council. If the plan is then approved under s 3(2), and the necessary proof of approval by ratepayers is thereafter given by the petitioner as required under s 4(1), the CID may be formed. Thereafter the levy, so debated and then approved by the municipal council, will be levied by the municipality under s 6(1) „in accordance with the approved plan‟. [19] In these circumstances it cannot be said that the levy which a ratepayer becomes obliged to pay under the CID Act, albeit after having been subjected to debate in the public participation process, was not determined and imposed by the municipality. Even if the monthly sum is reflected on property owners‟ accounts as a separate item from other rates and taxes, and is collected by the municipality before being paid to the management board of a CID, it is clearly imposed by the municipal council and is not an amount merely collected by the municipality. [20] I turn to the appellant‟s alternative argument that, even if the monthly amount a ratepayer becomes due to pay under the CID is to be regarded as a levy, it does not fall within the category of „rates and other taxes, levies and duties‟ the imposition of which, under s 160(2)(c) of the Constitution, may not be delegated by a municipal council. [21] The argument in this regard was that CID levies was neither intended to provide revenue to the State nor unilaterally imposed upon property owners but was, rather, „payable by the property owners to their own private management body consequent upon their majority decision to form an improvement district‟.5 It was also argued that as the persons who benefitted from the CID levies formed only a portion of the populus of the larger municipal area, the levies could not be regarded as being required for municipal services. [22] Neither of these contentions can be accepted. At the outset, s 160(2)(c) of the Constitution clearly seeks to impose a limitation upon a municipal council‟s power to delegate so as to ensure that the council, and only the council, is responsible for the function of raising municipal revenue. Undoubtedly, this was such a function. The purpose of the CID Act is stated in its preamble to be: ‘To provide procedures for the formation and independent management of city improvement districts to fund the provision of services in addition to those which a municipality ordinarily provides in order to facilitate investment in the city improvement district; to halt further degeneration of cities; and to promote economic growth and sustainable development within cities; and to provide for matters connected therewith.’ Moreover ss 6(4) to (7) of the CID Act provide as follows: „(4) Services provided for in the city improvement district plan and financed by the levy charged to the owners of rateable property must be in addition to or an enhancement of those provided by the municipality. 5 I quote from counsel for the appellant‟s heads of argument. (5) Any increase in applicable services provided by municipalities throughout its area of jurisdiction must be matched with increases in such services within the city improvement district. (6) The municipality must notify the management body in writing of any reduction or substantial change to services provided by the municipality in the city improvement district. (7) If the level of services provided by the municipality in the city improvement district is reduced by the municipality without a corresponding reduction of services throughout the municipality‟s area of jurisdiction, the management body may, by written notice, notify the municipality and require the municipality to reinstate such services within a period of 30 (thirty) days from such notice.‟ [23] Significantly in the present case, the CID plan prepared by Kagiso in February 2004 (and ultimately approved by the mayoral committee) recorded the results of a perception survey of ratepayers in the proposed CID carried out in March 2003. This indicated that, in order of importance, the following issues need to be addressed: safety and security, public environment (including maintenance of public facilities), litter, cleaning of grime, public transport and traffic flow, marketing, street lighting, mini-bus taxis and parking, and social issues. It further went on to state: „The perception survey indicates that the majority of respondents regard litter in the public environment to be an area of concern, and there are a number of interventions that the CID must therefore undertake. The CID manager will have to liaise closely with a number of council departments to ensure that the CID is able to undertake certain actions to ensure a high quality of environmental maintenance. The CID manager will have to negotiate and monitor a performance level contract with Pikitup, the council refuse collection agency.‟ [24] From this it appears that the whole purpose of the CID is for it, through its management board, to work in conjunction with the municipality to provide services falling within the sphere of municipal government but not at the time being adequately provided by the municipality. Consequently the services funded by the CID levies, while an adjunct to those being provided by the municipality itself, are of a municipal nature and are designed to supplement and enhance those which the municipality is able to deliver. [25] Not only are a CID‟s services municipal in nature but, despite the appellant‟s protestations to the contrary, the amounts payable by landowners under the CID Act constitute a revenue charge of the nature of a tax or other levy. In South African Reserve Bank & another v Shuttleworth & another 2015 (5) SA 146 (CC); (CCT 194/14, CCT 199/14 [2015] ZACC 17 (18 June 2015) the court was called upon to decide whether a particular amount charged by the Reserve Bank as an exit charge upon a resident transferring capital out of this country was a tax or a regulatory charge. In the majority judgment Moseneke DCJ, in holding that the exit charge was not calculated to raise revenue but was directed at curbing or discouraging the export of capital, said:6 „So, aside from mere labels, the seminal test is whether the primary or dominant purpose of a statute is to raise revenue or to regulate conduct. If regulation is the primary purpose of the revenue raised under the statute, it would be considered a fee or a charge rather than a tax. The opposite is also true. If the dominant purpose is to raise revenue then the charge would ordinarily be a tax. There are no bright lines between the two. Of course, all regulatory charges raise revenue. Similarly, “every tax is in some measure regulatory”. That explains the need to consider carefully the dominant purpose of a statute imposing a fee or a charge or a tax. In support of this basic distinguishing device, judicial authorities have listed non-exhaustive factors that will tend to illustrate what the primary purpose is.