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2932
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non-electoral
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2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 20104/2014
Reportable
In the matter between:
CLOETE MURRAY NO
FIRST APPELLANT
MABUTHO LOUIS MHLONGO NO
SECOND APPELLANT
and
FIRSTRAND BANK LTD T/A WESBANK
RESPONDENT
Neutral citation:
Cloete Murray NO & another v FirstRand Bank Ltd (20104/2014)
[2015] ZASCA 39 (26 March 2015)
Coram:
Navsa ADP, Ponnan and Zondi JJA and Schoeman and Fourie
AJJA
Heard:
9 March 2015
Delivered:
26 March 2015
Summary: Business rescue proceedings ─ Interpretation of s 133(1) of the Companies
Act 71 of 2008 ─ creditor of a company under business rescue cancelling a contract
concluded prior to the commencement of business rescue proceedings ─ cancellation
not constituting ‘enforcement action’ contemplated in s 133(1) ─ cancellation lawful.
ORDER
On appeal from: North Gauteng High Court, Pretoria (Jordaan J sitting as court of
first instance):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Fourie AJA (Navsa ADP, Ponnan and Zondi JJA and Schoeman AJA
concurring):
[1] This appeal deals with the provisions of Chapter 6 of the Companies Act 71
of 2008 (the Act) relating to business rescue proceedings, but, in reality, it has to do
with competing claims in liquidation. Be that as it may, the issue to be decided is
whether, once business rescue proceedings under the Act have commenced, the
creditor of a company under business rescue can unilaterally cancel an extant
instalment sale agreement that it had concluded with the company prior to the latter
being placed under business rescue.
Background
[2] On 22 July 2010 the respondent, FirstRand Bank Ltd t/a Wesbank
(Wesbank), concluded a written Master Instalment Sale Agreement (the MISA) with
Skyline Crane Hire (Pty) Ltd (Skyline), in terms of which Wesbank sold and delivered
movable goods (the goods) to Skyline, with Wesbank retaining ownership in the
goods until the purchase price had been paid in full.
[3] On 29 May 2012 the board of Skyline voluntarily resolved that Skyline be
placed under business rescue in terms of the provisions of s 129 of the Act. The
resolution was filed with the Companies and Intellectual Property Commission on 30
May 2012, which date, in terms of s 132(1)(a)(i) of the Act, is the date upon which
the business rescue proceedings commenced. Skyline had by then already fallen
into arrears in respect of the monthly instalments payable to Wesbank under the
MISA.
[4] On 30 May 2012 Wesbank dispatched a letter to Skyline, cancelling the MISA
due to Skyline’s failure to pay the monthly instalments due in terms thereof. The
letter was addressed to Skyline at its chosen domicilium and in terms of clause 27 of
the MISA it was deemed to have been received by Skyline three days later, ie on 3
June 2012.
[5] In the letter of cancellation Wesbank advised Skyline that the MISA was
cancelled with immediate effect, while reserving Wesbank’s right to repossess the
goods; to value and sell same; to credit the proceeds to the relevant accounts and to
claim damages.
[6] During the first week of July 2012, while the business rescue proceedings
relating to Skyline were still in progress, the business rescue practitioner (the
practitioner) appointed in terms of the Act to oversee the proceedings, consented to
Wesbank repossessing and selling the goods forming the subject matter of the
MISA. The proceeds realised from the sale were sufficient to discharge the debt
owing by Skyline to Wesbank under the MISA, leaving a surplus of some R800 000.
Wesbank retained the surplus, relying on set-off in respect of other amounts
allegedly owing to it by Skyline.
[7] On 17 July 2012 the practitioner obtained an order from the North Gauteng
High Court, Pretoria, discontinuing the business rescue proceedings, and placing
Skyline in provisional liquidation. On 10 September 2012 a final order of liquidation
was granted. The appellants were subsequently appointed by the master of the high
court as the co-liquidators (the liquidators) of Skyline.
[8] The liquidators took the view that Wesbank’s cancellation of the MISA was
contrary to the provisions of s 133(1) of the Act and accordingly of no force or effect.
I will in due course return to the provisions of s 133(1). The liquidators contended
that the full proceeds of the sale of the goods were to be paid over to them to be
dealt with under ss 83 and 84 of the Insolvency Act 24 of 1936 (the Insolvency Act).
These sections of the Insolvency Act regulate the manner in which the claims of
creditors under instalment sale transactions are to be dealt with upon sequestration
or liquidation.
[9] Wesbank, on the other hand, maintained that it had lawfully cancelled the
MISA and was entitled to the full proceeds of the goods. In particular, Wesbank
denied that s 133(1) of the Act precluded it from cancelling the MISA and dealing
with the goods in the manner that it did.
[10] The liquidators then approached the North Gauteng High Court, Pretoria, for
an order declaring that Wesbank’s letter of cancellation of the MISA was contrary to
s 133(1) of the Act and therefore invalid; that the MISA is to be administered by the
liquidators in terms of the provisions of ss 83 and 84 of the Insolvency Act and that
Wesbank is to pay over the full proceeds of the sale of the goods to the liquidators.
[11] Wesbank opposed the application. In the event, the matter was heard by
Jordaan J, who dismissed the application, but granted the liquidators leave to appeal
to this court.
Business Rescue Proceedings
[12] One of the declared purposes of the Act is to provide for the efficient rescue
and recovery of financially distressed companies, in a manner that balances the
rights and interests of relevant stakeholders (s 7(k)). Chapter 6 of the Act (ss 128 to
154) introduces the concept of business rescue proceedings, with s 128(1)(b)
defining ‘business rescue’ as ‘proceedings to facilitate the rehabilitation of a
company that is financially distressed by providing for:
(i) the temporary supervision of the company, and of the management of its affairs,
business and property;
(ii) a temporary moratorium on the rights of claimants against the company or in
respect of property in its possession; and
(iii) the development and implementation, if approved, of a plan to rescue the
company. . . .’
[13] The temporary moratorium envisaged in s 128(1)(b)(ii), has been enacted by
means of s 133 of the Act, which reads as follows:
‘General moratorium on legal proceedings against company
(1) During business rescue proceedings, no legal proceeding, including enforcement action,
against the company, or in relation to any property belonging to the company, or lawfully in
its possession, may be commenced or proceeded with in any forum, except—
(a) with the written consent of the practitioner;
(b) with the leave of the court and in accordance with any terms the court considers suitable;
(c) as a set-off against any claim made by the company in any legal proceedings,
irrespective of whether those proceedings commenced before or after the business rescue
proceedings began;
(d) criminal proceedings against the company or any of its directors or officers;
(e) proceedings concerning any property or right over which the company exercises the
powers of a trustee; or
(f) proceedings by a regulatory authority in the execution of its duties after written notification
to the business rescue practitioner.
(2) During business rescue proceedings, a guarantee or surety by a company in favour of
any other person may not be enforced by any person against the company except with leave
of the court and in accordance with any terms the court considers just and equitable in the
circumstances.
(3) If any right to commence proceedings or otherwise assert a claim against a company is
subject to a time limit, the measurement of that time must be suspended during the
company’s business rescue proceedings.’
[14] It is generally accepted that a moratorium on legal proceedings against a
company under business rescue, is of cardinal importance since it provides the
crucial breathing space or a period of respite to enable the company to restructure
its affairs. This allows the practitioner, in conjunction with the creditors and other
affected parties, to formulate a business rescue plan designed to achieve the
purpose of the process. See in general, F H I Cassim et al Contemporary Company
Law 2 ed (2012) at 878-879; P Delport et al Henochsberg on the Companies Act 71
of 2008 Service Issue 9 Vol 1 at 478(5) and H L Van Huÿssteen (2012) An overview
of the Business Rescue Moratorium Contained In Section 133 of the Companies Act
71 of 2008, Masters of Law (Commercial Law) [unpublished thesis]: University of
Johannesburg, Chapter 1 at 6-7. In fact, P Kloppers ‘Judicial Management ─ A
Corporate Rescue Mechanism In Need of Reform?’ (1999) 10 Stellenbosch LR 417
at 429 aptly described the moratorium as ‘a cornerstone of all business rescue
procedures’.
[15] I should also refer to two related sections of the Act, namely s 134(1)(c) and
s 136(2). Section 134(1)(c) provides that, during business rescue proceedings,
despite any provision of an agreement to the contrary, no person may exercise any
right in respect of any property in the lawful possession of the company, irrespective
of whether the property is owned by the company, except to the extent that the
practitioner consents in writing. The effect of s 136(2) of the Act is that a contract
concluded prior to the commencement of business rescue proceedings, is not
suspended or cancelled by virtue of the business rescue, but that the practitioner
may suspend, or apply to court to cancel, any obligation of the company under the
contract.
Evaluation
[16] It is plain from the above that, in their application in the court a quo, the
liquidators firmly pinned their colours to the mast of s 133(1) of the Act. This appears
from their notice of motion seeking an order declaring that Wesbank’s letter of
cancellation was contrary to the provisions of s 133(1) of the Act and as such invalid.
Similarly, in their founding papers the liquidators contended that the cancellation of
the MISA constituted ‘enforcement action’ as meant in s 133(1) of the Act, and as it
was effected without the consent of the practitioner or the leave of the court, it was
invalid.
[17] In their heads of argument in this court, the liquidators reiterated that ‘the
issue arising out of the application [in the court below] was the determination of the
proper meaning of s 133(1) of the Companies Act 71 of 2008 and particularly the
correct interpretation of the meaning of the term . . . no legal proceeding, including
enforcement action, against a company under business rescue may be
commenced’.
[18] At no stage prior to the date in the next paragraph did the liquidators rely on
the provisions of s 134(1)(c) of the Act as the basis for a finding that Wesbank’s
letter of cancellation was invalid. Although they did refer to s 134(1)(c) in their
papers, it was only for the purpose of invoking it in aid of their interpretation of s
133(1) of the Act.
[19] However, one court day before the hearing of this appeal, supplementary
heads were filed on behalf of the liquidators, in which they submitted that the
cancellation of the MISA by Wesbank ‘was invalid in terms of sections 133 and/or
134(1)(c) of the Companies Act’. Apart from the lateness of the supplementary
heads, this court questioned whether the liquidators were permitted to rely on s
134(1)(c) as their cause of action, seeing that it was not raised in the court below
and the parties have not had the opportunity of dealing with it in their papers or in
argument. Nor was the court a quo called upon to deal with s 134(1)(c) as the
foundation for the liquidators’ case.
[20] Counsel for the liquidators, relying on the decision in Barkhuizen v Napier
2007 (5) SA 323 (CC), submitted that the liquidators should be permitted to raise the
s 134(1)(c) argument in this court. In Barkhuizen the Constitutional Court reiterated
the well-known principle that the mere fact that a point of law is raised for the first
time on appeal, is not in itself sufficient reason for refusing to consider it, and if the
point is covered by the pleadings and its consideration on appeal involves no
unfairness to the other party, a court of appeal may in the exercise of its discretion
consider same.
[21] In my view the following considerations militate against the application of this
principle in the present appeal:
(a) The s 134(1)(c) point was not raised in the pleadings before the court a quo.
(b) The reliance on s 134(1)(c) does not raise a discrete point of law; on the contrary,
it would involve the determination of factual issues, to which I allude hereunder.
(c) The consideration on appeal of a cause of action based on s 134(1)(c), will no
doubt prejudice Wesbank. Particularly so, as it has not had the opportunity to deal
with it in its pleadings or to consider what evidence may be required to counter it.
(d) This court will be required to consider a case based on s 134(1)(c), which was
not pleaded and without the factual basis required for its determination. Nor would it
have the benefit of a reasoned judgment by the court a quo on this issue.
[22] Had the liquidators based their application on s 134(1)(c) of the Act, the
question would have arisen as to what the legal consequences were of the
practitioner’s consenting to Wesbank’s repossession of the goods forming the
subject matter of the MISA. Could this conduct of the practitioner not arguably be
regarded as an acceptance of the termination of the MISA by Wesbank, with the
result that the goods were no longer in the lawful possession of Skyline and
s 134(1)(c) would therefore not be available to the liquidators in their quest to reclaim
the goods or their proceeds from Wesbank? It also brings into sharp focus the
factual basis on which the practitioner relinquished possession of the goods.
[23] In the same vein it could be asked whether the repossession of the goods
with the consent of the practitioner, did not destroy the substratum of the MISA. One
of the essentialia of an instalment sale agreement such as the MISA, is that the
buyer is entitled to immediate possession of the relevant goods and to retain such
possession pending payment of the full purchase price, when ownership in the
goods will revert to the buyer. See M A Diemont and P J Aronstam The Law of
Credit Agreements and Hire-Purchase in South Africa 5 ed (1982) at 2. The
essentialia of a contract were described as follows by M Pothier A treatise on the
Law of Obligations or Contracts vol 1 (1806) 56:
‘Things which are of the essence of a contract are those without which such contract cannot
subsist, and for want of which there is either no contract at all, or a contract of a different
kind.’
(See also R H Christie and G B Bradfield Christie’s The Law of Contract in South
Africa 6 ed (2011) at 164.) In these circumstances a similar legal consequence may
follow, namely, that the repossession of the goods has resulted in the termination of
the MISA and therefore the liquidators are unable to invoke s 134(1)(c) to reclaim
the goods or the proceeds thereof. I should hasten to add that, as in the case of
paragraph 22 above, I make no finding in this regard.
[24] I do appreciate that the consent of the practitioner, as described above, was
not in writing as required in terms of s 134(1)(c) of the Act. However, I do not believe
that the requirement of writing should necessarily be regarded as peremptory rather
than directory. In this regard, it is important to note that there is no sanction added in
case the requirement is not met, nor does the section state that a failure to meet the
requirement of written consent should be visited with nullity. Also, on the liquidators’
own version, the practitioner, being fully aware of Wesbank’s letter of cancellation,
voluntarily consented to Wesbank repossessing the goods. In these circumstances it
would lead to an injustice to construe the requirement of writing in s 134(1)(c) as
peremptory and to hold that the practitioner’s failure to consent in writing, rendered
the repossession of the goods by Wesbank void. See Nkisimane v Santam
Insurance Company Limited 1978 (2) SA 430 (A) at 433H-434E; Taljaard v TL Botha
Properties 2008 (6) SA 207 (SCA) para 5; Chief Executive Officer, South African
Social Security Agency & others v Cash Paymaster Services (Pty) Ltd 2012 (1) SA
216 (SCA) para 28 and Liebenberg NO v Bergrivier Municipality [2012] 4 All SA 626
(SCA).
[25] Had the liquidators based their application on s 134(1)(c) of the Act, they may
very well have been met with a defence along the lines suggested above. However,
to properly consider a defence of this nature, evidence would be required regarding
the circumstances in which and the intention with which possession of the goods had
been relinquished. There are conflicting versions in the papers as to what the
practitioner intended when he consented to Wesbank repossessing the goods. On
the one hand, the liquidators allege that the practitioner allowed the repossession of
the goods for purposes of safekeeping pending the winding-up of Skyline. On the
other, they contend that the practitioner did not have any objection to Wesbank
selling the goods in business rescue. Wesbank, however, alleges that the
practitioner consented to the repossession of the goods as he felt that they were at
risk of depreciation and it would be prudent to transfer possession to Wesbank.
[26] I should add that, had the liquidators sought relief in terms of s 134(1)(c) on
the papers before the court a quo, the matter would have been decided on the facts
as stated by Wesbank (see Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty)
Ltd 1984 (3) SA 623 (A) at 634).This would inevitably have resulted in the dismissal
of the application.
[27] In these circumstances, and for the further reasons alluded to in paragraph 21
above, the liquidators are not at this late stage entitled to base their case on
s 134(1)(c) of the Act.
[28] Turning to s 133(1) of the Act, the liquidators’ approach was that Wesbank’s
cancellation of the MISA constituted ‘enforcement action’ as meant in the
subsection, and absent the consent of the practitioner or the leave of the court, the
cancellation was of no force or effect. By contrast, Wesbank submitted that the
cancellation of an agreement did not constitute ‘enforcement action’ as envisaged by
s 133(1) of the Act, therefore the consent of the practitioner or the leave of the court
was not required to effect a lawful cancellation of the MISA. The latter submission
found favour with the court a quo.
[29] It follows that an interpretation of s 133(1) of the Act is called for, the crisp
issue being whether the cancellation of the MISA by Wesbank by means of its letter
of 30 May 2012, constituted ‘enforcement action’ as meant in s 133(1) of the Act.
[30] In Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA
593 (SCA) para 18, this court reiterated that the inevitable point of departure in
interpreting a statute is the language of the provision itself, read in context and
having regard to the purpose of the provision and the background to the preparation
and production of the document. It should, however, be borne in mind that, if the
words of the relevant provision are unable to bear the meaning contended for, then
that meaning is impermissible. See Firstrand Bank Ltd v Land and Agricultural
Development Bank of South Africa 2015 (1) SA 38 (SCA) para 27. It is also
important to note that s 39(2) of the Constitution, which compels an interpretation of
legislative provisions in the light of the values enshrined in the Bill of Rights, applies
only where the language of the statute is not unduly strained. See South African
Airways (Pty) Ltd v Aviation Union of South Africa & others 2011 (3) SA 148 (SCA)
paras 25-26.
[31] Section 133(1) of the Act places a moratorium on ‘legal proceeding, including
enforcement action’. In the Afrikaans text the reference is to ‘geregtelike stappe,
insluitende afdwingingsaksie’. The Act does not contain a definition of these terms.
However, the term ‘legal proceeding’ is well-known in South African legal parlance
and usually bears the meaning of a lawsuit or ‘hofsaak’. See Van Zyl v Euodia Trust
(Edms) Bpk 1983 (3) SA 394 (T) at 399C-D and Lister Garment Corporation (Pty)
Ltd v Wallace NO 1992 (2) SA 722 (D) at 723G-H. Unsurprisingly, counsel were
agreed that the cancellation of an agreement does not constitute a ‘legal proceeding’
as envisaged in s 133(1) of the Act.
[32] As to the meaning of the phrase ‘enforcement action’, in my view Wesbank
correctly submitted that, in our legal parlance, ‘enforce’ or ‘enforcement’, usually
refers to the enforcement of obligations. In the context of s 133(1) of the Act, it is
significant that reference is made to ‘no legal proceeding, including enforcement
action’. (My emphasis.) The inclusion of the term ‘enforcement action’ under the
generic phrase ‘legal proceeding’, seems to me to indicate that ‘enforcement action’
is considered to be a species of ‘legal proceeding’ or, at least, is meant to have its
origin in legal proceedings. This conclusion is strengthened by the fact that s 133(1)
provides that no legal proceeding, including enforcement action, ‘may be
commenced or proceeded with in any forum’. (My emphasis.) A ‘forum’ is normally
defined as a court or tribunal (see the Concise Oxford Dictionary 12 ed (2011)) and
its employment in s 133(1) conveys the notion that ‘enforcement action’ relates to
formal proceedings ancillary to legal proceedings, such as the enforcement or
execution of court orders by means of writs of execution or attachment.
[33] Moreover, the concepts ‘enforcement’ and ‘cancellation’ are traditionally
regarded as mutually exclusive. The term ‘cancellation’ connotes the termination of
obligations between parties to an agreement. However, the liquidators contended for
a wider meaning to be attributed to the expression ‘enforcement action’ to include
the cancellation of an agreement. In so doing, I believe that they are doing violence
to the wording of s 133(1) of the Act. Cancellation is a unilateral act of a party to an
agreement and save for giving the other party notice of such cancellation, it does not
occur in or by means of any process associated with any form of forum. In any
event, as pointed out on behalf of Wesbank, it also does not make linguistic sense to
speak of cancellation as having ‘commenced or proceeded with’ in any forum, as
envisaged by s 133(1). It therefore seems to me that, linguistically, the phrase
‘enforcement action’ in s 133(1) is unable to bear the meaning of the cancellation of
an agreement, as contended for by the liquidators. Contextually it must be
understood to refer to enforcement by way of legal proceedings.
[34] This is really the end of the matter, but for the sake of completeness I will
succinctly deal with the remainder of the reasons for my conclusion. I have in
paragraph 14 above, alluded to the purpose of the moratorium in s 133(1) of the Act,
namely to provide a company in distress with the crucial breathing space to enable it
to restructure its affairs. I accept, as stated in Henochsberg at 478(6), that the
intention of the moratorium is to cast the net as wide as possible in order to include
any conceivable type of action against the company. The liquidators submit that,
having regard to this purpose, it would result in the inevitable demise of business
rescue proceedings if any creditor is allowed to cancel any contract with a company
under business rescue. Therefore, they contend that the net is cast so wide by
means of s 133(1) of the Act as to include a moratorium against a creditor cancelling
an agreement with a financially distressed company under business rescue.
[35] I do not agree with this submission. In my view there are sufficient safeguards
in Chapter 6 of the Act to prevent the disastrous result foreshadowed by the
liquidators. I refer to the following:
(a) In terms of s 136(2)(a) of the Act, the practitioner may, despite any provision of
an agreement to the contrary, entirely, partially or conditionally suspend, for the
duration of the business rescue proceedings, any obligation of the company that
arises under an agreement to which the company was a party at the commencement
of the business rescue proceedings. By invoking this provision, the practitioner could
prevent a creditor from instituting action and repossessing or attaching property in
the company’s possession.
(b) Section 154(2) of the Act provides that, once a business rescue plan has been
approved and implemented, a creditor is not entitled to enforce any debt owed by the
company prior to the beginning of the business rescue process, except to the extent
permitted in the business rescue plan.
[36] It follows, in my view, that an interpretation of s 133(1) of the Act, to the effect
that the cancellation of the MISA by Wesbank did not constitute ‘enforcement action’,
would not do violence to the purpose of s 133(1).
[37] In their interpretation of s 133(1) of the Act, the liquidators placed reliance on
the wording of s 128(1)(b)(ii) of the Act, in which a temporary moratorium on the
rights of claimants against a company under business rescue or in respect of
property in its possession, is envisaged. (My emphasis.) This section, it was
submitted, envisages a moratorium on the rights of creditors such as the right to
cancel an agreement. I do not agree. Section 128(1)(b)(ii) deals with the broad
purpose of Chapter 6 of the Act, while s 133 has been specifically enacted to cater
for the temporary moratorium. What is therefore required, is an interpretation of the
specific provisions of s 133(1) and not to seek to interpret it by resorting to
s 128(1)(b)(ii).
[38] The liquidators even attempted their hand at legislating, rather than
interpreting s 133(1) of the Act. They suggested that if one were to read the last part
of s 133(1) with a comma after the word ‘commenced’, the section is capable of
being read as envisaging ‘. . . legal proceedings being proceeded with in any
forum . . .’ or ‘. . . enforcement action commenced with . . .’, which would support the
interpretation contended for by them. What this submission really demonstrates is
that, if the legislature intended s 133(1) to have this meaning, it could easily have
done so by adopting the approach suggested by the liquidators. The fact that the
legislature did not follow this route puts paid to this submission of the liquidators.
[39] A further indication why the interpretation contended for by the liquidators is
untenable, is that it would render s 136(2) of the Act superfluous. In terms of the
latter section the practitioner may during business rescue proceedings entirely,
partially or conditionally suspend any obligation of the company arising under an
extant agreement. If, as the liquidators submit, s 133(1) already has the effect that
rights and obligations are frozen upon the commencement of business rescue, there
would have been no need for the legislature to incorporate s 136(2) in the Act.
[40] The liquidators’ construction that, in terms of s 133(1), the cancellation of an
agreement constitutes ‘enforcement action’ which requires the consent of the
practitioner or the court, would also fundamentally change our law of contract. As
explained earlier, our law of contract provides for a unilateral cancellation in the case
of a breach of contract. The way I see it, the legislature intended to allow the
company in distress the necessary breathing space by placing a moratorium on legal
proceedings and enforcement action in any forum, but not to interfere with the
contractual rights and obligations of the parties to an agreement. Such an intention
would, in any event, be contrary to the tenet of our law that the legislature does not
intend to alter the existing law more than is necessary, particularly if it takes away
existing rights. See L C Steyn Die Uitleg van Wette 5 ed (1981) at 97 and 237.
[41] Support for this view is found in s 133(3) of the Act, which provides protection
to third parties in respect of claims which are subject to the moratorium in that, if the
commencement of proceedings or claims are subject to a time limit, it is suspended
during business rescue proceedings. As emphasised by Jonathan Rushworth ‘A
critical analysis of the business rescue regime in the Companies Act 71 of 2008’
(2010) Acta Juridica at 384, the wording of s 133(3) is consistent with the concept of
a temporary moratorium on bringing claims, rather than a greater restriction on
creditors’ rights.
[42] We have been referred to some decisions of the high courts dealing with
various issues relating to business rescue. Apart from the general principles, these
decisions are not of much assistance, as they do not deal pertinently with the issues
to be decided in this appeal. It is, however, necessary to refer to one of the
decisions, namely LA Sport 4x4 Outdoor CC v Broadsword Trading 20 (Pty) Ltd &
others (A513/2013 [2015] ZAGPPHC 78 (26 February 2015), which concerned the
provisions of s 133(3) of the Act. In the course of the judgment the learned judge
opined that the cancellation of an agreement constituted ‘legal process which falls
under the moratorium placed on legal action against the company’. No reasons were
furnished for this obiter dictum, but, in view of what is set out above, I believe that it
is clearly wrong. In any event, it transpired during argument in this court that an
appeal against the decision has recently been upheld by the full court of that
division.
[43] Finally, I should refer to s 5(2) of the Act, which provides that ‘[t]o the extent
appropriate, a court interpreting or applying this Act may consider foreign company
law’. The liquidators referred us to corresponding provisions in foreign jurisdictions,
particularly those in England, Australia and Canada. Whilst apparently sharing the
same aim and goal as Chapter 6 of the Act, the wording of the corresponding
provisions in these jurisdictions, dealing with moratoriums and stay of proceedings,
differ to such an extent from their South African counterpart, that no meaningful
assistance would be gained by invoking them in the interpretation of s 133(1) of the
Act.
[44] I therefore conclude that the court a quo correctly rejected the liquidators’
interpretation of s 133(1) of the Act. It follows that the appeal falls to be dismissed.
As to costs, I am of the view that the employment of two counsel was justified.
[45] In the result the following order is made:
The appeal is dismissed with costs, including the costs of two counsel.
________________________
P B FOURIE
ACTING JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
F H Terblanche SC
J Hershensohn
Instructed by:
Tintingers Attorneys, Pretoria
Lovius Block Attorneys, Bloemfontein
For the Respondent:
C van der Spuy
L Meintjes
Instructed by:
Lanham-Love Attorneys, Pretoria
c/o Prinsloo-Van Der Linde Attorneys
McIntyre & Van Der Post 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
26 March 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Cloete Murray NO & another v FirstRand Bank Ltd (20104/2014) [2015] ZASCA 39 (26 March
2015)
The SCA has today delivered judgment in an appeal which concerned the interpretation of the
provisions of the Companies Act 71 of 2008 relating to business rescue proceedings. In interpreting
s 133(1) of Act 71 of 2008, the SCA held that the term ‘enforcement action’ does not include the
cancellation of an agreement concluded prior to the commencement of business rescue proceedings.
It accordingly held that a creditor of a company under business rescue had lawfully cancelled a
contract concluded with the company prior to the commencement of business rescue proceedings.
The appeal against the judgment of the North Gauteng High Court, Pretoria, was accordingly
dismissed with costs.
--- ends ---
|
14
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 267/2016
In the matter between:
SA METAL GROUP (PROPRIETARY) LIMITED
APPELLANT
and
THE INTERNATIONAL TRADE ADMINISTRATION
COMMISSION
FIRST RESPONDENT
THE MINISTER OF ECONOMIC DEVELOPMENT
SECOND RESPONDENT
Neutral citation:
SA Metal Group (Pty) Ltd v The International Trade Administration
Commission (267/2016) [2017] ZASCA 14 (17 March 2017)
Bench:
Ponnan, Leach, Majiedt and Willis JJA and Fourie AJA
Heard:
1 March 2016
Delivered:
17 March 2016
Summary: Appeal – s 16(2)(a)(i) Superior Courts Act 10 of 2013 – dismissal of
appeal where judgment or order sought would have no practical effect or result.
_____________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape High Court, Cape Town (Dolamo J sitting as court of
first instance):
Save for the costs of the application by the first respondent to adduce further evidence
on appeal, the appeal is dismissed with costs, such costs to include those consequent
upon the employment of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Ponnan JA (Leach, Majiedt and Willis JJA and Fourie AJA concurring):
[1] This may laconically be described as a scrap about scrap, in which counsel were,
at the outset of the hearing, required to address argument on the preliminary question of
whether the appeal and any order made thereon would, within the meaning of s
16(2)(a)(i) of the Superior Courts Act 10 of 2013, have any practical effect or result.
After hearing argument on this issue, the appeal was dismissed on 1 March 2017 in
terms of that section. It was intimated then that reasons would follow. These are the
reasons.
[2] Courts should and ought not to decide issues of academic interest only. That
much is trite.1 Section 16(2)(a)(i) provides:
„When at the hearing of an appeal the issues are of such a nature that the decision
sought will have no practical effect or result, the appeal may be dismissed on this ground alone.‟
1 See Legal-Aid South Africa v Magidiwana & others [2014] 4 All SA 570 (SCA) and the cases there cited.
Of its predecessor, s 21A of the Supreme Court Act 59 of 1959,2 this court stated:
'The purpose and effect of s 21A has been explained in the judgment of Olivier JA in the
case of Premier, Provinsie Mpumalanga, en 'n Ander v Groblersdalse Stadsraad 1998 (2) SA
1136 (SCA). As is there stated the section is a reformulation of principles previously adopted in
our Courts in relation to appeals involving what were called abstract, academic or hypothetical
questions. The principle is one of long standing.'3
[3] The primary question therefore – one to which I now turn – is whether the
judgment sought in this appeal will have any practical effect or result. It arises against
the backdrop of the following facts: The scrap metal supply chain in this country begins
with the collection by informal operators, who sell the metal to recyclers. Recyclers,
including the appellant, SA Metal Group (Pty) Ltd (SA Metal) – one of the largest scrap
metal dealers in South Africa – process the metal, which they then either export or sell
to the local scrap processing industry such as steel mills, mini mills and foundries. The
scrap-processing industry then manufactures products, which it onsells to various
downstream industries such as the mining, automotive, construction and agricultural
sectors. Historically, the export price of scrap metal had a direct bearing on the price at
which scrap metal was sold within the domestic market. According to the second
respondent, the Minister of Economic Development (the Minister), parts of the scrap-
processing industry are in a dire state and have experienced substantial decline over
the last decade. Job losses and closures have been the order of the day, and the
dramatic decline in parts of the domestic scrap-processing industry has impacted
negatively on Government‟s infrastructure-build programme and its imperative of
deepening downstream manufacturing.
[4] South Africa is a founding member of the World Trade Organisation Agreement
and also a signatory to the General Agreement on Tariffs and Trade of 1947 (the
GATT). The South African Government acceded to the GATT and its accession was
2 Section 21A(1) of the Supreme Court Act 59 of 1959 provided:
'When at the hearing of any civil appeal to the Appellate Division or any Provincial or Local Division of the
Supreme Court the issues are of such a nature that the judgment or order sought will have no practical
effect or result, the appeal may be dismissed on this ground alone.'
3 Coin Security Group (Pty) Ltd v SA National Union for Security Officers & others 2001 (2) SA 872 (SCA)
para 7.
published in the Government Gazette. Parliament approved the agreement in the
Geneva General Agreement on Tariffs and Trade Act 29 of 1948. The World Trade
Organisation Agreement was the outcome of the so-called Uruguay Round of the GATT
negotiations and was concluded in Marrakesh by the signing of some 27 agreements
and instruments in April 1994 by the members including South Africa.4 The Preamble to
the GATT reads:
„The Governments of . . . :
Recognizing that their relations in the field of trade and economic endeavour should be
conducted with a view to raising standards of living, ensuring full employment and a large and
steadily growing volume of real income and effective demand, developing the full use of the
resources of the world and expanding the production and exchange of goods,
Being desirous of contributing to these objectives by entering into reciprocal and mutually
advantageous arrangements directed to the substantial reduction of tariffs and other barriers to
trade and to the elimination of discriminatory treatment in international commerce.‟
[5] Domestically, that is echoed in the International Trade Administration Act 71 of
2002 (the Act), which seeks to „foster economic growth and development in order to
raise incomes and promote investment and employment in the Republic . . . .‟.5 Section
7 of the Act established the first respondent, the International Trade Administration
Commission (ITAC). ITAC is obliged to carry out the functions assigned to it in terms of
the Act or by the Minister or that arise out of an obligation of the Republic in terms of a
trade agreement.6 Section 5 of the Act empowers the Minister to issue trade policy
statements or directives. According to s 6(1) of the Act:
„The Minister may, by notice in the Gazette, prescribe that no goods of a specified class
or kind, or no goods other than goods of a specified class or kind, may be–
. . .
(c)
exported from the Republic; or
4 See Progress Office Machines v SARS 2008 (2) SA 13 (SCA) para 5; Bridon International GMBH v
International Trade Administration Commission 2013 (3) SA 197 (SCA) para 12; International Trade
Administration Commission & another v South African Tyre Manufacturers Conference (Pty) Ltd & others
(738/2010) [2011] ZASCA 137; 2011 JDR 1161 (SCA) para 1.
5 Section 2 of the Act.
6 Section 15 of the Act.
(d)
exported from the Republic, except under the authority of and in accordance with the
conditions stated in a permit issued by the Commission.‟
In terms of s 7(2), ITAC is subject to any trade policy statement or directive issued by
the Minister in terms of s 5 and any notice issued by the Minister in terms of s 6.
[6] On 10 May 2013 the Minister published „a policy directive on the export of
ferrous and non-ferrous waste and scrap metal‟ (the directive) in terms of s 5 of the Act.7
The directive provided:
„2.
(a)
Ferrous and non-ferrous waste and scrap metal should not be exported
unless it has first been offered to domestic users of scrap, for a period determined by ITAC, and
at a price discount or other formula determined by ITAC intended to facilitate local rather than
export sale.
(b)
To ensure the type and quality of scrap metal that is intended for export are accurately
reflected on applications for export permits, all permit applications should be accompanied by
confirmation by a metallurgical engineer or a suitably qualified person, confirming the type,
quality and quantity of scrap at hand for export, and information as to when and where such
scrap metal may be inspected by prospective buyers.‟
The concluding paragraph of the directive reads:
„Should this directive be found to be in conflict with any provision of a trade agreement
which is binding on South Africa, ITAC should apply it in a manner which ensures compliance
with such agreement.‟
[7] What motivated the directive is explained by the Minister thus:
„In the last decade, many steel mills, secondary smelters and foundries have been
forced to close shop as a result of being unable to make ends meet. This was caused, amongst
other things, by their inability to afford scrap metal at the prices at which scrap metal was
available for sale locally – which was effectively the same price at which the scrap was being
offered to international purchasers of scrap metal. The closure of these businesses caused job
losses and a reduction in the supply of steel products manufactured from recycled scrap metal
for sale to end users such as mining houses . . . .
7 Policy Directive on the Exportation of Ferrous and non-Ferrous Waste and Scrap Metal, GN 470, GG
36451, 10 May 2013.
This state of affairs also affected the quality of the scrap metal which was available for local use
because most of the high quality scrap was exported. These combined difficulties facing the
domestic industries caused an economic crisis in respect of which government had to intervene
. . . .
It was in the light of the economic crisis described above that I issued the Directive, which led to
the publication by ITAC of the original Guidelines and the amended Guidelines. I shall refer to
the Directive and the Guidelines collectively . . . as “the price-preference system”.
. . .
The Directive and Guidelines constitute interventions to address the crisis in the scrap-
processing industry. They form part of a much broader economic strategy on the part of
government.‟
[8] In accordance with the directive, on 2 August 2013 ITAC published „export
control guidelines on the exportation of ferrous and non-ferrous waste and scrap‟8 (the
guidelines) which, to the extent here relevant, provided:
„. . . scrap metal will be allowed to be exported only if the scrap metal concerned was
offered to domestic consumers at a price that is 20% below international spot prices for the
published types and grades of scrap metal.
. . .
ITAC will exempt affected exports from these requirements to the extent that application of
these requirements would be in conflict with South Africa‟s obligations under an existing trade
agreement. The guidelines will be applied and implemented in such a manner that they are
consistent with any binding trade agreement.‟
On 12 September 2014 ITAC published amended guidelines (the amended guidelines).
Paragraph 8.7 thereof read:
„ITAC will exempt affected exports from these requirements to the extent that application
of these requirements would be in conflict with South Africa‟s obligations under an existing trade
agreement. Where such an allegation is raised with ITAC, it must be raised at the time an
application form is submitted to ITAC and must be in sufficient details for ITAC to understand
the nature and basis of the allegation. ITAC will consider the merits of an allegation and make a
decision that will be determinative thereof for purposes of the export permit application.‟
8 ITAC Export Control Guidelines on the Export of Ferrous and non-Ferrous Waste and Scrap, GN R543
GG 36708, 2 August 2013.
[9] On 20 October 2014, SA Metal applied for ten permits for the export of scrap
metal. It sought an exemption in each instance from the price preference system
primarily on the basis that the application of those requirements would be in conflict with
South Africa‟s obligations under the GATT. On 30 October 2014 ITAC, asserting that
„subjecting the application to the guidelines would not violate South Africa‟s obligations
under the GATT‟, refused SA Metal‟s request. Aggrieved by that refusal, SA Metal
applied to the High Court, Western Cape Division, Cape Town seeking:
„1.
An order in terms of Sections 6 and 8 of the Promotion of Administrative Justice Act 3
of 2000 reviewing and setting aside the decision taken on 30 October 2014 by the first
respondent refusing to exempt the applicant‟s ten applications for export permits made
on 20 October 2014 annexed to the founding affidavit as “GB4” and “GB5” (“the permit
applications”) from the price preference system administered by it, and on that basis
refusing to grant the export permits;
2.
An order substituting for the decision of the first respondent described in paragraph 1
above the following decisions:
2.1
SA Metal‟s applications dated 20 October 2014 for export permits are exempted from the
price preference system;
2.2
SA Metal‟s applications dated 20 October 2014 for the following permits are granted:
2.2.1 Two permits to export 500 metric tons of grade 201 steel scrap each;
2.2.2 Two permits to export 20 metric tons of copper scrap each of the grade known
internationally as “Millberry”;
2.2.3 Two permits to export 20 metric tons of copper scrap each of the grade known
internationally as “Berry”;
2.2.4 One permit to export 50 metric tons, and one permit to export 40 metric tons, of copper
scrap of the grade known internationally as “Birch/Cliff”;
2.2.5 Two permits to export 50 metric tons of brass scrap each of the grade known
internationally as “Honey”;
3.
An order directing the first respondent forthwith to issue export permits in accordance
with the aforesaid decisions;
4.
Alternatively to paragraphs 2 and 3 above, an order remitting the permit applications and
the application for exemption from the price preference system for reconsideration by the
first respondent and directing the first respondent to take a decision within five (5) days
of the date of this order in accordance with such directions as the Court may make.‟
The High Court (per Dolamo J) dismissed the application but granted leave to SA Metal
to appeal to this court.
[10] Inasmuch as: (a) ITAC‟s refusal had occurred during October 2014; and (b) the
proposed dates in SA Metal‟s applications for the export of the scrap metal was
November 2014 to January 2015, we were required to consider, at the hearing of the
matter, whether the appeal should be entertained at all. To that end, counsel were
requested to file supplementary heads of argument and present argument as to whether
it was not appropriate to deal with the matter in terms of s 16(2)(a)(i) of the Act.
[11] In this regard, every case has to be decided on its own facts. And efforts to
compare or equate the facts of one case to those of another are unlikely to be of
assistance.9 SA Metal‟s notice of motion sought to review and set aside ITAC‟s refusal
to exempt its ten applications for export permits. Each application by SA Metal related to
specified items of scrap metal that were to be exported from November 2014 to January
2015 and said to be available for inspection at named locations. The permits did not
relate to scrap metal in generic terms. Rather, the relief sought was directed at
permitting SA Metal to export the specified scrap metal referred to in the applications. It
must be accepted that it would be impermissible for SA Metal to use the export permits
for any other scrap metal but those the subject of the applications.
[12] Counsel for the appellant was constrained to concede that the setting aside of
the High Court order now and the granting of prayers 1 to 3 of SA Metal‟s notice of
motion would plainly have no practical effect. He accordingly sought to rest his case on
prayer 4. But, prayer 4 is not a self-standing prayer. What is sought in prayer 4, in the
alternative to the main relief, is an order „remitting the permit applications and the
application for exemption from the price preference system for reconsideration by
[ITAC]‟. In context, the permit applications contemplated in prayer 4 can only be those
9 The Kenmont School & another v D M & others (454/12) [2013] ZASCA 79; 2013 JDR 1365 (SCA) para
12.
envisaged in prayer 2. And, as prayer 4 inexorably follows upon prayers 1 to 3, the fate
of the former is inextricably linked to the latter. There obviously can be little point in now
remitting the 20 October 2014 permit applications for reconsideration by ITAC. Given
the passage of time there can be nothing for ITAC to reconsider. To remit the matter to
ITAC in circumstances such as this, where the issue has become hypothetical, abstract
or academic, would be meaningless and amount to an act in futility.10 Moreover, even
were we to incline to the view that the high court was wrong in declining to grant a
declaratory order, there would be no point in referring the matter back to that court.11
[13] Faced with that difficulty, there was some attempt by Counsel to suggest that the
review also encompassed within its ambit a much broader challenge to the price
preference system, which, so the argument went, remained a live issue. But, that was
specifically eschewed by SA Metal in the court below. SA Metal had there pointed out
that when regard is had to the answering affidavits of ITAC and the Minister, it was
obvious that both of them had misconceived its (SA Metal‟s) case. It accordingly sought
to set matters to right when it stated in its replying affidavit:
„ITAC appears to be under the erroneous impression that SA Metal seeks a mandatory
interdict, and seeks to challenge the price preference system generally. The Minister, too,
appears to be under the impression that SA Metal seeks to impugn the price preference system
generally for being in violation of the GATT . . . .‟
„SA Metal‟s application is not a challenge to the price preference system generally . . . The
application is for an order reviewing and setting aside the decision made by ITAC on 30 October
2014 in respect of the export permit application . . . .‟
SA Metal thus made it plain that the relief sought was limited to the ten permit
applications annexed to its founding affidavit.
[14] It was nonetheless urged upon us that this is an appropriate matter for the
exercise of this court`s discretion to allow the appeal to proceed. In that regard we were
10 „A hypothetical interest is one that is expressly claimed, but is neither real nor true. And an academic
interest is one that is not related to a real or practical situation and is, therefore, irrelevant.‟ (Giant
Concerts CC v Rinaldo Investments (Pty) Ltd & others 2013 (3) BCLR 251 (CC) para 51).
11 West Coast Rock Lobster Association & others v The Minister of Environmental Affairs and Tourism &
others [2011] 1 ALL SA 487 (SCA) para 45.
referred to Natal Rugby Union v Gould.12 The fallacy in the approach of SA Metal,
however, is to assume, erroneously so, that what confronts us in this matter - as in
Gould’s case - is a discrete legal issue. As I shall show, it is not. As was explained in
Centre of Child Law v The Governing Body of Hoërskool Fochville:13
„This court has a discretion in that regard and there are a number of cases where,
notwithstanding the mootness of the issue as between the parties to the litigation, it has dealt
with the merits of an appeal (see, inter alia, Natal Rugby Union v Gould 1999 (1) SA 432 (SCA)
([1998] 4 All SA 258); Land en Landbouontwikkelingsbank van Suid-Afrika v Conradie 2005 (4)
SA 506 (SCA) ([2005] 4 All SA 509); The Merak S: Sea Melody Enterprises SA v Bulktrans
(Europe) Corporation 2002 (4) SA 273 (SCA) and Executive Officer, Financial Services Board v
Dynamic Wealth Ltd 2012 (1) SA 453 (SCA)). With those cases must be contrasted a number
where the court has refused to enter into the merits of the appeal.14 The broad distinction
between the two classes is that in the former a discrete legal issue of public importance arose
that would affect matters in the future and on which the adjudication of this court was required,
whilst in the latter no such issue arose.