‟ [26] The authorities to which the learned Deputy Chief Justice went on to mention7 include Permanent Estate and Finance Co Ltd v Johannesburg City Council 1952 (4) SA 249 (W) and Maize Board v Epol (Pty) Ltd 2009 (3) SA 110 (D), both of which were referred to by the appellant in argument before this court. In Permanent Estate and Finance the court was called upon to decide whether a 6 Paragraph 48. 7 Paragraphs 49-51. condition obliging the developer of a township to pay as an endowment to the local authority a percentage of the land value of all erven sold constituted a tax. The endowment had as its objective placing the municipality in funds to enable it to make available the services such as sanitation, water and lights, and roads that the township would require. The court concluded that the imposition of the obligation to pay such an endowment was not the imposition of a tax as: „To require any person who carries on business or who owns a dog or a motor-car to pay a prescribed fee is, I think, to impose a tax. The money paid is taken into general revenue and is used for general purposes; the person who pays receives no specific service in return for his payment. Endowment money paid by a township owner is quite a different thing; it is an agreed payment for services which are to be performed for the improvement of the township and from which the township owner will derive financial benefit. To require the township owner himself as a condition for the grant of permission to establish a township to make the township habitable by an urban community would not be to impose a tax upon him, and where that work is to be performed by a local authority, to require him to pay for, or to contribute towards the cost of, the work is likewise not to impose a tax.‟8 [27] Relying on this, the appellant argued that the levies were not of the nature of a tax as they are not to be paid into the municipality‟s general revenue fund for general public use but, after collection by the City, are to be paid to the management board for the specific services rendered in terms of the CID plan. That may well be so, but an endowment which was in effect to be used as payment to a municipality for its costs in establishing the infrastructure of a township is a far cry from monthly levies being imposed to enable what in effect amounts to the on-going provision of municipal services. The endowment related to a reimbursement of cost on municipal services. Monthly CID levies, on the other hand, are akin to rates: they are levied on the value of an owner‟s land and give rise to an on-going obligation to pay a monthly contribution to enable services of a municipal nature to be provided. 8 At 259A-C. [28] The decision in Permanent Estate and Finance thus does not advance the appellant‟s case. Neither does the decision in Maize Board. In that matter the Maize Board sought to recover various levies imposed under the Marketing Act 59 of 1968 as well as a maize marketing scheme. The structure of the Act was to regulate the production and sale of agricultural products with a view to ensuring stability in the market. It was argued that the levies were imposed for the purpose of benefitting the general public who would then enjoy an orderly market system, and was thus a tax. The court concluded otherwise. It held that the levies were not imposed upon the public as a whole or on a substantial sector thereof; were restricted in terms of the products to which they were related; were not utilised for public benefit as only a few members of the public were to benefit; were not intended to raise public revenue since they were not used to support government activities in general; and therefore did not constitute a tax.9 [29] For present purposes it is not necessary to decide whether the CID levies are, strictly speaking, a „tax‟ or merely a „levy‟ as envisaged in s 160(2)(c) of the Constitution. Whether a charge is a tax or a levy may well at times be difficult to determine with precision. But in either event, CID levies clearly have as their purpose the raising of revenue to fund the provision of services to enhance those actually rendered by a municipality. They are compulsory and not optional. They are imposed by a municipality on a substantial sector of the public, namely those who own land within the CID. And the revenue derived therefrom is utilised to provide services of a municipal nature in the general interest of those members of the public in the CID. The dominant object of the CID levies is therefore „to raise revenue to fund the State and its public operations‟.10 The decision in Maize Board is thus clearly distinguishable. Indeed, if anything, it shows that the levies presently under consideration are in the nature of a tax. 9 Paragraphs 27 and 28. 10 S A Reserve Bank v Shuttleworth para 52. [30] For these reasons, I conclude that the imposition of CID levies amounts to „the imposition of rates and other taxes, levies and duties‟ as envisaged by s 160(2)(c) of the Constitution. As the imposition of such levies is therefore a function which could not be delegated by a municipal council, any delegation to the mayoral committee to decide upon the approval of a CID plan under s 3 of the CID Act is invalid; and consequently a decision of the mayoral committee to approve such a plan lacks legality. [31] The appellant‟s entire case hinged upon an acceptance that the mayoral committee had been entitled to take the decision to approve the Randburg CID. For the reasons I have given, it was not and, as a result, the court a quo‟s finding that the appellant had not discharged the onus it bore in proving that the CID had been properly formed must be upheld. The appellant conceded, correctly, that if this court should find this to be the case, it had failed to show that the CID was lawfully established; that its claim for levies was therefore unenforceable; that the claims of the appellant were correctly dismissed by the court a quo; and that the appeal must fail. [32] Strictly speaking, this renders the various other issues debated in this court unnecessary to decide. However, like the court a quo, it may be of assistance in local government circles if this court, albeit briefly, deals with certain of these issues. [33] First, a further problem facing the appellant is to be found in s 229(1) of the Constitution which provides that a municipality may impose: „(a) rates on property and surcharges on fees for services provided by or on behalf of the municipality; and (b) if authorised by national legislation, other taxes, levies and duties appropriate to local government or to the category of local government into which that municipality falls, but no municipality may impose income tax, value-added tax, general sales tax or customs duty.‟ (My emphasis.) CID levies, which for the reasons already set out are embraced by „other taxes, levies and duties‟ envisaged in s 160(2)(c) of the Constitution, must fall within the compass of „other taxes, levies and duties appropriate to local government or to the category of local government into which that municipality falls‟ as envisaged by this section. However, as is spelled out in s 229(1)(b), such levies can only be imposed „if authorised by national legislation‟. CID levies are not authorised by national legislation. They are authorised by legislation passed by the Gauteng Provincial Legislature. On this basis, too, the levy imposition of CID levies offends the Constitution and therefore lacks legality. [34] Secondly, even if the Randburg CID had been properly formed and the imposition of its levies for the three years after its formation was lawful, the appellant faces yet a further difficulty in regard to establishing the extent of the first respondent‟s liability. The entire scheme envisaged by the CID Act is that a CID is to be established for a period of no more than three years in order to enhance the services being delivered by the municipality during that period. That is clear from s 2(4) of the CID Act which states that the petition „must take the form of a city improvement district plan, covering a three year period taking into account the requirements of this Act, and must include the prescribed requirements and be in the prescribed form‟. The prescribed form set out in the regulations defines a „city improvement district plan‟ as meaning „a business plan for the operation of a city improvement district covering a three year period from the anticipated date of approval of the district‟. Under Part D of the schedule to the regulations, particulars have to be given of the CID budget in respect of the three year period of the plan. All of this shows that the life of a CID may be no more than three years. [35] Despite this, it was argued on behalf of the appellant that there is no indication in either the CID Act or the regulations of an intention on the part of the legislature to limit the lifespan of a CID to three years; and that the three year period referred to in s 2(4) merely prescribes the length of time which the CID plan should cover in the context of the petition submitted to the municipality. This was presumably, so the argument went, that such period was considered to be sufficient to enable the municipality (and other interested parties) to properly assess the merits or demerits of the proposed CID plan; and that once a petition is approved and a CID formed, the relevance of the three year period falls away. [36] There is no merit in this argument. The CID Act and its regulations simply just do not provide for the suggested scheme of details being given in the petition for the initial three year period merely to illustrate the advantages of approving a CID plan. On the contrary, it is quite clear from the legislative provisions I have mentioned that the CID Act intended a CID plan to endure for no longer than three years from the date of its approval. [37] This conclusion is relevant to the amounts the Randburg CID could have recovered even if it had been validly formed (which it was not). The precise date on which it came into existence is not clear but it can be accepted that the initial three year period after its formation probably lapsed in 2007 (the court a quo found it was probably „sometime in 2007 or 2008‟). But, importantly, it is common cause that at no time thereafter was the original CID plan amended by an extension (for which a procedure is prescribed11) nor was a fresh plan ever approved by the municipal council. Despite that, the appellant and its agent, Kagiso, continued to do business not only as if the original plan remained in force, but by collecting levies which it, without the approval of the municipal council, had increased and imposed from time to time in clear contravention of both the CID Act and the Constitution. 