[15] In my view, this case plainly falls into the latter of the two categories alluded to
above.15 As best as I could discern the argument, the discrete legal issue alluded to
harked back to the price preference system, which, as I have already pointed out, had
been specifically disavowed on the papers. What is more, as the orders sought had
become moot and the relief prayed for was no longer competent, the attack, in truth,
became one that was directed at the reasoning of the court below. However, an appeal
does not lie against the reasons for judgment, but rather against the substantive order
made by a court.16
12 Natal Rugby Union v Gould 1999 (1) SA 432 (SCA).
13 Centre of Child Law v The Governing Body of Hoërskool Fochville 2016 (2) SA 121 (SCA) para 11.
14 See for example: Radio Pretoria v Chairman, Independent Communications Authority of South Africa &
another 2005 (1) SA 47 (SCA); Rand Water Board v Rotek Industries (Pty) Ltd 2003 (4) SA 58 (SCA);
Minister of Trade and Industry v Klein NO [2009] 4 All SA 328 (SCA); Clear Enterprises (Pty) Ltd v
Commissioner, South African Revenue Service and Others [2011] ZASCA 164 (29 September 2011);
Kenmont School and Another v D M and Others [2013] ZASCA 79 (30 May 2013) and Ethekwini
Municipality v South African Municipal Workers Union and others [2013] ZASCA 135 (27 September
2013) and Legal Aid South Africa v Magidwana [2014] ZASCA 141.
15 See Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others 2013 (3) SA
315 (SCA) para 5.
16 Western Johannesburg Rent Board & another v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A) at 355;
Absa Bank v Mkhize and Two Similar Cases 2014 (5) SA 16 (SCA) para 64.
[16] A further string to SA Metal‟s bow is that the issue in this appeal will arise
„regularly‟ in respect of export permit applications. There is, however, no reason to
believe that a „large number of similar cases‟, as SA Metal put it, can be anticipated.
ITAC is required to consider mero motu whether exports should be exempted from the
price preference system. The amended guidelines make it plain that a prospective
exporter is required to raise the exemption issue when it applies for an export permit,
and must do so „in sufficient detail for ITAC to understand the nature and basis of the
allegation‟. Although the price preference system has been in place since 2013, no
other exporter appears to have raised the exemption issue. It thus seems that the only
exporter likely to raise that issue „regularly‟ is SA Metal itself.
[17] SA Metal‟s submission therefore amounts to this: even if the determination of the
present appeal would have no practical effect for present purposes, this court should
nonetheless decide the appeal because SA Metal intends to raise the exemption issue
when it applies for export permits in the future. However, the fact that SA Metal may
have an intention to rely on the exemption issue in future applications does not mean
that there is a „discrete legal issue of public importance‟ before the court. The directive,
which was published in May 2013, is effective for five years. At the end of that period „it
will be reviewed to determine whether it should be terminated or extended for a limited
period, with or without amendment‟. The directive thus only has approximately one year
to run. It follows that any decision of this court would therefore have limited application.
[18] In circumstances where SA Metal has itself chosen to limit its relief to the ten
permit applications, there can be no reason of public interest why the court should
decide an appeal that would have no practical effect. The appellant is bound to the relief
that it sought and if that relief has now become academic, it cannot resort to a general
justification for pursuing the appeal. The general justification being that a similar legal
issue may arise in relation to other export applications. If the appellant had wanted to
have such an issue decided, it ought to have sought such relief and properly motivated
for its grant in the public interest.
[19] In effect what SA Metal really seeks is to have this court express a view on a
legal conundrum that may arise in the future without in any way affecting the position
between the parties to the present dispute. The essential flaw in SA Metal‟s case is one
of timing or ripeness.17 As it was put in Clear Enterprises (Pty) Ltd v SARS,18 whatever
issues may arise in those matters are not yet „ripe‟ for adjudication. In Coin Security
Group (Pty) Ltd v SA National Union for Security Officers,19 Plewman JA quoted with
approval from the speech of Lord Bridge of Harwich in the case of Ainsbury v Millington
[1987] 1 All ER 929 (HL), which concluded:20
„It has always been a fundamental feature of our judicial system that the Courts decide
disputes between the parties before them; they do not pronounce on abstract questions of law
when there is no dispute to be resolved‟.
[20] After all, courts of appeal often have to deal with congested rolls. And, as Innes
CJ observed in Geldenhuys & Neethling v Beuthin,21 they „exist for the settlement of
concrete controversies and actual infringements of rights, not to pronounce upon
abstract questions, or to advise upon differing contentions, however important‟. That
was echoed by the Constitutional Court in National Coalition for Gay and Lesbian
Equality & others v Minister of Home Affairs22 when it said:
„A case is moot and therefore not justiciable if it no longer presents an existing or live
controversy which should exist if the court is to avoid giving advisory opinions on abstract
propositions of law.‟
[21] SA Metal‟s appeal was accordingly dismissed at the hearing of the matter in
terms of s 16(2)(a)(i) of the Superior Courts Act. That leaves costs: In this court ITAC
sought leave to adduce further evidence on appeal. The evidence was to the effect that
an inspection by it revealed that SA Metal no longer had custody of the scrap metal, the
17 Ferreira v Levin NO & others; Vryenhoek v Powell NO & others 1996 (1) SA 984 (CC) para 199.
18 Clear Enterprises (Pty) Ltd v SARS (757/10) [2011] ZASCA 164.
19 In Coin Security Group (Pty) Ltd v SA National Union for Security Officers & others 2001 (2) SA 872
(SCA) para 9.
20 At 930g.
21 Geldenhuys & Neethling v Beuthin 1918 AD 426 at 441.
22 National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others 2000 (2)
SA 1 (CC) para 21 footnote 18.
subject of the ten permit applications. That application was opposed by SA Metal. The
opposition gave rise to a dispute of fact that was incapable of resolution on the papers.
In argument, ITAC accepted that the evidence sought to be introduced was not strictly
necessary for the determination of the appeal and accordingly did not persist with the
application. It follows that the application must be dismissed.
[22] The Minister did not seek any costs in respect of the aborted application. SA
Metal, however, did. SA Metal persisted in an obviously unmeritorious appeal despite a
note from the registrar of this court more than two months prior to the hearing of the
matter raising mootness and enquiring whether the appeal was being persisted in. In
addition, the costs of the application for leave to adduce evidence constitute a miniscule
portion of the overall costs of the appeal. I accordingly take the view that there should
be no order as to costs insofar as that application is concerned. Save for those costs,
the costs of the appeal must otherwise follow the result.
[23] In the result:
Save for the costs of the application by the first respondent to adduce further evidence
on appeal, the appeal is dismissed with costs, such costs to include those consequent
upon the employment of two counsel.
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For Appellant:
LS Kuschke SC (with him E F van Huyssteen)
Instructed by:
Bernadt Vukic Potash & Getz, Cape Town
Lovius Block, Bloemfontein
For First Respondent:
S Du Toit SC (with him F Ismail)
Instructed by:
The State Attorney, Cape Town
The State Attorney, Bloemfontein
For Second Respondent:
A Cockrell SC (with him A Friedman)
Instructed by:
Webber Wentzel, Cape Town
Honey Attorneys, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
17 March 2017
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.
SA Metal Group (Pty) Ltd v The International Trade Administration Commission
(267/2016) [2017] ZASCA 14 (17 March 2017)
Today the Supreme Court of Appeal (SCA) dismissed an appeal by SA Metal Group (Pty) Ltd
against a judgment of the Western Cape High Court, Cape Town.
The issue on appeal was whether, given the passage of time, the judgment sought in the
appeal would have any practical effect or result within the meaning of s 16(2)(a)(i) of the
Superior Courts Act 10 of 2013.
The dispute arose against the backdrop of a policy directive by the Minister of Economic
Development. In accordance with this directive the International Trade Administration
Commission (the ITAC) published guidelines on the export of ferrous and non-ferrous waste
and scrap. On 20 October 2014, SA Metal applied for ten permits for the export of scrap
metal. In each instance, it sought an exemption from the price preference system on the basis
that the application of these requirements would be in conflict with South Africa’s obligations
under the General Agreement on Tariffs and Trade (GATT). On 30 October 2014, ITAC
refused all ten applications, asserting that the application of the guidelines would not violate
the country’s obligations under the GATT. Aggrieved by that refusal, SA Metal applied to the
High Court primarily to review and set aside ITAC’s decision. The High Court dismissed the
application, but granted leave to appeal to the SCA.
On appeal, the SCA held that given that ITAC’s refusal occurred in October 2014, and that
the dates proposed by SA Metal for the export of the scrap metal were November 2014 to
January 2015, the matter had become moot and the decision of the court would thus be of no
practical effect. Substantiating its conclusion, the court further held that the relief sought by
SA Metal did not raise a discrete legal issue of public interest, or an issue affecting the
position between the parties in the present matter.
|
3433
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 792/19
In the matter between:
MUNICIPAL EMPLOYEES’
PENSION FUND
FIRST APPELLANT
AKANI RETIREMENT FUND
ADMINISTRATORS (PTY) LTD
SECOND APPELLANT
AKANI PROPERTIES (PTY) LTD
THIRD APPELLANT
and
CHRISAL INVESTMENTS (PTY) LTD FIRST RESPONDENT
TAKOU INVESTMENTS (PTY) LTD SECOND RESPONDENT
PROCPROPS 60 (PTY) LTD
THIRD RESPONDENT
ADAMAX PROPERTY PROJECTS
MENLYN (PTY) LTD
FOURTH RESPONDENT
Neutral citation: Municipal Employees’ Pension Fund and Others v
Chrisal Investments (Pty) Ltd and Others (792/19)
[2020] ZASCA 116 (1 October 2020)
Coram:
CACHALIA, WALLIS and MBHA JJA and EKSTEEN and
WEINER AJJA.
Heard:
20 August 2020
Delivered: This judgment was handed down electronically by
circulation to the parties' representatives via email,
publication on the Supreme Court of Appeal website and
release to SAFLII. The date and time for hand-down is
deemed to be 9.45 am on 1 October 2020.
Summary: Actio Communi Dividundo – Contract providing for co--
ownership of property in undivided shares and letting enterprise –
whether co-ownership an instance of bound or free co-ownership –
whether resort to actio competent.
___________________________________________________
ORDER
___________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (De
Villiers AJ sitting as court of first instance):
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the high court is set aside and replaced by the
following order:
'The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.'
JUDGMENT
Wallis JA (Cachalia and Mbha JJA and Eksteen and Weiner AJJA
concurring)
[1] Three companies (the Adamax co-owners), which owned a
business operating three shopping centres, disposed of a 55 percent share
in that business to the first appellant, the Municipal Employees' Pension
Fund (the MEPF), for a total price of R550 million. Simultaneously with
that disposal their holding company, the fourth respondent, Adamax
Property Projects Menlyn (Pty) Ltd (Adamax), concluded a detailed
co-ownership agreement (the COA) with the MEPF. This agreement
encompassed the distribution of income from the business; the incurrence
of costs and other obligations; the constitution of an executive committee;
property and financial management of the business; and the costs of
managing the shopping centres. The COA was firmly tied to the sale
agreement by way of a condition precedent that made the sale agreement
dependent on the conclusion of the COA. It contained detailed provisions
in regard to its duration and the manner in which either party might
dispose of their interest in the business.
[2] Was it open to the sellers, the day after these agreements had been
concluded and implemented and at all times thereafter, to ignore all those
detailed contractual arrangements and bring proceedings under the actio
communi dividundo to terminate the joint ownership of the business and
cause the properties on which the shopping centres stand to be sold? The
high court's judgment answers that question in the affirmative. I do not.
The agreements
[3] The first, second and third respondents are the Adamax co-owners.
They owned the shopping centre business and the immovable properties
on which the Parkview, Glen Village South and Glen Village North
shopping centres are constructed. The precise relationship between them
and even whether each one owns the properties on which one shopping
centre stands does not emerge from the papers. What is clear is that they
are merely corporate vehicles through which Adamax conducted the
shopping centre business. The other appellants are the administrator of
the MEPF and an associated company. They play no role in the legal
issues in this case.
[4] The two agreements that are relevant to this case are the sale
agreement and the COA. There was also a Property Management
Agreement governing the management of the shopping centres, but that
was itself a by-product of the other two agreements. The subject of the
sale agreement was 'the Enterprise', which was defined in clause 2.6.4 as:
'the letting enterprise carried on by the Sellers as a going concern on the Properties
consisting of the Properties and all right, title and interest in and to the Leases.'
Clause 2.6.12 defined the 'Properties' as a '55% undivided share in the
properties owned by the Sellers', that is, the first to third respondents.
Clause 2.6.6 defined the 'Leases' as the written agreements of lease in
respect of the letting and hiring of the premises forming part of the
Properties.
[5] In terms of clause 4.1 the Sellers sold the Enterprise to the MEPF
for a price of R550 million. Clause 4.3.8 said that the Properties and the
Leases were an 'enterprise' as defined in section 1 of the Value-Added
Tax Act 89 of 19911 and clause 4.3.9 provided that:
'such enterprise is being disposed of as a "going concern" within the meaning of
Section 11(1)(e)(i) of the VAT Act.'
The significance of an enterprise being disposed of as a going concern is
that it then attracts a zero rating for VAT purposes.2 In order to qualify
1 The relevant portion of the definition of an 'enterprise' is sub-sec (a), which reads:
' in the case of any vendor, any enterprise or activity which is carried on continuously or regularly by
any person in the Republic or partly in the Republic and in the course or furtherance of which goods or
services are supplied to any other person for a consideration, whether or not for profit, including any
enterprise or activity carried on in the form of a commercial, financial, industrial, mining, farming,
fishing, municipal or professional concern or any other concern of a continuing nature or in the form of
an association or club'.
2 Section 11(1)(e)(i) of the VAT Act reads:
' the supply is to a registered vendor of an enterprise or of a part of an enterprise which is capable of
separate operation, where the supplier and the recipient have agreed in writing that such enterprise or
part, as the case may be, is disposed of as a going concern: Provided that—
(i)
such enterprise or part, as the case may be, shall not be disposed of as a going concern
unless—
(aa)
such supplier and such recipient have, at the time of the conclusion of the agreement for the
disposal of the enterprise or part, as the case may be, agreed in writing that such enterprise or part, as
the case may be, will be an income-earning activity on the date of transfer thereof; and
(bb)
the assets which are necessary for carrying on such enterprise or part, as the case may be, are
disposed of by such supplier to such recipient; and
for this in terms of the VAT Act the enterprise must be an
income-earning activity. A business operating three shopping centres
qualifies as such.
[6] Furthermore, clause 3 recorded that the sale constituted a merger
between the MEPF and the first to third respondents for the purposes of
the Competition Act 89 of 1998 and required the approval of the
Competition Commission. In terms of the definition in s 12 of the
Competition Act a merger arises where one firm directly or indirectly
acquires or establishes direct or indirect control over the whole or part of
the business of another firm. This was a merger because the MEPF
acquired control, as defined in the Competition Act, over the business of
the Adamax co-owners.
[7] Importantly, these provisions demonstrate that under the sale
agreement the MEPF did not merely purchase certain immovable
properties, but acquired an interest in the business of operating the three
shopping centres (the Letting Enterprise). Its principal tangible assets
were the shopping centres themselves and the leases with tenants that
provided the revenue stream of the business. The importance of the leases
is apparent from clause 5 under which the sellers provided the MEPF
with a guarantee that the net income of the MEPF's 55 percent undivided
share in the Letting Enterprise would amount to at least R49.5 million per
annum for the first four years. Without the leases the shopping centres
would have been white elephants with little commercial value. The leases
(cc)
in respect of supplies on or after 1 January 2000, such supplier and such recipient have at the
time of the conclusion of the agreement for the disposal of such enterprise or part, as the case may be,
agreed in writing that the consideration agreed upon for that supply is inclusive of tax at the rate of zero
per cent;'
and their income earning potential were what transformed the buildings
from empty shells into a business valued for the purposes of the sale
agreement at R1 billion. Leases to suitable tenants, whose wares and
services were aimed at the target market of shoppers and visitors to the
business premises in the centres, would generate footfall through the
centres and create the goodwill attaching to them. Their importance was
demonstrated by the extensive warranties concerning the existence and
commercial viability of the leases given by the Adamax co-owners to the
MEPF in clauses 9.3, 9.4 and 9.5 of the sale agreement. In turn, without
the right to occupy the centres and turn them to commercial account, the
shopping centre business and the letting enterprise that was the subject of
the sale would not have existed. Counsel for both parties agreed that, in
the words of an old song, 'You can't have one without the other.'3
[8] I stress that the subject of the sale agreement was the business
described as the Letting Enterprise, although the immovable properties
together with the leases constituted the Letting Enterprise. However, the
application was brought on the premise that it concerned only the joint
ownership of the properties on which the shopping centres are situated.
The deponent to the founding affidavit, Dr de Muelenaere, said:
'The purpose of this application is to obtain an order under the common law in terms
of the actio communi dividundo to dissolve the current co-ownership between the
Adamax Co-owners and the MEPF and to provide for the structured unbundling of the
common property.
As will appear more fully herein below, the Adamax co-owners and the MEPF are co-
owners of immovable property in the form of three shopping centres in Pretoria. The
MEPF is the owner of a 55% undivided share in the common properties and the
3 Clause 4.3.11 of the Sale Agreement recorded that the 'Properties, together with the Sellers' rights and
obligations under the Leases (all of which are being sold to the Purchaser in terms of this Agreement)
comprise all the assets necessary for the carrying on of the business.'
Adamax co-owners are the owners of the remaining 45% share in the common
property.'
[9] In referring to co-ownership Dr de Muelenaere was concerned only
with co-ownership of the immovable properties on which the shopping
centres are situated. He made this clear a little later in the affidavit, where
he said that the Adamax co-owners 'owned a number of properties
essentially comprising of, or adjacent to, three shopping centres' and that
on 9 November 2011 they 'sold an undivided share in certain properties
(including the properties comprising the three aforementioned shopping
centres) to the MEPF'. He described these as the co-owned properties
and in dealing with the relief sought explained that the Adamax
co-owners were not in a position to buy the MEPF's 'share in the
properties'. The suggested relief was that 'the property portfolio' should
be placed on the market by a liquidator to be sold.
[10] It is true that in delivering the Letting Enterprise to the MEPF a
55 percent share in each of the immovable properties owned by the
Adamax co-owners was transferred to the MEPF. But there was also a
cession and assignment of their rights and obligations under the leases to
the extent of a 55 percent interest. Together this resulted in the transfer to
the MEPF of a 55 percent interest in the Letting Enterprise purchased by
it. Had the undivided share in the immovable properties not been
transferred to the MEPF, the sale of the 55 percent stake in the Letting
Enterprise would not have been affected, although its terms would have
needed to be adjusted, as the Adamax co-owners would still have been
obliged to allow the shopping centres to be used by the Letting Enterprise
for the purposes of conducting its business. No doubt part of the reason
for effecting a transfer of the 55% interest in the immovable properties
was to provide the MEPF with greater security and because in terms of
clause 9.2 of the COA each party was entitled to procure and register a
mortgage bond over their pro rata share in order to secure financing from
a financial institution without the consent of the other party.
[11] Turning to the COA it was concluded by Adamax, both on its own
behalf and on behalf of an entity, described in the COA as 'Propco' and
consisting of Adamax and the Adamax co-owners, thereby demonstrating
the complete control that Adamax exercised over the Adamax co-owners.
The other party was the MEPF. It recorded that the MEPF had a '55%
undivided share in the Letting Enterprise' which it defined as meaning
'the retail and commercial concern namely the letting enterprise'
comprised by the immovable properties and the right, title and interest in
and to the leases and the revenues relating to the properties. In other
words, it was a 55 percent share in the overall shopping centre business.
Propco, that is Adamax and its subsidiaries, had a 45 percent share. The
subject of the co-ownership was therefore the Letting Enterprise, not the
immovable properties separated from it. The Letting Enterprise and the
immovable properties could not be separated.
[12] It was the intention of Adamax and the MEPF that they would
conduct the business of the Letting Enterprise together for an indefinite
period. This emerges from clauses 4 and 5 of the COA, which read as
follows:
'4
Constitution of Co-Ownership
4.1
The Parties agree to carry on the Letting Enterprise under such name and style
as they may choose, currently, Parkview, Glen Village North and Glen Villlage
South.
4.2
The Parties agree that should this Co-Ownership be dissolved for any reason
whatsoever, that the use of any name applicable to the business or any part or
derivative thereof shall remain the absolute right of that Party which may continue to
operate such business and that no proprietary right in and to any name so used will
vest individually in the Co-Owners.
Duration
5.1
The Co-Ownership will commence with effect from the Effective Date and
shall terminate:
(1)
…
(2)
on the disposal of the Letting Enterprise by the Co-Owners; or
(3)
if either of the Co-Owners disposes of its share in the Letting Enterprise,
subject however to the provisions of clause 22 hereof.'
[13] Clause 22 is headed 'Prohibition on Sale' and reads as follows:
'It is expressly agreed amongst the Parties that no Party shall be entitled to sell its
undivided share in the Property without having complied in full with the terms and
conditions of this Agreement, more particularly the pre-emptive rights referred to in
Clause 23 below.'
It is unnecessary to set out the terms of clause 23 in full. It is a relatively
standard clause affording the party which does not wish to sell their share
in the Letting Enterprise a right of pre-emption if the other party or
parties wish to do so. Two provisions are important. The one is that if the
remaining co-owner acquires the interest of the departing co-owner they
become obliged to seek the release of the latter from any suretyship or
guarantee provided by the seller to any creditor of the co-ownership and,
if unable to do so, to indemnify the seller against any claim under such
suretyship or guarantee. The other is that it was to be a condition of a sale
to a third party that they agree to be bound by the terms and conditions of
the COA. In other words, the business relationship involved in
conducting the Letting Enterprise of the shopping centre business was to
continue. Whilst the co-ownership between the MEPF and the Adamax
co-owners would have terminated in terms of clause 5.1(3), a fresh
relationship of co-ownership would come into existence between the
remaining co-owner and the new purchaser.
Adamax's contentions
[14] Notwithstanding the creation of this complex web of ongoing
commercial relationships, Adamax contended that it could be brought to
an end in a manner other than that provided by the COA. Dr de
Muelenaere set out its position in the founding affidavit:
'I am advised that co-owners have a right under the common law, more specifically
under the actio communi dividundo to, at any time, demand that co-owned assets be
divided. I am further advised that no co-owner is obliged to remain a co-owner
against his will. In the absence of an agreement to the contrary, any co-owner may
consequently demand partitioning of the common property at any time.'
[15] The breadth of this contention is apparent from the repeated
statement that the actio may be invoked 'at any time'. In other words,
Adamax claimed that it was open to it to invoke the actio immediately
after the conclusion and implementation of the sale agreement and the
COA or at any time thereafter. One could add 'for any reason' because the
claim is unqualified by any restraint on the exercise of the right to
demand partition of the co-owned property. Notionally, it could be
because the one party had fallen out with the other over an issue unrelated
to the running of the business, or because they thought that selling the
entire enterprise would generate a greater return for them than would a
sale of their undivided share. A disagreement over the prescribed matters
in Schedule 1 to the COA, on which clause 11.9 required unanimity,
could be met with the nuclear option of a demand for division of the
co-ownership, even though clause 21 contained detailed provisions to
resolve a deadlock over any operational issue.
[16] Adamax's contentions meant that it mattered not that this would
destroy the very basis upon which the MEPF entered into the
arrangement, namely in order to secure a stable stream of income to meet
its obligations to pensioners. The blunt proposition was that resort could
be had to the actio communi dividundo because it afforded Adamax a
right to demand that the co-owned assets be divided. Resistance to such a
demand entitled it to bring the present application.
[17] The MEPF resisted this contention, pointing to the terms of the sale
agreement and the COA as the basis for opposing the application of the
actio communi dividundo. They contended that the application was an
endeavour to subvert the provisions of the COA, which they said
regulated all incidents of its operation and constituted the complete record
of the parties' agreement. Their primary case was that the relationship
between the parties was governed by the contracts and nothing else. The
actio was accordingly unavailable to Adamax. It is unfortunate that they
did not refer in their argument to the distinction between bound and free
co-ownership, their attention to it having been prompted by questions
posed by this court prior to the hearing. Greater clarity might then have
emerged at an earlier stage of the proceedings, but these are merely
jurisprudential labels and the essential case advanced by the MEPF was
always that the agreements created a situation of bound co-ownership.
[18] In the high court the judge characterised this argument as being
based on a tacit term that would exclude the actio communi dividundo.
He reached that conclusion notwithstanding the absence of any
suggestion in the answering affidavit that reliance was being placed upon
any such tacit term. He thought, erroneously, that the availability of the
actio was one of the naturalia (inevitable legal consequences) of any
agreement giving rise to co-ownership. In the result his entire approach to
the case was flawed. In refusing leave to appeal he compounded these
errors by burdening the MEPF with an onus to prove as a defence the
exclusion of the actio, when the true question was whether it was
available at all given the terms of the agreements. He then refused leave
to appeal. Had he paid regard to the consequences of holding that the
actio was available in the circumstances of this case he should have
granted leave to appeal to this court, notwithstanding his view that his
judgment was correct. All too frequently this court bemoans the grant of
leave to appeal in matters of no great complexity raising no significant
legal issue. This was not such a case and the leave to appeal that should
have been granted was granted by this court.
The elements of free and bound co-ownership
[19] There are countless situations that may create co-ownership of
property. The old authorities and the older cases are almost all concerned
with immovable property or inheritances.4 A common situation was
where under a will, or in accordance with the law governing intestacy,
property was inherited by two or more people in undivided shares. A
deed of donation of property in undivided shares to more than two people
was another. The purchase of immovable property by two or more
individuals in undivided shares was a third. Marriage in community of
property and partnership are common examples. The establishment of a
trust, which is not itself a separate juristic entity, renders the trustees the
co-owners in undivided shares of the trust property. The members of a
common law universitas that owns property, such as a club, a political
party, a church and many non-governmental organisations, own the
4 Grotius The Introduction to Dutch Jurisprudence 3.ed (A F S Maasdorp's translation, 1903) 3.28;
Johannes Voet Commentary on the Pandects (Gane's translation) 10.2 and 10.3.
property of the universitas in undivided shares. The owners of units in a
sectional title development are co-owners of the common property in
undivided shares.
[20] Co-ownership may be either free or bound co-ownership. The
distinction is explained by Professor C G van der Merwe in LAWSA:5
‘Common ownership may either constitute the only legal relationship between the
co-owners or it may result from some other legal relationship between the parties. In
the former case (designated free co-ownership) the relationship between the
co-owners is more individualistic in that the community of property can be dissolved
by any co-owner and in that each co-owner is allowed to use and enjoy the common
thing in accordance with his or her undivided share in it. … In the latter instance
(designated bound co-ownership), which is, for example, the result of a marriage in
community of property or a partnership, the relationship is more permanent in that no
division of property can be requested during the course of the community of property
and in that the undivided shares allotted to each owner do not have real significance.
The legal relationship between the parties further largely determines the rights and
duties of the co-owners.’ (My emphasis)
[21] Professor van der Merwe writes more extensively, but to similar
effect, in his book Sakereg.6 In regard to bound co-ownership he says the
following:7
‘Gebonde mede-eiendom ontstaan wanneer ’n besondere regsverhouding tussen
gemeenskaplike
eienaars
geskep
word,
soos
by
mede-erfgenaamskap,
huweliksgoederegemeenskap,
ń
vennootskap
en
verenigings
sonder
regs
persoonlikheid. Die besondere regsverhouding wat tussen die deelgenote bestaan,
bepaal die manier waarop eiendomsbevoegdhede ten opsigte van die gemeenskaplike
saak uitgeoefen word. Die feit van mede-eiendom is slegs één van die gevolge van die
regs betrekking wat tussen die partye bestaan. By vrye mede-eiendom daarinteen is
5 LAWSA, vol 27 (2 ed re-issue) para 265 (Citations omitted).
6 CG van der Merwe Sakereg (2 ed) 378-380. Cited with approval by this court in Mazibuko v National
Director of Public Prosecutions [2009] ZASCA 52; 2009 (6) SA 479 (SCA) para 47.
7 Ibid at 378-379.
die feit dat die mede-eienaars tesame eienaars van dieselfde saak is, die enigste
regsverhouding wat tussen die partye bestaan.’8 (My emphasis.)
[22] The fundamental point to be distilled from these passages is that in
bound co-ownership the existence of the co-ownership arises from a legal
relationship between the parties other than the co-ownership itself. In
other words, there is a legal relationship between them going above and
beyond the fact that they happen to be the co-owners of property. The
co-ownership arises from and is constituted as a consequence of that
relationship. It is not the source of the relationship between the parties.
[23] This point is emphasised by Kleyn and Wortley,9 writing jointly in
comparative terms about bound co-ownership in South Africa and its
equivalent, joint ownership, in Scotland:
‘As far as bound co-ownership is concerned, South African authorities mention the
following. There exists some other (special) relationship between the parties which is
of a more permanent nature; this relationship determines the rights of the parties;
co-ownership is just one of the consequences of that relationship; no division can be
called for unilaterally during the existence of the relationship; and a co-owner cannot
deal independently with the undivided share during the relationship. Scots law
provides a similar picture. As Lord Cooper pointed out in Magistrates of Banff v
Ruthin Castle,10 an independent relationship is ‘the indispensable basis of every joint
right’ and the ‘attributes [of joint property] are … the consequences flowing from the
relationship … there is no entitlement to division and sale.' …
8 'Bound co-ownership arises whenever a particular legal relationship is established between
co-owners, as in co-inheritance, marriage in community of property, a partnership and associations
without legal personality. The particular legal relationship that exists between the co-owners
determines the manner in which their ownership rights in relation to the joint property are exercised.
The fact of co-ownership is only one of the consequences of the legal relationship that exists between
the parties. By contrast, with free co-ownership the fact that the co-owners are owners of the same
thing is the only legal relationship between the parties.' (My translation.)
9 Kleyn & Wortley 'Co-Ownership' in Zimmerman, Visser and Reid (eds) Mixed Legal Systems in
Comparative Perspective: Property and Obligations in Scotland and South Africa (2005) at 709-710.
10 Magistrates of Banff v Ruthin Castle Ltd 1944 SC 36 at 68.
The importance, in bound co-ownership, of an extrinsic relationship is emphasised in
both systems. All the consequences of bound co-ownership flow from that
relationship. Although the two jurisdictions identify a limited number of different
kinds of relationships that constitute bound co-ownership, without such a special
relationship the co-ownership must always be free.’
Counsel for Adamax relied on this last sentence, and two later ones to
similar effect, as restricting the potential for a relationship to be one of
bound co-ownership. For my part I do not understand the reference in the
last sentence to 'a limited number of different kinds of relationships' or a
'special relationship' to mean that there is a closed list of situations of a
peculiar nature in which bound co-ownership can arise. That would be
inconsistent with the recognition earlier in the same passage that a
relationship between the parties that determines their rights and
obligations, and of which the co-ownership is only one consequence,
gives rise to bound co-ownership. It is simply a statement that in the two
jurisdictions in question only a few instances of bound co-ownership have
been identified. Insofar as the authors intend it to go further I do not agree
with them.
[24] South Africa recognises various sources of extrinsic legal
relationships giving rise to bound co-ownership. It may arise as a matter
of law from the fact that the parties have entered into a particular
relationship. An example of this is a marriage in community of property,
where the common law, as varied by the Matrimonial Property Act 88 of
1984, imposes co-ownership upon the parties to the marriage. Another is
the co-ownership of the common property in a sectional title
development, by virtue of the provisions of s 16(1) of the Sectional Titles
Act 95 of 1986.11 It may arise from an act such as the execution of a trust
deed by the founder of a trust and the acceptance by the trustees of office
under that deed. Another possibility is an agreement between the
co-owners, as in a partnership12 or the constitution of a universitas. In the
case of trust deeds, partnership agreements and constitutions the parties
are usually free to vary their terms and the terms of the relationship
between the co-owners.
[25] The leading Scottish judgment on joint ownership is that of Lord
Justice Clerk Cooper in Magistrates of Banff v Ruthin Castle.13 Lord Gill,
a recent successor of his as Lord President, said that this judgment
'eruditely expounded the distinction in Scots law between joint
ownership, being the class of right typified by the ownership of
co-trustees, and ownership in common, being the right typified by the
ownership of two or more persons in whom the right of a single subject
has come to be vested'.14 The key passage reads as follows:
'Joint property, on the other hand, has received little doctrinal exposition as a mode of
holding property, probably because its attributes are not so much the incidents of the
joint right as the consequences flowing from the relationship existing between the
persons who alone can have a joint right. So far as has been traced, there is no
instance of a joint right in the strict sense having been held to exist except in persons
who were inter-related by virtue of some trust, contractual or quasi-contractual bond
— partnership or membership of an unincorporated association being common
examples — and it seems to me that such an independent relationship is the
indispensable basis of every joint right. The distinctive feature of the right of such
joint proprietors is the jus accrescendi, which excludes the possibility of separate
11 This is not the case in Scots law where ownership of the common property is treated as free
co-ownership, but without the ability to invoke the actio communi dividundo. Klein and Wortley op cit
fn 9 at 711.
12 In South African law a partnership is not a separate juristic person, whereas in Scots law it is by
virtue of the Partnerships Act 1890. Klein and Wortley op cit fn 9 at 711-712.
13 Op cit fn 12 at 68-69.
14 Lord Gill 'Two Questions in the Law of Leases' in McCarthy, Chalmers and Bogle (eds) Essays in
Conveyancing and Property Law in Honour of Professor Robert Rennie' Chapter 13.
shares in the several joint owners, and still more emphatically excludes the possibility
of severance of the tie, except, of course, by dissolution of the relationship on which
the joint ownership rests. Finally, the considerations of public policy that nemo in
communis invitus detineri potest, have no application to the entirely different situation
created by joint ownership.' (My emphasis.)
[26] This statement of Scots law is undoubtedly authoritative in that
jurisdiction and wholly consistent with the views of Professor van der
Merwe. It stresses the fact that the incidents of the relationship between
the parties are derived not from the co-ownership itself, but from the
extrinsic relationship between the co-owners, separate and distinct from
their co-ownership. It accepts that the source of a joint ownership (bound
co-ownership in South African terminology) can be a trust or a
contractual or quasi-contractual bond. Lastly, it makes the point that in
cases of joint co-ownership the public policy rule that a person cannot be
compelled to remain a co-owner against their will has no application.
[27] Neither Professor van der Merwe, nor Lord Justice Clerk Cooper,
suggested that bound co-ownership was restricted to any defined class of
agreement. The former referred to legal relationships extrinsic to the
co-ownership and mentioned various examples of such relationships. The
latter said that it arose in relation to persons 'who were inter-related by
virtue of some trust, contractual or quasi-contractual bond', without in
any way limiting the type of contractual or quasi-contractual relationship
that might give rise to bound co-ownership. The only other Scots case I
have found in the course of my research is Munro v Munro.15 There the
court held that joint co-ownership was created where a property was
passed to family members on terms that it would descend to the last
15 Munro v Munro 1972 SLT (Sh Ct) 6.
surviving of their number and the family members contractually agreed to
this. The court held that this created a bound co-ownership that none of
the family members could defeat by way of a claim for division of the
property. On its face that appears to be consistent with the view of Lord
Justice Clerk Cooper. I cite the case with a measure of hesitation because
it has been criticised in its country of origin, both because it creates
problems for a good faith purchaser of a share in the property and
because it creates some difficulties in regard to the complex Scots law
provisions governing special destination clauses, such as this one.16
However, neither criticism has any purchase in South African law, at
least insofar as the issue of creating bound co-ownership by contractual
agreement is concerned.
[28] Adamax relied upon certain passages from Kleyn and Wortley's
article to contend that bound co-ownership only arises from an extrinsic
exceptional relationship in which the rights and obligations of the parties
are defined by common law or statute. The contention was that there is
only a limited number of relationships that constitute bound co-ownership
and that these are special relationships of a more permanent nature that
cannot be altered by agreement between the parties.
[29] Insofar as Scots law is concerned, neither Magistrates of Banff v
Ruthin Castle nor Munro v Munro lends any support to these conclusions.
Nor is it apparent that the relevant passages from Kleyn and Wortley's
article are dealing with the issue of whether the relationship between the
16 D L Carey Miller and M M Combe 'The Boundaries of Property Rights in Scots Law' (2006) EJCL
1-26 (art 103-4) accessed at <www.ejcl.org> (accessed 23 September 2020).
parties is one of bound or free co-ownership. They mainly occur in a
section of the article that commences as follows:17
'However clear the distinction between free and bound co-ownership may be in
theory, it can be undermined by the freedom of contract that the parties have in cases
of free co-ownership. The question then arises as to whether co-owners can arrange
matters in such a way that free co-ownership is converted into bound co-ownership. In
other words is it for the parties to decide whether the ownership is bound or free, or
does property law dictate the issue?' (Emphasis added.)
This is a puzzling passage. It is dealing with free co-ownership, not with
whether in any particular case the co-ownership is bound or free. If the
premise is that save in specific limited cases, such as partnership, all
co-ownership is free, it is unhelpful, as questions that assume the answer
always are. Furthermore, the two propositions are not the same. The
former deals with the conversion of free co-ownership to bound
co-ownership18 and the latter with the parties' freedom to determine
contractually the nature of their co-ownership. Approaching the problem
from an assumption of free co-ownership and asking whether this can be
altered by contract, is the wrong question, or at least the wrong question
in the present context. We are not dealing with a relationship
commencing as free co-ownership and asking whether the parties can
alter it by contract. Our concern is whether from the outset the
relationship created by the sale agreement and the COA was one of bound
or free co-ownership.
17 Kleyn & Wortley op cit fn 9 at 711.
18 A similar passage at the conclusion of this section includes the statement that:
'It is clear that the parties can to some extent change the rules of co-ownership by means of agreement.
…However, the matter is different with respect to the right to call for division, which personifies the
individual nature of co-ownership. …It therefore seems that there are underlying and fundamental
characteristics in free co-ownership which cannot be changed by agreement in order to convert it into
bound co-ownership: property law cannot be altered by contract.'
Ibid at 712. Adamax relied on this passage, but it deals with a situation other than that with which we
are concerned.
[30] Other passages from this section of the article also deal expressly
with free co-ownership. For example, the authors say:19
'It is clear that the parties can, to some extent, change the ordinary rules of free co-
ownership by means of agreement. … However, the matter is different with respect to
the right to call for division, which personifies the individualistic nature of free co-
ownership. Both jurisdictions seem to accept the principle that a free co-owner can
agree not to call for partition within a limited time, but that an agreement never to ask
for partition is void, a result which is in accordance with Roman Law'. (Emphasis
added)
In the result these passages are unhelpful in resolving the issue with
which we are confronted. That is not a criticism of the authors who said
at the outset20 that their focus was free co-ownership.
[31] The one South African judgment relied on by Kleyn and Wortley is
that of Ex parte Geldenhuys.21 That involved a will bequeathing a farm to
the children of the testatrix in undivided shares on the basis that division
would take place when the eldest child reached majority and then by a
drawing of lots. The court held that this was permissible and the
condition could be registered against the title deeds showing the
children's undivided shares in the property. De Villiers JP (as he then
was) said:22
'By the common law, each owner of an undivided share has the right to claim a
partition at any time, and can claim that such partition shall be effected either by
agreement or by the Court. The will, therefore, modifies the common law right, or
dominium, which an owner of an undivided share possesses. That this can validly be
done by a will (and presumably also by agreement inter vivos) seems to me to be clear
on principle, for the rights of an owner of an undivided share are not sacrosanct or
unalterable any more than the rights of an owner of a defined share are. Portions of
19 Kleyn & Wortley op cit fn 9 at 712.
20 Ibid at 705.
21 Ex Parte Geldenhuys 1926 OPD 155.
22 Ibid at 164-165.
the dominium of an owner of an undivided share can be parted with as undoubtedly as
portions of the dominium of an owner of a defined share can be parted with. There is,
in fact, the express authority of Grotius, if authority were needed, that an owner of an
undivided share can by will be deprived for a specified time of his right to claim a
partition (Grotius 3.28.6, Maasdorp's Institutes of Cape Law, bk. 2, ch. 14).
The rights of a joint owner in regard to partition can therefore be validly limited by
last will at any rate, and the limitations now under discussion (i.e., as to the time of
partition and as to the drawing of lots) are therefore valid.' (Emphasis added.)
[32] In fact, the provision of the will in Geldenhuys effectively
removed the right to demand division entirely, by specifying that it would
take place in a specific way at a defined future date. At no stage before
the arrival of that date would any of the children be entitled to claim
division of the property in accordance with their co-ownership. And, as
De Villiers JP said, if that could be done by will it could also be done by
agreement inter vivos. Therefore the judgment does not support the view
that bound co-ownership is confined to 'a limited number of relationships
that constitute co-ownership' and that without such a 'special relationship'
the co-ownership will always be free.23 That view is also not supported by
any South African or Roman Dutch authority to which they refer and is
incompatible with Professor van der Merwe's descriptions of bound
co-ownership.
[33] I have already mentioned that the old authorities address situations
far removed from the present one. They also do not use the terminology
of free and bound co-ownership, which we owe to an article by
Professor van Warmelo.24 As such, their discussion of the division of
23 Kleyn & Wortley op cit fn 9 at 710 and 711.
24 P van Warmelo ‘Die Geskiedkundige Ontwikkeling van die Mede-Eiendom in die Romeinse en
Romeins-Hollandse Reg’ (1950) 13 THRHR 205-242.
common property is apt to situations of free co-ownership, but does not
address bound co-ownership and does not consider a situation
comparable to that in this case. However, there are indications that there
are circumstances in which the right to division may be restricted. Grotius
3.28.6 says that co-owners are entitled to division unless it has by last
will been forbidden to dissolve within a certain time, although he accepts
that a perpetual prohibition would be invalid. Voet 10.2.32 goes further
and says that there is no reason why a testator may not forbid the division
of an inheritance for a long period or even the lifetime of a person. He
draws an analogy with partnership, pointing out that a partnership can be
constituted for the lifetime of the partners, which he describes as 'for
ever', and says:
'… it can be arranged that within a definite period no division shall take place nor any
departure from the partnership.'
[34] It is clear that these writers accepted that there were situations of
community of property, as they describe situations of co-ownership, that
were not susceptible to the action for division until the broader
relationship between the parties giving rise to the community had ended.
Van Leeuwen says this in relation to partnerships and marriages in
community of property.25 Recognition of the fact that partnership gives
rise to bound co-ownership of partnership assets, both tangible and
intangible, involves an acceptance of the proposition that parties can by
agreement so order their affairs as to create a situation of bound
co-ownership. Van der Linden gives the example of joint shipowners
being obliged to remain such, at least until the completion of the voyage,
in terms of the deed of ship ownership.26 It is important to note that this
25 Van Leeuwen Commentaries on Roman-Dutch Law (Kotzé's translation, 2 ed, 1923) 4.23.11.
26 Van der Linden Institutes of Holland (Juta's translation, 5 ed, 1906) 4.4.2.1.
would not necessarily be a partnership, but the parties could contract for
co-ownership and restrict any right to claim division of the jointly-owned
property, namely, the ship.
[35] It is necessary to consider in greater detail the article in which
Professor van Warmelo first applied the expressions free and bound
co-ownership in our jurisprudence. The learned author drew a distinction
between two forms of co-ownership. The first was where the relationship
between the co-owners and their rights to the property were determined
by the law and were unalterable by the exercise of free will on the part of
the parties. He said this could be called 'bound co-ownership'. The
instances he gave of this form of co-ownership were joint heirs in relation
to a joint estate; marriage in community of property; and
'boedelhouerskap', where the surviving spouse from a marriage in
community of property is appointed as executor of the predeceased
spouse, administrator of their estate and guardian of the minor children
born of the marriage, and continues the community pending the children's
majority.
[36] The second possibility was the relationship he called free
co-ownership. This was where a thing was owned by more than one
party, but the law did not impose unalterable consequences upon the
relationship of the parties to the property or among each other. Here there
were two possibilities. The first was where the only relationship between
the parties flowed from their co-ownership of the property. The second
was where there was a further arrangement emanating from the parties
themselves, that either confirmed the conventional legal relationship as
determined by the law, or changed it in whole or in part. The typical
example of this was a partnership, under which the partners could
regulate their relationship to the property and one another. Having said
that he went on to explain that the further discussion in the article would
be of free co-ownership other than partnership, because partners were
free to determine their own rules and in so doing alter the rules that would
otherwise apply to the partnership relationship.