11 Section 7 of the CID Act. [38] As appears from the details of the appellant‟s claims set out in para 4 above, all the levies claimed by the appellant in Case No 11637/2011 and, probably, the majority of those claimed in Case No 53025/09, relate to periods more than three years after the CID was approved. That being so, the levies claimed were not recoverable as they were determined by the appellant without lawful authority to do so. [39] In view of what is set out above, the issue whether the first respondent‟s two properties were „rateable property‟ as set out in para 2 in the statement of issues becomes moot in the light of the conclusion that the CID was not lawfully formed. It is an issue which is, in any event, fact sensitive and in which the general public have no interest. In the result, although it was an issue of considerable debate and formed the subject of a finding in the court a quo attacked by the appellant in this court, it is unnecessary to deal therewith. [40] On the other hand, it is necessary to record that the appellant argued that, in the event of this court concluding that the Randburg CID had not been legitimately formed, it would be just and equitable for an order to be issued under s 172(1)(b) of the Constitution limiting the retrospective effect of a declaration of invalidity to enable the appellant and the City to remedy the situation. I see no reason to do so. In reaching its conclusion this court has not determined that any statute or legislation is unconstitutional. The underlying ratio of this decision is that the City‟s mayoral committee took a decision which, in terms of the Systems Act, only the municipal council was lawfully entitled to take, and there is no reason to in effect declare that which was unlawful to be lawful. [41] Moreover, there must be considerable doubt whether it is possible to lawfully validate the imposition of levies under the CID Act. The decision in this case has been reached on the assumption that the CID Act is valid. But in the light of the provisions of s 229 of the Constitution already mentioned, and its directive that levies can only be imposed if authorised by national legislation, I have grave reservations as to whether the CID Act, being provincial legislation under which a municipality imposes levies on owners of immovable property, can pass constitutional muster. As the necessary interested parties to a decision on the constitutional validity of the CID Act were not joined and the issue was not properly ventilated either in the papers or in argument before this court, it would be inappropriate to deal any further with it. [42] As neither of the respondents appeared, there is no necessity to make any order as to costs. [43] The appeal is dismissed. _______________________ L E Leach Judge of Appeal Appearances: For the Appellant: A G Amiradakis Instructed by: Moodie & Robertson, Braamfontein Claude Reid Inc, Bloemfontein For the Respondent: None	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: 30 September 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: Randburg Management District v West Dunes Properties (451/2013) [2015] ZASCA 135 (30 September 2015) The Supreme Court of Appeal today delivered a judgment dealing with the legality of levies imposed under the Gauteng City Improvement Districts Act 12 of 1997 (the CID Act) which provides for the imposition of levies on rateable immovable properties situated within a city improvement district. The first respondent is the owner of two immovable properties situated within the municipal area of Johannesburg and what is known as the Randburg City Improvement District, the latter having purportedly being established under the provisions of the CID Act in 2004. It was thereafter managed by the appellant, the Randburg Management District. The appellant instituted action for levies imposed on the first respondent in respect of its immovable properties under the provisions of the CID Act. Its claim related to various periods from 2005 to 2011. The matter came before the Johannesburg High Court which had concluded that the appellant had not proved that the Randburg CID had been properly formed in compliance with ss 2 and 4 of the CID Act, that the imposition of levies under the CID Act from 2004 onwards was valid, that the decisions of the appellant from 11 September 2008 to increase levies were ultra vires its powers and invalid. Pursuant to these findings, the appellant’s claims were dismissed. The appellant then appealed to the Supreme Court of Appeal. The appeal was today dismissed. In doing so, it found that the high-water mark of the appellant’s case was that the Randburg CID had been approved by a mayoral committee and not by a municipal council, that the delegation by the municipal council to the mayoral committee was not lawful by reason of the provisions of the Local Government: Municipal Structures Act 117 of 1998 as read with s 160(2)(c) of the Constitution. In reaching this conclusion it dismissed arguments that the municipality had only collected levies under the CID Act and did not impose them and that CID levies were in any event not ‘levies’ as envisaged by s 160(2)(c) of the Constitution. Consequently the court held that the Randburg CID had never been validly established, that its claims for levies were therefore unenforceable and that the claim of the appellant had been correctly dismissed by the court a quo. Although on this basis alone, the appeal had to be dismissed, the court found further that the levies offended s 229(1) of the Constitution which provides that a municipality may only impose levies if authorised by national legislation, and that the CID Act was provincial and not national legislation. Moreover, the entire scheme envisaged by the CID Act is for the city improvement district to be established for a period of no more than three years. That period had elapsed without a fresh CID plan having been approved or the original CID plan having been amended. And instead of the municipality determining the CID levies, the appellant had thereafter merely done so without there being any statutory or constitutional authority for it to do so. On this further basis most of the levies claimed were not recoverable as they had been determined by the appellant without lawful authority to do so. Finally the court observed that it had assumed that the CID Act was valid. But in the light of the provisions of s 229 of the Constitution and the directive therein contained, that levies can only be imposed or authorised by national legislation, it expressed its grave reservations as to whether the CID Act, being provincial legislation under which a municipality imposes levies on immovable property, could pass constitutional muster. However as the necessary interested parties had not been joined and the issue not properly ventilated either in the papers or in argument, the court felt it would be inappropriate to deal any further with the issue. ---ends---