[37] It will be immediately apparent that this description of bound and
free co-ownership is not the same as the distinction drawn by Professor
van der Merwe, who places partnership in the category of bound
co-ownership. Professor van Warmelo derived his terminology from a
Dutch work,27 but acknowledged that its authors used it in a different
way, one that accords with Professor van der Merwe.28 The Dutch usage
was that free co-ownership applied to situations where the only
relationship between the parties was the co-ownership, while bound co-
ownership was where there was another legal tie between the co-owners
governed by its own rules.
[38] The argument by counsel for Adamax was that bound
co-ownership is limited in accordance with the approach adopted by
Professor van Warmelo. That approach was inconsistent with the
approach of Professor van der Merwe; this court's approval of Professor
van der Merwe's approach;29 the views of Kleyn and Wortley, and the
27 Asser-Scholten Handleiding tot de beoefening van het Nederlandsch Burgerlijk Recht Vol II
(8 ed, 1945) p133 et seq.
28 Van Warmelo op cit fn 24 at 210 fn 1, which reads: 'Hierdie terminologie word ook geneem uit
ASSER-SCHOLTEN … alhoewel dit daar in ń ander betekenis gebruik word. Met vrye mede-eiendom
word slegs verstaan dié verhouding waar daar geen ander regsband is dan die feit dat die partye saam
eienaar is van die saak nie, terwyl as gebonde mede-eienskap verstaan word waar daar wel ń ander
regsband is en sodoende ń mede-eiendom wat deur sy eie reëls beheers word. Hieronder val dus wel
die geval dat daar ń vennootskap tussen die mede-eienaars bestaan, asook die vorme soos
huweliksgemmenskap of medeerfenis.'
The Dutch writers cited by L Kuyler in his dissertation Vrye Mede-eiendom in die Suid-Afrikaanse Reg
at 1-3 accord with Asser-Scholten.
29 Mazibuko v National Director of Public Prosecutions op cit fn 6.
Scottish cases. Professor van Warmelo's view is cited in Dr Kuyler's
thesis but without any detailed analysis or consideration, which is hardly
surprising as the subject of the thesis was free co-ownership, not bound
co-ownership. The force of Dr Kuyler's endorsement of Professor van
Warmelo's approach30 is considerably diluted by the fact that on the
following page he says that partnership is a case of bound co-ownership,
whereas Professor van Warmelo said that it is a case of free co-
ownership.
[39] The exposition of the nature of the actio communi dividundo in
Robson v Theron31 does not assist in resolving the issue of free and bound
co-ownership. The case arose from the dissolution of a partnership where
the one partner had appropriated and retained the goodwill of the
partnership practice. It concerned a claim by the other partner to be
compensated for his share of the goodwill. It was not concerned with the
distinction between free and bound co-ownership as the dissolution of the
partnership had brought the co-ownership to an end. The parties had
agreed on what was to be paid for the retiring partner's share and the real
dispute between the parties was the factual one of whether the other
partner had retained the goodwill for his own benefit and was obliged to
compensate the retiring partner therefor.
[40] The judgment commences with a discussion of the remedies
available to the departing partner on dissolution of the property, namely
30 Kuyler, op cit, fn 27 at 4, fn 15.
31 Robson v Theron 1978 (1) SA 841 (A) at 854G-855H.
the actio pro socio and the actio communi dividundo.32 The discussion of
the former contains the following quotation from Pothier:33
'In order to dissolve the community which subsists, after the dissolution of the
partnership between the former partners, and to discharge the respective debts for
which they may be liable to each other, each of the former partners, or his heir, has a
right to demand of his partners or their heirs to proceed to an account and distribution
of the partnership effects. To effect this they can each maintain the actio pro socio or
the actio communi dividundo, at their option.' (Emphasis added.)
[41] Joubert JA endorsed the view of Pothier, concluding his discussion
of the actio pro socio in the following terms:34
'Pothier, on the other hand, makes it abundantly clear that, in the liquidation of a
partnership, distribution or division of the partnership assets may be effected among
the partners in such a manner as not to involve the physical division or partition of
tangible assets of the partnership. According to him the actio pro socio or the actio
communi dividundo may be used for the distribution or division of partnership assets.
His approach is both logical and practical. In following it Van der Linden introduced
it into Roman-Dutch law. It is also basically in conformity with our present day
practice of liquidating partnerships.'
[42] In discussing the actio communi dividundo Joubert JA did not
revisit these principles. The discussion is brief and concentrates on the
modes of division and the powers of the court in dividing the co-owned
property. The only substantive proposition was the statement that the
actio has been extended to intangible things held in common ownership
of which the goodwill in dispute in that action was an example.
32 Ibid at 848H-I. According to the heads of argument printed in the report there was no argument or
dispute over these principles.
33 Pothier Treatise on the Contract of Partnership (translation by Owen Davies Tudor) section 161.
34 Robson v Theron op cit fn 31 at 854D-E.
[43] A brief summary of the provisions of the two actiones followed. In
dealing with the actio pro socio it started by making the point that the
actio was available during the existence of the partnership to claim
specific performance and after dissolution to wind up the partnership.
Turning to the actio communi dividundo the summary commenced by
saying that:35
'No co-owner is normally obliged to remain a co-owner against his will.' (My
emphasis)
Significantly, there was no suggestion that the actio was available during
the subsistence of the partnership. Given that this was a brief summary of
the actio, it is no surprise that Joubert JA did not go on to set out in which
circumstances a co-owner would be obliged to remain a co-owner against
their will. The obvious case would be that of bound co-ownership (of
which partnership is a quotidian example) until the relationship giving
rise to the tie had itself been terminated. It would be surprising, given his
academic background, were Joubert JA not aware of this. He continued
by saying that the actio was available to any co-owner, whether or not the
co-owners were partners.
[44] The third point may be misconstrued. It contained the following
passage:36
'Hence this action may be brought by a co-owner for the division of joint property
where the co-owners cannot agree to the method of division. Since a partnership asset
is joint property which is held by the partners in co-ownership, it follows that a
partner may as a co-owner bring this action for the division of a partnership asset
where the co-partners cannot agree to the method of its division. This would
obviously cover the position where, after dissolution of a partnership, a continuing
partner as a co-owner retains possession of an undivided partnership asset.'
35 Ibid at 856H-857A.
36 Ibid at 856H-857B.
While the second sentence is not in terms limited to a division after
dissolution of the partnership, it should not be understood as postulating
that the actio is available during the subsistence of the partnership,
although it may possibly be invoked in conjunction with a claim that the
partnership has been dissolved or for its dissolution. It is unnecessary to
express a firm view on this. Given the entire discussion in the judgment it
does not support the proposition that the actio is available during the
subsistence of the partnership, as opposed to at the stage of its
dissolution. The relevant principles are discussed solely in the context of
the dissolution of the relationship leading to a claim for division of the
co-ownership.
[45] Accordingly, the judgment casts no light on how to determine
whether co-ownership is free or bound. The case is not authority for the
general proposition that no co-owner may be compelled to remain a
co-owner against their will. That ignores the context and the careful
qualification that this is 'normally' the position. Bound co-ownership is
precisely the case where a co-owner is obliged to remain such against
their will, unless and until the tie that creates the bound co-ownership has
been severed.
[46] In summary therefore, I conclude, in accordance with the
authorities discussed above, that the distinction between free and bound
co-ownership is that in the former the co-ownership is the sole legal
relationship between the co-owners, while in the latter there is a separate
and distinct legal relationship between them of which the co-ownership is
but one consequence. Co-ownership is not the primary or sole purpose of
their relationship, which is governed by rules imposed by law, including
statute, or determined by the parties' themselves by way of binding
agreements. The relationship is extrinsic to the co-ownership, but is not
required to be exceptional.37 In other words it requires no special feature
for the co-ownership consequential upon the relationship to qualify as
bound co-ownership. Whether it is depends upon the terms upon which
the relationship is constituted. The mere fact that co-owners decide to
exploit their co-ownership commercially will not of itself constitute the
co-ownership as bound co-ownership. That will depend upon the nature
and terms of the commercial agreement between the parties and matters
such as the provision made for its termination.
[47] There is no closed list of instances of bound co-ownership. If the
relationship gives rise to bound co-ownership the co-ownership will
endure for so long as the primary extrinsic relationship endures. Once it is
terminated then, as in Menzies38 and Robson v Theron, it will become free
co-ownership and be capable of being terminated under the actio. I
consider the facts of this case in accordance with those principles.
Is this a case of bound co-ownership?
[48] It is necessary to start by identifying both the subject matter of the
co-ownership and how it arose. That is complicated by the fact that there
are different things that are the subject of co-ownership. As explained
earlier in analysing the sale agreement and the COA the primary subject
of the co-ownership is the Letting Enterprise. The COA regulates the
operation of the business relationship between the MEPF and Adamax
and the Adamax co-owners. Pursuant to the obligation of the Adamax
co-owners to deliver the 55 percent share in the Letting Enterprise to the
37 Counsel for Adamax contended for an exceptional relationship on the basis of Professor van der
Merwe's expression 'ń besondere regsverhouding', but in context that means 'a particular legal
relationship', not an exceptional legal relationship.
38 Ex Parte Menzies et Uxor 1993 (3) SA 799 (C) at 810G-811G.
MEPF in terms of the sale agreement, a 55 percent interest in each of the
immovable properties was transferred to the MEPF in undivided shares.
[49] The primary relationship between the parties is therefore their
relationship in respect of the Letting Enterprise governed by the COA.
Their co-ownership of the immovable properties is a consequence of that
relationship, albeit not a necessary consequence, in that transfer of an
undivided share in the properties was not essential in order to give effect
to the sale of the Letting Enterprise or its operation in terms of the COA.
Conceivably the Letting Enterprise could have come into existence
without transferring an undivided share in those properties to the MEPF.
Some other mechanism for securing the right to conduct the Letting
Enterprise in the shopping centres could have been devised. It is not, as I
understand it, suggested that in that case the Adamax co-owners would
have been entitled to dispose of the properties to a third party and thereby
deprive the Letting Enterprise of access to and control over the shopping
centres and the MEPF of its interest in the Letting Enterprise.
[50] The premise upon which the Adamax co-owners brought the
application was therefore incorrect, because it undermined the entire
relationship between the parties in terms of the COA. It took as its
starting point the subsidiary and consequential co-ownership of the
immovable properties and treated it not simply as if it were the primary
legal relationship, but as if it were the only legal relationship. That was
plainly incorrect. Any attempt to invoke the actio had necessarily to start
with the co-ownership of the Letting Enterprise and the question whether
that constituted bound co-ownership. It is to that question that I now turn.
[51] At the outset I reject the proposition in the respondents' heads of
argument that the starting point is that in co-ownership the availability of
the actio is implied by law, so that it must be excluded unambiguously.
That is incorrect. It puts the cart of a conclusion – 'This is free
co-ownership' – before the horse of the question – 'Is this free or bound
co-ownership?'. The common law is that the actio is always available in
the case of free co-ownership and never available in bound co-ownership.
In any particular case the question of the proper characterisation of the
co-ownership arises at the outset. Only once it has been answered can one
decide what the common law attributes of the co-ownership are. One
cannot therefore start with a predisposition in favour of free
co-ownership. That also renders irrelevant the reliance placed upon the
statement by Marais JA in First National Bank of SA Ltd v Rosenblum,39
that:
'In matters of contract the parties are taken to have intended their legal rights and
obligations to be governed by the common law unless they have plainly and
unambiguously indicated the contrary.'
Where, as here, we are dealing with one of two different forms of
co-ownership, one of which affords the right to invoke the actio and the
other does not, it is necessary first to identify which form of
co-ownership is applicable in order to determine what the common law is.
As it happens, Marais JA was dealing with an exception clause and was
articulating the approach our law adopts to such clauses, which is that
they are strictly construed and must clearly and unambiguously exclude
liability for the loss suffered by the claimant. The quoted dictum must be
read and understood in that light.
39 First National Bank of SA Ltd v Rosenblum and Another 2001 (4) SA 189 (SCA) para 6.
[52] The relevant features of the co-ownership of the Letting Enterprise
have already been identified in the analysis of the sale agreement and the
COA. It was a business relationship of indefinite duration with careful
and detailed provisions for the conduct of the relationship. In clause 5 it
contained an express provision in regard to its duration, providing that it
would terminate as a result of an election by the parties if transfer had not
been achieved by 30 June 2012; if the parties agreed to dispose of the
Letting Enterprise; or, if either co-owner disposed of its share in the
Letting Enterprise after affording the other a right of pre-emption in terms
of clauses 22 and 23 of the COA. Although not mentioned in clause 5 it
could also be terminated as a result of cancellation for breach, or as a
result of a forced sale upon insolvency or winding up.
[53] During the course of argument there was some debate with
counsel for the MEPF over whether, in the light of the decision in Putco
Ltd v TV & Radio Guarantee Ltd and Other Related Cases,40 these were
the only grounds upon which the COA could be terminated. I would be
hesitant without full argument to reach any conclusion on this point, as
neither side's counsel had addressed their minds to the issue and the
implications of an ability to terminate the COA by notice were not
explored in the affidavits. However, it is unnecessary to do so because the
PUTCO case is clearly distinguishable. It concerned a contract to secure
advertising to be placed on the appellant's buses. The contract was
embodied in a letter containing the following paragraphs:41
'This letter, although binding upon both of us, is intended to be a temporary interim
arrangement, and we confirm that, in due course, a detailed agreement will be
concluded between us as a result of the negotiations we have been conducting.
40 Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd and Other Related Cases 1985 (4) SA 809 (A) at
827D-828C.
41 Ibid at 824C-F.
… [W]e reserve to ourselves the right to withdraw from this arrangement should
damage result to our image flowing from your activities, or should our earnings at any
time be insufficient from this scheme, or should the arrangement become
administratively impracticable in regard to your ability to signwrite and maintain the
advertising copy.'
[54] In that context it was said:42
‘[W]hen parties bind themselves to an agreement which requires them to work closely
together and to have mutual trust and confidence in each other, of which the
agreement under consideration is an example, it is reasonable to infer that they did not
intend to bind themselves indefinitely, but rather contemplated termination by either
party on reasonable notice. Where an agreement is silent as to its duration, it is
terminable on reasonable notice in the absence of a conclusion that it was intended to
continue indefinitely. The inclusion in the agreement of three specific grounds for
termination does not exclude termination by reasonable notice. The logical
consequence of an argument that only three specific grounds for cancellation of the
agreement exist would be that, provided those grounds for cancellation do not arise,
the agreement would continue indefinitely. This would not be a proper construction to
place on the agreement as it ignores the intention of the parties when entering into the
agreement …’
[55] That situation was by no means comparable to the present case.
The parties clearly expressed the intention that their agreement was an
interim and a temporary arrangement. A detailed agreement was to be
negotiated which would no doubt have dealt with matters such as the
ability of either party to terminate it on notice. The nature of the
relationship did not involve the joint and co-ordinated operation of a
business, but the provision of services to PUTCO. All of this is absent
from the present case. We are dealing with a suite of agreements of some
considerable commercial complexity, in a transaction involving more
42 Ibid at 827G-828B.
than half a billion Rand. It was clearly intended to continue for more than
four years, as that was the period in respect of which the income
guarantee in terms of clause 5 of the sale agreement would operate.
Construing the COA as permitting a termination on notice within that
period would run counter to an express provision of the sale agreement.
Similarly, permitting the Adamax co-owners to bring the actio during that
period would also be utterly inconsistent with the sale agreement that
created the co-ownership of the Letting Enterprise and the immovable
properties. Yet, as pointed out at the outset of this judgment, that is the
approach of the Adamax parties.
[56] It may be, as debated in argument, that the COA is terminable on
reasonable notice duly given. I express no firm view on that question. The
fact that it may terminate in other circumstances does not necessarily
exclude that possibility, but it does not affect the question whether the
relationship gives rise to bound co-ownership. A partnership undoubtedly
does so, but most partnership agreements provide for their termination on
reasonable notice and in the ordinary course that is one of the naturalia of
a partnership. Nothing was drawn to our attention to suggest that this
would affect the partners' co-ownership of either the partnership business
or any movable or immovable property co-owned by them.
[57] The mention of partnership brings me to a consideration of the
nature of the legal relationship constituted under the COA. The
requirements of a partnership are that each party bring something into the
business, be it assets, finance, skill or labour; that the business is carried
on for the joint benefit of the partners; and that the business is conducted
for the purpose of making a profit.43 Any joint venture that exhibits the
characteristics of a partnership is itself a partnership.44 The COA exhibits
all of these features. Of course, if it is a partnership then cadit quaestio,
as it is accepted that co-ownership of a partnership business or property is
bound co-ownership.
[58] As with termination on notice, the possibility that the COA gave
rise to a partnership was not explored in argument. No doubt this was
because clause 7 of the COA, said that:
'Nothing in the agreement shall be deemed to constitute a partnership or a joint
venture of whatsoever nature and/or description and none of the Parties shall be
entitled to bind the other in any manner.'
This clause cannot detract from the other provisions of the agreement or
alter its proper legal characterisation. Its principal purpose is to make it
clear that there is no agency relationship under which the parties would
be able to bind one another contractually, as would conventionally be the
case with a partnership. Whether it has effect in accordance with its terms
to exclude the COA from being characterised as a partnership or joint
venture is another matter.
[59] I have reservations whether the mere fact that the parties say that it
is not a partnership can affect the legal position where the relationship has
all the hallmarks of a partnership.45 In Rhodesia Railways Stratford AJA
said:
'I asked Mr. Tindall, who appeared on behalf of the appellant, if he had found any
authority or any decided case in which these four essentials have been present where
the relationship has been held not to constitute a partnership, and he was unable to cite
43 Butters v Mncora [2012] ZASCA 29; 2012 (4) SA 1 (SCA) para 11.
44 Bester v Van Niekerk 1960 (2) SA 779 (A) at 784B-785A; Purdon v Muller 1960 (2) SA 785 (E) at
792F-793C. The latter was confirmed on appeal. See fn 37 below.
45 Rhodesia Railways and Others v Commissioner of Taxes 1925 AD 438 at 465.
any. Where all these four essentials are present, in the absence of something showing
that the contract between the parties is not an agreement of partnership, the Court
must come to the conclusion that it is a partnership. It makes no difference what the
parties have chosen to call it; whether they call it a joint venture, or letting and hiring.
The Court has to decide what is the real agreement between them.'
The nature of 'something showing that the contract between the parties
was not an agreement of partnership' was explained by Ogilvie-
Thompson JA in Purdon v Muller46 in the following terms:
'The meaning of this qualification is, I think, that, although the presence in an
agreement of the four essentials will prima facie establish the existence of a
partnership, such presence is not necessarily conclusive but must yield to contrary
intention as revealed in the agreement itself read in the light of the other admissible
evidence. (Cf. Estate Davison v Auret, 22 S.C. 10 at p. 16). In the ultimate analysis
the question is always one of construction.'
I doubt that a boilerplate clause in an agreement suffices to avoid the
relationship being characterised as a partnership.
[60] Be that as it may, it is unnecessary to reach any final conclusion on
this question. The parties have described the business venture on which
they embarked as a Letting Enterprise, an expression that has no specific
legal meaning. Its basic character is that the business lets premises in
shopping centres and seeks to make a profit from them. Its primary assets
are the shopping centres and the tenant leases that generate the revenue of
the business. Such a business has employees, letting agents, cleaning and
maintenance staff or contractors, and a need to engage in marketing both
to potential tenants and to potential customers, because 'footfall' is vital.
We were not told how the accounting for this enterprise worked, but there
seems to be no reason to believe that the revenue was not used to pay the
bills and the surplus, subject to provisions or building up a contingency
46 Purdon v Muller 1961 (2) SA 211 (A) at 218A-C.
fund, was to be distributed between the parties in proportion to their
interest in the enterprise.
[61] The relationship constituted by the COA was plainly an ongoing
joint business venture, regulated in terms of the three agreements
concluded by the parties. It had many characteristics of a partnership and
counsel accepted that the central document, the COA, was based on a
conventional shareholders' agreement in a private company.47 A
convenient term is to describe it as a joint business venture, without the
need to go further and place it in some jurisprudential pigeonhole.48 Its
importance is that it established the terms of the contractual bond
between the parties. In my view those terms make it sufficiently similar
to a partnership or joint venture in the conventional sense that the
co-ownership of the letting enterprise (the primary asset) and that of the
properties (the subsidiary assets) should like partnership be a case of
bound co-ownership.
[62] I am not concerned at the prospect of bound co-ownership being
created by way of a commercial agreement between contracting parties.
Partnership is a product of a commercial agreement between private
contracting parties yet it has always been recognised as bound
co-ownership. Going back to the old authorities they always accepted that
a partnership would terminate in accordance with the provisions of the
partnership agreement. The co-ownership arising from a marriage in
community of property is likewise the result of a private agreement
47 Gihwala and Others v Grancy Property Ltd and Others [2016] ZASCA 35; 2017 (2) SA 337 (SCA)
paras 53-54. Of course, if the same business had been conducted through the medium of a company the
only way in which Adamax could have achieved its goal would have been by way of a winding-up on
just and equitable grounds. There could be no question of it being entitled to a sale of the property
portfolio as a matter of right.
48Ibid para 61.
between the parties to the marriage. Both a will and a deed of trust are
capable of creating a situation of bound co-ownership where the actio is
excluded for a significant period of time, yet they are also the product of
private arrangements. If the co-ownership is exercised through the
medium of a company the actio is excluded. The similarities between a
conventional shareholders' agreement and the COA in this case have
already been noted.
[63] In summary, my view is that the correct analysis must start from
the primary fact that what was bought and sold was a business, the
Letting Enterprise, and that the terms of the co-ownership of the Letting
Enterprise, rather than the consequential co-ownership of the immovable
properties, should determine whether this is bound or free co-ownership.
The legal relationship under the COA is governed by conventional
principles of the common law in regard to contracts. It is separate from
and extrinsic to the co-ownership of the immovable properties. It is
impermissible to separate the co-ownership of the immovable properties
from the co-ownership of the Letting Enterprise and the agreement to
operate it for the joint benefit of the MEPF and Adamax. To quote
Professor van der Merwe, co-ownership of the immovable properties is
not the sole relationship between the parties. It results from another legal
relationship, namely the co-ownership of the Letting Enterprise and the
COA and it can only be dissolved when the latter relationship is
terminated in any manner that may be permissible.
Result
[64] In the result I make the following order:
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the high court is set aside and replaced by the
following order:
'The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.'
________________________
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
A E Franklin SC (with him B L Manentsa).
Instructed by:
Webber Wentzel, Johannesburg;
Symington & De Kok, Bloemfontein.
For respondent:
M C Maritz SC (with him D R van Zyl).
Instructed by:
Malatji & Co, Sandton;
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 1 October 2020
STATUS Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
Municipal Employees' Pension Fund and Others v Chrisal Investments (Pty)
Ltd and Others (792/2019) [2020] ZASCA 116 (1 October 2020)
The SCA today upheld an appeal by the Municipal Employees' Pension Fund
(the MEPF) against a judgment of the Gauteng Division of the High Court,
Pretoria, granting an order at the instance of the group of companies
controlled by the fourth respondent Adamax Property Projects Menlyn (Pty)
Ltd (Adamax), for the liquidation of the properties on which stand three
shopping centres in Menlyn, Pretoria.
The MEPF purchased a 55% interest in the shopping centre business
conducted by the three subsidiaries of Adamax for a price of R550 million.
The parties concluded a detailed co-ownership agreement with Adamax (the
COA) encompassing the manner in which the business would be jointly
conducted. A 55% share in each of the immovable properties on which the
shopping centres were erected was transferred to the MEPF and a 55%
interest in all the leases of premises in the centres was ceded and assigned to
it as part of the delivery of the interest it had purchased in the business.
The parties having fallen out the Adamax companies claimed that they were
entitled as a matter of law to require that the immovable properties be divided
between them and the MEPF and contended that this should be done by
placing the shopping centres in the hands of a liquidator to be sold. The
MEPF contended that this would undermine the foundations of their
acquisition of a 55% share in the business of the shopping centres and the
terms of the COA in regard to the circumstances in which the relationship
between it and the Adamax parties could be terminated. The high court
granted an order for the liquidation of the properties in accordance with the
actio communi dividundo, the common law action for the dissolution of
co-ownership.
The SCA held that there are two categories of co-ownership in our law. The
first is free co-ownership, where any party to the co-ownership may demand
that it be terminated and the co-owned assets divided among the co-owners,
or sold and the proceeds divided in accordance with the co-owners'
respective shares. The second is bound co-ownership, where the co-
ownership has its source in another binding relationship between the parties
and can only be dissolved when that relationship is dissolved. Examples of
this are partnership, marriage in community of property, clubs and other
unincorporated associations and the co-ownership of the common property in
sectional title developments. The essential difference between the two is that
in free co-ownership the co-ownership was the only relationship between the
parties and any party can at any stage demand its dissolution, while in bound
co-ownership the extrinsic relationship is the primary relationship and the co-
ownership only incidental to or consequent upon that relationship. As a result
the co-ownership can only be dissolved when the primary relationship is
dissolved.
The SCA held that this was a case of bound co-ownership. The primary
relationship between the parties was the sale of the letting enterprise by the
Adamax parties to the MEPF and the COA that regulated in considerable
detail their future joint business relationship. An income guarantee given to
the MEPF for the first four years of the relationship was inconsistent with the
notion that the relationship could be terminated at will by the Adamax parties.
The nature of the relationship was governed by the COA to which the co-
ownership of the immovable properties was subordinate. Accordingly, the
court held that there was no right to demand division of the immovable
properties and that the appeal had to succeed and the high court order be set
aside.
|
2416
|
non-electoral
|
2013
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 604/12
In the matter between:
DAVID SITHOLE
Appellant
and
THE STATE
Respondent
Neutral citation: Sithole v The State (604/12) [2013] ZASCA 55
(04 April 2013)
Coram:
Mpati P, Majiedt JA, Southwood, Plasket, Saldulker AJJA
Heard:
14 March 2013
Delivered:
04 April 2013
Summary: Criminal Law - unrepresented accused - robbery with aggravating
circumstances - reliability of identification - evidence of complainant not
corroborated – criminal proceedings - right to a fair trial - role of Judicial officers
and state prosecutors – lack of fairness and impartiality.
_______________________________________________________________
ORDER
____________________________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (De Jager AJ and
Bergenthuin AJ sitting as court of appeal):
1.
The appeal is upheld.
2.
The order of the high court is set aside and substituted with the following:
‘The appeal is upheld and the conviction and sentence are set aside.’
JUDGMENT
SALDULKER AJA (Mpati P, Majiedt JA, Southwood and Plasket AJJA
concurring):
[1] The appellant was convicted in the regional court, Mamelodi, Pretoria on a
charge of robbery with aggravating circumstances on 20 November 2002.
Having found no substantial and compelling circumstances, the regional
magistrate sentenced the appellant on the same date to 15 years’ imprisonment in
terms of the Criminal Law Amendment Act,105 of 1997 (the Act). On 17 July
2006, his appeal to the North Gauteng High Court (De Jager AJ and Bergenthuin
AJ) against both the conviction and sentence failed. The appellant was, however,
granted leave to appeal to this court on both conviction and sentence by Van der
Merwe DJP and De Vos J on 21 September 2011.
[2] Regrettably for the appellant, given the outcome hereof, this appeal comes
before us after his release on parole, and after he had served eight years of the
sentence.
[3] The main issue in this appeal is whether the appellant, who was
unrepresented during his trial, was properly convicted of the charge against him.
I shall also comment on whether he had a substantively fair trial. The events
giving rise to the charges upon which the appellant was convicted and sentenced
are as follows. The complainant, Ms Nancy Mokoena, testified that at 07h30 on
13 December 2001, she was walking in (the district of ) Mamelodi East, on her
way to visit her cousin, when she was accosted by two men, both unknown to
her, one armed with a firearm, and robbed of her cellphone. They then ran away
but a distance away, the one with the firearm fired two shots in her direction. The
complainant proceeded to her cousin’s home where she reported the incident.
Her cousin Mr Edward Leyana then accompanied her to the site of the incident
where they found a group of people sitting and drinking sorghum beer at a
nearby house. Two of the people from the group claimed that they had seen the
incident, and that the robber with the firearm was known to them, and that his
name is David and he exercised at the nearby gymnasium. According to the
complainant that afternoon, whilst she had been sitting outside her cousin’s
house, she saw the appellant, walked passed her to the gymnasium. The appellant
was then identified as the robber and this led to his arrest.
[4] The appellant’s version was an alibi. He denied his involvement in the
robbery incident and stated that on that day, he was at work in Sunnyside. The
trial court found that the state had proved the appellant’s guilt beyond a
reasonable doubt and rejected the appellant’s version on the basis that it was so
improbable and beyond belief that it could not reasonably possibly be true.
[5] On appeal the state contended in its head of argument that the appellant
had been wrongly convicted and that he had not received a fair trial. The state
confirmed this at the hearing. The state’s case against the appellant rested on the
evidence of the identification of the appellant by a complainant, who was a
single witness to the robbery. In S v Sauls1 it was held that when it comes to a
consideration of the credibility of a single witness, the trial judge will weigh the
evidence, consider its merits and demerits and, having done so, will decide
1 S v Sauls 1981 (3) SA 172 (A) at 179G-180H.
whether, despite the fact that there are short-comings or defects or contradictions
in the testimony, he is satisfied the truth has been told. Futhermore, the exercise
of caution must not be allowed to displace the exercise of common sense. The
complainant’s identification of the appellant in this case was not reliable and was
based on what other people had told her, and none of these people testified.
There is nothing in the objective facts which corroborates the complainant’s
identification of the appellant during the actual robbery. The magistrate
accordingly erred in concluding that the complainant’s evidence was satisfactory
in every material respect and that the appellant’s guilt was proved on the strength
of her testimony, as a single identification witness2.
[6] As far as the appellant’s version is concerned, it appears that the
magistrate gave it only cursory and superficial consideration. The magistrate did
not follow the rules of assessing the appellant’s evidence in the context of all the
evidence to determine whether his defence was reasonably possibly true.3 A
court cannot simply reject the accused’s version because it finds the prosecution
witnesses to be credible. It must substantiate reasons for rejecting the accused’s
version.4
[7] The unreliability of the state’s case on identification set out above and the
fact that the appellant’s version was wrongly rejected as not being reasonably
possibly true, must result in the conviction and sentence being set aside.
[8] I deem it necessary to mention that there were disquieting features of the
trial which amount to irregularities which were prejudicial to the appellant and
which would, in any event, have resulted in the proceedings against him being
vitiated. I propose doing no more than to mention them briefly:
(a) the magistrate failed to inform the appellant of his constitutional right to choose
2 S v Mthetwa 1972 (3) SA 766 (A) at 768A-C.
3 S v Van Aswegen 2001 (2) (SACR) 97 (SCA) para 8.
4 S v Guess 1976 (4) SA 715 (A) at 718D-719A; S v Shackell 2001 (2) SACR 185 (SCA) para 30.
and be represented by a legal practitioner;5 or his right to have a legal
representative assigned to him by the state and at state expense where, as here,
substantial injustice would otherwise result;
(b) the magistrate failed to assist the unrepresented appellant during the trial, and
on the contrary, curtailed his cross examination concerning a material aspect,
namely discrepancies between Leyana’s viva voce evidence and his police
statement;
(c) the magistrate was biased against the appellant by making the following
statement at a stage in the trial when the state had not yet closed its case :
‘Yes, Sithole. You must consider yourself lucky for getting away with this because even if the
firearm is not found, if there is proof that it was fired you look to face prison charges. You
must thank your lucky stars’.
[9] An unrepresented accused has a limited appreciation of the legal process
and is greatly disadvantaged in legal proceedings, where he or she has to conduct
his or her own defence. Judicial officers must ensure impartiality, objectivity and
procedural fairness in respect of the unrepresented accused who lacks familiarity
with courtroom technique and legal knowledge in order to ensure a fair trial. The
judicial officer must assist the unrepresented accused in all facets of the trial,
ensuring that only admissible evidence is placed before it.
[10] For more than a decade the appellant has tried to have his conviction and
sentence set aside. After he was convicted and sentenced on 20 November 2002,
he lodged an appeal against both his conviction and sentence which was heard by
De Jager AJ and Bergenthuin AJ on 17 July 2006. In that court, the prosecution
was unyielding in its quest to have the appellant’s conviction confirmed and
continued to contend that the complainant was a satisfactory and reliable
5 Hlantlalala v Dyanti NO 1999 (2) SACR 541 (SCA) para 8; S v Rudman; S v Mthwana 1992 (1) SA 343 (A) at
382C-H; S v May 2005 (2) SACR 331(SCA).
witness. The appellant subsequently lodged an application for leave to appeal to
this court in July 2007.This application was delayed and postponed on several
occasions thereafter.
[11] On 7 January 2010, eight years after being sentenced, the appellant was
released on parole. He continued to pursue the hearing of his application for
leave to appeal which was eventually heard and granted by Van Der Merwe DJP
and De Vos J on 20 September 2011. The state did not oppose this application as
it was not convinced that the appellant had been correctly convicted. The state
had an opportunity to concede in the court below that the appellant had not been
convicted properly, but failed to do so until the matter was heard before this
court. It is a travesty of justice that the appellant had to wait more than a decade
to finally succeed in having his conviction and sentence set aside, and then only
after being released on parole, having served eight of the fifteen year sentence.
[12] In the circumstances, I make the following order:
The appeal is upheld.
The order of the high court is set aside and substituted with the following:
‘The appeal is upheld and the conviction and sentence are set aside.’
_____________________
H SALDULKER
ACTING JUDGE OF APPEAL
APPEARANCES
For Appellant:
M. Calitz
Instructed by:
Justice Centre, Bloemfontein
For Respondent:
A. Coetzee
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
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.
David Sithole v The State (604/12) [2012] ZASCA ( 4APRIL 2013)
The Supreme Court of Appeal (SCA) handed down judgment today in an appeal from the
North Gauteng High Court, Pretoria (High Court). The matter concerned an appeal against
both conviction and sentence on a charge of robbery with aggravating circumstances.
The appellant was convicted in the regional court in Mamelodi, Pretoria (the trial court) on a
charge of robbery with aggravating circumstances in 2002, and sentenced to the prescribed
minimum of 15 years’ imprisonment pursuant to the Criminal Law Amendment Act 105 of
1997. His appeal against both conviction and sentence was dismissed by the High Court in
2006. In 2011, the appellant was granted leave to appeal both conviction and sentence by the
High Court. The appellant served eight years of his imprisonment before being released on
parole in 2010.
The main issue in this appeal was whether the appellant, who had been unrepresented in the
trial court, had been properly convicted of the charge against him , and further whether he
had received a substantively fair trial. The state’s case against the appellant rested on the
identification of the appellant by a complainant who was a single witness to the robbery.The
appellant’s version was an albi.
The SCA held that there was nothing in the objective facts which corroborated the
complainant’s identification of the appellant during the actual robbery. The complainant’s
identification had been based on what other people had told her, and none of these people had
testified. The magistrate accordingly erred in concluding that her identification was reliable
and satisfactory. As far as the appellant’s version was concerned the magistrate in the trial
court gave it only cursory and superficial consideration.
The SCA held that the magistrate did not follow the rules of assessing the appellant’s
evidence in the context of all the evidence to determine whether his defence was reasonable
possibly true. It held that a court cannot simply reject the accused’s version because it finds
the prosecution witnesses to be credible. It must substantiate reasons for rejecting the
accused’ version. Thus the magistrate had erred in concluding that the appellant’s guilt was
proved beyond a reasonable doubt. The appeal was upheld and both conviction and sentence
were set aside.
The SCA further deemed it necessary to mention that there were disquieting features of the
trial which amounted to irregularities which were prejudicial to the appellant and which
would in any event have resulted in the proceedings against the appellant being vitiated. It
was a travesty of justice that the appellant had to wait for more than a decade to finally
succeed in having his conviction and sentence set aside, and then only after being released on
parole, having served eight of the fifteen year sentence.
|
3924
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 810/21
In the matter between:
SAMANCOR CHROME LIMITED APPELLANT
and
BILA CIVIL CONTRACTORS (PTY) LTD RESPONDENT
Neutral citation: Samancor Chrome Limited v Bila Civil Contractors (Pty)
Ltd
(Case
no
810/2021)
[2022] ZASCA
(28 November 2022)
Coram:
PETSE DP and ZONDI and MABINDLA-BOQWANA JJA and
DAFFUE and SALIE-HLOPHE AJJA
Heard:
30 August 2022
Delivered: 28 November 2022
Summary: Contempt of court – non-compliance with court orders to be
established beyond reasonable doubt – elements of wilfulness and mala fides
not established – appeal dismissed.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Fourie J,
sitting as court of first instance):
The appeal is dismissed with costs.
JUDGMENT
Mabindla-Boqwana JA (Petse DP and Zondi JA and Daffue and Salie-
Hlophe AJJA concurring)
[1] This appeal concerns the question whether the respondent, Bila Civil
Contractors (Pty) Ltd (Bila), is in contempt of two court orders granted by the
Gauteng Division of the High Court, Pretoria (high court), per Neukircher J
on 1 July 2019 and Janse van Niewenhuizen J on 10 December 2019
respectively. The appellant, Samancor Chrome Limited (Samancor), which
brought the contempt application before the high court, contended for that
question to be answered affirmatively. The high court disagreed with
Samancor in respect of both orders, albeit for different reasons, and dismissed
the application. It also dismissed the application for leave to appeal. This
appeal is therefore with the leave of this Court.
[2] Samancor is the co-owner and the holder of a converted mining right in
respect of the Remaining Extent Portion 2 of the farm, Elandskraal 469 JQ
(RE Portion 2). It has the sole and exclusive right to mine1 and recover chrome
in, on and under RE Portion 2, among other areas. It also has obligations to
safeguard and protect the environment, the area and persons using it, from
damage or injury. The Mine Health and Safety Act 29 of 1996 (the MHSA)
also imposes safety obligations on Samancor.
[3] Bila has a prospecting2 right for chrome ore over RE Portion 2. In terms
of this right, it is entitled to remove and dispose, for its benefit, chrome ore
and other minerals found during prospecting operations on RE Portion 2, as
contemplated in s 20 of the Mineral and Petroleum Resources Development
Act 28 of 2002 (the MPRDA).3 Bila is permitted to remove only authorised
quantities of chrome ore as may be required in order to conduct tests on it or
to identify or analyse it, as permitted in terms of s 20(2) of the MPRDA.
1 In terms of s 1 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) the term
‘mine’ when used as verb is defined as ‘any operation or activity incidental thereto, in, on or under the
relevant mining area’.
2 ‘prospecting’ – ‘means intentionally searching for any mineral by means of any method –
(a) which disturbs the surface or subsurface of the earth, including any portion of the earth that is under the
sea or under other water; or
(b) in or on any residue stockpile or residue deposit, in order to establish the existence of any mineral and to
determine the extent and economy value thereof; or
(c) in the sea or other water on land.’ (s 1 of the MPRDA)
3 Section 20 provides:
‘(1) Subject to subsection (2), the holder of a prospecting right may only remove and dispose for his or her
own account any mineral found by such holder in the course of prospecting operations conducted pursuant
to such prospecting right in such quantities as may be required to conduct tests on it or to identify or analyse
it.
(2) The holder of a prospecting right must obtain the Minister’s written permission to remove and dispose
for such holder’s own account of diamonds and bulk samples of any other minerals found by such holder in
the course of prospecting operations.’
[4] Bila’s prospecting right is for five years commencing on 13 May 2018
and ending on 29 May 2023. All planned prospecting activities were to be
conducted in three phases and within specific timeframes. Phase 1 would
consist of non-invasive prospecting activities, which included collation of
data and literature surveys. These activities would not disturb the land where
prospecting would take place. This phase was to last for a period of six
months, from June 2018 to December 2018.
[5] Phase 2 would last for a period of 12 months, from January 2019 to
December 2019. The activities planned for this phase would be invasive and
result in land disturbance, for example, sampling, drilling, trenching, and bulk
sampling. The proposed drilling programme consisted of six holes,
approximately 30m deep, depending on local depth to bedrock. The pits would
be 3m x 3m x+/- 10m deep on a grid of 100 x 100 metres and 50 x 50 metres
when necessary. These test pits had to be closed immediately before the
excavator moved to the next. It was envisaged that at least 100 test pits would
be excavated.
[6] Phase 3 would cover the remainder of the period from January 2020 to
29 May 2023. During this period, invasive prospecting activities such as
sampling, excavation, drilling, blasting, and bulk sampling would take place.
The prospecting area is described as 434 hectares, and it was anticipated that
a total of 50 000m³ (100 000 ton) would be tested by making trenches on
different locations over the whole prospecting area, where the possibility of
ore was identified with the test pits. Bila would be able to process 960m³ a
month and the processing of 50 000m³ would take about 42 months overall.
The total budget to complete the work for the duration of the prospecting right
was stated as R1 248 122.
[7] On 12 June 2019, Samancor lodged an urgent application in the high
court for an order interdicting Bila, its employees, and contractors from
conducting unlawful mining operations on RE Portion 2 (and Portion 154,
which is not relevant for this particular appeal). Samancor alleged that these
unlawful activities infringed upon its rights as a co-owner and the holder of
converted mining rights and posed health, safety, and environmental risks.
[8] In resisting Samancor’s application, Bila denied that it was conducting
unlawful mining activities. It alleged that it employed 85 people and had
invested in excess of R100 million in its authorised prospecting operations
and activities.
[9] The matter served before Neukircher J, who in her comprehensive
judgment, found in favour of Samancor on 1 July 2019. She granted, inter alia,
the following order:
‘1. In respect of the remaining extent of Portion 2 of the farm Elandskraal 469 JQ North
West Province:
1.1
[Bila], its employees and contractors are interdicted and restrained from
conducting, facilitating or being involved in any manner whatsoever in mining operations
on this property;
1.2
[Bila], its employees and contractors are interdicted and restrained from the
removal of any material containing chrome or chrome ore or other minerals from this
property outside of that allowed by its prospecting right.’
[10] Bila applied for leave to appeal against Neukircher J’s order, which was
dismissed on 12 August 2019. On 8 September 2019, Samancor lodged
another application in the high court for an order joining Bila’s directors as
respondents, and for Bila and its directors to be held in contempt of the order
granted by Neukircher J on 1 July 2019.
[11] In that application, Samancor alleged, inter alia, that various people
from Samancor – including its service specialist, Mr Vusumzi Vilakazi, its
mineral resources manager, Mr Kabelo Dube and an official from a security
company it employs, Mr Dolf Labuschagne – observed Bila conducting
mining activities on RE Portion 2 and Portion 154. Mr Vilakazi and Mr Dube
conducted an analysis of the pits where the alleged activities had taken place
and found that Bila had, by 22 August 2019, removed an estimated amount of
174 382.23 tons of chrome ore from MG4 Reef and 75 441.37 tons of chrome
ore from MG4A on RE Portion 2. The dimensions of the pits excavated were
in sizes that were more than those allowed in Bila’s Prospecting Work
Programme (PWP). Bila denied these allegations, while offering no evidence
to refute them, allegedly because of the urgency with which the application
had been brought.
[12] Samancor’s second application was heard by Van der Westhuizen J,
who dismissed it on 30 September 2019 on the basis that Samancor could not
obtain an order for contempt ‘summarily against the respondents [Bila’s
directors] without them being granted a need to be heard.’4 This Court granted
4 Relying on R v Keyser 1951 (1) SA 512 (A) at 518E-F endorsed in Matjhabeng Local Municipality v Eskom
Holdings Limited and Others; Mkhonto and Others v Compensation Solutions (Pty) Limited [2017] ZACC
35; 2018 (1) SA 1 (CC) para 79.
Samancor leave to appeal Van der Westhuizen J’s order after he had refused
leave.
[13] On 7 October 2019, Bila applied for leave to appeal Neukircher J’s
order to this Court, which was dismissed on 30 November 2019. Nearly eight
months later, on 22 July 2020, it applied for leave to appeal to the
Constitutional Court, which was dismissed on 13 November 2020.
[14] The dismissal of the application for leave to appeal by this Court on 30
November 2019, made Neukircher J’s order operative and enforceable until
22 July 2020, when an application for leave to appeal was lodged with the
Constitutional Court.
[15] On 13 July 2020, Samancor lodged another application, which is the
subject of this appeal, for an order holding Bila in contempt of the orders
granted by Neukircher J on 1 July 2019 and Janse van Niewenhuizen J on 10
December 2019, as mentioned earlier. Fourie J heard that application. Counsel
for Samancor submitted that the difference between the application that
served before Van der Westhuizen J in respect of Neukircher J’s order and the
one heard by Fourie J was the applicable contempt period.
[16] He contended that the application before Van der Westhuizen J dealt
with the contempt period between 12 August 2019, which is when Neukircher
J dismissed the application for leave to appeal, and 8 September 2019, when
the application before Van der Westhuizen J was brought. In contrast, the
matter heard by Fourie J, dealt with the period between the dismissal of the
petition by this Court on 30 November 2019 and the lodgement of the
application for leave to appeal to the Constitutional Court on 22 July 2020.
[17] As regards the facts relating to Janse van Niewenhuizen J’s order,
Samancor alleged that on 3 October 2019, it had lodged an internal appeal
with the Department of Environment, Forestry and Fisheries (the
Department)5 in terms of the National Environmental Management Act 107
of 1998 (NEMA) against the decision to grant Bila an environmental
authorisation, in respect of a prospecting right that had been granted to it over
RE Portion 2.
[18] In terms of s 43(7) of NEMA, an appeal suspends an environmental
authorisation, exemption, directive, or any other decision made in terms of
that Act or any other specific environmental management Act or any provision
or condition attached thereto. Samancor’s internal appeal accordingly
suspended any activities by Bila on RE Portion 2.
[19] According to Samancor, Bila continued to conduct mining and
prospecting activities on RE Portion 2 despite the lodgement of the internal
appeal. Because of this conduct, Samancor lodged an urgent application in the
high court seeking an order interdicting Bila from conducting any activities
on RE Portion 2 until the internal appeal had been determined. On 10
December 2019, Janse van Niewenhuizen J granted an order interdicting Bila
from being involved in any manner whatsoever, in any activities, including
prospecting operations on RE Portion 2, pending the outcome of the appeal.
5 Currently known as Department of Forestry, Fisheries and the Environment.
[20] On 13 December 2019, Bila applied for leave to appeal against Janse
van Niewenhuizen J’s order. This prompted Samancor’s attorneys to write a
letter to Bila’s attorneys on 19 December 2019 advising them that Janse van
Niewenhuizen J’s order was interlocutory and consequently did not have the
effect of a final judgment. Unfazed, Bila did not withdraw its application for
leave to appeal Janse van Niewenhuizen J’s order. It, however, never
prosecuted that application.
[21] In advancing a case of non-compliance with the Neukircher J and Janse
van Niewenhuizen J’s orders, Samancor alleged that on 10 June 2020, one Mr
Riaan Greeff, of a security company it employed, reported that he had noticed
Bila’s trucks operating on Bila’s prospecting area and RE Portion 2. On 11
June 2020, with a view to ascertaining the nature and extent of these activities,
Samancor’s finance and administration security specialist, Mr Nel, took aerial
photographs, from a drone, of the prospecting area and RE Portion 2.
[22] This was followed by a letter sent to Bila by Samancor’s attorneys on
15 June 2020, advising that Bila had again commenced with illegal mining
and prospecting operations in contempt of Janse van Niewenhuizen J and
Neukircher J’s orders. The letter demanded an immediate cessation of the
alleged illegal mining and prospecting operations failing which Samancor
would apply to court to hold Bila in contempt of the orders.
[23] On 25 and 26 June 2020, Mr Nel took aerial videos of the activities on
RE Portion 2. The video footage and photographs taken by Mr Nel were
studied by Mr Dube, Samancor’s mineral resources manager and qualified
mine surveyor. Mr Dube confirmed that the photographs and footage depicted
mining and/or prospecting operations.
[24] On 3 July 2020, Samancor employed the services of Directional Survey
and Mapping (DSM) to conduct a drone survey on RE Portion 2. DSM
processed the data and provided it to Samancor. Mr William Jele, Samancor’s
survey practitioner, analysed this data by using industry-standard digital
terrain modelling in surveying software, ‘model-maker’.
[25] As pointed out in the founding affidavit:
‘Mr Jele calculated that by 3 July 2020, [Bila] has mined additional volumes of chrome ore
of 258, 117 cubic metres from the MG4 Reef and 114, 211 cubic metres from MG4A Reef
on RE Portion 2. [Samancor’s chief surveyor, Mr Eddie Maleka] converted these volumes
to tons by multiplying the amount of the volumes with the density of the ore (being 4.04
tons per cubic metre for the MG4 Reef and 3.95 tons per cubic metre for the MG4A Reef).
This resulted in an additional 1,493,926 tons of chrome ore removed by [BILA] from the
MG4 Reef and MG4A Reef on RE Portion 2 i.e. in excess of the 920,611 tons of chrome
mined in 2019.’ (My emphasis.)
[26] Samancor submitted that Bila’s unlawful operations adversely affected
Samancor’s obligations imposed on it by the MHSA. Bila’s actions, it was
contended, also posed environmental, health and safety risks and placed the
integrity of the underground mined out area at risk.
[27] In its defence, Bila contended that the orders were not capable of being
breached, as they were not operational. Neukircher J’s order, so it contended,
was automatically suspended by virtue of the provisions of s 18(1) of the
Superior Courts Act 10 of 2013 (the Superior Courts Act) as the papers
seeking leave to appeal to the Constitutional Court had then been filed. In
respect of Janse van Niewenhuizen J’s order, Bila alleged that, although the
order was of an interim nature, it was final in effect and therefore its operation
was suspended upon the lodging of the application for leave to appeal against
it.
[28] Consequently, Fourie J was required to determine whether contempt
had been established on the papers. He found that Samancor’s application was
based on Bila’s conduct, which occurred after 10 June 2020. He held that
‘[t]he relevant period applicable for the order granted by Neukircher J [was]
therefore between 10 June 2020 (the effective date) and 22 July 2020 when
the application for leave to appeal to the Constitutional Court was filed.’ The
effective date was based on Samancor’s allegation that Mr Greeff had noticed
Bila’s trucks operating on the prospecting area on RE Portion 2 on 10 June
2020. He made the following key findings:
‘[40] Taking into account the period during which the order granted by Neukircher J is
operative for purposes of this application (between 10 June, the effective date, and 21 July
2020), the question to be considered is whether the respondent, by conducting these
activities, was conducting mining operations as opposed to prospecting activities, by
removing material or other minerals from this property “outside of that allowed by its
prospecting rights”.’
[41] The founding affidavit still refers to “unlawful mining and/or prospecting activities”,
even after Jele’s calculations. The explanation given in the founding affidavit “that by 3
July 2020 the respondent has mined additional volumes of chrome ore” in the quantities
as mentioned, also does not take the matter any further as it is not explained during what
period these quantities of material had been mined and/or removed outside of that allowed
in terms of the prospecting rights. Put differently, had it been illegally mined or was the
respondent conducting prospecting activities? Furthermore, had the material been removed
between 10 June (the effective date) and 3 July 2020 (when the calculation was apparently
made) or had the activities and removal already started prior to 10 June 2020? If the
activities had already started prior to 10 June 2020, what is the amount of material that was
removed after the effective date?’ (Emphasis in the original text.)
[29] Fourie J further noted the concession made in the replying affidavit that
Samancor became aware of these activities on 10 June 2020. For
completeness, the replying affidavit records that ‘[t]he difference between this
contempt application and the one before Van der Westhuizen J is that this
application is based on the [Bila’s] conduct after 10 June 2020, whereas the
application before Van der Westhuizen J was based on conduct up to 8
September 2019.’
[30] Fourie J accordingly found that ‘there [was] no sufficient evidence to
indicate, beyond reasonable doubt (or even on a balance of probabilities), that
[Bila] has disobeyed the order granted by Neukircher J by conducting mining
operations, as opposed to prospecting activities, and by removing material
outside of that allowed by its prospecting right during the period referred to
above.’
[31] As to the order granted by Janse van Niewenhuizen J, Fourie J found
that, that order which prohibited all activities, including prospecting
operations, was operational from when it was granted on 10 December 2019
and was not suspended by the application for leave to appeal. It was an
interlocutory order not having the effect of a final judgment, as contemplated
in s 18(2) of the Superior Courts Act. It was therefore effective and
enforceable also from 10 June 2020.
[32] He further found that, Bila had admitted that it was carrying out
prospecting activities even during the relevant period. The uncertainty about
the removal of the material outside of that allowed by the prospecting right
during the relevant period, while relevant, was of less importance when regard
is had to the terms of Janse van Niewenhuizen J’s order. He therefore
concluded that Bila had failed to comply with the order granted by Janse van
Niewenhuizen J.
[33] As to wilfulness and mala fides in respect of this order, Fourie J
accepted the explanation given by Bila that it had received legal advice to the
effect that the order was suspended and it could therefore continue with its
prospecting activities, which it bona fide accepted. In this regard, he was
satisfied that Bila had ‘advanced sufficient evidence to establish a reasonable
doubt (even on a balance of probabilities) as to whether the non-compliance
was wilful and mala fide, notwithstanding the fact that [Bila] was later found
to be wrong about the supposed suspension.’ He accordingly dismissed the
application with no order as to costs.
[34] Before us, counsel for Samancor submitted that Fourie J erred by
conceiving 10 June 2020 as the effective date on which the contempt
commenced. That date, counsel emphasised, was simply the date on which
Samancor became aware of Bila’s continued unlawful activities and not the
date from when non-compliance with the orders began. According to
Samancor’s counsel, Samancor had expressly stated in its replying affidavit
that the conduct for which it sought to hold Bila in contempt began from 30
November 2019 to 22 July 2020.
[35] Counsel expressed regret that Samancor had also stated in the replying
affidavit that the application was based on Bila’s conduct after 10 June 2020.
He emphasised that, despite that assertion, Samancor’s case, clearly showed
that Bila’s unlawful conduct, apparent from a holistic reading of its affidavits,
at the earliest, commenced from when this Court refused Bila’s application
for leave to appeal to when the application for leave to appeal was filed in the
Constitutional Court. That meant that Neukircher J’s order remained operative
until Bila’s belated filing of its application for leave to appeal to the
Constitutional Court.
[36] He further argued that Fourie J erred in finding that Samancor did not
present sufficient evidence to establish contravention of Neukircher J’s order
and further contended that the high court failed to analyse the evidence that
was presented before it.
[37] As to the finding that non-compliance with Janse van Niewenhuizen J’s
order was not proved to be wilful and mala fide, counsel for Samancor
submitted that Bila had been informed by Samancor’s attorneys on 19
December 2019 that the order was operative, and it had to adhere to it despite
its application for leave to appeal. Relying on S v Abrahams,6 Samancor
contended that Bila had failed to provide, in its answering affidavit, any details
6 S v Abrahams 1983 (1) SA 137 (A) at 146F-H.
of the advice it had allegedly received, including what the advice entailed,
when and by whom it was given.
[38] Bila readily conceded in its answering affidavit that both the
Neukircher J and Janse van Niewenhuizen J orders existed and were served
upon it. Consequently, the first two requirements to establish contempt were
met.
[39] The main defence in respect of these two orders was that they were not
breached because they were not operative. In my view, Fourie J was correct
in dismissing this defence because Janse van Niewenhuizen J’s order was
interlocutory in nature and therefore not suspended as s 18(2) of the Superior
Courts Act explicitly provides. Neukircher J’s order remained operative
during the period of 30 November 2019 and 22 July 2020, as already stated.
It was similarly not suspended during the period in which Samancor claims
the unlawful activities were taking place.
[40] I do not need to delve into the non-compliance with Janse van
Niewenhuizen J’s order as Bila admitted conducting prospecting operations,
which the order had interdicted. Fourie J was correct on this score, and Bila
mounted no challenge on appeal. In respect of that order, the issue that
remains to be determined is whether Bila advanced evidence that established
a reasonable doubt as to whether the breach was wilful and mala fide.
[41] I deal next with Neukircher J’s order. The first question is whether
Samancor established breach of that order beyond reasonable doubt.7 I am
willing to accept the argument made on Samancor’s behalf that on a proper
reading of the papers, 10 June 2020 was the date its ‘officials’ observed the
operations and the contempt complained of started on 30 November 2019 to
22 July 2020, despite the assertion made in its replying affidavit suggesting
otherwise.
[42] Therefore, the period that should be assessed as to whether Bila was
conducting mining operations in contempt of Neukircher J’s order is 30
November 2019 to 22 July 2020. It is important to carefully examine the
allegations relating to that period. This is so because a lot of background
precedes it and touches on the application brought for contempt of Neukircher
J’s order in relation to conduct from 12 August 2019 to 8 September 2019.
[43] In my assessment, there are two main paragraphs of the founding
affidavit that pointed to whether Samancor showed that Bila conducted
mining activities. Mr Greeff noticed Bila’s trucks operating on the site and
reported them. Mr Nel followed that up by taking photographs and making a
video of their activities. So far, the two witnesses’ observations on their own
were not vouching for whether mining or prospecting was taking place. The
person who could do that and indeed who studied the photos and the video
was Mr Dube, who was an expert in this regard. On scrutiny, the allegation
relating to what Mr Dube studied is not helpful either. It is, at best for
7 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) para 42.
Samancor, ambivalent. It is stated, he confirmed that ‘they show mining
and/or prospecting operations.’ (My emphasis.)
[44] The key allegation that remains is that which states that as at 3 July
2020 there was ‘. . . an additional 1,493,926 tons of chrome ore removed by
[Bila] from the MG4 Reef and the MG4A Reef on RE Portion 2 i.e. in excess
of the 920, 611 tons of chrome ore that it had already mined in 2019.’
[45] The question is whether the allegation quoted in the preceding
paragraph is sufficient to hold Bila in breach of the order beyond reasonable
doubt. The difficulty I have with this allegation is its lack of particularity.
First, it must be accepted that by this stage, Bila was in phase 3 of the
prospecting activities in terms of the PWP. It is not alleged by how much it
exceeded its allowable extraction for this period.
[46] No allegations are made as to whether it had exceeded the permissible
amount of chrome ore. It is left to the court to make its own deductions that
the additional tons of chrome referred to in the quoted part of the relevant
paragraph meant that Bila had exceeded what it was allowed to extract.
[47] If regard is had to the slides provided in support of the measurements
for 2019 and 2020, it appears that the measurements for 2019 were done on
24 May 2019, which leaves the possibility that the measurements done on 3
July 2020 included the six months period from May 2019 to November 2019
(which is a period not forming part of the complaint).
[48] It is neither conclusive nor clear whether any extractions took place
after November 2019 to 3 July 2020. This is because calculations presented
for 2019 stopped on 24 May 2019, which could mean calculations for 2020
included those from 25 May 2019. It may be surmised, according to
Samancor’s counsel, that part of the volumes removed should be between 30
November 2019 and 3 July 2020. This, however, may be lending us into the
realm of supposition.
[49] The difficulty is that the allegations made by Samancor are too wide
and difficult to devise into the particular period. This may be because of the
manner in which the allegations are made, which leaves gaps and requires the
court to put pieces together for it to understand how the infringement could
be attributed to that period.
[50] While it may be easy to say numbers speak for themselves, one must
be careful that such numbers indicate a breach during the period concerned. I
am not sure that it is fair to have to undertake the analysis of assembling pieces
together, that counsel sought to make in argument. This is so because the party
having to respond to the allegations must be clear as to the exact infringement
and not have to wait for the hearing to take place in order to understand what
the actual breach is, ie the analysis of the quantities and comparisons is, as
shown in the slides.
[51] In my view, the hurdle that Samancor has to overcome is to show non-
compliance beyond a reasonable doubt, and that requires a clearly pleaded
case. Lack of clarity regarding the breach of Neukircher J’s order could have
been brought about by the clumping together of allegations dealing with the
orders of Janse van Niewenhuizen J and Neukircher J.
[52] The problem with that approach is that all that was required to be shown
in respect of Janse van Niewenhuizen J’s order was that Bila had conducted
prospecting operations after the granting of the order. In contrast, insofar as
Neukircher J’s order is concerned, Samancor had to show that Bila was
mining after 30 November 2019 to 22 July 2020.
[53] The theme of mixing allegations in respect of the two orders
unfortunately showed equivocation, even if not intended, that permeated the
entire founding affidavit. For example, another averment is made in the
founding affidavit that Bila was continuing to conduct unlawful mining and/or
prospecting activities and operations on RE Portion 2.
[54] In the circumstances, it is difficult to find that non-compliance with
Neukircher J’s order was distinctly and clearly decipherable from allegations
dealing with the breach of Janse van Niewenhuizen J’s order, without having
to apply a strained analysis to the facts. Contempt of a court is a serious matter,
with grave consequences; hence, the standard that must be met whenever a
criminal sanction is sought is proof beyond reasonable doubt.
[55] While there may be a general sense that even during the period alleged,
Bila may have been conducting mining operations, clear and unequivocal
allegations ought to have been made. The facts, such as they are, are
insufficient to sustain an inference of non-compliance during the alleged
period.
[56] For those reasons, I am constrained to find that Samancor has not
clearly established the breach of Neukircher J’s order beyond a reasonable
doubt.
[57] As regards Janse van Niewenhuizen J’s order, the issue is whether
wilfulness and mala fides have been established. Bila alleged that it relied on
legal advice that the order, although interlocutory, was final in effect. In this
regard, a notice of application for leave to appeal was lodged, even though the
application was never pursued.
[58] As indicated earlier, counsel for Samancor argued that Bila failed to
provide any detail pertaining to the advice, including what the advice was and
by whom it was given, as contemplated in Abrahams.8 Whether sufficient
detail has been provided in support of a defence of legal advice, is a question
of fact. In Abrahams, the appellant had been convicted of contravening the
Rent Control Act 80 of 1986, in that he demanded from tenants rental in
excess of what was determined by the Rent Board while he had received a
letter from the Rent Board stating what the controlled rent was. He then
consulted an attorney who advised him that he was entitled to increase the rent
as he had done. In this regard, the Court held:
‘At the time he sought the attorney’s advice he knew or at least suspected that the premises
were rent-controlled and in addition he had a letter from the Rent Board confirming that
8 S v Abrahams 1983 (1) SA 137 (A) at 146F-H.
fact. In such circumstances it was not sufficient for one burdened by the onus under s 18
(4) (a) to seek to discharge the onus by stating in court that his attorney told him that his
action in requiring the payment of an increased rent was in order. In the case of R v
Meischke’s (supra) the accused advanced in mitigation of his sentence the fact that his
attorney had advised him that he need not obtain permission of the Rent Board to increase
rentals controlled by a determination. In dealing with this plea TINDALL ACJ stated in
the course of his judgment in that case at 711 that if an accused wished the Court to have
regard to this advice as a mitigating factor, then it could be expected of him to produce the
advice if it was in writing. In addition the Court would require to be satisfied that the advice
was given on a full and true statement of facts. In the absence of such safeguards the fact
of the advice having been given was held to be of no avail as a mitigating factor. These
remarks are pertinent to the present enquiry, more particularly as the attorney on whose
advice the appellant claimed to have relied was not called to testify in regard to all the
circumstances relevant to the giving of such advice.’9 (My emphasis.)
[59] In R v Meischke’s10 the Court had said the following:
‘This, however, must be emphasised, that if the accused wishes to rely on the receipt of
such advice as a mitigating factor, he ought to give evidence in mitigation so that the court
may be in a position to investigate whether in truth he did get such advice, and on what
statement of facts by the accused the advice was given. If, as in the present case, the
accused merely states in his evidence given before conviction that he took legal advice, he
is not likely to be exposed to full interrogation on the matter. But if he gives such evidence
after conviction and then pleads in mitigation that he acted on legal advice, he will be
asked to produce the advice, if it was in writing, and whether it was written or oral, and
the court will require to be satisfied that the advice was given on a full and true statement
of facts. In the absence of these safeguards the plea of having acted on legal advice would
be liable to abuse. In the present case, owing to the fact that Amoils did not tender evidence
in mitigation, these safeguards were absent; the magistrate had no opportunity of verifying
9 Abrahams fn 8 above at 146 D-H.
10 R v Meischke’s (Pty) Ltd and Another 1948 (3) SA 704 (A) at 711.
whether the accused did get the legal advice in question and, if he did, on what facts such
advice was given. In the circumstances the statement made by Amoils under cross
examination that his legal adviser had advised him that the permission of the control board
was not necessary, is of no value in the assessment of the punishment and can be
disregarded.’ (My emphasis.)
[60] As appears from the cases in the preceding two paragraphs, evidence in
support of the plea of legal advice is required to prevent abuse. In both
Abrahams and Meisckhe’s, the accused simply mentioned in court that they
had relied on legal advice without providing evidence in support of such
claims. Consequently, it was held that the respective courts could not verify
whether the alleged legal advice was given and, if so, on what facts. There are
additional factors though, that distinguish those cases from the present one. In
Meischke’s the accused appears to have relied on legal advice during cross-
examination. In Abrahams the accused ‘was well aware of the fact that he was
acting in conflict with the requirements of the Act.’11
[61] In the present case, throughout the answering affidavit, the theme that
carried through Bila’s defence was that the two court orders were
automatically suspended, and in particular that of Janse van Niewenhuizen J,
due to the lodgement of the application for leave to appeal. For present
purposes, the focus is not on the correctness of that defence, but on whether
legal advice to that effect was given, by whom, its nature and whether it was
bona fide received by Bila.
11 Abrahams fn 8 above at 147G.
[62] It is so, that in dealing with the elements of wilfulness and mala fides
all that is recorded is that Bila ‘acted bona fide and on the basis of legal advice
to the effect that the two court orders remain suspended, inoperational and
non-executable for all the reasons already canvassed above.’ (My emphasis.)
[63] As is apparent from the answering affidavit, on 10 December 2019
(which is the same day that Janse van Niewenhuizen J’s order was issued),
Bila’s attorneys addressed a letter to Samancor which, inter alia, stated as
follows:
‘3. Our client has instructed us:
3.1 to file an application for leave to appeal in respect of the judgment of the Honourable
Judge Janse Van Niewenhuizen… .’ (My emphasis.)
[64] On 17 December 2019, Bila indeed lodged that application. As proof
of the lodgement, it annexed a notice of application for leave to appeal. In the
notice, it is stated that the application for leave to appeal did not fall to be
determined in terms of s 18(2) of the Superior Courts Act as the judgment was
final in effect.
[65] In addition, still on 17 December 2019, Bila addressed a letter to the
Department requesting it to urgently constitute an independent panel to hear
the NEMA administrative appeal including Bila’s objection.
[66] Elsewhere in the answering affidavit, Bila stated that the question of
whether Janse van Niewenhuizen J’s order is automatically suspended ‘is
totally dependent on the finding in respect of the legal question whether the
decision was final in effect.’ The deponent went on to allege that he had
‘received legal advice that in view of the aforegoing, the relevant decisions
[could] not be breached.’
[67] Samancor dealt with these allegations in the replying affidavit.
Consequently, it could not be argued that it was ambushed during oral
argument. Although, the notice of application for leave to appeal was not dealt
with under the heading of wilfulness and mala fides, it clearly asserted the
automatic suspension of the orders. While the notice does not clearly set out
the reasons why Janse van Niewenhuizen J’s order is final in effect, in
circumstances like these, it is hard to conclude that Bila as a lay litigant did
not genuinely accept the advice given by its legal representatives, albeit
uncritically so, that the interim order could be appealed against.
[68] I am therefore of the view that, from the reading of the papers and the
context of this case, the legal advice given was clear. The court cannot ignore
it. For the purposes of contempt, the question is whether there is sufficient
explanation given for the breach, which raises reasonable doubt as to whether
the order was disobeyed wilfully and mala fide.
[69] In my view, as Fourie J found, the alleged legal advice was in respect
of an issue that was legal in nature. It depended on the interpretation of the
order, its context and particular circumstances. Although the legal advice was
later found to have been incorrect, this does not detract from the fact that it
was given and Bila accepted it in good faith.
[70] Even if Bila’s acceptance of the advice could be said to be
unreasonable, if it is accepted that it was received bona fide, it would not
amount to contempt.12 In the result, Fourie J’s conclusion that sufficient
evidence had been provided by Bila, creating reasonable doubt that its non-
compliance with Janse van Niewenhuizen J’s order was not wilful and mala
fide, cannot be faulted. Accordingly, for all the foregoing reasons the appeal
must fail.
[71] It remains to address the issue of costs. Bila asked for costs of two
counsel. This matter was not complex to warrant such a costs order. I would
therefore not allow costs of two counsel.
[72] In the result, the appeal is dismissed with costs.
______________________________
N P MABINDLA-BOQWANA
JUDGE OF APPEAL
12 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) paras 9 and 10.
APPEARANCES
For appellant:
G D Wickins SC
Instructed by:
Malan Scholes Inc, Johannesburg
Claude Reid Attorneys, Bloemfontein
For respondent:
D C Mpofu SC (with M ka-Siboto)
Instructed by:
Mabuza Attorneys, Johannesburg
Matsepes Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 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
Samancor Chrome Limited v Bila Civil Contractors (Pty) Ltd (Case no 810/2021) [2022]
ZASCA 163 (28 November 2022)
Today, the Supreme Court of Appeal (SCA) dismissed with costs 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 respondent, Bila Civil Contractors (Pty) Ltd (Bila)
was in contempt of two court orders granted by the high court, per Neukircher J on 1 July 2019
and Janse van Niewenhuizen J on 10 December 2019, respectively.
Samancor is the co-owner and the holder of a converted mining right in respect of the
Remaining Extent Portion 2 of the farm, Elandskraal 469 JQ (RE Portion 2). It has the sole and
exclusive right to mine and recover chrome in, on and under RE Portion 2. Bila has a
prospecting right for chrome ore over RE Portion 2. In terms of this right, it is entitled to remove
and dispose, for its benefit, chrome ore and other minerals found during prospecting operations
on RE Portion 2.
On 12 June 2019, Samancor lodged an urgent application in the high court for an order
interdicting Bila, its employees, and contractors from conducting unlawful mining operations
on RE Portion 2. In resisting Samancor’s application, Bila denied that it was conducting
unlawful mining activities. The matter served before Neukircher J, who found in favour of
Samancor on 1 July 2019. Bila applied for leave to appeal against Neukircher J’s order, which
was dismissed on 12 August 2019.
On 8 September 2019, Samancor lodged another application in the high court for an order,
joining Bila’s directors as respondents, and for Bila and its directors to be held in contempt of
the order granted by Neukircher J on 1 July 2019. Samancor’s second application was heard
by Van der Westhuizen J, who dismissed it on 30 September 2019 on the basis that Samancor
could not obtain an order for contempt ‘summarily against the respondents [Bila’s directors]
without them being granted a need to be heard’.
On 7 October 2019, Bila applied for leave to appeal Neukircher J’s order to this Court, which
was dismissed on 30 November 2019. Nearly eight months later, on 22 July 2020, it applied
for leave to appeal to the Constitutional Court, which was dismissed on 13 November 2020.
The dismissal of the application for leave to appeal by this Court on 30 November 2019, made
Neukircher J’s order operative and enforceable until 22 July 2020, when an application for
leave to appeal was lodged to the Constitutional Court.
On 13 July 2020, Samancor lodged another application, which is the subject of this appeal, for
an order holding Bila in contempt of the orders granted by Neukircher J on 1 July 2019 and
Janse van Niewenhuizen J on 10 December 2019. Fourie J heard that application. Counsel for
Samancor submitted that the difference between the application that served before Van der
Westhuizen J in respect of Neukircher J’s order and the one heard by Fourie J was the
applicable contempt period.
According to Samancor, Bila continued to conduct mining and prospecting activities on RE
Portion 2 despite the lodgement of the internal appeal with the Department of Environment,
Forestry and Fisheries, in terms of the National Environmental Management Act 107 of 1998
(NEMA), against the decision to grant Bila an environmental authorisation, in respect of a
prospecting right that had been granted to it over RE Portion 2. In terms of s 43(7) of NEMA,
an appeal suspends an environmental authorisation. Activities by Bila on RE Portion 2 were
accordingly suspended.
Because of this conduct, Samancor lodged an urgent application to the high court seeking an
order interdicting Bila from conducting any activities on RE Portion 2 until the internal appeal
had been determined. On 10 December 2019, Janse van Niewenhuizen J granted an order
interdicting Bila from being involved, in any manner whatsoever, in any activities, including
prospecting operations on RE Portion 2, pending the outcome of the appeal.
In its defence, Bila contended that the orders were not capable of being breached, as they were
not operative. Neukircher J’s order, so it contended, was automatically suspended by virtue of
the provisions of s 18(1) of the Superior Courts Act 10 of 2013 (the Superior Courts Act) as
the papers seeking leave to appeal to the Constitutional Court had then been filed. In respect of
Janse van Niewenhuizen J’s order, Bila alleged that although the order was of an interim nature,
it was final in effect, and therefore its operation was suspended upon the lodging of the
application for leave to appeal against it.
The SCA found that Fourie J was correct in dismissing this defence because Janse van
Niewenhuizen J’s order was interlocutory in nature and therefore not suspended as s 18(2) of
the Superior Courts Act explicitly provides. Neukircher J’s order remained operational during
the period of 30 November 2019 and 22 July 2020. It was similarly not suspended during the
period in which Samancor claimed the unlawful activities were taking place.
In respect of non-compliance with Neukircher J’s order, the SCA found that the allegations
made by Samancor were too wide and difficult to devise into the particular period, given that
the contempt was alleged to only be in respect of the period from 30 November 2019 to 22 July
2020. This may be because of the manner in which the allegations were made, which left gaps
and required the court to put pieces together for it to understand how the infringement could
be attributed to that period. Samancor clumped together allegations dealing with both the orders
of Janse van Niewenhuizen J and Neukircher J.
The problem with that approach was that, all that was required to be shown in respect of Janse
van Niewenhuizen J’s order was that Bila had conducted prospecting operations after the
granting of the order. In contrast, insofar as Neukircher J’s order was concerned, Samancor had
to show that Bila was mining after 30 November 2019 to 22 July 2020. For those reasons, the
SCA found that Samancor had not clearly established the breach of Neukircher J’s order
beyond a reasonable doubt.
As regards Janse van Niewenhuizen J’s order, to rebut an inference of wilfulness and mala
fides, Bila contended that it acted on legal advice that the order was automatically suspended
by virtue of it lodging a notice of application for leave to appeal that order. Furthermore,
although it was interim in nature, it was final in effect. The SCA found that the alleged legal
advice was in respect of an issue that was legal in nature. It depended on the interpretation of
the order, its context and particular circumstances. It held that although the legal advice was
later found to have been incorrect, this did not detract from the fact that it was given and Bila
accepted it in good faith. Even if Bila’s acceptance of the advice could be said to be
unreasonable, if it is accepted that it was received bona fide, it would not amount to contempt.
In the result, Fourie J’s conclusion that sufficient evidence had been provided by Bila, creating
reasonable doubt that its non-compliance with Janse van Niewenhuizen J’s order was not wilful
and mala fide, could not be faulted.
~~~~ends~~~~
|
3215
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO 585/2006
In the matter between
THE ROAD ACCIDENT FUND
Appellant
and
THEMBISILE VIERA NGUBANE
Respondent
Coram:
Scott, Mthiyane, Jafta, JJA and
Malan, Mhlantla AJJA
Heard:
7 SEPTEMBER 2007
Delivered: 21 SEPTEMBER 2007
Summary: Regulation 2(3) read with section 17(1)(b) of the Road
Accident Fund Act 56 of 1996 – claim to be lodged with the Fund within
two years – the Fund may waive this requirement or enter into a
compromise.
Neutral citation: This judgment may be referred to as Road Accident
Fund v Ngubane [2007] SCA 114 (RSA)
___________________________________________________________
JAFTA JA
[1] On 8 December 2000 a collision occurred on Mid Illovo Highway,
Umbumbulu, KwaZulu-Natal between a motor vehicle driven by the
respondent (the plaintiff) and another vehicle driven by an unidentified
person. Arising from the injuries sustained by her in the collision, the
plaintiff lodged a claim and later instituted action for compensation
against the Road Accident Fund (the Fund) in the Durban High Court.
The Fund, in a special plea, alleged that the plaintiff’s claim had
prescribed as it was lodged after the expiry of two years from the date of
the collision. However the plaintiff had, in her particulars of claim,
alleged that the Fund had agreed to pay 80 per cent of damages proved at
the trial.
[2] Having ordered a separation of issues, the court below (Hurt J) was
asked to deal with the matter as if it were an exception and determine
whether on the facts alleged in the particulars of claim, the Fund had the
authority to conclude an agreement to compensate the plaintiff. The
importance of this was that the allegations in the plaintiff’s particulars
were taken as correct for purposes of deciding the special plea. The
remaining issues stood over for determination at a later date. I will adopt
the same approach in deciding this appeal.
[3] The learned judge held that ‘the passage of a period of two years
after the date of injury, without the delivery of a claim form in terms of
section 24 cannot vitiate any claim which the “plaintiff” may have’.
Accordingly he ruled that the defendant had the capacity to enter into the
agreement in question and postponed the matter sine die at the request of
the parties. The Fund appeals against that ruling with leave of this court.
[4] It is common cause that the plaintiff did not comply with reg 2(3)
of the regulations made under s 26 of the Road Accident Fund Act 56 of
1996 (the Act), regarding the time frame within which she ought to have
lodged her claim. The regulation requires that claims such as the present
be lodged with the Fund within two years from the date of the accident.
In this case the plaintiff’s claim was lodged six weeks after the deadline.
[5] But the Fund (through a claims handler) entered into an agreement
with the plaintiff in terms whereof it admitted liability to an apportioned
degree and agreed to pay 80 per cent of the plaintiff’s established
damages. This agreement was concluded after the period of two years had
expired. The question that arose both in this court and the court below
was whether the Fund had, by entering into the agreement, competently
caused to be enforceable what was otherwise an invalid and
unenforceable claim, in view of the peremptory provisions of the
subregulation.
[6] Before dealing with the Fund’s submissions it is necessary to refer
to the relevant legislation. The Fund’s liability to compensate claimants
such as the plaintiff is imposed by s17 of the Act. The section provides:
‘(1)
The fund or an agent shall-
(a)
….
(b)
subject to any regulation made under section 26, in the case of a claim for
compensation under this section arising from the driving of a motor vehicle
where the identity of neither the owner nor the driver thereof has been
established, be obliged to compensate any person (the third party) for any loss
or damage which the third party has suffered as a result of any bodily injury to
himself or herself or the death of or any bodily injury to any other person,
caused by or arising from the driving of a motor vehicle by any person at any
place within the Republic, if the injury or death is due to the negligence or
other wrongful act of the driver or of the owner of the motor vehicle or of his
or her employee in the performance of the employee’s duties as employee.’
[7] The relevant part of regulation 2 reads:
‘(3)
A claim for compensation referred to in section 17(1)(b) of the Act
shall be sent or delivered to the Fund, in accordance with the provisions of
section 24 of the Act, within two years from the date upon which the claim
arose, irrespective of any legal disability to which the third party concerned
may be subject and notwithstanding anything to the contrary in any law.
(4)
The liability of the Fund in respect of any claim sent or delivered to it
as provided for in subregulation (3) shall be extinguished upon the expiry of a
period of five years from the date upon which the claim arose, irrespective of
any legal disability to which the third party concerned may be subject and
notwithstanding anything to the contrary in any law, unless a summons to
commence legal proceedings has been properly served on the Fund before the
expiry of the said period.’
[8] Relying on Geldenhuys & Joubert v Van Wyk and Another; Van
Wyk v Geldenhuys & Joubert and Another 2005 (2) SA 512 (SCA),
counsel for the Fund submitted that the lodging of a claim within two
years of the collision is a precondition for the existence and enforceability
of any claim against the Fund under s 17(1)(b). Accordingly, so it was
argued, neither the claims handler nor the Fund was empowered to ‘give
life’ to a claim after the expiry of the two-year period by concluding an
agreement to accept liability. Any such agreement would, the argument
concluded, be ultra vires the Act and regulations and hence not binding
on the Fund. It was also argued that, although s 4(1)(b) empowers the
Fund to ‘investigate and settle’ claims arising under the Act, it does not
entitle the Fund to undertake liability where none existed at the time of
the settlement or compromise.
[9] I do not accept the argument. Geldenhuys & Joubert was
concerned with the validity of regulation 2(3), and which upheld it (see
para 24). The statements made in that case to the effect that ‘[t]he
regulation plainly makes the lodging of the claim within the two-year
period a precondition to the existence of the debt’ and ‘[i]f the claim is
not lodged within this period, there is no “debt’’’ must be read in context.
The reference to ‘no debt’ was clearly intended to be understood as
meaning ‘no recoverable debt’. This is so because in that case the court
referred to the word ‘debt’ in the context of prescription as contemplated
in the Prescription Act 68 of 1969. In that context the term ‘debt’ carries
a wide and general meaning which includes a claim for damages.
[10] In the present case the claim came into existence at the time of the
collision on 8 December 2000. The plaintiff’s failure to lodge it timeously
with the Fund did not affect its existence at all. Instead what was
compromised was her right to enforce the claim. In rejecting the
proposition that a claim does not exist in the absence of compliance, this
court in Road Accident Fund v Smith 2007 (1) SA 172 (SCA) said (para
6):
‘There is a claim but, unless there has been compliance with the regulation, the claim
is not enforceable. Put differently, absent compliance with the regulation, the Fund is
not obliged to compensate the claimant. It is the enforceability of the claim, not its
existence, which is compromised by non-compliance with the regulation.’
See also Engelbrecht v Road Accident Fund and Another 2007 (5) BCLR
457 (CC) paras 21-22.
[11] It is by now settled that a statutory provision such as regulation
2(3) which was enacted for the special benefit of a body such as the Fund
may be waived by that body if no public interests are involved (SA Eagle
Co Ltd v Bavuma 1985 (3) SA 42 at 49G-H). Accordingly, compliance
with the regulation can be waived by the Fund (Road Accident Fund v
Smith para 8). It is not required, as was submitted on the Fund’s behalf,
that this waiver be specifically pleaded because implicit in the
compromise is a waiver by the Fund of compliance with the regulation. In
this case sufficient facts have been alleged to inform the Fund of the case
the plaintiff is relying on (see Imprefed (Pty) Ltd v National Transport
Commission 1993 (3) SA 94 (A)).
[12] Consistently with waiver the parties have, by entering into a
compromise, terminated whatever rights and obligations they may have
had including the Fund’s right to demand compliance with regulation
2(3). In other words the plaintiff is not entitled to recover full
compensation for damages she had suffered and the Fund is precluded
from raising any defence it had against the original claim. The agreement
of compromise gave rise to new rights and obligations upon which the
plaintiff has rooted her cause of action (see Lieberman v Santam Ltd 2000
(4) SA 321 (SCA) paras 11-12). Unless reserved in the compromise,
parties thereto are precluded from enforcing rights and obligations arising
from the compromised claim. In Hamilton v Van Zyl 1983 (4) SA 379 (E)
the court said (at 383F-H):
‘A compromise need not necessarily however follow upon a disputed contractual
claim. Any kind of doubtful right can be the subject of a compromise….Delictual
claims are, for example frequently the subject of a compromise. Nor need the claim be
even prima facie actionable in law. A valid compromise may be entered into to avoid
even a spurious claim, and defendants frequently, for various reasons, settle claims
which they know or believe the plaintiff will not succeed in enforcing by action.
An agreement of compromise, in the absence of an express or implied reservation of
the right to proceed on the original cause of action, bars the bringing of proceedings
based on such original cause of action…. Not only can the original cause of action no
longer be relied upon, but a defendant is not entitled to go behind the compromise and
raise defences to the original cause of action when sued on the compromise.’
See also Gollach & Gomperts (1978) (Pty) Ltd v Universal Mills &
Produce Co (Pty) Ltd and Others 1978 (1) SA 914 (A) at 921.
[13] It follows that on the facts as they presently stand, the plaintiff has
a claim enforceable in law. The position may, however, change if she
fails to prove the agreement of compromise at the trial. Therefore, the
ruling of the court below was correct.
[14] In the result the appeal is dismissed with costs.
____________________
C N JAFTA
JUDGE OF APPEAL
CONCUR: )
SCOTT JA
)
MTHIYANE JA
)
MALAN AJA
)
MHLANTLA AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
21 September 2007
Status:
Immediate
RAF v NGUBANE
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
Today, the Supreme Court of Appeal (the SCA) dismissed an appeal by
the Road Accident Fund against the judgment of the Durban High Court,
which ruled that a woman who failed to lodge her claim within a period
of two years was entitled to sue the Fund. The Fund had contended that
such claim had prescribed and that a claims handler who had agreed to
pay the claim after the expiry of two years had no authority to bind the
Fund.
The SCA rejected this argument and held that a provision which was
enacted for the special benefit of the Fund may be waived by it and by
entering into the agreement to pay, the Fund (through the claims handler)
had waived its right to demand that the regulation requiring that claims be
lodged within two years, be complied with.
|
3441
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 567/2019
In the matter between:
RENETTE WHITEHEAD
FIRST APPELLANT
JACOBUS HERCULES DU PREEZ
SECOND APPELLANT
and
TRUSTEES, INSOLVENT ESTATE OF
FIRST RESPONDENT
DENNIS CHARLES RIEKERT
ALVIN HENRI FUHRI
SECOND RESPINDENT
DESMEON LOUIEN FUHRI
THIRD RESPONDENT
ABSA BANK LIMITED
FOURTH RESPONDENT
THE REGISTRAR OF DEEDS,
FIFTH RESPONDENT
MPUMALANGA
THE MINISTER OF AGRICULTURE,
SIXTH RESPONDENT
FORESTRY AND FISHERIES
THE SHERIFF OF THE HIGH COURT
SEVENTH RESPONDENT
MBOMBELA
YOLANDÈ THÊRESA NAIDOO
EIGHTH RESPONDENT
SHAN VISHNU NAIDOO
NINTH RESPONDENT
Neutral citation: Whitehead and Another v Trustees of the Insolvent Estate of
Dennis Charles Riekert and Others
(567/2019)
[2020] ZASCA
(7 October 2020)
Coram:
NAVSA, MBHA and MOCUMIE JJA and SUTHERLAND and
POYO-DLWATI AJJA
Heard:
16 September 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
10h00 on 7 October 2020.
Summary: Civil law and procedure – court proceedings challenging effect of prior
court order – no application for rescission or appeal pursued – existing order bar to
relief sought – doctrine of peremption also operating against appellant– prior order
remains standing.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (functioning as
Mpumalanga Circuit Court, Mbombela) (Masango AJ sitting as court of first
instance):
1 The appeal is dismissed.
2 The order of the court a quo is set aside and substituted with the following:
‘The application is hereby dismissed with costs on the attorney and client
scale, including the costs of one counsel.’
3 The costs of the appeal to be borne by the appellants, jointly and severally,
the one paying the other to be absolved.
JUDGMENT
Sutherland AJA (Navsa, Mbha and Mocumie JJA and Poyo-Dlwati AJA
concurring):
[1] This case is about a contrived attempt by the appellants to undo, by subsequent
proceedings, the effect of an earlier unchallenged court order.
[2] The first appellant, Ms Renette Whitehead, and Mr Charles Riekert were once
a couple. In 2007, together, they bought a farm from the second and third
respondents, Alvin Henri Fuhri and Desmeon Louien Fuhri (the Fuhris). Thus, they
became joint owners in equal undivided shares. To finance the purchase of the farm,
Ms Whitehead and Mr Riekert, jointly, obtained a mortgage bond from the fourth
respondent, ABSA Bank Limited (ABSA).
[3] In August 2013, Ms Whitehead and Mr Riekert separated. At that time,
payments on the bond were in arrears. Unbeknownst to Ms Whitehead, Mr Riekert,
who was responsible to make payments, had not been doing so. From 2014 onwards,
Ms Whitehead endeavoured to catch up on the arrears. On 15 September 2015 Mr
Riekert was sequestrated. Notwithstanding some payments that Ms Whitehead made
on the bond, her efforts to satisfy ABSA did not bear fruit.
[4] Eventually, in June 2015, ABSA sought a judgment on the debt and leave to
execute on the bonded property. It got summary judgment on 24 March 2016,
including leave to execute on Ms Whitehead’s undivided half share in the farm.1 An
application for leave to appeal against that order was refused. The date of that order
refusing leave to appeal does not appear in the record. More importantly, there is no
indication that there was ever an attempt to procure leave to appeal on petition to
this Court or to the Constitutional Court. Plainly, the court order of 24 March 2016
remains standing. This is the critical fact in this case.
[5] Thereafter, several more earnest efforts were pursued by Ms Whitehead to
clear the debt and satisfy ABSA. Sadly, all these efforts failed. ABSA then
proceeded to put the farm up in a public sale in execution. Yolandé and Shan Naidoo,
1 Mr Riekert’s half share was of course an asset in his insolvent estate and was controlled by the trustees who are
collectively cited as the first respondent. It was logically destined for sale to meet the creditor’s demands. The record
does not address what the position of ABSA was in relation to the claim it logically had against the insolvent estate.
the eighth and ninth respondents (the Naidoos), bid for the farm and bought it on
13 September 2017. The next logical step would therefore be Ms Whitehead’s
vacation of the farm, by means of eviction, if necessary.
[6] The several respondents, other than ABSA, did not participate in the hearing
before the court a quo or in the hearing before this Court.
[7] A fortnight after the sale in execution had occurred, on 28 September 2017,
Ms Whitehead and the second appellant, Mr Du Preez, thereupon launched an
application.2 The critical proposition advanced in the application was that the 2007
sale of the farm by the Fuhris to Ms Whitehead and Mr Riekert was null and void,
and on that basis to seek several declaratory orders linked to that allegation. The
relief sought was articulated thus:
‘(1) Declaring the sale of property between the applicant, . . . Riekert (now Insolvent) and the 2nd
and 3rd respondents, dated 28 October 2007, in respect of portion 10 (portion of Portion 4) of the
farm Hilltop 458 Registration Division JT Mpumalanga Province, (the property) is hereby declared
null and void ab intio.
(2) That the Title Deed purporting to transfer ownership of the property to the applicant and . . .
Riekert . . . and all bonds registered there against be cancelled by the fifth respondent.
(3) That the warrant of execution issued by the High court of South Africa Gauteng division,
Pretoria, under case No 37560/2015 be set aside.
(4) That the sale agreement entered into by the Sheriff of the High Court, Mbombela and the 8th
and 9th respondents as a result of the sale in execution of the property on 13 September 2017 be
declared null and void ab initio.’
2 Mr Du Preez is ostensibly Ms Whitehead’s life partner, his given address being that of Ms Whitehead on the farm in
question. He plays no further role in the relevant events, and his interest is not specifically addressed, save that he and
Ms Whitehead claim a lien over the farm.
[8] The contention of invalidity of the 2007 sale of the farm is based on an
interpretation of s 3(b) of the Subdivision of Agricultural Land Act 70 of 1970
(SALA).3 In short, it was contended that it was unlawful to have bought the farm in
undivided shares without permission from the Minister of Agriculture. It is true that
the Minister had not given the requisite permission. It is disputed by ABSA that,
upon a proper interpretation of s 3 of SALA, non-observance of the section results
in the invalidity of the sale. ABSA also contended that the appellants were bound by
the court order it had obtained, referred to above. For reasons which follow, it is
unnecessary for this Court to decide which perspective concerning the interpretation
of s 3 of SALA is correct.
[9] The only interest in the property expressed by Ms Whitehead and Mr Du Preez
is based on the considerable improvements she alleges have been made to the
property and an expectation that they could be recovered; essentially, she asserts an
improvement lien. To this aspect, I shall revert.
[10] The significance of the alleged contravention of s 3(b) of SALA for the case
that Ms Whitehead and Mr Du Preez sought to advance lay in the contention that, in
3 Section 3 provides:
‘Prohibition of certain actions regarding agricultural land
Subject to the provisions of section 2 –
(a) agricultural land shall not be subdivided;
(b) no undivided share in agricultural land not already held by any person, shall vest in any person;
(c) no part of any undivided share in agricultural land shall vest in any person, if such part is not already held by any
person;
. . .
(g) . . . unless the Minister has consented in writing.’ (Emphasis added.)
A curious circumstance has enveloped this statute. A subsequent statute which repeals the whole Act has been enacted:
the Subdivision of Agricultural Land Act Repeal Act 64 of 1998. Section 2 provides that the repeal will take effect
when the President, by Proclamation, determines a date for the Act to become effective. Despite the elapse of 22 years
since the Repeal Act was enacted, no date has yet been proclaimed. There does not appear to be a publicly stated
explanation.
consequence of such invalidity, there were several material knock-on effects. These
effects were a cascade of allegedly invalid juristic acts: ie, (1) that Ms Whitehead
and Mr Riekert could not have lawfully become owners of the farm; (2) that no
mortgage bond could validly have been sought and granted to them; (3) that the
Fuhris were still owners of the farm; (4) that the summary judgment order of
24 March 2016 was ‘ineffective’; (5) that the writ of execution pursuant to that order
should be set aside by the court; (6) that the sale in execution to the Naidoos should
be set aside; and (7) that the transfer of ownership to the Naidoos as registered by
the fifth respondent, the Registrar of Deeds, must be set aside.
[11] The application advancing this thesis was dismissed by the court a quo. It is
that judgment which is before this Court on appeal.
The critical issue
[12] The effect of the relief sought is to override or nullify the effect of the
summary judgment order. The critical and determinative question for decision is,
thus, whether it is open to the appellants to bring such an application which achieves
that end, the order itself having been neither rescinded nor set aside on appeal? A
further problem confronting the case advanced by Ms Whitehead is peremption.
The existing order is a barrier to the relief sought
[13] The conception of the application is that it is proper, in our law, to seek,
through subsequent separate but related proceedings to nullify an existing order of
court.
[14] The only means by which an order of a court of first instance is nullified is by
either rescinding the order or by setting it aside through a successful appeal.
[15] The authority of Gainsford NO v Tiffski Property Investments and Another4
was summoned up in argument to proffer support for the perspective held by Ms
Whitehead and Mr Du Preez. At para 38 of that judgment it was stated that:
‘It is trite that no legal consequences flow from a void jural act.’
Ergo, it was contended, once the sale transaction was void, all that was built thereon
must also collapse. However, this case is unhelpful to the argument that is advanced.
The controversy in Gainsford was whether a transaction was a voidable preference
for the purposes of insolvency proceedings. The mechanics of the Insolvency Act 24
of 1936 provide for a power vested in a court to reverse improper transactions which
occur within six months before the declaration of insolvency, and thus the
Insolvency Act prescribes that transactions that occur during this period are
voidable, ie susceptible, upon examination, to be set aside if good cause is found to
impugn them. The legislative scheme is not comparable to s 3 of SALA and the facts
of that matter are far removed from those of the present matter.
[16] In The Master of the High Court, (North Gauteng High Court, Pretoria) v
Motala NO and Others, the validity of the appointment of provisional judicial
managers was disputed.5 A Judge had made an order appointing one Mr Hendrik
Abram Van Vuuren to such office. In ostensible defiance of that order, the Master
appointed the respondent. In subsequent contempt proceedings, it was held that a
Judge had no competence to make such an appointment because the power to make
4 [2011] ZASCA 187; [2011] 4 All SA 445 (SCA); 2012 (3) SA 35 (SCA).
5 [2011] ZASCA 238; 2012 (3) SA 325 (SCA) paras 8 and 14.
such appointment was reserved to the Master. Because of a lack of lawful judicial
competence, the order could therefore be ignored because it was a nullity and no
contempt could occur. This predicament is to be contrasted with a court order which
is made within the scope of a Judge’s competence. In such a case, the order stands
until it is set aside, assuming there are grounds for doing so.
[17] Plainly, neither of these two cases are usefully comparable to the present
matter.
[18] In this matter, the order granting summary judgment and authorising
execution against the property was made by a competent court at the conclusion of
fully defended proceedings. The effect of the order was that the indebtedness of Ms
Whitehead in terms of her liability on the mortgage bond to ABSA was finally
determined as was ABSA’s right to execute on the property. What this appeal
contrives to do is to undo that order. That is impermissible. In Minister of Home
Affairs and Others v Somali Association of South Africa and Another, Ponnan JA,
reiterated the well-established principle:6
‘In Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd para
17 it was put thus:
“As Froneman J observed in Bezuidenhout v Patensie Sitrus Beherend Bpk 2001 (2) SA 224 (E) at
229B-C:
“An order of a court of law stands until set aside by a court of competent jurisdiction. Until that is
done the court order must be obeyed even if it may be wrong (Culverwell v Beira 1992 (4) SA 490
(W) at 494A-C). A person may even be barred from approaching the court until he or she has
obeyed an order of court that has not been properly set aside (Hadkinson v Hadkinson [1952] 2 All
ER 567 (CA); Bylieveldt v Redpath 1982 (1) SA 702 (A) at 714).”’
6 [2015] ZASCA 15; 2015 (3) SA 545 (SCA); [2015] 2 All SA 294 (SCA) para 34.
Peremption
[19] It is plain that by reason of the conduct of Ms Whitehead and Mr Du Preez,
peremption operates.
[20] The relevant facts demonstrating this result are as follows:
(1) Prior to the court order of 24 March 2016, neither the validity of the title deed
nor of the bond were questioned.
(2) During the summary judgment proceedings, the question of invalidity of the
deed or bond were not raised.
(3) After a failed application for leave to appeal against the order, no further steps
were taken to challenge the order. It was unequivocally, therefore, accepted
as a final order.
(4) Moreover, after the order was granted, consistent only with acquiescence in
the effect of the order, several further attempts were made to reach an
accommodation with ABSA.
(5) Ms Whitehead contemplated a scheme in terms whereof she might subdivide
the farm and keep a half portion. On 15 November 2016, she instructed her
attorneys to propose to ABSA that she pay up the arrears and obtain the
Minister’s permission to subdivide the farm. ABSA refused to co-operate,
apparently because of the complication of securing relief from the trustees of
the insolvent estate of Mr Riekert’s Trustee, the first respondent.
(6) Ms Whitehead did not give up. She made enquiries to have Mr Riekert
substituted as a debtor. This effort too failed.
(7) Ms Whitehead also put the farm up for sale in the open market in the hope of
obtaining a better price than in a sale in execution. As a result, a prospective
purchase arose on 30 May 2016 but did not mature.
(8) On 7 June 2017, Ms Whitehead’s attorney addressed a letter to ABSA
articulating, for the first time, the notion of the invalidity of title and soliciting
a settlement. It was claimed that this defect in title had just been noticed. This
is odd because in November 2016, Ms Whitehead was aware that a
subdivision of the farm required ministerial permission and she must therefore
have been aware of s 3 of SALA. On 8 June ABSA rejected the proposal.
(9) On 20 June a further settlement proposal and a payment was made.
(10)
On 12 July 2017 ABSA confirmed a sale in execution would be
scheduled.
(11)
On 25 August 2017 the public notice was published advertising the sale.
(12)
On 13 September 2017 the sale in execution took place.
[21] It is plain from these events that, other than protests, no steps were taken to
halt the sale in execution. Only afterwards was an application launched,
opportunistically.
[22] It is possible to attack a judgment belatedly in circumstances where the
interests of justice require it. Obviously, such a judicial intervention is one which is
fact-specific. What is necessary to establish is that the aggrieved litigants have not
by their conduct demonstrated an acquiescence in the orders granted against them.
Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and
Others7 held thus:
7 [2012] ZASCA 166; 2013 (3) SA 315 (SCA) para 3.
‘. . . Where, after judgment, a party unequivocally conveys an intention to be bound by the
judgment any right of appeal is abandoned. The principle can be traced back to the judgment of
this court in Dabner v South African Railways & Harbours, where Innes CJ said:
“The rule with regard to peremption is well settled, and has been enunciated on several occasions
by this Court. If the conduct of an unsuccessful litigant is such as to point indubitably and
necessarily to the conclusion that he does not intend to attack the judgment, then he is held to have
acquiesced in it. But the conduct relied upon must be unequivocal and must be inconsistent with
any intention to appeal. And the onus of establishing that position is upon the party alleging it. In
doubtful cases acquiescence, like waiver, must be held non-proven.”
That judgment has been consistently followed in this court.’
[23] At least since shortly before 7 June 2017, the basis upon which the application
was brought was known. Ms Whitehead waited until after the sale in execution and
on 12 October, at last, launched it. This belated step was too late to be meaningful.
Does Ms Whitehead, on her own case, have locus standi to challenge title?
[24] In any event, the application is itself premised on grounds which,
paradoxically, destroys its viability. If the contention were to be correct that the
initial sale agreement between the Fuhris and Ms Whitehead and Mr Riekert was
unlawful and it had the consequences as alleged, Ms Whitehead would have
demonstrated, on her own case, that she has no locus standi to seek the relief sought.
It was correctly conceded that on the premise of her case, Ms Whitehead can lay no
claim, whatsoever, to title over the farm.
[25] Indeed, the interest which Ms Whitehead invokes in her affidavit is a different
right: that of a lien-holder.8 She relates in her founding affidavit that over a period
of five years since Mr Riekert left, she and Mr Du Preez have made substantial
improvements to the property which she estimates to be worth about R900,000.
These allegations can be assumed to be accurate and well-founded for the purposes
of the analysis. If a lien is proven, Ms Whitehead’s interest can be protected by
asserting it against the world. She has no interest in title to the farm.
[26] Were ownership to revert to the Fuhris, they would again own it in undivided
shares. This, the crucial invalidity in title, on the case advanced about the effect of
an absence of ministerial permission, would manifest again. There is no evidence
adduced about the marital status of the Fuhris, save for what appears on the 2007
deed of transfer to Ms Whitehead and to Mr Riekert. That document records them
as married in community of property. When they acquired the farm is not recorded.
However, it can be safely inferred from the information about their identity numbers,
that having been born in 1955 and 1957 they were both still minors in 1970 when
SALA was enacted. They could not therefor have acquired the farm prior to its effect
and had the benefit of preserved vested rights.
[27] In short, Ms Whitehead’s case is self-destructive of her locus standi to seek
the relief claimed.
8 See 15(2) LAWSA 2 ed para 49: ‘A lien (right of retention, ius retentionis) is the right to retain physical control of
another’s property, whether movable or immovable, as a means of securing payment of a claim relating to expenditure
of money or something of monetary value by the possessor (termed the “retentor” or “lien-holder”, while exercising
his or her lien) on that property until the claim has been satisfied.’
Conclusion
[28] For all the reasons set out above it follows that the appeal must be dismissed.
Costs
[29] The order by the court a quo erroneously alluded to the costs of three counsel
to be allowed. It was a patent error, as pointed out by counsel for the fourth
respondent in this hearing. It shall be corrected to provide simply for the costs of one
counsel. The costs of the appeal ought to be borne by the appellants.
The Order
The following order is accordingly issued:
1 The appeal is dismissed.
2 The order of the court a quo is set aside and substituted with the following:
‘The application is hereby dismissed with costs on the attorney and client
scale, including the costs of one counsel’.
3 The costs of appeal to be borne by the appellants, jointly and severally, the
one paying the other to be absolved.
____________________
ROLAND SUTHERLAND
ACTING JUDGE OF APPEAL
APPEARANCES:
For appellant:
T P Kruger SC
Instructed by:
Cochrane Attorneys Incorporated, Nelspruit
Phatsoane Henney Incorporated, Bloemfontein
For fourth respondent:
A E Bham SC
Instructed by:
Webber Wentzel, Johannesburg
Kramer Weihmann & Joubert Attorneys, Bloemfontein.
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
7 October 2020
Status:
Immediate
Please note that the media summary is for the benefit of the media and does not form part of the judgment of the
Supreme Court of Appeal.
Whitehead and Another v Trustees of the Insolvent Estate of Dennis Charles Riekert and Others (567/2019)
[2020] ZASCA 124 (7 October 2020)
Today the Supreme Court of Appeal (SCA) dismissed the appeal by the appellant with costs to be borne by the
appellants, jointly and severally, the one paying the other to be absolved.
The first appellant is Ms Renette Whitehead who was Mr Charles Riekert’s partner. In 2007 they bought a farm
from the second and third respondents (the Fuhris). Ms Whitehead and Mr Riekert, jointly, obtained a mortgage
bond from the fourth respondent, ABSA Bank Limited (ABSA). Ms Whitehead and Mr Riekert later separated
and the payments on the bond were in arrears. ABSA got a summary judgment including leave to execute on Ms
Whitehead’s undivided half share in the farm. Leave to appeal against that order was refused. A sale in
execution was proceeded with. A fortnight after the sale in execution had occurred, Ms Whitehead and the
second appellant, Mr Du Preez, launched an application alleging that the sale of the farm by the Fuhris to
Ms Whitehead and Mr Riekert was null and void in terms of their interpretation of s 3(b) of the Subdivision of
Agricultural Land Act 70 of 1970 (SALA), which, so it was contended, meant that the sale by the Fuhris to Ms
Whitehead and Mr Riekert was null and void on grounds of unlawfulness for want of consent by the Minister of
argriculture for them to own the farm jointly. ABSA contended that the absence of the Minister’s consent did
not result in an unlawful sale. The application to declare the sale by the Fuhris unlawful and set aside the sale in
execution was dismissed by the court a quo. It is that judgment which was before this Court on appeal. This
Court found it unnecessary to decide which perspective concerning the interpretation of s 3 of SALA was
correct. ABSA also contended that the appellants were bound by the court order it had obtained.
The SCA held that the effect of the relief sought was to override or nullify the effect of the summary judgment
order. The critical and determinative question for decision was whether it was open to the appellants to bring
such an application which achieves that end, the order itself having been neither rescinded nor set aside on
appeal. This Court held that the only means by which an order of a court of first instance would be nullified was
by either rescinding the order or by setting it aside through a successful appeal. In this matter, the order granting
summary judgment and authorising execution against the property was made by a competent court at the
conclusion of fully defended proceedings. Further, this Court established that the aggrieved litigants, by their
conduct, demonstrated an acquiescence in the orders granted against Ms Whitehead and thus peremption
operated against them. It was further held that it was correctly conceded that on the premise of her case, Ms
Whitehead could lay no claim, whatsoever, to title over the farm and were her contentions to have been correct
the effect of that would have been that she lacked locus standi to bring the application. For all those reasons the
appeal was dismissed with the costs of the appeal borne by the appellants.
--THE END--
|
3572
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 358/2020
In the matter between:
GERT LOUWRENS STEYN DE WET FIRST APPELLANT
JOHAN FRANCOIS ENGELBRECHT SECOND APPELLANT
and
SUMAIYA ABDOOL GAFAAR KHAMMISSA FIRST RESPONDENT
BETHUEL BILLYBOY MAHLATSI SECOND RESPONDENT
KEHEDITSE DESIREE JUDITH MASEGE THIRD REPONDENT
GURWANTRAL LAXMAN BHIKA FOURTH RESPONDENT
ALBERT IVAN SURMANY FIFTH RESPONDENT
Neutral citation: De Wet and Another v Khammissa and Others (358/2020) [2021]
ZASCA 70 (4 June 2021)
Coram:
SALDULKER, MAKGOKA, MBATHA JJA and GORVEN and GOOSEN
AJJA
Heard:
4 May 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, and by publication on the Supreme Court of Appeal
website and release to SAFLII. The time and date for hand down is deemed to be
10h00 on the 4th day of June 2021.
Summary: Administrative law – Master refusing to appoint liquidators and later
appointing them – Master functus officio and second decision a nullity.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng High Court, Pretoria (Siwendu J sitting as court of first
instance): judgment reported sub nom Khammissa and Others v Master of the High
Court, Gauteng and Others 2021 (1) SA 421 (GJ).
The appeal is dismissed with costs, including costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Makgoka JA (Saldulker and Mbatha JJA and Gorven and Goosen AJJA
concurring):
[1] This appeal concerns two mutually exclusive decisions made by the Master of
the High Court, Gauteng Division, Johannesburg (the Master). The Master is
appointed under s 2(1)(a)(ii) of the Administration of Estates Act 66 of 1965. In s 1 of
that Act the term ‘Master’ is defined as meaning a Deputy Master or Assistant Master
appointed under s 2 and is subject to the control, direction and supervision of the Chief
Master.
[2] On 31 August 2017 the Master made a decision not to appoint the appellants
as additional joint trustees of Duro Pressing (Pty) Ltd (in liquidation) (Duro), (the first
decision). On 25 October 2017 the Master made a decision to appoint the appellants
as additional joint trustees of Duro (the second decision). The two decisions were
made against the following factual backdrop. Duro was voluntarily wound-up by
special resolution on 27 February 2014. The winding - up was converted to a
compulsory one by the court on 25 July 2014.
[3] The respondents and one CF De Wet were appointed by the Master as Duro’s
joint final liquidators on 8 April 2014. CF de Wet died on 23 May 2017. Acting in terms
of s 377 of the Companies Act 61 of 1973 (the Companies Act), the Master convened
a creditors’ meeting on 29 August 2017 for the purpose of nominating a liquidator in
the place of CF De Wet. The meeting was chaired by the Assistant Deputy Master, Mr
Reuben Maphaha, during which the appellants were nominated for appointment as
additional joint liquidators of Duro. The first appellant, Gert Steyn de Wet, is CF de
Wet’s brother.
[4] Pursuant to the creditors’ meeting, on 31 August 2017, the Master, per Ms
Pamela Dube, also an Assistant Deputy Master, conveyed the first decision in a letter
to the appellants, and accordingly issued a new certificate of appointment reflecting
the removal of CF de Wet as a liquidator of Duro, and the respondents as the only
joint liquidators. In the same letter, the Master informed the appellants of their right in
terms of s 371(1) of the Companies Act, to request the Master in writing to submit his
reasons to the Minister of Justice for the first decision.1 The appellants did not exercise
this right. Instead, the Master received a letter from attorneys on behalf of undisclosed
creditors seeking reasons for the first decision, and after Ms Dube had done so, they
requested the Master to reconsider it. On 25 October 2017, the Master, represented
by Mr Maphaha, made the second decision and accordingly issued an amended
certificate of appointment, evenly dated, reflecting the appellants’ appointment as co-
liquidators with the respondents.
[5] On 20 December 2017 the respondents launched an application in the court a
quo seeking to review and set aside the second decision, and declaring the
first decision to be the valid one, together with ancillary relief. The application was
1 Section 371(1) of the Companies Act reads as follows:
‘371 Remedy of aggrieved persons
(1) Any person aggrieved by the appointment of a liquidator or the refusal of the Master to accept the
nomination of a liquidator or to appoint a person nominated as a liquidator, may within a period of seven
days from the date of such appointment or refusal request the Master in writing to submit his reasons
for such appointment or refusal to the Minister.
(2) The Master shall within seven days of the receipt by him of the request referred to in subsection (1)
submit to the Minister, in writing, his reasons for such appointment or refusal together with any relevant
documents, information or objections received by him.
(3) The Minister may, after consideration of the reasons referred to in subsection (2) and any
representations made in writing by the person who made the request referred to in subsection (1) and
of all relevant documents, information or objections submitted to him or the Master by any interested
person, confirm, uphold or set aside the appointment or the refusal by the Master and, in the event of
the refusal by the Master being set aside, direct the Master to accept the nomination of the liquidator
concerned and to appoint him as liquidator of the company concerned.’
brought in terms of s 151 of the Insolvency Act 24 of 1936 (the Insolvency Act),
alternatively the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The
grounds of review were that the second decision was: (a) ultra vires; (b) procedurally
unfair; (c) taken arbitrarily or capriciously; and (d) not rationally connected to the
information before the Master. The Master did not oppose the application, and filed a
notice to abide the decision of the court a quo. Accordingly, the Master took no part in
this appeal. The appellants opposed the application but did not deliver an answering
affidavit. Instead, they filed a notice in terms of rule 6(5)(d)(iii) of the Uniform Rules of
Court, in which they raised the following three questions of law:
‘1. That the applicants [the respondents] do not have locus standi to seek the relief to the
main application; and
2. That the relevant provisions of section 151 of the Insolvency Act of 1936, and the provisions
of the Promotion of Administrative Justice Act of 2000 do not apply to the relief sought in the
current application;
3. That the applicants [the respondents] have disregarded the provisions of section 371 of the
Companies Act of 1973, which failure is destructive of the relief sought in the current
application.’
[6] The thrust of the appellants’ case was this: s 151 of the Insolvency Act finds no
application in the matter and that s 371 provides the only means of obtaining redress
in respect of the Master’s appointment of liquidators. Even if s 151 applied, it was not
available to the respondents as they were not ‘aggrieved persons’ for purposes of that
section. Furthermore, PAJA was not applicable since the respondents had failed to
exhaust internal remedies by not appealing to the Minister in terms of s 371. Even in
the event of PAJA being applicable, the respondents had failed to establish the
requisite locus standi.
[7] The application came before Siwendu J. The learned Judge recorded that
‘whether such a decision is reviewable under PAJA was raised but not pursued’. She
proceeded to identify the issues for determination as follows (at para14):
‘The contested issues expose two fundamental legal considerations. The first is, who can
legitimately challenge an appointment of a liquidator? In this case, can the applicants
challenge the appointment of another liquidator? The second is, what is the correct gateway
to relief when there is a challenge to an appointment of a liquidator? There is limited and
conflicting authority on these issues.’ (Emphasis added.)
As I demonstrate later, the court a quo, with respect, misconstrued the basis on which
the review application fell to be determined. As a result, it embarked on an
unnecessary survey of ss 371 and 151.
[8] To determine the respondents’ locus standi, the court a quo considered s 371
and the related case law. As mentioned earlier, s 371 entitles ‘any person aggrieved’
by the appointment of a liquidator or the refusal thereof, to request the Master in writing
to submit his reasons for such appointment or refusal to the Minister of Justice. The
court a quo spent considerable effort seeking to determine whether the respondents
qualified as ‘aggrieved persons’.
[9] It considered three decisions of provincial divisions: Janse Van Rensburg v The
Master 2004 (5) SA 173 (T); Geduldt v The Master and Others 2005 (4) SA 460 (C)
and Patel v The Master of the High Court 2014 JDR 0346 (WCC). Those decisions
are not unanimous on who qualified as an ‘aggrieved person’ to clothe them with the
necessary locus standi in terms of s 371. The court preferred the reasoning in Geduldt
and Patel and concluded that the appellants qualified as ‘aggrieved persons’ as
envisaged in s 371. The court also concluded that, in addition to s 371, the
respondents were entitled to rely on s 151 to challenge the Master’s decision.
[10] Having disposed of the issue of locus standi in the respondents’ favour, the
court concluded that the Master was functus officio and ‘not empowered to issue a
second decision once the decision not to appoint the second and third respondent was
made’. Accordingly, the court a quo issued an order in terms of which: the second
decision was reviewed and set aside; the Master’s certificate of appointment in respect
of the second decision was revoked; and the appellants were ordered to pay the costs
of the application, including costs of two counsel.
[11] Aggrieved by that order, the appellants appeal to this Court, with the leave of
the court a quo. In this Court, the appellants persisted with the gravamen of their case
asserted in the court a quo, summarised in para 6 above. As already stated, the court
a quo, with respect, failed to properly identify the issue for determination. The
respondents’ challenge, properly construed, was not about the merit of the
appointment of the appellants as joint liquidators, as the court a quo consistently
mentioned in its judgment. It is so that the decision under review has its genesis in
that appointment. However, the thrust of the respondents’ challenge was that the
Master had become functus officio once she had made the first decision, and thus had
no power to revoke it and replace it with second decision.
[12] Viewed in that light, the application quintessentially concerned administrative
law, as opposed to insolvency or company law. The decision of the Master directly
affected the respondents and they indubitably had locus standi at common law. They
did not need either s 371 of the Companies Act or s 151 of the Insolvency Act to
establish their locus standi. If anything, it is the appellants who would have had to rely
on s 371 had they sought to challenge the Master’s first decision (not to appoint them),
a decision they clearly were aggrieved by.
[13] Once the conceptual issue concerning the nature of the appellants’ true
complaint is appreciated, it follows that the court a quo’s excursion on s 371 and the
related case law, was irrelevant. This applies with equal force to the court a quo’s
interpretation of s 151, on which the court a quo also expended much effort. As a
result, I do not express any view as to the correctness of the court a quo’s
interpretation of these sections, nor of any of the decisions referred to in its judgment.
To be clear, that should not be considered as an endorsement or rejection of the court
a quo’s conclusions.
[14] This case demonstrates the importance of a court’s central role in the
identification of issues. It is only after careful thought has been given to a matter that
the true issue for determination can be properly identified. That task should never be
left solely to the parties or their legal representatives. Unfortunately, this is what
happened in this case. The court a quo was apparently led astray by the arguments
contained in the appellants’ notice in terms of rule 6(5)(d)(ii), which it accepted
uncritically.
[15] Back to the merits of the appeal. In this Court, counsel for the appellants fairly
accepted the correctness of the views expressed in paras 11 and 12 above, and that
the case turns on the legality of the second decision. I now turn to that decision. The
respondents contend that the Master became functus officio after making the
first decision, and that she was not empowered to revoke it and replace it with the
second decision. Broadly stated, functus officio is a doctrine in terms of which
decisions of officials are deemed to be final and binding once they are made. Thus,
the question as to whether the Master was functus officio, calls for a consideration
whether the first decision was final. Hoexter,2 explains that finality is a point arrived at
when the decision is published, announced or otherwise conveyed to those affected
by it, ie it must have passed into the public domain in some manner.3
[16] In the present case, on 31 August 2017 the Master:
(a) communicated to the appellants her first decision;
(b) issued a certificate of appointment reflecting the removal of CF de Wet as a
liquidator of Duro, and reflecting the respondents as Duro’s only joint liquidators;
(c) advised the appellants of their right to request her to furnish the reasons for her
decision, to the Master.
[17] In my view, these constituted overt acts in terms of which the Master’s decision
passed into the public domain. In the absence of a statutory provision to the contrary,
the Master had no power to revoke the first decision. Neither the Companies Act nor
the Insolvency Act confers such power on the Master. The requirements for functus
officio were thus met, and finality reached on 31 August 2017. The first decision
became final and irrevocable. It follows ineluctably that the second decision was
invalid.
[18] The appeal must fail and it is dismissed with costs, including costs of two
counsel.
2 C Hoexter Administrative Law in South Africa 2 ed (2011) at 277.
3 Compare President of the Republic of South Africa and Others v South African Rugby Football Union
and Others 2000 (1) SA 1 (CC); 1999 (10) BCLR 1059 (CC) para 44.
____________________
T Makgoka
Judge of Appeal
APPEARANCES:
For Appellants:
F H Terblanche SC
Instructed by:
Senekal Simmonds Inc., Johannesburg
Symington De Kok Attorneys, Bloemfontein.
For Respondents:
J M Suttner SC (with him P M Cirone)
Instructed by:
Goodes & Seedat Attorneys, Johannesburg
Honey Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY: JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM:
The Registrar, Supreme Court of Appeal
DATE:
4 June 2021
STATUS:
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
De Wet and Another v Khammissa and Others (358/2020) [2021] ZASCA 70 (4 June 2021).
Today, the Supreme Court of Appeal (the Court) dismissed an appeal against an order of the
Gauteng High Court, Pretoria, which upheld the respondents’ application to review and set
aside the decision of the Master of the High Court, Gauteng Division, Johannesburg
(the Master) in terms of which the Master had purported to replace her earlier decision (the
first decision) not to appoint the appellants as joint co-liquidators with the respondents, with a
decision (the second decision) to appoint the appellants as joint co-liquidators with the
respondents.
The Court found that the Master’s first decision was final and binding, and therefore the Master
had no power to rescind it and replace it with the second decision. The Master was therefore
functus officio and thus the second decision a nullity.
The Court critisised the high court for failing to properly identify the legal issue for
determination, which had led it to consider irrelevant sections of the Companies Act 61 of 1973
and the Insolvency Act 24 of 1936, as well as decisions related thereto. The Court emphasised
that the identification of issues remained the task of a court and should never be left solely to
the parties or their legal representatives.
The Court, per Makgoka JA (with Saldulker and Mbatha JJA and Gorven and Goosen AJJA
concurring), dismissed the appeal with costs of two counsel.
END
|
110
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 983/2016
In the matter between
PEPSICO INC
APPELLANT
and
ATLANTIC INDUSTRIES
RESPONDENT
Neutral citation: PepsiCo v Atlantic Industries (983/16) [2017] ZASCA 109 (15
September 2017)
Coram:
Lewis, Cachalia & Petse JJA & Lamont & Rogers AJJA
Heard:
28 August 2017
Delivered:
15 September 2017
Summary:
Trade marks: respondent’s registered marks TWIST, LEMON TWIST
and DIET TWIST inherently capable of distinguishing its soft drinks: such marks not
purely descriptive of products or their characteristics: appellant’s expungement
application correctly dismissed.
Trade marks: appellant’s proposed marks, consisting of or incorporating the words
PEPSI TWIST, likely to deceive or cause confusion by virtue of similarity to
respondent’s marks: respondent’s opposition to appellant’s trade mark application
correctly upheld.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: A full court of the Gauteng Division of the High Court, Pretoria (per
Louw J, Prinsloo & Meyer JJ concurring), sitting on appeal from a judgment of the
Gauteng Division of the High Court, Pretoria (Preller J)
The appeal is dismissed with costs, including those attendant on the employment of
two counsel.
JUDGMENT
___________________________________________________________________
Rogers AJA (Lewis, Cachalia & Petse JJA and Lamont AJA concurring)
Introduction
[1] The appellant, PepsiCo Inc (PepsiCo), is the registered proprietor in South
Africa of various trade marks consisting of or incorporating the words PEPSI and
PEPSI-COLA. The respondent, Atlantic Industries (Atlantic), a wholly owned
subsidiary of The Coca-Cola Company, is the registered proprietor in South Africa of
the trade marks TWIST, LEMON TWIST and DIET TWIST. Both parties’
registrations are in class 32, a class which includes ‘mineral and aerated waters and
other non-alcoholic drinks’.
[2] In 2006 PepsiCo applied for the registration, also in class 32, of a word mark
PEPSI TWIST and of a device mark incorporating the words PEPSI TWIST. The
representation of the device mark in the record is monochrome though I assume
there is no colour limitation.1 Below is a monochrome depiction of the proposed
device mark as it would appear on a canned beverage (the small text above the
words ‘Pepsi Twist’ does not form part of the proposed mark):
1 Section 32 of the Trade Marks Act 194 of 1993.
[3] Atlantic opposed the registrations. PepsiCo countered by applying for the
expungement of Atlantic’s marks. In accordance with a request by the parties, the
Registrar of Trade Marks referred the matter to the Gauteng Division of the High
Court, Pretoria, for determination. On 5 May 2014 that court (per Preller J)
dismissed PepsiCo’s application for the expungement but granted PepsiCo’s
application for the registration of its PEPSI TWIST marks. Each side appealed to a
full court against their respective defeats. On 24 May 2016 the full court upheld
Atlantic’s appeal and dismissed PepsiCo’s cross-appeal. Having obtained special
leave, PepsiCo appeals to this court against the whole of the full court’s judgment.
Expungement of Atlantic’s marks
[4] It is convenient to start with PepsiCo’s expungement application. Section 24
of the Trade Marks Act2 entitles an interested party to apply to have the trade mark
register rectified inter alia by removing any entry ‘wrongly made in or wrongly
remaining on’ the register. PepsiCo’s expungement application asserted that
Atlantic’s marks wrongly remained on the register because they fell foul of
ss 10(2)(a) and 10(2)(b). Section 10 provides that certain marks shall not be
registered as trade marks or, if registered, shall be liable to be removed from the
register. Sections 10(2)(a) and (b) apply to a mark which:
‘(a) is not capable of distinguishing within the meaning of section 9; or
2 Act 194 of 1993.
(b) consists exclusively of a sign or an indication which may serve, in trade, to designate the
kind, quality, quantity, intended purpose, value, geographical origin or other characteristics
of the goods or services, or the mode or time of production of the goods or of rendering of
the services’.
[5] Section 9(1) requires that in order to be registrable a mark must be capable
of distinguishing the goods or services of the proprietor from the goods or services
of another person. Section 9(2) states that a mark shall be considered to be capable
of so distinguishing if, at the date of application for registration, it is inherently
capable of so distinguishing or if it is capable of so distinguishing by reason of prior
use. By virtue of the proviso to s 10, a registered mark is not liable to be removed if,
by the date of the expungement application, it has become capable of distinguishing
within the meaning of s 9.
[6] PepsiCo’s case on ss 10(2)(a) and (b) rests on the same essential
contention, namely that the word ‘twist’ is a common English word which is merely
descriptive of the kind, quality or characteristics of the goods to which Atlantic’s
marks relate and is not inherently capable of distinguishing its beverages from those
of other proprietors. In support of these contentions PepsiCo referred to the New
Shorter OED3 which includes, among the meanings of ‘twist’ as a noun, ‘a curled
piece of lemon etc. peel used to flavour a drink’ and ‘a drink consisting of a mixture
of two different spirits or other ingredients, such as gin and brandy etc’.
[7] The courts below were right to reject these contentions. ‘Twist’ as meaning a
beverage of mixed ingredients is described by the New Shorter OED and in the
unabridged OED4 as slang. In the 1961 edition of Eric Partridge’s dictionary of
slang,5 this slang was said to be obsolete. It does not appear in other dictionaries of
slang.6 This obsolete British slang is likely to be known to very few, if any, South
Africans, even those whose first language is English. Those familiar with cocktails
may know that ‘twist’ can mean a curled piece of citrus peel though the word would
3 The New Shorter Oxford English Dictionary.
4 The Oxford English Dictionary 2 ed (1989).
5 Partridge Dictionary of Slang and Unconventional English 5 ed (1961). This remained the recordal
in the last edition (8 ed, 1984). The entry was omitted altogether in Dalzell & Victor The New
Partridge Dictionary of Slang and Unconventional English (2006).
6 See The Oxford Dictionary of Slang (1998) and Duckworth’s online Dictionary of Slang: English
Slang and Colloquialisms Used in the United Kingdom.
not be so used in isolation – one would speak of ‘a twist of lime peel’ etc.7 ‘Twist’ in
this sense would at most create a mental association between the word and a
refreshing or exotic drink.
[8] It is probable that for most South African consumers the word ‘Twist’ as
applied to Atlantic’s beverages is an arbitrary brand name without meaning. Like a
made-up word, a common word which is arbitrary when applied to a particular
product is the exemplar of a mark inherently capable of distinguishing.8 Such words
are to be contrasted with descriptive words. It is a common feature of trade mark
legislation that purely descriptive marks may not be registered. The reason is that
other traders should not be barred from using them in relation to their goods. Lord
Parker in W & G Du Cros9 formulated the test as being ‘whether other traders were
likely, in the ordinary course of their business and without any improper motive, to
desire to use the same mark . . . in connection with their goods’. More succinctly, in
order for a word to be really distinctive of a proprietor’s goods it ‘must generally
speaking be incapable of application to the goods of anyone else’ (see this court’s
decision in On-line Lottery10 quoting with approval a dictum of Lord Russell in
Shredded Wheat11). For as Lord Simonds said in Copper Works:12
‘Paradoxically perhaps, the more apt a word to describe the goods of a manufacturer, the
less apt it is to distinguish them: for a word that is apt to describe the goods of A, is likely to
be apt to describe the similar goods of B.’
[9] In the High Court of Australia, Kitto J in Clark Equipment13 expressed the
same idea well when he said that the question whether a mark is adapted to
distinguish should be tested
‘by reference to the likelihood that other persons, trading in goods of the relevant kind and
being actuated only by proper motives - in the exercise, that is to say, of the common right
7 This is borne out by the illustrative quotations given in the unabridged OED.
8 See eg Orange Brand Services Ltd v Account Works Software (Pty) Ltd [2013] ZASCA 158 para 15.
9 Registrar of Trade Marks v W & G Du Cros Ltd [1913] UKHL 588; [1913] AC 624 at 634, cited with
approval inter alia in Joshua Gibson Ltd v Bacon 1927 TPD 207 at 203 and Distillers Corporation
(SA) Ltd v Stellenbosch Farmers Winery Ltd 1979 (1) SA 532 (T) at 536G-H.
10 On-line Lottery Services (Pty) Ltd v National Lotteries Board & another [2009] ZASCA 86; 2010 (5)
SA 349 (SCA) para 16.
11 Shredded Wheat Co Ltd v Kellogg Co of Canada Ltd [1938] 55 RPC 125 (PC).
12 Copper Works application (1953) 71 RPC 150 at 153.
13 Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55; (1964) 111 CLR 511 para 5.
of the public to make honest use of words forming part of the common heritage, for the sake
of the signification which they ordinarily possess - will think of the word and want to use it in
connexion with similar goods in any manner which would infringe a registered trade mark
granted in respect of it.’
[10] The approach in Du Cros and Clark Equipment was recently affirmed by the
High Court of Australia in Cantarella14 where the following was stated:15
‘When the "other traders" test from Du Cros is applied to a word . . . the test refers to the
legitimate desire of other traders to use a word which is directly descriptive in respect of the
same or similar goods. The test does not encompass the desire of other traders to use
words which in relation to the goods are allusive or metaphorical.’
[11] As I have said, ‘twist’ is not descriptive of Atlantic’s beverages. No trader,
acting legitimately and not wishing to take advantage of the reputation of Atlantic’s
brand, would wish to use the word ‘twist’ in relation to its soft drinks. To adapt Kitto
J’s words, such a trader could not honestly say that he desired to apply the word
‘twist’ to his soft drinks for the sake of the signification which the word ordinarily
possesses. If ‘twist’ has any meaning as applied to soft drinks, it is ‘allusive or
metaphorical’.
[12] The present case is readily distinguishable from one of the authorities to
which we were referred, Pepkor Retail,16 where this court found that the mark THE
LOOK in relation to apparel was not inherently capable of distinguishing the
proprietor’s goods. This was because of a factual finding that in the fashion retail
industry the expression ‘the look’ carried ‘the universal ordinary meaning of
fashionable or trendy clothing or outfits’ rather than being a ‘covert or skilful allusion’
to such goods.17
[13] I am thus satisfied that the mark TWIST, as applied to soft drinks, is
inherently capable of distinguishing Atlantic’s beverages from those of other
14 Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48; (2014) 254 CLR 337,
particularly paras 70-71.
15 Para 59.
16 Pepkor Retail (Pty) Ltd v Truworths Ltd [2016] ZASCA 146.
17 Para 17.
producers and that its registration was not precluded by virtue of its being purely
descriptive. It is thus unnecessary to explore whether possible deficiencies when the
marks were registered have been cured by subsequent use. I content myself by
saying that there is overwhelming evidence that Atlantic and its predecessors have
used TWIST widely as a trade mark on millions of cans and bottles of soft drinks
and through substantial advertising expenditure. The following statement by Harms
JA in Groupe LFE18 concerning the use of the SWARTLAND mark in relation to wine
could equally be applied to the present case:
‘The Winery’s wines have been known for many decades as Swartland wines and by no
other name (save for the use of the non-distinctive ‘Winery’ suffix). No other wine has been
sold under that name. How, under these circumstances, it can be suggested that the mark
did not become distinctive is impossible to fathom.’
[14] The courts below were thus correct in concluding that PepsiCo’s
expungement application should fail.
Registration of PepsiCo’s marks
[15] PepsiCo’s proposed marks cannot be registered if PepsiCo has no bona fide
claim to proprietorship thereof (s 10(3)). And in terms of s 10(14), registration of a
mark is prohibited if it is
‘… identical to a registered trade mark belonging to a different proprietor or so similar
thereto that the use thereof in relation to goods or services in respect of which it is sought to
be registered and which are the same as or similar to the goods or services in respect of
which such trade mark is registered, would be likely to deceive or cause confusion, unless
the proprietor of such trade mark consents to the registration of such mark’.
[16] These are the two grounds on which Atlantic opposed registration of the
marks. In view of my conclusion on s 10(14) it is unnecessary to consider the scope
and applicability of s 10(3).
18 Groupe LFE (SA) (Pty) Ltd v Swartland Winery Ltd & another [2011] ZASCA 4 para 16.
[17] The proposed mark PEPSI TWIST is not identical to Atlantic’s registered
marks. The question is whether there it is sufficient similarity to create a likelihood of
deception or confusion.
[18] Since similar language is used in s 34(1) in relation to infringement, cases
dealing with infringement can be consulted for guidance. In Yuppiechef19 this court
summarised the test thus:
‘What is required is a value judgment on the question of the likelihood of deception or
confusion based on a global appreciation of the two marks and the overall impression that
they leave in the context of the underlying purpose of a trademark, which is that it is a
badge of origin. The value judgment is largely a matter of first impression and there should
not be undue peering at the two marks to find similarities and differences.’
[19] There is an inter-relationship between the similarity of the marks and the
similarity of the goods to which the marks apply. Lesser similarities in the marks
might be counter-balanced by stronger similarities in the goods but ultimately the
question remains whether in combination there is a likelihood of confusion or
deception.20 In regard specifically to the goods to which the respective marks are
applied, relevant considerations will include (i) the uses of the respective goods;
(ii) the users of the respective goods; (iii) the physical nature of the goods; and
(iv) the trade channels through which the goods respectively reach the market .21
[20] In testing for deception and confusion, courts will usually identify the features,
if any, of the respective marks which are dominant. If they share a dominant feature,
there is ordinarily a greater likelihood of deception or confusion. As recently affirmed
by this court, in the global assessment of the marks ‘the visual, aural and conceptual
similarities of the marks must be assessed by reference to the overall impressions
created by the marks bearing in mind their distinctive and dominant components’.22
[21] Here the goods to which the competing marks would be applied are identical.
If the proposed marks were registered, PepsiCo would be entitled to use them in
19 Yuppiechef Epson Holdings (Pty) Ltd v Yuppie Gadgets Holdings (Pty) Ltd [2016] ZASCA 118 para
26.
20 Mettenheimer & another v Zonquasdrif Vineyards CC & others 2014 (2) SA 204 (SCA) para 11.
21 Mettenheimer para 13.
22 Distell Ltd v KZN Wines and Spirits CC [2016] ZASCA 18 para 10.
relation to carbonated beverages with similar flavours to Atlantic’s carbonated
beverages. From the proposed device mark one can infer that PepsiCo intends to
apply the proposed marks to a lemon-flavoured carbonated beverage. At any rate, if
the marks were registered, their notional fair and reasonable use would include use
in relation to a lemon-flavoured carbonated beverage. Such a product might be
practically indistinguishable, in taste, from Atlantic’s Lemon Twist.
[22] The soft drinks to which PepsiCo would be entitled to apply the proposed
marks would be directed at the same consumers who buy Atlantic’s soft drinks. The
trade channels, too, would be the same – supermarkets, cafes, convenience stores,
retail outlets, bars and restaurants. In some instances the beverages might be
displayed in close proximity to each other; in other instances an outlet might carry
the one product but not the other or might display them apart from each other.
[23] As to similarity in the marks, PepsiCo’s proposed marks will incorporate the
whole of Atlantic’s mark TWIST and part of Atlantic’s marks LEMON TWIST and
DIET TWIST. In the latter two instances TWIST is the dominant and distinctive
feature, LEMON and DIET being purely descriptive. In the case of LEMON TWIST
there is an endorsement on the registration that the mark gives no right to the
exclusive use of the word ‘lemon’ in its ordinary signification and apart from the
mark. Although there is no similar disclaimer for DIET TWIST, Atlantic could not
claim a monopoly on the word ‘diet’ in relation to beverages.
[24] PepsiCo’s proposed marks thus incorporate the sole distinctive feature of
Atlantic’s marks. Does the insertion of PEPSI before TWIST avoid the confusion
which would undoubtedly arise without the insertion? Aurally, the two elements have
equal prominence. In their barest written form, PEPSI and TWIST have equal
prominence (they each comprise five letters) but in fair and reasonable notional use
PepsiCo could choose to give TWIST greater visual prominence than PEPSI. In the
device mark, TWIST is more prominent than PEPSI – the font is larger and fancier.
And in fair and reasonable notional use Atlantic could depict its mark TWIST in
much the same way as the same word appears in PepsiCo’s proposed device mark
and in any of the ways in which PepsiCo might choose to depict its proposed word
mark.
[25] The appellant’s contention that PEPSI is the dominant component rests on an
assertion that PepsiCo has an existing mark PEPSI which is so widely known that
consumers will instantly notice and remember it (I shall call this conceptual
prominence). Whether, in making the comparison for purposes of s 10(14), we may
have regard to the existence and reputation of PEPSI as a registered mark is
doubtful. The appellant’s own counsel opened the appeal by submitting that in
applying s 10(14) one must simply place the marks side by side in the market place;
the court is not entitled to have regard to extraneous matter arising from the actual
use of the marks, though the comparison must take account of all fair and normal
uses to which the proprietors might notionally put their marks. Although counsel was
making this point in support of an argument that in the opposition proceedings we
should disregard evidence of Atlantic’s use of the TWIST marks, the argument, if
sound, applies equally to extraneous matter such as the existence and reputation of
the PEPSI mark. That such extraneous matter should be disregarded was certainly
the view of Harms J writing for the full court in Upjohn Company23 and he returned to
this question, without finally deciding it, in Cowbell.24
[26] We were not fully addressed on the question and it is unnecessary to decide
it because on either approach the result is the same. If, in line with Upjohn
Company, one were to disregard the existence and reputation of PEPSI as an
existing mark, one could not say that PEPSI enjoys greater conceptual prominence
than TWIST in the proposed marks. Because TWIST in this context is non-
descriptive, it has the same ability as the made-up word PEPSI to be memorable
and distinguishing. As I have said, in fair and reasonable use PepsiCo could choose
to give more prominence to TWIST than PEPSI. In the proposed device mark,
TWIST is visually more prominent than PEPSI though this prominence may be offset
to some extent by the non-verbal components of the device.
[27] Assuming, on the same basis, that one must ignore the evidence of the
actual use by Atlantic and its predecessors of the TWIST marks, what one cannot
ignore is that TWIST is on the register and is thus recognised as being distinctive of
23 The Upjohn Company v Merck & another 1987 (3) SA 221 (T) at 226H-227D, dealing with s 17(1)
of the Trade Marks Act 62 of 1963, the equivalent provision of the current s 10(14).
24 Cowbell AG v ICS Holdings Ltd 2001 (3) SA 941 (SCA) para 17.
Atlantic’s beverages.25 The incorporation of the sole distinctive feature of Atlantic’s
TWIST marks into the proposed PEPSI TWIST marks as an element with no less
prominence than the word PEPSI, and in relation to identical products, is such as to
create a likelihood of deception or confusion.
[28] If, on the other hand, the court may take into account the existence and
reputation of the PEPSI mark, this means no more than that the average South
African consumer would take it for granted that a beverage called Pepsi Twist is a
product from the same stable as other Pepsi beverages. While the incorporation of
PEPSI into the proposed mark would avoid creating in the minds of ordinary
consumers the mistaken belief that Pepsi Twist was produced by a party
independent of the Pepsi stable, consumers might be deceived into thinking that, or
be confused about whether, the producer of beverages under the name Twist (ie
Atlantic) is part of the Pepsi stable. The greater the similarity in the ways in which
the producers chose to depict TWIST on their products, the greater the likelihood of
this confusion. I have already observed that in fair and reasonable notional use the
parties might depict TWIST in similar styles. Having regard to actual use, there is
already some similarity in the way in which Atlantic depicts TWIST on its products
and the manner in which PepsiCo depicts TWIST in the proposed device mark – in
each case the word slants upwards from left to right and the letter ‘i’ is not
capitalised and has a dot above it.
[29] Another relevant consideration is that PEPSI would be regarded by most
consumers as a primary identifying mark of all PepsiCo’s products. Where a second
word is added to a primary mark in order to distinguish the producer’s products from
each other, the second word has a unique and important function in identifying the
product – eg Pepsi-Cola, Pepsi Zero, Pepsi Max, Pepsi Wild Cherry and (if it is
registered) Pepsi Twist. In the case of primary and sub-brands, the sub-brand is
important to consumers. They will not look for Pepsi products in general but for a
particular product. Because Pepsi-Cola was the first and probably still is the most
widely sold Pepsi beverage, the word ‘Pepsi’ on its own would probably be
25 Danco Clothing (Pty) Ltd v Nu-Care Marketing Sales and Promotions (Pty) Ltd & another 1991 (4)
SA 850 (A) at 861G-H; Lawsa 2 ed vol 29 para 110.
understood as referring to Pepsi-Cola. For other Pepsi products, the emphasis
would fall on the sub-brand, in the present case the TWIST component.
[30] It is not necessary to find that all or most consumers would be confused. It is
enough that a substantial number of them are likely to be confused. And the
confusion need not be a settled belief that Pepsi is the source of all beverages
under the name Twist. It is sufficient that uncertainty on that score would be created
in the minds of consumers.26 In that regard one must remember that the universe of
consumers for carbonated soft drinks is large: it includes persons of all ages, the
rich and the poor; the sophisticated and unsophisticated. Soft drinks are often
bought on a whim. Consumers would not ordinarily subject the bottle or can to
careful scrutiny.
[31] One should also bear in mind that consumers will not always have the bottles
or cans in front of them when choosing their soft drink. In a bar or restaurant setting
consumers would order beverages from a bar attendant or waiter. Because
consumers are likely to equate a ‘Pepsi’ with the well-known Pepsi-Cola beverage, a
consumer wanting a Pepsi Twist might drop ‘Pepsi’ and simply ask for a ‘Twist’. I
can envisage that a bar attendant or waiter might, in response to a request for a
‘Twist’, bring the customer either a Pepsi Twist or a Lemon Twist.
[32] The respondent’s counsel referred us to Medion,27 a judgment of the
European Court of Justice (ECJ), which is particularly apposite. Medion was the
registered proprietor of the trade mark LIFE for leisure electronic devices. It brought
infringement proceedings in Germany against Thomson for using the mark
THOMSON LIFE in relation to leisure electronic devices. The German court referred
the interpretation of Article 5(1)(b) of the European Union’s Trade Mark Directive to
the ECJ. Article 5(1)(b) is similar to our s 10(14). The ECJ distilled the essence of
the referring court’s question as being:
‘whether Article 5(1)(b) . . . is to be interpreted as meaning that where the goods or services
are identical there may be a likelihood of confusion on the part of the public where the
26 Roodezandt Ko-operatiewe Wynmakery Ltd v Robertson Winery (Pty) Ltd & another [2014] ZASCA
173 para 6; Shimansky & another v Browns the Diamond Store (Pty) Ltd [2014] ZASCA 214 para 12.
27 Medion AG v Thomson multimedia Sales Germany & Australia GmbH [2005] EUECJ C-120/04.
contested sign is composed by juxtaposing the company name of another and a registered
mark which has normal distinctiveness and which, although it does not determine by itself
the overall impression conveyed by the composite sign, has an independent distinctive role
therein.’
[33] After setting out the general principles on which a comparison should be
made for purposes of Article 5(1)(b) – very similar to the principles applied in this
country28 – the ECJ continued (citation of authority omitted):29
‘However, beyond the usual case where the average consumer perceives a mark as a
whole, and notwithstanding that the overall impression may be dominated by one or more
components of a composite mark, it is quite possible that in a particular case an earlier mark
used by a third party in a composite sign including the name of the company of the third
party still has an independent distinctive role in the composite sign, without necessarily
constituting the dominant element.
In such a case the overall impression produced by the composite sign may lead the public
to believe that the goods or services at issue derive, at the very least, from companies
which are linked economically, in which case the likelihood of confusion must be held to be
established.
The finding that there is a likelihood of confusion should not be subject to the condition that
the overall impression produced by the composite sign be dominated by the part of it which
is represented by the earlier mark.’
[34] The respondent’s counsel also referred us to a decision of an appeal court in
Paris30 where the court found in favour of the proprietor of the registered mark E.ON
in its opposition to the registration of a proposed mark HYUNDAI EON. The appeal
court agreed with the earlier proprietor that the HYUNDAI element of the proposed
mark had ‘no defined semantic value which would be added to that of the brand
EON to form a conceptually different whole with regard to the previous brand E.ON’.
The same conclusion, I may add, was reached in the United Kingdom in
28 Paras 23-29.
29 Paras 30-32.
30 E.ON AG v Hyundai Motor Company Appeal Court of Paris Division 5 Case 12/05489, 22
December 2011. The respondent's counsel provided us with a sworn translation of the French
decision.
proceedings between the same parties before the Registrar of Trade Marks31 where
the Hearing Officer spoke of the trend towards the use of sub-brands (in that case
HYUNDAI as the primary brand and EON as the sub-brand) and said that the
average consumer would assume that the identical and similar goods at issue came
from undertakings which were economically linked.
[35] The exposition in Medion is consistent with the principles of our law and
fortifies me in the conclusion I have reached on the s 10(14) issue. I thus consider
that the full court was right to uphold Atlantic’s appeal against the dismissal of its
opposition to the registration of PepsiCo’s marks.
Conclusion
[36] Accordingly the following order is made:
The appeal is dismissed with costs, including the costs of two counsel.
______________________
OL Rogers
Acting Judge of Appeal
31 In re Hyundai Motor Corporation Appn 2577601 per Hearing Officer, Mr CJ Bowen,14 November
2012; upheld on appeal to the Appointed Person, Ms A Michaels, Appeal 0-313-13, 1 August 2013.
Appearances
For the Appellant
R Michau SC (and with him I Joubert)
Instructed by
Spoor & Fisher, Centurion c/o Phatshoane
Henney Attorneys, Bloemfontein
For the Respondent
P Ginsberg SC (and with him F Southwood)
Instructed by
Adams
&
Adams,
Pretoria
c/o
Honey
Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
15 September 2017
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
PepsiCo Inc v Atlantic Industries (983/16) [2017] ZASCA 109
The Supreme Court of Appeal (the SCA) today dismissed an appeal against a
judgment of a full court of the Gauteng Division of the High Court, Pretoria, in
which the full court had (i) dismissed an appeal by PepsiCo against the
dismissal, by a single judge, of PepsiCo’s application for the expungement of
certain registered trade marks of which Atlantic is the proprietor and
(ii) upheld an appeal by Atlantic against the single judge’s granting of
PepsiCo’s application for the registration of certain trade marks.
Atlantic Industries Is the registered proprietor of the trade marks TWIST,
LEMON TWIST and DIET TWIST in relation to non-alcoholic drinks. PepsiCo
applied to have these marks expunged and applied for the registration of the
word mark PEPSI TWIST and of a device mark incorporating the words
PEPSI TWIST. PepsiCo applied for the expungement of Atlantic’s marks on
the basis that the word ‘Twist’ was not capable of distinguishing a proprietor’s
goods and was purely descriptive. The SCA rejected these contentions,
finding that the word ‘Twist’ in relation to non-alcoholic drinks was an arbitrary
non-descriptive word and that any association with non-alcoholic drinks was
at most allusive or metaphorical. There was in any event overwhelming
evidence that through extensive use the mark TWIST had become distinctive
of Atlantic’s beverages.
In regard to PepsiCo’s application for the registration of its marks, the SCA
held that the incorporation, in the proposed marks, of the sole distinctive
feature of Atlantic’s marks, namely TWIST, was likely to deceive or cause
confusion as to the origins of the beverages manufactured by Atlantic and
PepsiCo respectively. The likelihood of deception or confusion was not
avoided by inserting PEPSI before TWIST because the latter word played an
independent distinctive role in the composite sign.
~~ end~~
|
2833
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case no: 93/12
In the matter between:
EDSON NDOU
Appellant
and
THE STATE
Respondent
Neutral citation:
Ndou v S (93/12) [2012] ZASCA 148 (28 September 2012)
Coram:
MPATI P, LEWIS, VAN HEERDEN and SHONGWE JJA
and ERASMUS AJA
Heard:
11 September 2012
Delivered:
28 September 2012
Summary:
Sentence – rape of girl under the age of 16 years – imposition of life
imprisonment in terms of s 51(1) of the Criminal Law Amendment Act
105 of 1997 – whether misdirection exists – no substantial and
compelling circumstances found by high court – whether appeal court
can interfere.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo High Court (Thohoyandou) (Hetisani J sitting as court of
first instance):
1 The appeal is upheld.
2 The sentence of the court below is set aside and replaced with the following:
‘The accused is sentenced to 15 years’ imprisonment’. This sentence is antedated
to 5 May 2004.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SHONGWE JA (… concurring)
[1] This is an appeal against sentence only. The appellant was convicted by the
regional court in Sebasa (Limpopo) of raping a 15 year-old girl. In terms of s 52 of
the Criminal Law Amendment Act 105 of 1997 (the Act), the matter was referred to
the Limpopo High Court, Thohoyandou, for the imposition of sentence. (Section 52
has since been repealed.) The matter came before Hetisani J who sentenced the
appellant to life imprisonment in terms of s 51(1) of the Act. The appeal is with the
leave of this court.
[2] In brief the appellant contends that life imprisonment is grossly inappropriate
and induces a sense of shock. The court below found no substantial and compelling
circumstances that warranted the imposition of a lesser sentence. The appellant
argues that the court should have found substantial and compelling circumstances
and therefore that it erred. It is contended that the appellant did not use any violence
or weapon to force the complainant to submit to having sexual intercourse with him;
instead, the argument continues, she accepted money and gifts from the appellant. It
was further argued that there was no evidence of ‘post-traumatic stress suffered by
the complainant’.
[3] The State, on the other hand, argues that sentencing is pre-eminently a
matter for the discretion of the sentencing court and that such discretion should not
be lightly interfered with by a court of appeal. It may only interfere if it finds that the
sentencing court misdirected itself on the law or facts. The State further contends
that rape of a 15 year-old girl falls within the ambit of Part 1 of Schedule 2 to the Act
and therefore a court of appeal may not lightly deviate from a prescribed minimum
sentence and for flimsy reasons. That the appellant is the stepfather of the
complainant and occupied a position of trust and authority over her, the State
argues, is an aggravating factor. The State also contends that any sentence less
than life imprisonment would undermine the objectives of the Act and would make a
mockery of justice.
[4] It is not necessary to deal in any detail with the evidence on the merits.
However, one needs to have a brief backdrop in order to appreciate the ultimate
sentence. The complainant testified that she was asleep in one of the bedrooms
together with her two younger sisters. In the middle of the night the appellant entered
the bedroom laid down next to her and inserted his penis into her vagina from
behind. She did not scream or cry – she intended to tell her mother, who was asleep
in one of the other rooms, in the morning. She also stated that it was not the first
time he had done this.
[5] Her mother testified that the appellant came back from drinking and took off
all his clothes and slept next to her. In the middle of the night she discovered that he
was no longer sleeping next to her. She woke up and went to the children’s
bedroom. She found the appellant having sexual intercourse with the complainant.
She enquired what he was doing and he said that he was waking up the children so
that they could go and urinate; she then went back to their room. Later on that day
she reported the matter to the police and the appellant was arrested. The
complainant was taken to the hospital for medical examination. The mother’s
evidence in this regard differs from that of the complainant who testified that when
her mother came into the bedroom the appellant had finished having intercourse with
her and that he was fast asleep next to her as he was drunk. Other witnesses
testified but their evidence did not take the matter any further.
[6] The State did not lead the evidence of the doctor who examined the
complainant because the doctor had returned to his/her home country. However, the
State and the defence agreed that the contents of the medical report (the J88 form)
be read into the record. The clinical findings were, inter alia, that ‘she has evidence
of previous penetration with a hymen which broke long ago but evidence of recent
coitus – a discharge and small tears of the posterior fourchette’. In terms of
s 212(4)(a) of the Criminal Procedure Act 51 of 1997, the medical report was
admitted as evidence. That concluded the State’s case. The appellant
unsuccessfully applied for his discharge in terms of s 174 of the Criminal Procedure
Act. He closed his case without testifying or calling witnesses.
[7] It is significant to record that the complainant testified that it was not for the
first time that the appellant had sexual intercourse with her. On the previous
occasion the appellant had bought her sandals, panties and had also given her some
money. He had threatened to kill her if she divulged the rape. He also told her not to
inform her mother about what had happened; indeed she did not inform her mother.
On the occasion which forms the subject of the present rape charge, it would appear
that there were no threats of violence by the appellant.
[8] When the matter came before the court below for sentencing, Hetisani J found
that the conviction was in accordance with justice and confirmed it. In considering an
appropriate sentence, the court below correctly pointed out that sexual assault on
children is prevalent in that area. The court went on to consider the triad of factors
relevant to sentence, namely the personal circumstances of the appellant, the
seriousness of the offence and the interests of society (S v Zinn 1969 (2) SA 537 (A)
at 540G-H). It was suggested by defence counsel that because the complainant’s
mother had moved on with her life, and had left the family to stay with another man,
and because the complainant is now married, leaving the appellant alone to take
care of the other three children, there were substantial and compelling
circumstances to justify a lesser sentence. The court below did not agree with this
submission and found that substantial and compelling circumstances did not exist.
[9] The question which arises on appeal is whether, in the circumstances of this
case, life imprisonment is an appropriate sentence. The appellant denied having had
sexual intercourse with the complainant. His conduct, as it was proved, attracted a
sentence of life imprisonment unless the court was satisfied that substantial and
compelling circumstances that justify a lesser sentence exist.
[10] The court below asked itself the following question. ‘In this case that we are
dealing with, the court must ask itself, is there anything that makes it different from any other
case where an adult male person has raped a minor female person? More so when one
looks at the fact that the rape was continuous when it was done, the day that it was
discovered was not the first day, there had been previous occasions when this abuse had
been going on’.
The formulation of the question is questionable, in my view, because it assumes and
suggests that the complainant was raped continuously and that there had been
previous occasions on which she was raped. This conclusion is clearly incorrect and
constitutes a misdirection. The appellant was charged and convicted of one count of
rape only. The evidence of the complainant was that it was not for the first time that
the appellant had had sexual intercourse with her and she testified under cross-
examination about one previous occasion. She said that it happened when her
mother was away and came back the following day. This suggests that when the
appellant was apprehended it was the second time. It is therefore incorrect, as the
court below found, that the ‘rape was continuous’ and that there had been ‘previous
occasions’ on which the appellant sexually abused the complainant. It was this
reasoning that led to the misdirection that entitles this court to consider the sentence
afresh (see S v Malgas 2001 (1) SACR 469 (SCA) para 12).
[11] The court below also reasoned that ‘(i)t is not this court’s discretion to impose
a life sentence, it is the discretion of the community via the legislator that these types
of things should please stop …’. The impression created is that the minimum
sentence of life imprisonment had to be imposed regardless of the circumstances. In
Malgas (para 25) this court said:
‘Section 51 has limited but not eliminated the courts’ discretion in imposing sentence in
respect of offences referred to in Part I of Schedule 2 ….’
It is indeed the sentencing court that is empowered to exercise a discretion to depart
from the prescribed sentences. The ‘determinative test’ for departure from the
prescribed sentence was articulated in S v Dodo 2001 (1) SACR 594 (CC) para 40
where the Constitutional court, referring with approval to Malgas said:
‘On the construction that Malgas places on the concept “substantial and compelling
circumstances” in s 51(3), which is undoubtedly correct, s 51 does not require the High Court
to impose a sentence of life imprisonment in circumstances where it would be inconsistent
with the offender’s right guaranteed by s 12(1)(e) of the Constitution. The whole approach
enunciated in Malgas, and in particular the determinative test articulated in paragraph I of
the summary, namely:
“If the sentencing court on consideration of the circumstances of the particular case is
satisfied that they render the prescribed sentence unjust in that it would be disproportionate
to the crime, the criminal and the needs of society, so that an injustice would be done by
imposing that sentence, it is entitled to impose a lesser sentence.”’
The above approach was also endorsed and followed in S v Vilakazi 2009 (1) SACR
552 (SCA) paras 14 – 15.
[12] It is trite that rape is a very serious offence (see S v Chapman 1997 (3) SA
341 (SCA) at 344I-J where it was described as ‘a humiliating, degrading and brutal
invasion of the privacy, the dignity and the person of the victim’). In the present case
a 15 year-old girl who was the victim regarded the appellant as a father figure from
whom she expected protection, but he had abused that position. No evidence was
led on the effect the rape had on her. The lack of such evidence should not and
cannot be construed as absence of post-traumatic stress at all. It would be
unrealistic to think there was none.
[13] On the other hand the complainant did not suffer any serious physical injuries.
She submitted to the sexual intercourse on the occasion in question without any
threat of violence. The fact that she had accepted gifts and money from the appellant
must have played a role in her submitting to the sexual intercourse. When she was
asked whether she had screamed for help, she said that she had not resisted or
screamed but simply waited for the appellant to finish what he was doing. She also
confirmed that the appellant was drunk and fell asleep next to her after the rape.
Thus the degree of the trauma suffered by her cannot be quantified. All these factors
must be taken into account in considering whether in this case the ultimate sentence
of imprisonment for life is proportionate to the crime committed by the appellant.
A balance must be struck on all the factors to avoid an unjust sentence. In my view
the sentence imposed is disproportionate to the crime committed and the legitimate
interests of society.
[14] Trial courts take months, and in some instances years, dealing with evidence
and principles of law to establish the guilt or innocence of an accused person.
However, my observation is that when it comes to the sentencing stage, that process
usually happens very quickly and often immediately after conviction. Sentencing is
the most difficult stage of a criminal trial, in my view. Courts should take care to elicit
the necessary information to put them in a position to exercise their sentencing
discretion properly. In rape cases, for instance, where a minor is a victim, more
information on the mental effect of the rape on the victim should be required,
perhaps in the form of calling for a report from a social worker. This is especially so
in cases where it is clear that life imprisonment is being considered to be an
appropriate sentence. Life imprisonment is the ultimate and most severe sentence
that our courts may impose; therefore a sentencing court should be seen to have
sufficient information before it to justify that sentence. In S v Siebert 1998 (1) SACR
554 (A) Olivier JA at 558i - 559a said:
‘Sentencing is a judicial function sui generis. It should not be governed by considerations
based on notions akin to onus of proof. In this field of law, public interest requires the court
to play a more active, inquisitorial role. The accused should not be sentenced unless and
until all the facts and circumstances necessary for the responsible exercise of such
discretion have been placed before the court.’
(See also S v Dodo supra para 37 and S v Matyityi 2011 (1) SACR 40 (SCA) paras
15 – 17.)
[15] In S v Dodo supra para 38 Ackerman J said:
‘To attempt to justify any period of penal incarceration, let alone imprisonment for life as in
the present case, without inquiring into the proportionality between the offence and the
period of imprisonment, is to ignore, if not to deny, that which lies at the very heart of human
dignity. Human beings are not commodities to which a price can be attached; they are
creatures with inherent and infinite worth; they ought to be treated as ends in themselves,
never merely as means to an end. Where the length of a sentence, which has been imposed
because of its general deterrent effect on others, bears no relation to the gravity of the
offence … the offender is being used essentially as a means to another end and the
offender’s dignity assailed. So too where the reformative effect of the punishment is
predominant and the offender sentenced to lengthy imprisonment, principally because he
cannot be reformed in a shorter period, but the length of imprisonment bears no relationship
to what the committed offence merits. Even in the absence of such features, mere
disproportionality between the offence and the period of imprisonment would also tend to
treat the offender as a means to an end, thereby denying the offender’s humanity.’
[16] I have already mentioned that rape is a very serious offence, especially when
perpetrated against a minor. It deserves severe punishment. However, the
circumstances under which it took place are relevant in the consideration of an
appropriate sentence. There is no doubt that there is a public outcry to stop the
scourge of rape. The appellant was 46 years of age when he committed this offence.
He is the step father of the complainant. He is a first offender and self-employed. In
my view the circumstances in this case are such that a sentence of life imprisonment
is disproportionate to the crime. I therefore find that there are substantial and
compelling circumstances justifying a lesser sentence than the one prescribed.
[17] In the result, having considered all the relevant factors and the purpose of
punishment I consider 15 years’ imprisonment to be an appropriate sentence.
[18] I make the following order:
1 The appeal is upheld
2 The sentence of the court below is set aside and replaced with the following:
‘The accused is sentenced to 15 years’ imprisonment’. This sentence is antedated to
5 May 2004.
________________________
J B Z SHONGWE
JUDGE OF APPEAL
APPEARANCES
FOR APPELLANT:
M J Manwadu
Instructed by:
Justice Centre, Thohoyandou;
Justice Centre, Bloemfontein.
FOR RESPONDENT:
R J Makhera
Instructed by:
Director of Public Prosecutions, Thohoyandou;
Director of Public Prosecutions, Bloemfontein.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 September 2012
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
* * *
EDSON NDOU V THE STATE
The SCA today upheld an appeal against a sentence of life imprisonment and substituted it
with a sentence of 15 years’ imprisonment.
The appellant the stepfather to the complainant, a girl under the age of 16 years, was
convicted of rape by the regional court in Sibasa (Limpopo). In terms of section 52 of the
Criminal Law Amendment Act 105 of 1997, the case was referred to the high court for
sentence. The high court sentenced him to life imprisonment because it concluded that no
substantial and compelling circumstances existed to justify the imposition of a lesser sentence
as prescribed by section 51(1) of the minimum sentence legislation.
The SCA having considered all the factors of this case, concluded that the high court
misdirected itself by suggesting that the child had been continuously raped on previous
occasions. It is not correct that she had been continuously raped on previous occasions; no
evidence was tendered to that effect, however, she had been raped once, by the appellant
which rape does not form the subject of this case at all. The appellant had been charged and
convicted of one count of rape.
The appellant came home one night drunk. He took off his clothes and slept next to his wife,
who was sleeping in one of the rooms. In the middle of the night the appellant woke up and
proceeded to the room where the children, including the complainant were asleep. He then
had sexual intercourse with the complainant. She did not scream or cry. Her evidence was
that she waited until he finished as she intended to tell her mother about the incident in the
morning. It was not the first time that he had had sexual intercourse with the complainant.
After the first occasion he bought her sandals and panties and also gave her money –
therefore her submission to the second encounter appears to have been influenced by the gifts
she received previously.
This court having found that the high court misdirected itself was at large to sentence afresh.
This court found that substantial and compelling circumstances existed to justify the
imposition of a lesser sentence. These are inter alia that no threats or violence was used on
the complainant. She did not sustain any serious physical injuries. She got married thereafter,
her mother went on to live with another man. However an imprisonment sentence for a long
period was considered appropriate in the circumstances. This court found that life
imprisonment was disproportionate to the crime hence it interfered.
|
3200
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number : 391/06
Reportable
In the matter between :
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
APPELLANT
and
BRUMMERIA RENAISSANCE (PTY) LTD
FIRST RESPONDENT
PALMS RENAISSANCE (PTY) LTD
SECOND RESPONDENT
RANDPOORT RENAISSANCE (PTY) LTD
THIRD RESPONDENT
CORAM : SCOTT, CLOETE, VAN HEERDEN JJA, KGOMO et MHLANTLA AJJA
HEARD :
24 AUGUST 2007
DELIVERED : 13 SEPTEMBER 2007
Summary: Income tax ─ Act 58 of 1962 ─The right to use loans interest-free is
‘gross income’ which ‘accrues’ to a taxpayer; the effect of ss 79(1), 81(4) and
81(5) discussed.
Neutral citation: This judgment may be referred to as Commissioner, SARS v
Brummeria Renaissance (Pty) Ltd [2007] SCA 99 (RSA).
_________________________________________________________
JUDGMENT
CLOETE JA/
[1] The appellant is the Commissioner for the South African Revenue Service.
The first to third respondents are respectively Brummeria Renaissance (Pty) Ltd,
Palms Renaissance (Pty) Ltd and Randpoort Renaissance (Pty) Ltd (‘the
companies’). The companies have since 1988 developed retirement villages as
contemplated in the Housing Development Schemes for Retired Persons Act.1
[2] The Commissioner issued assessments, then revised assessments and
subsequently, further revised assessments to the companies as follows: Brummeria,
for the years 1996 to 2000; Palms, for the years 1994 to 2000; and Randpoort, for
the years 1995 to 2000. It is the further revised assessments which are in issue in
these proceedings.
[3] During the relevant years the companies entered into written agreements with
potential occupants of units still to be constructed in retirement villages. The salient
features of these agreements were the following:
(a)
each company obtained an interest-free loan from a potential occupant in
order to finance the construction of a unit in a particular retirement village by the
company in question;
(b)
a debenture was issued to the lender acknowledging the loan, the title deeds
of the property forming the subject matter of the development were endorsed and a
covering bond was registered as further security in favour of the lenders;
(c)
the lender was granted the right of lifelong occupation of the unit, whilst
ownership remained with the company; and
(d)
the company was obliged to repay the loan to the occupant upon cancellation
of the agreement, or upon the occupant’s death.
The standard agreement entered into with each occupier provided in terms that the
interest-free loans constituted the consideration for the life rights: ‘Lewensreg’ was
defined as
‘Die reg van die okkupeerder om die eenheid te okkupeer en die fasiliteite te gebruik, onderworpe aan
die reels vanaf datum van okkupasie tot datum van beëindiging, as teenprestasie vir die lening en
1 65 of 1988.
onderworpe aan die betaling van maandelikse heffings en spesiale heffings’;
clause 6.4 provided:
‘As teenprestasie vir die lening onderneem die maatskappy om aan die okkupeerder lewensreg van
die eenheid te verleen . . . ‘;
and clause 8.1 provided:
‘Die grondslag van hierdie ooreenkoms is lewensreg teen ‘n lening met sekuriteit. . . ‘.
[4] Mr Pauw, who was called by the companies, testified that the interest-free
loans were utilized solely as the source of financing by the companies for the
development of the units; that nothing was invested in income-earning investments;
that repayment of a loan was financed by the granting of a new loan (presumably by
a new occupier of the relevant unit); and that the intention of the companies was
ultimately to sell the units at a profit.
[5] In the further revised assessments amounts equal to the value of the rights of
the companies to use the funds advanced to them as interest-free loans were
included in the companies’ gross income. Such amounts were determined by
applying the weighted prime overdraft rate for banks to the average amount of the
interest-free loans in the possession of the particular company in the relevant year of
assessment. The statement of the grounds of assessment delivered by the
Commissioner in terms of rule 10 of the tax rules (made in terms of s 107A of the
Income Tax Act 58 of 1962)2 reads as follows:
’11.
In the case of a developer conducting a housing scheme for retired persons, the capital of the
developer is the property units. The property units are employed in its business by either:
11.1
selling the units under sectional title to the purchasers; or
11.2
granting the use (occupation) of the units to the occupiers by way of selling life rights to the
occupiers.
12.
The quid pro quo which the developer received in return is, respectively:
12.1
the selling price obtained from the purchasers, in respect of the disposal of the units under
sectional title; or
12.2
the benefit of the rights to interest free loans obtained from the occupiers, in respect of the
disposal of the life rights to occupy the units.
2 And contained in GN R467 published in Government Gazette 24639 of 1 April 2003.
13.
The benefit received in exchange for the provision of occupation rights has an ascertainable
money value and accordingly falls within the definition of “gross income” of the Act.
14.
As income tax is calculated on an annual basis, an annual value is placed on the benefit
referred to above. The value of the benefit is determined by applying the weighted prime overdraft
rate of banks to the average loan capital over the period for which the developer had the use of the
loan capital during that specific year of assessment.
15.
The money value of the benefit of the interest free loans accrues to the developers, and as
such fall within “gross income” as defined in section 1 of the Act.’
[6] The companies raised several grounds in their statement of grounds of appeal
in terms of rule 11 of the tax rules. Two remain relevant:
(a)
All of the companies contended that the interest-free loans did not result in
any ‘amounts’ being ‘received by’ them, as contemplated in the definition of ‘gross
income’ in s 1 of the Act, and accordingly that the amounts included in their gross
income, calculated on the basis I have already set out, were wrongly so included;
and
(b)
Brummeria contended that s 79(1) of the Act precluded the Commissioner
from raising the further revised assessments which the Commissioner had raised
against it.
[7] The Johannesburg Tax Court, presided over by Goldblatt J, upheld the
appeals by the companies on the first ground and accordingly found it unnecessary
to consider the additional ground raised by Brummeria. Goldblatt J subsequently
granted the Commissioner leave to appeal to this court in terms of s 86A(5) of the
Act.
[8] The relevant part of the definition of ‘gross income’,3 in relation to any year or
period of assessment, was at the time:
‘. . . the total amount, in cash or otherwise, received by or accrued to . . . [the taxpayer] during such
year or period of assessment from a source within the Republic, excluding receipts or accruals of a
3 In s 1 of the Act.
capital nature . . . ‘.
[9] It is important to emphasise that the Commissioner did not contend that the
actual receipt of the loan capital resulted in the receipt of amounts for the purposes
of the definition of gross income ─ and rightly so, as it has been decided in this court
that a receipt of loan capital, as such, is not a receipt for the purposes of such
definition: Commissioner for Inland Revenue v Genn & Co (Pty) Ltd;4 Commissioner
for Inland Revenue v Felix Schuh (SA) (Pty) Ltd.5 The Commissioner’s case is that it
was the right to retain and use the loan capital, interest-free, for the relevant periods,
which constituted the right which had an ascertainable money value and which
accrued to the companies.
[10] Counsel for the companies sought to argue in this court that the right which
the Commissioner sought to include in the companies’ taxable incomes was of a
capital nature. This question was not an issue before the tax court. Tax rule 10(1)
provides that the Commissioner must deliver to the taxpayer a statement of the
grounds of assessment and sub-rule (3) provides that the statement of the grounds
of assessment must be in writing, be signed by the Commissioner or his or her
representative and must be divided into paragraphs ─
‘(a)
setting out a clear and concise statement of the grounds upon which the taxpayer’s objection
is disallowed; and
(b)
stating the material facts and legal grounds upon which the Commissioner relies for such
disallowance.’
Tax rule 11(1) provides that the taxpayer must deliver to the Commissioner a
statement of the grounds of appeal. Sub-rule (2) provides that the statement must be
in writing and be signed by the appellant or his or her representative and must be
divided into paragraphs ─
‘(a)
setting out a clear and concise statement of the grounds upon which the appellant appeals;
(b)
stating the material facts and legal grounds upon which the appellant relies for such appeal;
and
(c)
stating which of the facts and legal grounds alleged in the statement of the grounds of
4 1955 (3) SA 293 (A) at 301B-G.
5 1994 (2) SA 801 (A) at 812D-G.
assessment are admitted and which of those facts and legal grounds are denied.’
Tax rule 12 provides that the issues in any appeal to the court ‘will be those defined
in the statement of the grounds of assessment read with the statement of the
grounds of appeal’. Tax rule 13 provides:
‘(1)
The Commissioner and the appellant may agree in writing to the amendment of the statement
of the grounds of assessment or the statement of grounds of appeal or both.
(2)
The Court, consisting of the President sitting alone, may, on application on notice grant leave
to amend the statement of the grounds of assessment or the statement of grounds of appeal, subject
to such orders as to postponement and costs as the Court deems appropriate.’
The companies did not, in their statement of grounds of appeal in terms of rule 11 of
the tax rules, raise as an issue the question whether the rights which the
Commissioner sought to include in their taxable incomes was of a capital nature and
neither procedure contemplated in tax rule 13 was followed. The issue cannot
accordingly be pursued before this court.
[11] I turn to consider the first ground of appeal, ie whether the rights to use the
loans interest free constituted ‘amounts’ which ‘accrued to’ the companies. The word
‘amount’ and the phrase ‘accrued to’ were interpreted by Watermeyer J writing for
the full court of the Cape Provincial Division in Lategan v Commissioner for Inland
Revenue6 and both interpretations were approved by this court in Commissioner for
Inland Revenue v People’s Stores (Walvis Bay) (Pty) Ltd.7 The law was restated by
this court in Cactus Investments (Pty) Ltd v Commissioner for Inland Revenue.8
Hefer JA, who wrote both judgments in this court, summed up the law in Cactus
Investments by saying that the definition of gross income
‘includes, as explained in Commissioner for Inland Revenue v People’s Stores (Walvis Bay) (Pty) Ltd
1990 (2) SA 353 (A), not only income actually received, but also rights of a non-capital nature which
accrued during the relevant year and are capable of being valued in money’9
and that
‘The judgment in the People’s Stores case tells us that no more is required for an accrual than that
6 1926 CPD 203.
7 1990 (2) SA 353 (A).
8 1999 (1) SA 315 (SCA).
9 At 319G-H.
the person concerned has become entitled to the right in question.’10
[12] The Commissioner’s counsel submitted on the authority of the decisions to
which I have just referred that the right to retain and use the borrowed funds without
paying interest had a money value, and accordingly that the value of such right must
be included in the companies’ gross incomes for the years in which such rights
accrued to the companies. I agree. This court has held that the making of an
interest-free loan constitutes a continuing donation to the borrower which confers a
benefit upon such borrower: Commissioner for Inland Revenue v Berold.11 Indeed, it
can hardly be doubted that, in the modern commercial world, a right to retain and
use loan capital for a period of time, interest-free, is a valuable right. The basis upon
which the Commissioner valued that right in each particular year of assessment in
the further revised assessments, was not challenged on appeal.
[13] It was submitted on behalf of the companies that the rights so valued by the
Commissioner could not be turned into money by the companies and therefore did
not fall within the ambit of the decision of this court in the People’s Stores case. For
this proposition, counsel for the companies relied on the decision of the full court of
the Cape Provincial Division in Stander v Commissioner for Inland Revenue12 and
the decision of the House of Lords to which it refers,13 namely, Tennant v Smith
(Surveyor of Taxes).14
[14] In Stander’s case the taxpayer received an overseas trip as a prize and the
Commissioner sought to include the value of the prize in his taxable income. The
prize was awarded by Delta Motor Corporation (Pty) Ltd, which was not Stander’s
employer. Friedman JP writing for the full court held:15
‘The question, then, is whether the prize of an overseas trip constitutes “property”, ie did Stander, by
10At 320H.
11 1962 (3) SA 748 (A) at 753F-G and cf Commissioner, South African Revenue Service v Woulidge
2002 (1) SA 68 (SCA) para 10.
12 1997 (3) SA 617 (C).
13 At 621E-I.
14 [1892] AC 150 (HL).
15 At 622D-H.
being given this trip, acquire a right which had a monetary value in his hands.
The promise by Delta to give Stander an overseas trip amounted to an executory donation. At
common law the promise by Delta gave Stander, on acceptance by him of the promise, a personal
right to compel performance by Delta. However, by virtue of s 5 of the General Law Amendment Act
50 of 1956
“no executory contract of donation . . . shall be valid unless the terms thereof are embodied in a
written document signed by the donor”.
The terms of the donation were not embodied in a written document signed by Delta. Consequently
Delta’s offer of an overseas trip did not give rise to a valid contract of donation which was enforceable
by Stander and Stander cannot be said to have acquired a “right” even if a monetary value could be
placed on the the trip he received. However, once he had embarked upon the trip, the donation was
no longer executory and the question then is whether a value could be placed on what Stander
received by going on the trip. The answer to this question is, in my view, in the negative. Having gone
on the trip he had not received any “property” on which a monetary value could be placed in his
hands. He was no more able to turn it into money or money’s worth after accepting the award, than he
was at the time when the donation was still at the executory stage.’
The learned Judge President then went on to deal with ITC 701,16 decided by
Conradie J in the Special Court, and said the following:17
‘Conradie J, in delivering the judgment of the Special Court, accepted the principle that in order to fall
within the tax net, receipts or accruals other than money had to have a money’s worth. However
Conradie J rejected the argument that only benefits which a taxpayer can turn into money can be said
to have a money’s worth. He stated that there was no warrant for such a restricted form of valuation
and held that a service which is available in the market place has a value attached to it by the market.
That, he stated, was the value of the benefit which anyone who availed himself of the service, enjoys.
In other words, one simply looks at what the consumer of the service would have had to pay for it if he
had not been given it for nothing.
With respect to the learned Judge, this approach fails to take account of the impact of Watermeyer J’s
judgment in Lategan’s case supra, as approved by the Appellate Division in the People’s Stores case
supra. Having regard to the conditions applicable to the enjoyment of the award, the overseas trip had
no “value” in Stander’s hand which brought it within the terms of para (c) of the definition of “gross
income”.
I did not understand Mr De Haan, who appeared for the Commissioner, to contend that in order to
16 (1950) 17 SATC 108.
17 At 623C-I.
qualify as an “amount” for the purposes of para (c),18 it was not necessary for the award to consist of
“money’s worth”. He submitted that in order to determine “money’s worth” an objective value had to be
placed on the award. By “objective value”, he argued, was meant “market value”.
I do not agree. If the award cannot be said to consist of “money’s worth” it does not qualify for
inclusion in terms of para (c). Nor, in my judgment, is there any basis upon which, on the facts of this
case, “money’s worth” can be attributed to Stander’s prize by seeking to place an “objective” or
“market value” on it. Whatever it cost Delta, or whatever a person who wished to go on such a trip
would have had to pay for it, does not constitute an amount which can be said to have money’s worth
in Stander’s hands.’
[15] The views of the learned Judge President are contrary to what this court had
previously held in the People’s Stores case, restated in Cactus Investments. The
passage in Cactus Investments has already been quoted in para [11] above:
according to that decision, all that is required is that rights of a non-capital nature
‘are capable of being valued in money’. The relevant passage in the People’s Stores
case19 is the following:
‘It must be emphasised that income in a form other than money must, in order to qualify for inclusion
in the “gross income”, be of such a nature that a value can be attached to it in money. As Wessels CJ
said in the Delfos case20 supra at 251:
“The tax is to be assessed in money on all receipts or accruals having a money value. If it is
something which is not money’s worth or cannot be turned into money, it is not to be regarded as
income.”
(See also Mooi v Secretary for Inland Revenue21 (supra at 683A-F).) On the other hand, the fact that
the valuation may sometimes be a matter of considerable complexity (cf the Lace Proprietary Mines
case22 supra at 279-81) does not detract from the principle that all income having a money value must
be included.’
It is clear from the passage quoted from the judgment of Hefer JA, as well as the
passage quoted by him from the judgment of the Chief Justice in the Delfos case,
that the question whether a receipt or accrual in a form other than money has a
18 Of the definition of gross income which includes ‘any amount, including any voluntary award,
received or accrued in respect of services rendered . . . or any amount (other than an amount
referred to in s 8(1)) received or accrued in respect of or by virtue of any employment or the holding of
any office . . .’.
19 At 364G-J.
20 Commissioner for Inland Revenue v Delfos 1933 AD 242.
21 1972 (1) SA 675 (A).
22 Lace Proprietary Mines Ltd v Commissioner for Inland Revenue 1938 AD 267.
money value is the primary question and the question whether such receipt or
accrual can be turned into money is but one of the ways in which it can be
determined whether or not this is the case; in other words, it does not follow that if a
receipt or accrual cannot be turned into money, it has no money value. The test is
objective, not subjective. It is for that reason that the passages quoted from the
Stander case incorrectly reflect the law and the reasoning of Conradie J in ITC 701
was correct. The question cannot be whether an individual taxpayer is in a position
to turn a receipt or accrual into money. If that were the law, the right to live in a
house rent-free, or to drive a motor vehicle without paying for it, for example, could
be rendered tax-free by the simple expedient of limiting the right to exercise such
benefit to the recipient ─ which manifestly is not the case.
[16] Nor is the decision of the House of Lords in the Tennant case authority for the
companies’ argument. That case turned on the provisions of the income tax
legislation applicable in England at the time, which were very different from the
meaning which this court has held must be given to the definition of gross income in
the South African statute. The position as it was in England appears from the
following passage in the speech of Halsbury LC:23
‘Now, Mr. Tennant occupies this house without paying any rent for it. It may be conceded that if he did
not occupy it under his contract with the bank rent free, he would be obliged to hire a house
elsewhere, pay rent for it, and pro tanto diminish his income. And if any words could be found in the
statute which provided that besides paying income tax on income, people should pay for advantages
or emoluments in its widest sense (such as I think the word “emoluments” here has not, for reasons to
be presently given), there is no doubt of Mr. Tennant’s possession of a material advantage, which
makes his salary of higher value to him than if he did not possess it, and upon the hypothesis which I
have just indicated would be taxable accordingly.’
The law in South Africa appears from the following passage in the People’s Stores
case:24
‘The first and basic proposition [in Lategan’s case25] is that income, although expressed as an
amount26 in the definition, need not be an actual amount of money but may be
23 At 155.
24 At 363I-364C.
25 Above, n 6.
26 Emphasis in the original.
“every form of property earned by the taxpayer, whether corporeal or incorporeal, which has a money
value . . . including debts and rights of action”
(per Watermeyer J at 209).
This proposition is obviously correct so that very little need be added to what Watermeyer J himself
said in support thereof. It is hardly conceivable that the Legislature could not have been aware of, or
would have turned a blind eye to, the handsome profits often reaped from commercial transactions in
which money is not the medium of exchange. Consider, for example, the many instances of valuable
property changing hands, not for money, but for shares in public or private companies; or share-
cropping agreements, dividends in the form of bonus shares, or remuneration for services in the form
of free or subsidised housing27 and the use of motor vehicles. These are only a few of the many
possible illustrations that readily come to mind and which, as we know, have not been overlooked by
the Legislature.’
[17] Counsel for the companies submitted that the phrase relating to free or
subsidised housing that I have emphasised in the passage just quoted from the
People’s Stores case and the further statement that such a benefit has ‘not been
overlooked by the Legislature’ must be taken as a reference to paragraph (i) of the
definition of gross income28 and to the Seventh Schedule to the Act; and that unless
a benefit of the nature contemplated falls within those provisions, it is not taxable. I
cannot agree. Those provisions were inserted into the Act not because such benefits
are not otherwise taxable, but to put beyond doubt what benefits are taxable and,
equally importantly, to determine how their value is to be assessed for the purpose of
calculating the tax to be deducted by an employer from an employee’s
remuneration.29 It is clear from the People’s Stores and Cactus Investments cases
that the word ‘amount’ in the definition of gross income is to be interpreted widely.
[18] The Tax Court held that the companies received no monies on loan which
were used to produce any income, and that the Commissioner had therefore
assessed the companies on notional income. It is true that had the companies
27 Emphasis supplied.
28 ‘(i) [T]he cash equivalent, as determined under the provisions of the Seventh Schedule, of the value
during the year of assessment of any benefit or advantage granted in respect of employment or to the
holder of any office, being a taxable benefit as defined in the said Schedule, and any amount required
to be included in the taxpayer’s income under section 8A.’
29 In terms of the Fourth Schedule to the Act.
invested the amounts lent, the income so derived would also have formed part of
their gross incomes. But that is beside the point. The Commissioner did not seek to
tax the companies on this basis. Nor is the fact that the companies were unable to
make such investments but were obliged to use the loans for the purposes of
developing the units relevant, as submitted on behalf of the companies. The
Commissioner taxed the companies on the basis of the benefit consisting in the right
to use the loans without having to pay interest on them. That benefit remained,
whatever the companies did or did not do with the loans. Furthermore, no question of
double taxation would arise, as suggested on behalf of the companies, if the
amounts lent were to have been invested so as to produce interest ─ in such a case
there would be two separate and distinct receipts or accruals, each of which would
fall to be included in the companies’ gross incomes.
[19] The Tax Court also held that the benefit included by the Commissioner in the
companies’ gross incomes had no existence independent from the liability to repay
the monies borrowed; that it could not be transferred or ceded; and that it ‘clearly has
no money value’. This reasoning loses sight of the fact that if a right has a money
value ─ as the right in question did, for the reasons I have given ─ the fact that it
cannot be alienated does not negate such value. The contrary view articulated in
Stander’s case is wrong.
[20] I therefore conclude that the first ground of appeal raised by the companies
should have been dismissed by the Tax Court. The second ground of appeal, that
the Commissioner was precluded by s 79(1) from issuing the further revised
assessments, concerns Brummeria only and is limited to the tax years 1996 to
1999.30 The chronology relevant to this question is the following:
(a)
On 13 March 2000 the Commissioner issued original assessments to
Brummeria for the 1996, 1997, 1998 and 1999 years of assessment.
(b)
On 3 March 2002 the Commissioner issued revised assessments. The basis
30 Although the notice of appeal refers also to the 2000 year of assessment, counsel for Brummeria
did not pursue the argument in regard to this year.
of these revised assessments was that the interest-free loans received in exchange
for the granting of occupation rights constituted ‘gross income’.
(c)
In terms of a letter dated 19 April 2002 Brummeria objected to the revised
assessments inter alia on the ground that the amounts borrowed by it were not
received by and did not accrue to it for the purposes of the definition of gross
income.
(d)
On 1 July 2004 and consequent upon the objection the Commissioner issued
further revised assessments ─ the assessments with which this appeal is concerned.
The basis of these assessments, as I have already said, was that the value of the
benefit of the right to utilise the amounts lent without paying interest, constituted
gross income.
[21] The relevant provisions of ss 79(1), 81(4) and (5) of the Act read at the time
as follows:
‘79(1) If at any time the Commissioner is satisfied ─
(a)
that any amount which was subject to tax and should have been assessed to tax under this
Act has not been assessed to tax; or
(b)
that any amount of tax which was chargeable and should have been assessed under this Act
has not been assessed; or
(c)
. . .
he shall raise an assessment or assessments in respect of the said amount or amounts,
notwithstanding that an assessment or assessments may have been made upon the person
concerned in respect of the year or years of assessment in respect of which the amount or amounts in
question is or are assessable, and notwithstanding the provisions of sections 81(5) and 83(18):
Provided that the Commissioner shall not raise an assessment under this subsection ─
(i)
after the expiration of three years from the date of the assessment (if any) in terms of which
any amount which should have been assessed to tax under such assessment was not so assessed or
in terms of which the amount of tax assessed was less than the amount of such tax which was
properly chargeable, unless the Commissioner is satisfied that the fact that the amount which should
have been assessed to tax was not so assessed or the fact that the full amount of tax chargeable was
not assessed, was due to fraud or misrepresentation or non-disclosure of material facts. . .’.
‘81(4) The Commissioner may on receipt of a notice of objection to an assessment alter the
assessment or may disallow the objection and shall send to the taxpayer or his or her representative
notice of such alteration or disallowance, and record therein any alteration or disallowance made in
the assessment.
(5)
Where no objections are made to any assessment or where objections have been allowed in
full or withdrawn, such assessment or altered assessment, as the case may be, shall be final and
conclusive.’
[22] Section 81(5) deals with three situations:
(a)
Where no objections are made to any assessment; the assessment then
becomes final and conclusive.
(b)
Where objections are made but have been withdrawn; the assessment then
similarly becomes final and conclusive.
(c)
Where objections are made and have been allowed in full; the altered
assessment then becomes final and conclusive.
[23] Broadly stated, the effect of s 79(1) read with s 81(5) is as follows. In the
circumstances contemplated in paragraphs (a), (b) and (c) of the former section, the
Commissioner is obliged to raise an assessment:
(a)
even if previous assessments have been made and
(b)
even if
(i)
no objections are made to any assessment
(ii)
objections have been allowed in full or
(iii)
objections have been withdrawn;
but the Commissioner may not do so if the defined three year period has elapsed,
unless he is satisfied that there was fraud, misrepresentation or non-disclosure. In
other words, if (inter alia) an objection is allowed in full and the three year period has
elapsed, the Commissioner cannot raise an assessment (absent fraud or one of the
specified irregularities).
[24] Counsel for Brummeria submitted that the Commissioner, in changing the
basis of assessment in the first revised assessments pursuant to its objection,
allowed its objection in full as contemplated in s 81(5); that the further revised
assessments, to the extent that they set aside the revised assessments, had the
effect of reinstating the original assessments; that because three years had elapsed
since the original assessments had been issued, those assessments had become
final and conclusive as contemplated in s 81(5); and that s 79(1) accordingly
precluded the Commissioner from raising the assessments which he did in the
further revised assessments.
[25] The Commissioner’s counsel submitted that the Commissioner was entitled to
alter the revised assessments by issuing the further revised assessments as this
was done after receipt of an objection and s 81(4) in terms permits him ‘on receipt of
a notice of objection to an assessment’ to ‘alter the assessment’; and further, that the
three year period contemplated in s 79(1) ran not from the date of the original
assessments, but from the date of the revised assessments (which was less than
three years before the further revised assessments were issued).
[26] It seems to me that these competing contentions must be resolved by having
regard to the purpose underlying ss 79(1) and 81(5), which is obviously to achieve
finality. To uphold either of the Commissioner’s contentions would undermine that
purpose. It is obviously in the public interest that the Commissioner should collect tax
that is payable by a taxpayer. But it is also in the public interest that disputes should
come to an end ─ interest reipublicae ut sit finis litium; and it would be unfair to an
honest taxpayer if the Commissioner were to be allowed to continue to change the
basis upon which the taxpayer were assessed until the Commissioner got it right ─
memories fade; witnesses become unavailable; documents are lost. That is why
s 79(1) seeks to achieve a balance: it allows the Commissioner three years to collect
the tax, which the legislature regarded as a fair period of time; but it does not protect
a taxpayer guilty of fraud, misrepresentation or non-disclosure. If either of the
Commissioner’s arguments were to be upheld, this balance would be unfairly tilted
against the honest taxpayer.
[27] In my view, 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 for the
tax years 1996, 1997, 1998 and 1999 which he did in the further revised
assessments.
[28] Counsel representing the companies sought to raise a further issue, namely,
that the Commissioner’s refusal to direct that interest should not be paid by the
companies on the tax attributable to the inclusion of the value of the right to use the
amounts of the loans without paying interest (as he has the power to do in terms of
s 89 quat) should be set aside (in terms of s 89 quat (5)). This issue can be disposed
of relatively briefly and on the same basis as the argument put forward on behalf of
the companies that the right included in their taxable incomes was of a capital
nature. To repeat: the point was not raised in the grounds of appeal; neither of the
procedures contemplated in tax rule 13 was followed; and the point cannot be raised
now.
[29] Finally, there is the question of costs. Although there was one composite
record and although the companies were each represented by the same counsel,
there were in reality three appeals. There were four discrete issues, three relating to
all three companies and one just to Brummeria. Palms and Randpoort lost on all of
the issues relating to them and in those appeals, costs must follow the result.
Brummeria on the other hand lost on three issues but succeeded on one, the s 79(1)
issue. Less time was spent on that issue than on the other issues, but the effect of its
success on that issue is that the assessments for four of the five years of
assessment raised against it will be set aside with a consequent reduction in liability
for tax from R6,47m to R900 000. In Protea Assurance Co Ltd v Matinise31 the
appellant raised four distinct issues on appeal.32 It succeeded on only one issue.33
31 1978 (1) SA 963 (A).
32 Tabulated at 970H-in fine.
33 The respondent was deprived of one third of his trial costs: 977G-in fine.
Instead of making cross-orders as to costs, this court made a partial order in favour
of the litigant who had enjoyed the greater measure of success on appeal ─ it
ordered the appellant to pay two-thirds of the appeal costs of the respondent.34 A
similar course was followed in Community Development Board v Mahomed & Others
NNO35 where a provisional order was made requiring the partially successful
appellant to pay one half of the respondent’s appeal costs.36 In the present matter it
seems to me that justice would be served if the Commissioner were to be ordered to
pay two-thirds of Brummeria’s costs of appeal. Two counsel were briefed by the
Commissioner and the companies and this was in my view justified.
[30] The following order is made:
1.1
The appeal succeeds against the first respondent to the limited extent that the
order of the Tax Court is altered to read:
‘Save in respect of the 2000 year of assessment, the appeal is allowed and the
further revised assessments of 3 March 2002 for the years 1996, 1997, 1998 and
1999 are set aside. The appeal against the 2000 year of assessment is dismissed.’
1.2
The Commissioner is ordered to pay two-thirds of the first respondent’s costs
of appeal in this court including the costs of two counsel.
2.1
The appeal succeeds against the second respondent and the order of the Tax
Court is altered to read:
‘The second appellant’s appeal is dismissed.’
2.2
The second respondent is ordered to pay the appellant’s costs of appeal in
this court which related to the appeal against it, including the costs of two counsel.
3.1
The appeal succeeds against the third respondent and the order of the Tax
Court is altered to read:
‘The third appellant’s appeal is dismissed.’
34 At 978A-C.
35 1987 (2) SA 899 (A) at 919F-920B. See also Hollywood Curl (Pty) Ltd v Twins Products (Pty) Ltd
(1) 1989 (1) SA 236 (A) at 253I-254G.
36 This order was subsequently made final: See the Hollywood Curl case above, n 35 at 254F.
3.2
The third respondent is ordered to pay the appellant’s costs of appeal in this
court which relate to the appeal against it, including the costs of two counsel.
______________
T D CLOETE
JUDGE OF APPEAL
Concur: Scott JA
Van Heerden JA
Kgomo AJA
Mhlantla AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
13 September 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE v
BRUMMERIA RENAISSANCE (PTY) LTD & OTHERS
1.
Three
companies,
Brummeria
Renaissance
(Pty)
Ltd,
Palms
Renaissance (Pty) Ltd and Randpoort Renaissance (Pty) Ltd developed
retirement villages. The companies obtained interest-free loans in order to
build units in exchange for granting life occupation rights of the units to the
lenders. The Commissioner, SARS assessed the companies to tax,
contending that the right to use the loans interest-free had a money value and
therefore formed part of the companies’ taxable income. The Commissioner’s
contention was dismissed by the Johannesburg Tax Court but upheld on
appeal. The SCA held that although a loan was not income, the value of the
right to use a loan interest-free was.
2.
The SCA also held that where the Commissioner had raised an original
assessment, and thereafter a revised assessment to which the taxpayer had
successfully objected in full, the Commissioner could not raise a further
assessment more than three years after the original assessment (absent
fraud, misrepresentation or non-disclosure of material facts).
--ends--
|
120
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1185/2016
In the matter between:
DRIFT SUPERSAND (PTY) LIMITED
APPELLANT
and
MOGALE CITY LOCAL MUNICIPALITY FIRST RESPONDENT
GREENVILLE GARDENS CC SECOND RESPONDENT
Neutral citation: Drift Supersand (Pty) Ltd v Mogale City Local Municipality
(1185/2016) [2017] ZASCA 118 (22 September 2017)
Coram:
Navsa ADP, Leach and Petse JJA and Molemela and Mokgohloa
AJJA
Heard:
21 August 2017
Delivered: 22 September 2017
Summary: Administrative law - Town Planning and Townships Ordinance 15
of 1986 – owner of land in close proximity to proposed township having
standing as an interested person to challenge establishment of township.
Fairness of procedure to approve township – breach of legitimate expectation of
a hearing by municipal tribunal – procedure inherently unfair in various
respects.
Party excluded from process not obliged to pursue internal appeal against such
decision before seeking to review the administrative action taken.
Procedure – striking out – court required to exercise practical, common sense
and flexible approach in considering whether allegations made in reply need be
struck out – cross-appeal relating to the failure to strike out an incontrovertible
fact which was in any event not relied upon to decide the merits of the dispute –
cross-appeal dismissed.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Coetzee AJ sitting as court of first instance):
The appeal succeeds with costs, including the costs of two counsel.
The order of the court a quo is set aside and is replaced with the
following:
‘(a)
The first respondent’s approval on or about 28 August 2012 (acting
through its executive mayor) of the application for the establishment of a
township to be known as Greengate Extension 24 Township on Portion 33 (a
portion of Portion 6) of the farm Roodekrans 183 IQ, is set aside.
(b)
The respondents are to pay the applicant’s costs, including the costs of
two counsel, jointly and severally, the one paying the other to be absolved.’
The second respondent’s cross-appeal is dismissed, and the second
respondent is ordered to pay the appellant’s costs relating thereto.
________________________________________________________________
JUDGMENT
________________________________________________________________
Leach JA (Navsa ADP, Petse JA and Molemela and Mokgohloa AJJA
concurring)
[1] During August 2012, after a process that had been initiated some six
years previously, the first respondent, the Mogale City Local Municipality (the
Municipality) approved an application of the second respondent to establish a
township on a piece of immovable property known as Portion 33 (a portion of
Portion 6) of the farm Roodekrans 183 IQ (the subject property). The appellant,
a nearby landowner, thereafter applied to the Gauteng Local Division,
Johannesburg for an order, inter alia, reviewing and setting aside the
Municipality’s decision to approve the establishment of this township. Its
application was dismissed and it appeals to this Court with leave of the court a
quo. Also before us is a cross-appeal by the second respondent against the court
a quo’s refusal to strike out certain factual allegations made by the appellant in
its replying affidavit.
[2] It is common cause that the appellant is the registered owner of three
pieces of immovable property known, respectively, as the remainder of Portion
79, the remainder of Portion 80, and Portion 116 of the farm Roodekrans 183
IQ. For convenience I intend to refer to these properties either as Portion 79, 80
and 116 respectively or, collectively, as ‘the appellant’s property’. They are
contiguous with each other and in the immediate vicinity of both the subject
property, Portion 33, and the property known as Portion 81 of the farm
Roodekrans 183 IQ. The latter property, which is also owned by the appellant
(although the appellant’s allegation to this effect forms part of the striking out
application and the cross-appeal) borders on both Portion 80 and the subject
property. According to the Municipality, the subject property is at its closest
point some 50 metres from Portion 80 and about 350 metres from the furthest
point the appellant’s property. The position of these various properties in
relation to each other is set out in the plan below:1
1 This has been prepared from the plan annexure EDJ28 to the Municipality’s answering affidavit.
[3] The appellant’s property (ie Portions 79, 80 and 116) is a so-called
‘mining area,’ in respect of which a mining right was granted under s 9 of the
Minerals Act 50 of 1991 to a wholly owned subsidiary of the appellant, Drift
Supersand Mining (Pty) Ltd (Supersand Mining). This was an ‘old order mining
right’ as referred to in the Mineral and Petroleum Resources Development Act
28 of 2002. In March 2012, it was converted into a mining right for a period of
one year under item 7 of Schedule II of the latter Act. In April 2013 that period
was extended to 25 years. The appellant, in reply, stated that although the
mining right had been granted to Supersand Mining, it had at all material times
exercised that right under a verbal agreement it had concluded with Supersand
Mining. In doing so it operates an open cast mine, quarrying sand and gravel.
This involves the blasting and crushing of rock.
[4] The appeal to this Court has a long and drawn out history commencing
some 11 years ago, when, in September 2006, the second respondent applied to
the Municipality to establish a township on the subject property. In its papers
the appellant had sought to impugn the decision to approve the township
application on the strength of various contentions. Inter alia, it argued that the
decision had been irrational; that there had been a failure to evaluate all relevant
facts and considerations; and that the decision was wholly unreasonable, had
been arbitrary or capricious and had been taken for an ulterior purpose, namely,
to generate greater revenue. In this Court, however, the appellant essentially
confined itself to contending that the ultimate approval of the second
respondent’s application was the product of a procedurally unfair process in
breach of s 3 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
which was reviewable under s 6(2)(c) of that Act. In the light of this, it becomes
necessary to examine the circumstances under which the Municipality came to
approve the second respondent’s application.
[5] The relevant history of the application is as follows:
(a)
In its initial form, the second respondent’s application proposed the
development of a township on the subject property having 25 dwelling units per
hectare, a floor area ratio of 0,6 and a building coverage of 40 per cent.
However, in March 2007, the second respondent amended the application in
order to increase the density to 60 dwelling units per hectare, with concomitant
increases in both the floor area ratio and the building coverage. It was in this
amended form that the application came to be approved. For convenience I shall
refer to it simply as the ‘township application’.
(b)
The township application was made to the Municipality under the
provisions of s 69 of the Town Planning and Townships Ordinance No 15 of
1986 (the Ordinance),2 ss 69(1) and (2) of which prescribe that any landowner
who wishes to establish a township may apply in writing to the relevant local
authority to do so, and provide certain prescribed information and
documentation. The section then goes on to lay down a consultative procedure
to be followed to obtain objections, views and comments from various persons
and entities before a final decision is taken in regard to a new township
development.
(c)
As part of this process, s 69(6)(a) of the Ordinance provides that on
receipt of an application to establish a township in prescribed form, ‘the local
authority may, in its discretion, give notice of the application by publishing
once a week for two consecutive weeks a notice in such form and such manner
as may be prescribed’. In compliance with this, on 18 and 25 April 2007 a
notice of the township application was published in both the Provincial Gazette
and newspapers sold in the district, calling for written objections to the
proposed township to be filed with the Municipality by 16 May 2007.
2 A provincial Ordinance of the former province of Transvaal, the administration of which was assigned to the
province of Gauteng with effect from 31 October 1994.
(d)
It is not disputed that these notices did not come to the appellant’s
attention. It came to learn of the application only several months later, in
August 2007, during the course of a public participation process being
undertaken by the second respondent under the National Environmental
Management Act 107 of 1998 (NEMA) in order to obtain environmental
approval for the township.
(e)
On hearing of the application, the appellant immediately took steps to
oppose it. On 17 August 2007, in a four page letter, annexure JH5 to the
appellant’s founding affidavit, the appellant’s attorneys wrote to the
Municipality detailing the appellant’s objection to the proposed development
and arguing that for various reasons based on the appellant’s nearby quarrying
operations, the proposed township was ‘simply inappropriate and should be
avoided’. I shall return to this letter in due course.
(f)
It is common cause that JH5 was received by the Municipality’s chief
town planner, Mr Van Wyk, to whom the Municipality had delegated
responsibility for handling the proposed township application. However, the
Municipality failed to respond to it.
(g)
Indeed nothing relevant appears to have been done by the Municipality
until 3 March 2008 when, in purported compliance with the provisions of
section 69(6)(b) of the Ordinance (again, a section that I shall refer to later in
more detail), it forwarded copies of the application to various government
departments, local authorities and functionaries, inviting their comment on the
proposed development within 60 days. Why this was only done almost a year
after the publication of the notices under s 69(6)(a) is a mystery unexplained on
the papers.
(h)
A few days later, on 7 March 2008, the Municipality circulated the
township application to five persons whom it perceived to be the owners of the
various properties bordering the subject property, and called on them to lodge
any comments and representations they might have in respect of the proposed
development by 7 April 2008. This was done under a municipal policy that had
been in place since 1998 (the Policy) which regulated the procedure to be
implemented in relation to town planning and township establishment
applications. Inter alia, this Policy provides that in the case of a party applying
under the Ordinance to establish a township, the application ‘be advertised in
the press as prescribed and the consent of the adjoining property owners be
obtained’.
(i)
The Municipality’s records reflected an S Fourie as being the owner of
Portion 81 and, on 7 March 2008, a copy of the application was accordingly
addressed to such a person. However, as appears from the title deeds of Portion
81 attached to the appellant’s replying affidavit, no person named S Fourie was
or had been an owner of that property. In 2003 Portion 81 had been registered
in the name of E M Fourie and S Strydom who, in 2005, had transferred it to a
company, Yellow Star Prop 103 (Pty) Ltd. Thereafter, on 31 August 2007,
Portion 81 was transferred to the appellant (this too is an issue to which I shall
return when dealing with the cross-appeal).
(j)
In any event, what is apparent from this is that the appellant’s objection to
the township development, seemingly prepared without sight of the township
application or the second respondent’s representations in that regard, had been
received by the Municipality well before it delivered copies of the township
application to the adjoining landowners and called for their comments.
(k)
After the notices of March 2008, proceedings relating to the proposed
development moved at the pace of a snail. It is undisputed that after delivering
the letter of objection JH5, the appellant’s attorneys periodically liaised with the
Municipality on whether there had been any movement in regard to the
township application, although quite what passed between them, or between any
of the other interested parties for that matter, is not clear from the papers. But in
2011, more than three years later, certain significant events took place.
(l)
First, on 1 June 2011 a representative of the appellant’s attorneys,
Mr Gonsalves, telephonically discussed the proposed development with Mr Van
Wyk, who told him that the township application had not yet been approved as
the second respondent’s basic assessment report under NEMA was still being
awaited. Mr Gonsalves alleges Mr Van Wyk went on to inform him that as a
result of its objection, the appellant had been duly placed on record as an
interested and affected party; that the township application would therefore be
referred to a tribunal for hearing; and that the appellant would be notified and
invited to attend the tribunal hearing when it was held. Two days later, on 3
June 2011, a consultant in the appellant’s firm of attorneys, Mr Athienides,
confirmed these arrangements in a letter, annexure JH7 to the founding
affidavit, that was telefaxed to Mr Van Wyk. The Municipality admits that this
letter was received and does not dispute that it did not reply. I shall return to this
aspect in greater detail below.
(m)
Secondly, the appellant’s attorneys had been in contact with the
Department of Mineral Resources regarding the proposed development. In a
letter dated 14 February 2011, the Department’s regional manager had informed
an environmental management consultant employed by the second respondent
that ‘the proposed township is unlikely to impede the objects of the Mineral and
Petroleum Resources Development Act at this time’ and that approval under s
53 of that Act had been granted for a period of five years. However, the
Department changed its stance. In a letter to the attorneys dated 26 September
2011, it stated:
‘2
The proposed area is adjacent to Drift Supersand and 400 metres north east from W G
Wearne (Pty) Ltd sand mine. Mining is being conducted by means of explosives. A provision
of 1000 metres buffer zone from the abovementioned mines has to be implemented.
It is likely that the aforementioned township will impede the objects of the Mineral
and Petroleum Resources Development Act, in terms of the Provision of section 53 of the Act
and the approval of the Minister has not been granted for the proposed township.’
(n)
I must record that subsequently, after the disputed decision of the
Municipality to approve the township application, the Department seems to
have changed its position yet again to grant approval but, for present purposes,
nothing turns on this. What is relevant is that on 17 November 2011 the
appellant’s attorney forwarded the Department’s letter of 26 September 2011 to
the Municipality and advised that, in the light of its contents ‘we are of the view
that the environmental authorisation of the proposed township can no longer
proceed’. Once more, the Municipality does not appear to have responded.
(o)
Be that as it may, it is of some importance that during the course of 2011
the Municipality adopted an integrated development plan as envisaged by s 35
of the Local Government: Municipal Systems Act 32 of 2000 (the Systems
Act). This included a so-called Precinct Plan for the Muldersdrift Development
Zone into which the subject property falls (Precinct Plan). Section 7.3 of the
Precinct Plan sets out environmental guidelines in which it is recorded that a
quarry increases the risk of dust pollution and poses the danger of sinkholes
developing, and states that any development adjacent to a quarry should
therefore be required to observe a buffer zone of 750 metres.
(p)
Thereafter, on 18 May 2012, Mr Van Wyk prepared a report on the
development to be submitted to what was referred to as ‘the municipal section
80 committee’ – presumably a committee appointed in terms of s 79, read with s
80 of the Local Government: Municipal Structures Act 117 of 1998, to assist the
executive mayor. Mr Van Wyk recorded in this report, JH24 to the appellant’s
replying affidavit, that the application had been duly advertised and that no
objections or representations had been received against the application, which
was therefore unopposed. This flew in the face of the appellant’s unchallenged
statement concerning the discussion between Mr Van Wyk and Mr Gonsalves,
as recorded in the letter JH7. Interestingly, the report also states that the
township application ‘is in line with the latest planning policies of the relevant
authority’, a statement which is somewhat dubious in the light of the proposed
township falling within both the buffer zone for quarries recently imposed in the
Precinct Plan and the 1000 metres buffer zone insisted on by the Department of
Mineral Resources in its letter of 26 September 2011.
(q)
In due course JH24 was placed before the section 80 committee, which
approved it and recommended that the township development be approved.
Presumably, although no affidavit from him or her was forthcoming, the
executive mayor then relied on JH24 and the section 80 committee’s
recommendation, to approve the township application on 28 August 2012. It is
common cause that, despite the terms of the letter JH7 and what the appellant
alleges Mr Van Wyk had said on 1 June 2011, the matter was not referred to a
tribunal for hearing at any stage before this decision was taken.
[6] No more need be said in regard to the history of the second respondent’s
application to establish a township on the subject property. More than a month
after the application had been approved in this way, and in response to a letter
written to Mr Van Wyk on behalf of the appellant on 1 October 2012 requesting
‘an update regarding the status of the above mentioned township application’,
the Municipality informed the appellant of the executive mayor’s decision. In
due course, in March 2013, the appellant proceeded to institute proceedings in
the court a quo seeking to have that decision reviewed and set aside.
[7] It is accepted by all parties that the decision to approve the township
application constituted an ‘administrative action’ by an organ of state as
contemplated by PAJA, being one ‘which adversely affects the rights of any
person and which has a direct, external legal effect . . .’3 Section 3(1) of PAJA
goes on to require that ‘[a]dministrative action which materially and adversely
affects the rights or legitimate expectations of any person must be procedurally
fair’. As already mentioned, the appellant seeks to review the Municipality’s
decision on the basis that it was the result of a process that was not procedurally
fair and therefore breached this requirement.
[8] In Joseph & others v City of Johannesburg & others,4 the Constitutional
Court observed that ‘a finding that the rights of the applicants were not
materially and adversely affected would have the result that s 3 of PAJA would
not apply’.5 Seizing on this, and relying upon the appellant’s explanation in
reply that its wholly owned subsidiary, Supersand Mining, to whom the mining
right had been granted, had authorised it to exercise the right to mine on its
behalf, the respondents argued that any rights likely to be affected by a
township being developed nearby the quarry were not those of the appellant but
its subsidiary. They therefore argued that whilst its subsidiary may have had
standing to review the executive mayor’s decision, the appellant did not.
[9] In the light of this, I turn at the outset to consider the question of
standing. In addition to that which I have already mentioned, the respondents
also argued that the allegation that the appellant was quarrying in terms of an
agreement with Supersand Mining lacked detail and cogency and that, as this
3 See the convoluted definition of ‘administrative action’ in s 1 of PAJA.
4 Joseph & others v City of Johannesburg & others [2009] ZACC 30; 2010 (4) SA 55 (CC).
5 Para 27D.
had emerged in reply, the appellant had impermissibly tried to make out its case
in reply. They therefore submitted that the appellant’s allegations in reply
should either be ignored or struck out.
[10] There is in my view no merit in any of this. As this Court recently stated
in Lagoon Beach,6 not only must a court exercise practical, common sense in
regard to striking out applications but there is today a tendency to permit greater
flexibility than may previously have been the case to admit further evidence in
reply. Consequently, as stated in Nkengana,‘if the new matter in the replying
affidavit is in answer to a defence raised by the respondent and is not such that
it should have been included in the founding affidavit in order to set out a cause
of action, the court will refuse an application to strike out’.7 The appellant’s
case was always that it was the person who was carrying out the mining
activities on its property. As proof of that, it attached to its founding affidavit
the mining right granted to Supersand Mining. In their answering affidavits the
respondents contended that the appellant’s mining activities were illegal as it
was not the person to whom the mining right had been granted. It was in order
to rebut this that the appellant explained in reply that it was conducting its
activities on behalf of Supersand Mining in terms of an agreement between
them. This was merely a gloss on what it had set out in its founding affidavit. It
was not seeking to make out a fresh cause of action in reply, and there is no
reason either to strike out the explanation made in reply or to ignore it.
[11] Moreover, the respondents’ argument on this issue seeks to limit the
rights of the appellant which were potentially adversely affected by the decision
solely to those associated with the mining activities being conducted on its
6 Lagoon Beach Hotel (Pty) Ltd v Lehane NO & others [2015] ZASCA 210; 2016 (3) SA 143 (SCA) para 16.
7 Nkengana & another v Schnetler & another [2010] ZASCA 64; [2011] 1 All SA 272 (SCA) para 10.
property. This is both a strained and unnecessary limitation. Whilst the
appellant, as owner of the property, has indeed permitted mining activities on its
property, it would be wrong to regard those activities as being the only legal
rights to which regard can be had in considering whether the establishment of a
township in the immediate vicinity impacts upon the appellant’s rights as
owner. Adopting the phraseology of this Court in JDJ Properties8 the appellant,
as owner, had the ‘right to safeguard the amenity of [its] immediate
neighbourhood’9 which would be potentially affected by a decision to allow a
township to be developed in the immediate vicinity of its quarry. In that case,
the owner of land had sought to review a municipality’s approval of building
plans. This Court held that the owner, as a person in whose interest a town
planning scheme had been enacted, had the necessary standing to do so. It
referred with approval10 to the decision in BEF (Pty) Ltd v Cape Town
Municipality & others11 in which it had been held that a person living in an area,
generally speaking, has the right to take legal steps to enforce compliance with a
town planning scheme. (Although the court in BEF went on to say that it ‘would
not like to assert dogmatically that such a remedy would be available to all
persons living in the area covered by a scheme as large as that of Cape Town’
that was not an issue on which it had to engage as the case involved ‘an
immediate neighbour to the property on which the non-conforming garage was
built’.)12
[12] In the present case, as I have already pointed out, not only is the subject
property in the immediate vicinity of the appellant’s property, but at first blush
the approval granted by the Municipality offends the buffer zone of its own
8 JDJ Properties CC & another v Umngeni Local Municipality & another [2012] ZASCA 186; 2013 (2) SA 395
(SCA).
9 Para 21.
10 Para 32.
11 BEF (Pty) Ltd v Cape Town Municipality & others 1983 (2) SA 387 (C).
12 BEF at 401E-F.
Precinct Plan that forms part of the Municipality’s integrated development plan
adopted under the Municipal Systems Act. A municipality is bound in the
exercise of its executive authority (which was so exercised in approving the
township application) by s 35(1)(b) of the Municipal Systems Act. In addition,
s 36 of that Act goes on to provide that a municipality ‘must give effect to its
integrated development plan and conduct its affairs in a manner which is
consistent with its integrated development plan’.
[13] The Municipality avers that this buffer zone was only introduced several
years after the second respondent had lodged its application and notice thereof
had been advertised in November 2006 and April 2007. If this was an attempt to
evade the applicability of the integrated development plan to the township
application, it must be rejected. If the buffer requirement was introduced before
the application was considered, it clearly had to be taken into account in
considering whether the application should be approved.
[14] The Municipality also contended that the dimensions of the buffer zone in
the Precinct Plan were not binding and operated only as a guideline. Even if this
is correct, however, the closer a proposed township development is to a quarry,
the greater the imperative for the guideline to be observed, especially where, as
here, the effects of blasting rock and related quarrying activities are likely to
have potentially substantial adverse effects on nearby residents. As the
appellant’s property at its furthest point is less than half the prescribed width of
the buffer zone from the subject property, and only some 50 metres away at its
closest, there was every reason to take the Precinct Plan recommendation
relating to the buffer zone into account. In these circumstances, even should the
binding nature of the buffer zone and whether it ought to have been taken into
account be matters of debate, the appellant was entitled to have its voice heard
in determining the outcome of that debate.
[15] As I understood the respondents, they sought to buttress their argument in
regard to the appellant’s alleged lack of standing by contending that the
appellant was not an ‘interested party’ as envisaged under its Policy to whom
notice or a copy of the application had to be given – and that accordingly the
appellant lacked standing to seek to review the approval of the township
application. Although this contention is also relevant to the aspect to whether
the approval of the township application involved a fair administrative process,
an aspect to which I shall return, it is convenient to deal with it at this stage.
[16] At its outset the Policy provides that ‘the various procedures to notify
adjoining property owners on town planning applications as depicted by
different legislation, be noted’. It goes on to state ‘that due to the subjective
nature of the word “interested party/parties” the terms “interested parties” and
“adjoining property owners” used in the Policy – and presumably the relevant
legislation – be defined as “the owner/occupant of any land” abutting or sharing
a common boundary with such land (specifically including any land which is
only separated by road) and to any other person who may in the opinion of the
authorised local authority, be directly affected by the application’(my
emphasis.) As already mentioned, the Policy then provides that in the case of an
application under the Ordinance to establish a township, the application ‘be
advertised in the press as prescribed and the consent of the adjoining property
owners be obtained.’
[17] The Municipality’s argument is that as the appellant’s property did not
share a common boundary with the subject property and was neither ‘adjoining’
nor ‘adjacent’ to nor ‘abutting’ the subject property – terms used in the Policy –
the appellant was not an ‘interested party’, as envisaged by the Policy. For this
reason it also alleged that it had not been of the opinion that the appellant was
directly affected by the application. In my judgment, to uphold this would be to
allow semantic formalism to trump administrative justice. The appellant’s
property and the subject property are in the immediate vicinity of each other,
and by their very nature the mining and quarry activities upon the appellant’s
property, of which the Municipality has stressed throughout it was aware, are
wholly inimical to a nearby residential township having its closest point about
50 metres from the appellant’s property. There was, if anything, more reason to
regard the appellant as an interested party, particularly after it had lodged its
objection JH5, than any of the five adjoining neighbours who had neither
responded to the published notices nor, for that matter, to the copies of the
township application forwarded to them on 7 March 2008.
[18] In these circumstances it is nothing short of spurious for the Municipality
to allege that because the situation of its land did not precisely fit that of an
interested party as set out in the Policy, the appellant was not an interested party
and was not directly affected by the application. Under s 195(1)(e) of the
Constitution ‘the public must be encouraged to participate in policy-making’.
This Court pointed out in Koukoudis & another v Abrina 1772 (Pty) Ltd &
another13 that, in matters of local government, the right to object to the
establishment of a township forms part of a legislative scheme founded upon the
Constitution which both entitles and encourages individual members of society
13 Koukoudis & another v Abrina 1772 (Pty) Ltd & another [2016] ZASCA 95; 2016 (5) SA 352 (SCA) para 33.
to actively participate in municipal decision-taking. Further, in Joseph14 the
Constitutional Court stated that the values and principles reflected in s 191 of
the Constitution of the Republic of South Africa, 108 of 1996 oblige
government to act in a respectful and fair manner, when fulfilling its
constitutional and statutory obligations and that:
‘This is of particular importance in the delivery of public services at the level of local
government. Municipalities are, after all, at the forefront of government interaction with
citizens. Compliance by local government with its procedural fairness obligations is crucial
therefore, not only for the protection of citizens' rights, but also to facilitate trust in the
public administration and in our participatory democracy.’
[19] In the light of these authorities, the Municipality had the constitutional
obligation to attempt to ensure that regard was had to the views of all residents
within its jurisdiction whose rights might be affected before a decision was
taken in regard to the establishment of the township. To seek to regard a party
who clearly was affected by such a decision as being not ‘interested’ merely
because of a loose definition in its Policy, is inconsistent with the values a
municipality is expected to observe in the performance of its constitutional
obligations. More simply put, for the Municipality to regard a party whose
rights of ownership would clearly be affected as not being interested, is simply
unfair and unjust. The appellant clearly was a party interested in the application.
[20] Consequently, the issue whether the appellant’s financial interests or
those of its wholly owned subsidiary would potentially be adversely affected by
the approval of the township scheme, is no more than a red herring. As owner of
property situated in the immediate vicinity, the appellant clearly has standing to
question the validity of the decision to allow a township to be established on
14 Joseph fn 4 para 46.
property in the immediate vicinity of the site of its quarrying operations. This is
all the more so bearing in mind the likely adverse consequences of that activity
and the fact that the decision may well have been granted in breach of the
municipal integrated development plan.15 The court a quo was therefore correct
in holding that the appellant had standing in the review application and the
respondent’s argument to the contrary cannot succeed.
[21] Having determined that issue in favour of the appellant, I turn to deal
with the question of the fairness of the procedure adopted by the Municipality
before the township application was approved. For the reasons already
mentioned, the appellant clearly had an interest in the application. However,
whether it was an ‘interested party’ as envisaged in s 69(6)(b) of the Ordinance
is another disputed aspect which needs to be mentioned in regard to the question
of the fairness of the process adopted by the Municipality.
[22] Section 69(6)(b) of the Ordinance provides that on receipt of an
application to establish a township:
‘(b)
the local authority or the applicant with the consent of the local authority shall
forward a copy of the application to-
(i)
the [Gauteng] Roads Department;
(ii)
every local authority whose area of jurisdiction is situated within a distance of 10 km
from the land in respect of which application has been made;
(iii)
every local authority or body providing any engineering service contemplated in
Chapter V to the land contemplated in subparagraph (ii) or to the local authority
contemplated in subsection (1);
15 Compare further Esterhuyse v Jan Jooste Family Trust & another 1998 (4) SA 241 (C) at 253H-254B.
(iv)
any other department or division of the [Gauteng] Provincial Administration, any
State department which or any other person who, in the opinion of the local authority,
may be interested in the application,
and every such department, local authority, body, division or person may, within a period of
60 days from the date on which a copy of the application was forwarded to him or it, or such
further period as the local authority may allow, comment in writing thereon: Provided that an
applicant who has forwarded a copy in terms of this paragraph shall submit proof to the
satisfaction of the local authority that he has done so.’ (My emphasis.)
[23] Despite its obvious interest in the township application, the Municipality
neither forwarded a copy of the application to the appellant nor called for its
comments. It sought to justify its failure to do so by relying on the unreported
decision of A Gautschi AJ in the matter of Abseq Properties (Pty) Ltd v Maroun
Square Shopping Centre (Pty) Ltd.16 In that case, the first two respondents had
applied to establish a township and to rezone their properties in order to develop
a shopping centre and residential accommodation. The applicant, the owner of a
shopping centre situated a few 100 metres away, sought an interim interdict to
stop the township establishment process, pending determination of a declarator
for the review of certain decisions taken by the third respondent, the City of
Johannesburg, relevant to the establishment of the proposed township. As in the
present case, the applicant did not become aware of the notices which had been
published in newspapers under s 69(6)(a) of the Ordinance, and as a result did
not timeously file a formal objection. It argued, however, that the City of
Johannesburg had breached s 69(6)(b)(iv) of the Ordinance in that it had failed
to forward it a copy of the application. In this regard it relied on the phrase in
that subsection that a local authority must provide a copy of the application to
‘any other person who, in the opinion of the local authority, may be interested in
16 Abseq Properties (Pty) Ltd v Maroun Square Shopping Centre (Pty) Ltd & others 27808/2011; [2012]
ZAGPJHC 53 (2 March 2012).
the application’. The court rejected this argument. It held that the phrase in the
subsection ‘any other person who . . . may be interested’ did not bear its
ordinary, wide meaning but was to be interpreted euisdem generis and restricted
to persons similar to those organs of state referred to in s 69(6)(b)(i)-(iii) ‘such
as parastatals, Eskom, Rand Water, Transnet and the like’.17 It therefore held
that the applicant was not a ‘person . . . interested’ for the purposes of
s 69(6)(b)(iv) of the Ordinance, and dismissed the application.
[24] In the present instance, the learned judge in the court a quo expressed his
reservations as to the correctness of this decision, but concluded that as he was
not persuaded that it was clearly wrong, the rule of precedent obliged him to
follow it. He therefore held that in the present case, too, the appellant was not a
person ‘interested’ as envisaged by the subsection and for this reason alone
dismissed the application.
[25] I, too, doubt the correctness of the decision in Abseq Properties. Like any
other statutory enactment, the Ordinance must be interpreted in the light of the
values enshrined in the Constitution which, as already mentioned, include the
encouragement of public participation in policy making. To apply such a
restrictive approach to the interpretation of the section would frustrate that
purpose. But in my view it is unnecessary to deal further with this issue for,
unlike the learned judge in the court a quo, I do not regard the issue as being
determinative of the outcome of this matter.
17 Abseq Properties para 23.
[26] In deciding whether approval of the township application can stand, the
provisions of the Ordinance are not to be considered alone. PAJA governs
administrative action in general and its provisions are to be read together with
the enabling legislation so that those authorised to take administrative decisions
must do so in a manner consistent with PAJA.18 Section 3(3) of PAJA provides
that in order to give effect to the right to procedurally fair administrative action,
an administrator in his or her discretion may also give the person whose rights
or legitimate expectations are materially and adversely affected, the opportunity
to, inter alia, present and dispute information. That brings me to the appellant’s
contention that it had a legitimate expectation to a hearing before the decision
was taken, and that the failure of the Municipality to afford it such a hearing
renders the decision void.
[27] As appears from the seminal judgment of Corbett CJ in Administrator,
Transvaal, & others v Traub & others,19 the doctrine of legitimate expectation
to a hearing bears as its hallmark the obligation of an administrative authority to
act fairly. Thus in what has become known as SARFU,20 the Constitutional
Court stated:
‘The question whether an expectation is legitimate and will give rise to the right to a hearing
in any particular case depends on whether, in the context of that case, procedural fairness
requires a decision-making authority to afford a hearing to a particular individual before
taking the decision. To ask the question whether there is a legitimate expectation to be heard
in any particular case is, in effect, to ask whether the duty to act fairly requires a hearing in
that case. The question whether a “legitimate expectation of a hearing” exists is therefore
more than a factual question. It is not whether an expectation exists in the mind of a litigant
but whether, viewed objectively, such expectation is, in a legal sense, legitimate; that is,
18 See Zondi v MEC for Traditional and Local Government Affairs & others 2005 (3) SA 589 (CC) para 101.
19 Administrator, Transvaal, &others v Traub & others 1989 (4) SA 731 (A), in particular at 754G-762G.
20 President of the Republic of South Africa v South African Rugby Football Union & others 2000 (1) SA 1 (CC)
para 216.
whether the duty to act fairly would require a hearing in those circumstances. It is for this
reason that the English courts have preferred the concept of “legitimate expectation” to that
of “reasonable expectation”.’
[28] Professor Hoexter points out that since its recognition in Traub, the
expectations that the courts have recognised ‘have been engendered in a variety
of ways: by an express assurance, a settled practice or an established policy and,
in a small but growing number of cases, by none of these things’.21 And, of
course, the expectation must qualify as being one that is legitimate. As this
Court pointed out in Duncan v Minister of Environmental Affairs and Tourism
& another22 the requirements for legitimacy of such an expectation have been
formulated as being:
‘(a)
The representation inducing the expectation must be clear, unambiguous and devoid
of any relevant qualifications.
(b)
The expectation must have been induced by the decision-maker.
(c)
The expectation must be reasonable.
(d)
The representation must be one which is competent and lawful for the decision-maker
to make.’
[29] In the present case the appellant relies on an express assurance given by
the Municipality to found its contention that it had a legitimate expectation to a
hearing before the decision to approve the township development was taken. Its
argument in this regard is based upon the events set out in para 5(l) above,
namely, the conversation between its attorney and Mr Van Wyk, the letter JH7
21 C Hoexter Administrative Law in South Africa 2 ed (2012) at 421.
22 Duncan v Minister of Environmental Affairs and Tourism & another [2009] ZASCA 168; 2010 (6) SA 374
(SCA) para 15.
sent to the Municipality following that conversation (confirming that the
appellant was on record as an interested and affected party and would be invited
to attend a hearing), and the fact that despite that letter having been received by
the Municipality, it failed to respond.
[30] Clearly Mr Van Wyk’s representation was one which was competent and
lawful for the Municipality to make, and induced a reasonable expectation that
the appellant would be afforded a hearing – or at the very least that its
representations in its objection JH5 would be taken into account before a
decision on the application was taken. Thus the essential requirements
envisaged in sub-paragraphs (b), (c) and (d) of the test for legitimacy as set out
in Duncan were satisfied. However, based on an averment that Mr Van Wyk’s
assurance had simply been that the appellant would be informed of a tribunal
hearing if one was convened, the Municipality sought to argue, in essence, that
requirement (a) was not fulfilled as there had not been an unconditional
statement that there would be a hearing. It also argued that the contents of JH5
were taken into account before approval of the township was granted.
[31] I shall return to this latter aspect in due course. But dealing with the
question of whether the promise to hold a hearing was unconditional, the
Municipality based its argument on the answering affidavit of the municipal
manager, Mr Dan Mashitisho. In stating that the Municipality was unable to
comment on how it had received Mr Athienides’ letter JH7, he also alleged that
Mr Van Wyk had advised the appellant that should any hearing in respect of the
proposed township be held the appellant would be notified in respect thereof.
Details as to when, where or in what terms this was allegedly conveyed were
not set out, nor is there a meaningful affidavit from Mr Van Wyk himself.
Instead the Municipality adopted the sloppy method of adducing evidence by
way of a hearsay allegation made by Mr Mashitisho supported by a so-called
‘confirmatory affidavit’ by Mr Van Wyk, who stated no more than that he had
read the affidavit of Mr Mashitisho and ‘confirmed the contents thereof in so far
as it relates to me and any of activities’. This might be an acceptable way of
placing non-contentious or formal evidence before court, but where, as here, the
evidence of a particular witness is crucial, a court is entitled to expect the actual
witness who can depose to the events in question to do so under oath. Without
doing so, a hearsay statement supported merely by a confirmatory affidavit, in
many instances, loses cogency.
[32] Importantly, not only is the averment relied on by the Municipality vague
in the respects already mentioned, but it is extremely improbable. The excuse
offered by the Municipality for not having a hearing before a tribunal was that
when Mr Van Wyk spoke to Mr Gonsalves he ‘was under the mistaken
apprehension that objections to the township had been received’ and that it was
only later when the file was being prepared for consideration of the application
by the Municipality that it was established that the letter of objection JH5 was
not an objection as contemplated by the Ordinance and had in any event been
lodged out of time. As a result, Mr Van Wyk felt that as no valid objections had
been received, no tribunal needed to be convened. The Municipality therefore
alleged there was nothing ‘Van Wyk could have or should have informed the
applicant of.’ However, in response to the appellant’s specific allegation in
regard to the phone call between Mr Gonsalves and Mr Van Wyk, the contents
of which were confirmed in the letter JH7, the Municipality admitted the phone
call without qualifying it in any way. In doing so it admitted that the appellant’s
attorney had been told that the appellant had been recorded as an interested
party who had objected to the development. As Mr Van Wyk at that stage
regarded the appellant as an objector who was entitled to a hearing before a
tribunal, he would hardly have told the appellant that it would be informed of
when the hearing would take place only if a tribunal was convened. Any
contrary suggestion can be rejected outright on the papers.
[33] In the light of these considerations, I understood counsel for the
Municipality not to persist in the argument that what Mr Van Wyk had told
Mr Gonsalves had been conditional upon a hearing being held, and to accept
that JH7 correctly recorded the essence of what the appellant had been told.
[34] In the light of what I have said, the appellant was clearly an interested
party who had sought to object to the township application. In addition, the
Municipality told the appellant that it had been recorded both as an interested
party and as an objector, that it would be notified of the date on which a tribunal
would consider its objection, and that it would be invited to attend that hearing.
That the appellant persisted in its objection was obvious in the light of its letter
to the Municipality of 17 November 2011, expressing the view that the attitude
of the Department of Mineral Resources meant that the proposed township
could not proceed. The failure to reply to this letter made it all the more
reasonable for the appellant to expect that it would be afforded a hearing if the
Municipality was intending to consider granting the township application. That
being so, all the requirements of a legitimate expectation of a hearing flowing
from the conversation between Mr Van Wyk and Mr Gonsalves were fulfilled.
In any event, the Municipality’s failure to reply to the letter JH7 amounted to a
representation that the Municipality accepted the correctness of its contents.
That representation is, in itself, sufficient to ground a legitimate expectation that
the arrangements set out in JH7 would be honoured by the Municipality.
[35] The excuse offered by the Municipality for failing to convene a tribunal
and to invite the appellant to attend a hearing, namely, that it later decided that
it was not in fact an objector, is disingenuous. As Cameron J stated in Kirland
Investments23 there is no reason to exempt government from due process and
that ‘(o)n the contrary, there is a higher duty on the state to respect the law, to
fulfil procedural requirements and to tread respectfully when dealing with
rights’.24 This, the Municipality failed to do. In breach of the legitimate
expectation the appellant had to a hearing, it failed to honour its promise to
convene a tribunal to hear the appellant’s objection. Instead it sought to place
form above substance and to regard the appellant as not having been an objector
in disregard of its earlier contrary promise and in circumstances in which, as I
have already remarked, it was unfair not to have recognised the appellant as an
interested party under the Municipality’s Policy. In the circumstances, I have no
hesitation in finding that on this basis alone its decision to approve the
establishment of a township was procedurally unfair and cannot stand.
[36] There are, however, other features of the process that need to be
mentioned. In this regard it is once again necessary to comment adversely on
the manner in which the Municipality placed its evidence before court. As
already mentioned, its answering affidavit was deposed to by its municipal
manager, Mr Mashitisho. He alleged that ‘the City’ (ie the Municipality) was
aware of the activities being conducted in the vicinity of the subject property,
that the City formed the opinion that the appellant ‘was not a person who may
be directly affected by the granting of the township application’, that the City
took the ‘financial interests’ of the appellant into account in considering the
application before the City approved the application on 28 August 2012. In fact
23 MEC for Health, Eastern Cape & another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute [2014]
ZACC 6; 2014 (3) SA 481 (CC).
24 Para 82.
the functionary who took that decision was the executive mayor but, noticeable
by its absence, is an affidavit from the latter to explain why he or she granted
approval. In fact no affidavit was forthcoming from the executive mayor to
explain what information was available or what steps were taken into account
before granting the necessary approval. As the relevant functionary whose
decision was subject to review and who was therefore a crucial witness, it is
inexplicable that no evidence from the executive mayor was placed before
court.
[37] Furthermore, Mr Mashitisho alleged in his affidavit that the contents of
the appellant’s objection, JH5, were taken into account by the ‘City’ when
considering whether to grant the township application. In the light of the
executive mayor’s failure to depose to an affidavit, this bold allegation can be
ignored as hearsay in regard to whether he or she took JH5 into account.
Surprisingly, although the truth of the statement that regard had been had to JH5
was denied by the appellant in its replying affidavit, it was not directly
challenged by the appellant in this Court. Not only is the averment hearsay, but
it flies in the face of the further factual averments made by Mr Mashitisho. He
alleged that any correspondence received in respect of the township application
would be filed and that, when the application is later prepared for consideration,
such correspondence is then carefully read and attended to at that stage. He
went on to allege that in the present case it was only when the file was being
prepared for the consideration of the application by ‘the City’ (in this context,
he presumably meant by the section 80 Committee rather than the executive
mayor) that it was established that JH5 was not an objection as contemplated by
the Ordinance as it had been lodged after the date for objections set out in the
notices published in the press. As already mentioned it was for this reason, that
JH5 was considered not to be an objection and no tribunal hearing was
convened.
[38] Consequently, in his report to the section 80 Committee, JH24, Mr Van
Wyk stated that no objection or representations had been received against the
application which was therefore ‘unopposed’. Nothing could have been further
from the truth. Moreover, in the light of the failure to either mention the
appellant’s objection or to attach it to JH24, the municipal manager’s allegation
that JH5 had been taken into account by the City before granting its approval
simply cannot be accepted. In JH5, the appellant’s attorney had drawn attention
to there being three quarry mining operations, including that of the appellant,
operating close to the subject property, and that the appellant’s operations
involved, inter alia, sand excavation, rock crushing and rock blasting which
would result in excessive dust, vibration, noise and blasting in close proximity
to residents on the subject property. He had further alleged that the large
transportation vehicles used by the quarries travelling along the gravel roads in
the area would make it hazardous and undesirable for urban residential traffic;
and that for these reasons the location of a residential zone close to quarrying
activities was ‘simply inappropriate and should be avoided’. He had concluded
by contending that the approval of the proposed township would prevent the
appellant from extending its business operations on its property which would
‘constitute a gross and unjust infringement upon our client’s right in terms of
the licenses issued to it to utilise the entire property owned by it for its
commercial purposes and to enable it to gain the maximum financial benefit
there from’. None of these contentions were mentioned by Mr Van Wyk in
JH24. One can therefore accept that the legitimate expectation the appellant
had of its representations being taken into account before a final decision was
taken on the township application, was not met.
[39] We were informed from the bar that the prevailing practice in
implementing the procedures provided by s 69 of the Ordinance is to treat only
objections made timeously pursuant to s 69(6)(a) notices as ‘objections’ and
those out of time merely as ‘comments’. Whatever the rights or wrongs of this
practice may be, it seems to me to matter not a whit. As a matter of fact, even if
JH5 was merely a ‘comment’, it was in substance an objection. To state, as
Mr Van Wyk did in JH24, that the application to establish a township was
unopposed, was to his knowledge factually false. Moreover, even if JH5 fell to
be treated merely as a ‘comment’ rather than an ‘objection’, s 69(8) required all
comments and representations made in respect of the township application to be
forwarded to the second respondent who, under s 69(9), had 28 days from
receipt to reply thereto. Whether this was done in respect of JH5 does not
appear from the papers, but nothing of moment turns on that for present
purposes. What is of importance, however, is that s 69(10) goes on to provide
that ‘the local authority shall consider the application with due regard to every
objection lodged and all representations and comments made and every reply
contemplated in subsection (9) . . .’.
[40] Despite these provisions, the contents of the appellant’s objection and the
representations therein contained were not mentioned in Mr Van Wyk’s report.
All that was stated was the following:
‘Sand and aggregate quarries
Due to the location of the proposed township in the vicinity of active sand and aggregate
quarries the Gauteng Department of Mineral Resources has indicated that the following
conditions must be inserted into the title deeds of all erven in the township when the opening
of the townships register takes place:
(a)
As the erf (stand, land, plot, etc) forms part of land which is located in close
proximity to active sand and aggregate quarries the erven in the proposed township
may be subject to subsidence, settlement, shocks and cracking due to quarrying
operations past, present or future, the owner thereof accepts exclusively all liability
for any damage thereto and any structure and building thereon which may result from
such subsidence, settlement, shocks and cracking.
(b)
As the erf (stand, land, plot) forms part of an area which may be liable to fly rock,
dust pollution, noise and fumes created by the detonation of explosives as a result of
the nearby quarrying activities in the area, the owner thereof shall accept that
inconvenience and possible health hazards may be experienced as a result thereof.
(c)
The municipality nor the Gauteng Provincial Government shall in any way or form be
liable for any damage to property, inconvenience or any health problems that may
result from quarrying activities in the area.’
[41] Thus, while the section 80 committee was told of the existence of a
nearby quarry, and this was presumably brought to the attention of the executive
mayor (although one has to infer this from the papers) the fact that the appellant
had objected to the development and the nature and importance of its opposition
thereto, do not appear to have been placed before either that committee or the
executive mayor who had to take the final decision. The Municipality
repeatedly stated that the contents of JH5 were taken into account by ‘the City’
(and indeed suggested in its papers that this constituted a hearing, a contention
not persisted in during argument in this Court). However, in the light of what I
have mentioned and the contents of Mr Van Wyk’s report JH24, that was not
the case.
[42] As a result the appellant, an interested party, was denied the opportunity
of placing its views before the executive mayor who was the functionary
entrusted with the discretion to approve the application. This was not
procedurally fair. As Professor Hoexter has commented, in a passage approved
by the Constitutional Court in Joseph:25
‘Procedural fairness . . . is concerned with giving people an opportunity to participate in the
decisions that will affect them, and - crucially - a chance of influencing the outcome of those
decisions. Such participation is a safeguard that not only signals respect for the dignity and
worth of the participants, but is also likely to improve the quality and rationality of
administrative decision-making and to enhance its legitimacy.’26
[43] To sum up, the appellant was an interested party who had as a matter of
fact objected to the application; it had a legitimate expectation to a hearing
which was breached; and it was denied the opportunity of having its views
considered by the relevant functionary by reason of an unfair process that was
adopted. The Constitutional Court in Janse van Rensburg NO & another v
Minister of Trade and Industry & another NNO stated:27
‘Observance of the rules of procedural fairness ensures that an administrative functionary has
an open mind and a complete picture of the facts and circumstances within which
the administrative action is to be taken. In that way the functionary is more likely to apply his
or her mind to the matter in a fair and regular manner.’28
In the present circumstances, the procedure adopted by the Municipality had the
very opposite effect. It resulted in the executive mayor not having a complete
picture of the relevant facts and circumstances. There can in my view be no
doubt that the decision taken to approve the establishment of a township was
consequently fatally flawed by reason of procedural unfairness. The court a quo
erred in not reaching this conclusion.
25 Joseph fn 4 para 42.
26 C Hoexter Administrative Law in South Africa 2 ed (2012) at 363.
27 Janse van Rensburg NO & another v Minister of Trade and Industry & another NNO 2001 (1) SA 29 (CC).
28 Para 24.
[44] Despite this, the respondent sought to take refuge in an argument that a
court ought not to grant relief in favour of the appellant as it had failed to
exhaust its domestic remedies under the Ordinance. Section 104(1) of the
Ordinance provides that an applicant or objector who is aggrieved by a decision
of an authorised local authority on an application such as that with which we are
here concerned, may appeal within a prescribed period from the date upon
which it was notified in writing of the decision. It is common cause that the
appellant did not seek to exercise such right of appeal before it instituted
proceedings in the court a quo.
[45] In the light of this failure, both respondents relied upon s 7(2) of PAJA
which, inter alia, provides as follows:
‘7(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 interest of justice.’
[46] As the appellant had failed to appeal under s 104 of the Ordinance and
had also neither alleged any exceptional circumstances as contemplated in
s 7(2)(c) of PAJA nor sought to obtain relief under that section, the respondents
contended that the appellant should be non-suited. This argument was upheld in
the court a quo which concluded that the appellant had been bound to appeal
under the Ordinance before launching the review proceedings. In doing so, it
said:
‘Section 104 of the Ordinance provides that an objector who is aggrieved by a decision of an
authorised local authority in a township application may appeal to the Provincial
Government. The applicant is an objector. The letter of 17 August 2007 so illustrates. The
fact that the letter was out of time and consequently invalid does not change the applicant’s
status as an objector as aforesaid. It only renders the objection invalid. It does not follow
from the invalidity of an objection that the objector loses its status as an objector.’
[47] I must say I find this reasoning startling, to say the least. It would hold a
person who as a result of having invalidly objected, and therefore excluded
from the decision-taking process, being regarded as an objector for the purposes
of an appeal against whatever decision was taken in the process from which it
was so excluded. This would simply be absurd and nonsensical. I cannot see
how the Municipality can be heard to say that the appellant had not objected to
the application but, as an aggrieved objector, ought to have appealed against the
decision to approve the application. And therein lies the answer to the
respondents’ argument on this issue. As Plasket AJA stated in JDJ Properties:
‘How can a person appeal against a decision taken in proceedings in which he or she was not
a party? The essence of an appeal is a rehearing (whether a wide or narrow) by a court or
tribunal of second instance. Implicit in this is that the rehearing is at the instance of an
unsuccessful participant in a process.’29
[48] In the circumstances I have already detailed above, the Municipality
excluded the appellant from the decision-taking process. As the appellant was
29 JDJ Properties fn 8 para 43; (See further in this regard City of Cape Town v Reader & others [2008] ZASCA
130; 2009 (1) SA 555 (SCA) para 30.)
not a party to that process, it was not incumbent upon it to attempt to appeal
against the decision taken as a result of that process. Put somewhat differently,
the appellant cannot be expected to exhaust its internal remedies when it was
not afforded any remedies at all. In these circumstances, the respondents are not
entitled to rely upon s 7(2) of PAJA to support an argument that the court a quo
ought not to have reviewed the executive mayor’s decision as the appellant had
not sought to appeal under s 104 of the Ordinance.
[49] Consequently, for the reasons already mentioned, the appeal must
succeed. In its notice of motion, the appellant sought various orders of directory
relief. Wisely, in this Court, it sought no more than an order setting aside the
decision taken on 28 August 2012 to approve the establishment of a township
on the subject property. This will be reflected in the order below.
[50] There is no reason for the costs of the appeal not to follow the event. As
both respondents made common cause in opposing the relief sought by the
appellant both in the court below and in this Court, their liability for costs
should be joint and several.
[51] That brings me to the second respondent’s cross-appeal. It sought to
strike out various passages in the appellant’s replying affidavit. The court a quo
dismissed the application to strike out, and it was against this order that the
second respondent cross-appealed. There are various reasons why the cross-
appeal cannot succeed.
[52] The vast majority of the passages objected to refer to the appellant’s
statement in reply that it was the owner of Portion 81. The application to strike
these averments was based on the contention that the appellant had not relied
upon its ownership of Portion 81 in its founding affidavit in order to
substantiate its entitlement to relief. However, as appears from the contents of
this judgment, we have disposed of the matter without referring to the
appellant’s ownership of Portion 81 and these passages have caused no
prejudice and are irrelevant to the outcome, Moreover, the appellant raised its
ownership of Portion 81 to rebut the Municipality’s statement that it had given
notice to all adjoining landowners, and therefore did not seek to make out a case
in reply. Finally, it should be mentioned that the appellant’s ownership of
Portion 81 seems to be incontrovertible, supported as it was by a copy of the
title deed. To strike out this allegation would in all the circumstances have been
an exercise in futility and of academic interest only.
[53] Apart from those referring to Portion 81, there were only two other
passages about which the second respondent complained. Both were wholly
uncontroversial. In the first, the appellant alleged, justifiably, that its right to
just administrative action, and its legitimate expectation to a hearing, had been
infringed. In the second it complained, again justifiably, that as a person who
had been directly affected by the application to establish a township, it ought to
have been given notice of the application. It is self-evident that these passages
ought not to have been struck out.
[54] Accordingly, there is no merit in the cross-appeal which falls to be
dismissed with the second respondent paying the appellant’s costs.
[55] It is therefore ordered:
The appeal succeeds with costs, including the costs of two counsel.
The order of the court a quo is set aside and is replaced with the
following:
‘(a)
The first respondent’s approval on or about 28 August 2012 (acting
through its executive mayor) of the application for the establishment of a
township to be known as Greengate Extension 24 Township on Portion 33 (a
portion of Portion 6) of the farm Roodekrans 183 IQ, is set aside.
(b)
The respondents are to pay the applicant’s costs, including the costs of
two counsel, jointly and severally, the one paying the other to be absolved.’
The second respondent’s cross-appeal is dismissed, and the second
respondent is ordered to pay the appellant’s costs relating thereto.
______________
L E Leach
Judge of Appeal
Appearances:
For the Appellant:
S J Grobler SC (with him J G Uys)
Instructed by:
Brand Potgieter Incorporated, Craighall Park
Lovius-Block, Bloemfontein
For First Respondent:
J Both SC (with him A W Pullinger)
Instructed by:
ODBB Incorporated, Sandton
McIntyre & Van der Post, Bloemfontein
For Second Respondent:
M M Rip SC (with him P Lourens)
Instructed by:
Ivan Pauw & Partners, Pretoria
Phatshoane Henney Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED
IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
22 September 2017
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
DRIFT SUPERSAND (PTY) LIMITED
v
MOGALE CITY LOCAL MUNICIPALITY & ANOTHER
The appellant is the owner of certain rural property situated within the
municipal area of the Mogale City Local Municipality. A wholly owned
subsidiary of the appellant has a mining right over the appellant’s property.
That right has been exercised by the appellant, which operates an open cast
mine, quarrying sand and gravel on its property. The appellant alleges that it
does this pursuant to an agreement it has with its subsidiary.
The second respondent is the owner of a piece of immovable property
extremely close to the appellant’s property. It applied to the first respondent,
the Mogale City Local Municipality, to establish a township on its property.
After a period of some six years this application was eventually approved by
the Municipality. This was done without the appellant’s knowledge, although
years previously it had filed an objection to the proposed township
development.
On hearing of the approval of the application, the appellant applied to the
Gauteng Local Division, Johannesburg for an order reviewing and setting
aside the Municipality’s decision to approve the township. Its application was
dismissed but leave was granted to appeal to the Supreme Court of Appeal.
The first issue on appeal was whether the appellant had standing to bring
review proceedings. The respondent alleged it lacked such standing for
various reasons. Firstly, it was contended that as it was not the appellant but its
subsidiary who held the mining right under which the quarry was being
operated, the subsidiary ought to have brought the review. They also argued
that despite the proximity of the appellant’s land to the proposed township, it
was not an interested party under either the Municipality’s policy relating to
township applications or the provisions of s 69 of the Town Planning and
Townships Ordinance 15 of 1986.
The Supreme Court of Appeal rejected these contentions. It held that the
appellant, as owner, had the right to safeguard the amenity of its immediate
neighborhood and that the question of interest in the application had to be
determined not only in relation to the policy and the Ordinance but in the light
of PAJA. It found that it was spurious for the Municipality to allege that
because the situation of the appellant’s land did not precisely fit that of an
‘interested party’ as defined in the policy, the appellant was not an interested
party directly affected by the application when clearly the contrary was the
case. It drew attention to s 195 of the Constitution which encouraged the
public to participate in policy taking, as well as various other authorities, the
effect of which was to oblige local government to act in a respectful and fair
manner when fulfilling its functions. It stressed that, in matters of local
government, the right to object to a township forms part of a legislative
scheme which both entitles and encourages individual members of society to
actively participate in the decision taking process. The court concluded that
the appellant clearly was a party interested in the application.
Turning to the merits of the review, the senior municipal official who had
received the objection by the appellant had given an undertaking that a hearing
would be held to which the appellant would be invited. However the final
decision on the township application was taken without any such hearing. In
the light of all the circumstances the court concluded that the Municipality had
breached a reasonable expectation it had engendered in the appellant that such
a hearing would be held and that, for this reason alone, the decision to approve
the township application had to be set aside.
The court went on to deal further with the manner in which the approval had
been granted. It found that although the Municipality alleged in its founding
papers that it had taken the appellant’s objection into account, it was clear that
it had not. This, too, justified the decision being set aside.
Moreover, as the appellant had been excluded from the administrative
decision-taking process, the appellant had not in the circumstances of this case
been obliged to exhaust its so-called domestic remedies before seeking to
review the Municipality’s decision.
For these reasons the appeal succeeded and the order of the court below
dismissing the application for review was set aside and substituted by an order
reviewing and setting aside the Municipality’s decision to approve the second
respondent’s application to establish a township.
In regard to a cross-appeal filed by the second respondent relating to certain
matters which it contended the court below ought to have struck out of the
appellant’s replying affidavits, the Supreme Court of Appeal held that it could
not succeed. The cross-appeal was dismissed.
|
3241
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
UITSPRAAK
NIE RAPPORTEERBAAR
Saaknommer : 600/06
In die saak tussen :
LUKAS JACOBUS JURIE NORTJE
APPELLANT
En
DIE STAAT
RESPONDENT
CORAM :
BRAND, VAN HEERDEN et COMBRINCK ARR
DATUM :
2 NOVEMBER 2007
GELEWER :
9 NOVEMBER 2007
Opsomming:
Verkragting en onsedelike aanranding – alibi verweer op feite van die
hand gewys – verweer van toestemming vir die eerste keer op appèl
geopper – eweneens onsuksesvol – vonnis van 10 jaar
gevangenisstraf vir verkragting opgelê in terme van Wet 105 van
1997 – geen wesenlike en dringende omstandighede aanwesig nie.
Neutrale verwysing:
Nortje v Die Staat [2007] SCA 140 (RSA)
_____________________________________________________
BRAND AR/
BRAND AR :
[1] Die appellant het in die Streekhof te Vereeniging tereg gestaan op
aanklag dat hy op 23 Februarie 2000 eers die klaagster onsedelik aangerand
en daarna verkrag het. Ten spyte van sy pleit van onskuldig is hy skuldig
bevind op beide aanklagte. Daarna is hy gevonnis tot tien jaar
gevangenisstraf vir die verkragting en ses maande gevangenisstraf vir die
onsedelike aanranding, maar is gelas dat hierdie vonnisse samelopend
uitgedien sal word. Sy appèl teen beide sy skuldigbevindings en opgelegde
vonnisse is in die Pretoriase Hooggeregshof deur Southwood R – met wie
Ismail WR saamgestem het – van die hand gewys. Die verdere appèl, weer
eens teen beide die skuldigbevindings en die vonnisse, is met verlof van die
hof a quo.
[2] Aanvanklik was die appellant se verweer een van 'n totale ontkenning
gesteun deur 'n alibi. Hiervolgens was hy op die tydstip toe die misdade na
bewering by die klaagster se huis in Vereeniging gepleeg is, glad nie daar nie,
maar besig om 'n besigheidsafspraak na te kom. Beide die verhoorhof en die
hof a quo het hierdie verweer van die hand gewys. In hierdie hof is namens
die appellant toegegee dat die alibi verweer nie water hou nie. Nietemin is
geargumenteer dat die appèl teen die skuldigbevindings moet slaag op die
grondslag van 'n nuwe verweer waarop die appellant self hom nooit beroep
het nie, naamlik dat daar op die klaagster se weergawe 'n redelike
moontlikheid bestaan dat sy aan hom toestemming verleen het om met haar
gemeenskap te hou. Die oorweging van hierdie verwere is makliker
verstaanbaar teen die agtergrond van die verskillende weergawes van die
feite wat deur die Staat en die appellant, onderskeidelik, aan die verhoorhof
voorgehou is.
[3] Ek handel vervolgens eers met die Staat se weergawe wat uiteraard
hoofsaaklik op die klaagster se getuienis gebaseer is. Op 23 Februarie 2000,
toe die gewraakte gebeure volgens die klaagster plaasgevind het, was sy in
haar dertigerjare, getroud en met twee jong dogters van tien en agt.
Omstreeks 08:10 die oggend het sy nog geslaap. Sy was alleen in die huis
want die kinders was al skool toe en haar man reeds by die werk. Sy het
wakker geword as gevolg van 'n klop aan die deur. Sy het 'n japon oor haar
nagklere aangetrek en die deur oopgemaak. Die appellant het voor die deur
gestaan. Hy was goed aan haar bekend omdat hulle mekaar, saam met hulle
families, oor-en-weer aan huis besoek het en ook sosiaal verkeer het by
danse, verjaardagpartytjies en dies meer. Tog het sy dit snaaks gevind dat hy
daardie tyd van die oggend by haar besoek sou aflê terwyl hy eintlik by die
werk moes wees. Ook sy opmerking dat hy kom koffie soek, het haar vreemd
opgeval. Met 'n terugkykende oordeel, het die klaagster toegegee, was sy op
daardie stadium miskien te naïef. Hierdie toegewing het voortgespruit uit haar
weergawe dat die appellant vantevore by twee of drie geleenthede aan haar
telefonies gesê het dat 'hy haar graag sou wou roer', wat sy verstaan het as
synde te beteken dat hy graag met haar geslagtelike gemeenskap sou wou
hê. Nietemin, sê die klaagster, het sy hom nie werklik ernstig opgeneem nie
en het sy nie daardie oggend gedink dat sy in gevaar verkeer nie. Die man
was immers, sê sy, as familievriend aan haar bekend. Gevolglik het sy hom
binne genooi.
[4] In die sitkamer het beide van hulle op verskillende punte van die
rusbank gaan sit. Sy wou gaan koffie maak, maar die appellant het gesê hy
wou nie regtig koffie hê nie. Hulle het sit en gesels en die klaagster het 'n
sigaret aangesteek. Mettertyd het die appellant al nader aan haar begin skuif
totdat hy sy arm om haar kon sit. Hy het vatterig begin raak waarteen sy
geprotesteer het, maar sonder sukses. Later het hy haar borste betas en haar
met sy vinger vaginaal gepenetreer wat, terloops, die grondslag is vir die
aanklag van onsedelike aanranding. Op daardie stadium, sê die klaagster,
was sy so lam van skok dat sy eintlik niks kon doen nie. Sy het gesoebat,
maar die appellant het hom nie aan haar gesteur nie.
[5] In die proses het hy haar na die slaapkamer gedwing en haar op die
bed laat val. Sy het gesien wat gaan gebeur en hom fisies probeer afweer,
maar hy was te sterk vir haar. Sy het hom gesmeek om dit nie aan haar te
doen nie, maar die appellant het eenvoudig voortgegaan om haar te
oorweldig en tot seksuele verkeer met hom te dwing. Nadat hy klaar was, het
hy opgestaan en na die badkamer gegaan. Toe hy uitkom het hy op sy
horlosie gekyk en gesê 'dit is nou nege-uur, as ek nou ry, kan ek halftien by
die werk wees'. Met dié woorde is hy toe daar weg.
[6] Na die gebeure, sê die klaagster, was sy in 'n toestand van verwarring
en skok. Sy het haar moeder probeer bel, maar dié was nie by die huis nie.
Uiteindelik het sy op haar broer se selfoon met haar ma kontak gemaak. Die
twee van hulle was op pad na 'n doktersafspraak en die klaagster het hulle
gevra om haar na afhandeling van die afspraak te besoek. Omtrent 'n uur en
'n half later het hulle toe by haar aangekom. Intussen, sê die klaagster, het sy
vuil en verneder gevoel. Gevolglik het sy gaan bad en was sy aangetrek toe
haar ma en broer daar aankom. Sy het haar ma eenkant geneem en haar
vertel wat met haar gebeur het; in kort, dat die appellant, na wie sy verwys het
as Lukas, haar oorweldig en verkrag het.
[7] Sy wou nie na 'n dokter of die polisie gaan nie, omdat sy bang was dat
haar man sou uitvind en bevrees was vir wat hy dan sou doen. In der
waarheid het sy haar ma laat belowe dat sy tog nie vir die klaagster se man
sou vertel nie. Die rede vir haar vrees, sê die klaagster, was dat haar man
baie kort van humeur is en beheer oor homself verloor wanneer hy so kwaad
word. Sy was dus bang dat, indien hy die storie sou hoor, hy óf vir haar en hul
kinders, óf vir die appellant ernstige leed sou aandoen. Wat klaarblyklik haar
vrees vererger het was die feit dat sy enkele jare vantevore 'n buitegtelike
verhouding gehad het wat op die lappe gekom het en haar man buitengewoon
besitlik en jaloers gelaat het.
[8] Ongeveer 'n week na die voorval het die vrees by die klaagster
ontstaan dat sy moontlik HIV-vigs opgedoen het en het sy haar huisdokter vir
dié doel besoek. By die geleentheid het sy dan ook vir die dokter vertel dat sy
verkrag is. Die uitslag van die toetse was gelukkig negatief, soos gestaaf word
deur die mediese verslag wat by ooreenkoms ingehandig is.
[9] Die klaagster se moeder het bevestig dat sy die betrokke oggend na
aanleiding van 'n telefoon oproep die klaagster aan huis besoek het. Volgens
haar getuienis kon sy sien dat die klaagster gehuil het en dat sy baie
senuweeagtig en hoogs ontsteld was. Hoewel die klaagster nie spontaan wou
praat nie, het haar moeder uiteindelik tog die weergawe wat sy later aan die
hof oorgedra het, met rukke en stote uit haar getrek. Die moeder het ook
getuig dat sy daarop aangedring het dat die klaagster 'n dokter spreek en 'n
klagte by die polisie moes gaan lê. Die klaagster het egter volstrek geweier
omdat sy bang was vir haar man se reaksie indien hy sou uitvind wat gebeur
het. Omdat die moeder haar skoonseun geken het, het sy haar dogter se
vrese verstaan. Sy het dan ook op die klaagster se aandrang belowe dat sy
vir niemand van die gebeure sou vertel nie.
[10] Op die ou end was die klaagster egter tog deur omstandighede
gedwing om bykans twee maande na die gebeure, op 12 April 2000, vir haar
man daarvan te vertel. Hoe dit gekom het, was kortweg dat die vrou met wie
die appellant in 'n saamleef verhouding betrokke was, met 'n omweg daarvan
te hore gekom het dat die klaagster die appellant van verkragting beskuldig
en gedreig het om die klaagster se man daarvan te vertel indien die klaagster
dit nie self doen nie. Een aand laat het die klaagster toe vir haar man vertel.
Sy reaksie was soos die klaagster verwag het. Dit is gemene saak dat hy
dieselfde nag nog die appellant gebel en hom gevloek, gedreig en geskel het
en hom meegedeel het dat hy die saak by die polisie sou aanmeld. Die
appellant se reaksie was 'n ontkenning dat hy weet waarvan die klaagster
praat. Die saak is dieselfde nag nog by die polisie aanhangig gemaak. Dit is
eweneens gemene saak dat die appellant nooit daarna weer met die
klaagster gepraat het nie, maar teenoor almal anders volgehou het dat hy nie
naby die klaagster was nie.
[11] 'n Verdere staatsgetuie was 'n kliniese sielkundige na wie beide die
klaagster en haar man deur hul huisdokter vir behandeling verwys is nadat die
man van die gebeure bewus geword het. Volgens die sielkundige het sy toe
post traumatiese stresversteuring by die klaagster gediagnoseer. Die
simptome waarop sy hierdie diagnose baseer het, beskryf die sielkundige
onder meer soos volg in haar verslag:
'Daarna [dit is na die gebeure van 23 Februarie 2000] het sy aan gemoedsversteurings gely.
Sy het onstellende drome ondervind en het aan slaaploosheid gely. Sy was bevrees gewees
en wou nie uit die huis uitgaan nie of was te bang om die deur oop te maak as iemand aan
die deur klop al was die persoon aan haar bekend. Sy het haarself toegesluit in die huis, die
meeste van die tyd in haar kamer. . . .. '
[12] Soos in die vooruitsig gestel, het die appellant ontken dat hy
hoegenaamd die betrokke oggend by die klaagster se huis was. Volgens hom
het hy die betrokke oggend in werkshoedanigheid vir mnr Pieter Haferkamp
by Dorbyl in Vereeniging besoek. Aanvanklik, sê die appellant, het hy geen
onafhanklike herinnering van die besoek gehad nie. Dat hy egter wel daar
was, is volgens die appellant bevestig deur 'n sekuriteitstrokie wat die
betrokke oggend by Dorbyl ingevul is en waarvan daar ook 'n deurslag in 'n
boek by Dorbyl te vinde was. Ter bewys het hy dan ook 'n gesertifiseerde
afskrif van die strokie beskikbaar gestel wat saam met die Dorbyl boek as
bewysstukke by die hof ingehandig is.
[13] Blykens die strokie het die appellant inderdaad op 23 Februarie 2000
om 07:10 by Dorbyl aangekom en eers om 09:10 die perseel verlaat. Vir
sover dit die strokie en die boek aangaan, is die sekuriteitstelsel by Dorbyl in
breë trekke veronderstel om soos volg te funksioneer: 'n persoon wat in
Dorbyl se perseel wil ingaan, moet eers by die sekuriteitshek rapporteer. Daar
word die boonste gedeelte van die strokie ingevul. Dit dui onder meer die
datum en tyd van aankoms aan, asook die naam van die amptenaar wat
besoek staan te word. Die strokie word dan uitgeskeur en aan die besoeker
oorhandig. 'n Deurslag daarvan bly in die boek agter. Na afhandeling van die
besoek moet die betrokke Dorbyl-amptenaar op die onderste deel van die
strokie die tyd aandui waarop die besoek geëindig het en sy handtekening
daarby aanbring. Hy oorhandig dan weer die strokie aan die besoeker wat dit
by die sekuriteitshek moet afgee alvorens hy toegelaat word om die perseel te
verlaat.
[14] Voortspruitend uit die appellant se beroep op die strokie is mnr Pieter
Haferkamp deur die Staat as getuie geroep. Hy het bevestig dat hy die tyd,
09:10, op die onderste gedeelte van die strokie ingevul het en dat hy daarby
geteken het. Hy kon ook bevestig dat die appellant hom gereeld in
werkshoedanigheid besoek het. Volgens hom het hierdie besoeke,
afhangende van die doel daarvan, enigiets van 'n uur en 'n half tot vyf minute
geduur. Hy het egter geen onafhanklike herinnering gehad dat die appellant
hom op 23 Februarie besoek het nie. Dat die appellant reeds om 07:10 die
oggend daar was, kon hy in elk geval nie bevestig nie omdat hy as 'n reël eers
om 07:30 begin werk. Al wat hy dus eintlik kon sê was dat hy waarskynlik die
tyd waarop die besoek geëindig het, korrek aangedui het.
[15] Hoewel die posisie rondom die strokie aanvanklik heel helder
voorgekom het, het die skyn bedrieg. Eerstens het dit uit die appellant se
getuienis geblyk dat hy 'n polisiebeampte versoek het om dit as 'n ware afskrif
te sertifiseer en dat aan sy versoek voldoen is sonder dat die oorspronklike
beskikbaar was. Tweedens was dit duidelik dat die strokie en die boek, wat
veronderstel is om 'n deurslag daarvan te wees, nie heeltemal ooreenstem
nie. Op die strokie is daar naamlik 'n motorregistrasienommer aangebring wat
nie in die boek verskyn nie. Daarbenewens het die Staat ook die getuienis
aangebied van 'n familievriend van die klaagster wat op haar versoek die
sekuriteitstelsel by Dorbyl op die proef gestel het. Waarop sy getuienis in
wese neergekom het, was dat 'n persoon die boonste gedeelte van die strokie
– insluitende sy tyd van aankoms – by die sekuriteitshek kon laat invul en met
die strokie kon wegstap sonder om hoegenaamd iemand by Dorbyl te besoek.
[16] Net soos die klaagster was die appellant indertyd ook in Vereeniging
woonagtig. Volgens sy getuienis was beide van hulle se huise dan ook om en
by vyf minute se ry van Dorbyl af. Daarteenoor was sy werkplek 30 kilometer
weg in Alberton en het dit hom in die oggend omtrent 50 minute geneem om
daar te kom. Aangesien sy werksure as 'n reël tussen 7 vm tot 5 nm was,
moes hy gewoonlik net na 6 vm van sy huis vertrek om betyds by die werk te
wees. Volgens die appellant was die klaagster van hierdie roetine bewus
omdat hy haar daarvan vertel het.
[17] 'n Belangrike aspek van die saak is uiteraard die getuienis wat om die
sekuriteitstrokie van Dorbyl wentel. Na evaluering van hierdie getuienis het
die verhoorhof, sowel as die hof a quo, bevind dat die appellant tot ongeveer
09:10 die betrokke oggend saam met Haferkamp by Dorbyl was.
Daarbenewens beskryf beide howe egter die appellant se alibi as alles
behalwe waterdig.
[18] Met die eerste oogopslag lyk die toetsing van 'n alibi aan die maatstaf
van ‘waterdig’ na 'n mistasting. Daar is immers geen onus op 'n beskuldigde
persoon om sy of haar alibi te bewys nie en nog minder tot op die vlak van
‘waterdig’. By behoorlike beoordeling van die twee vorige uitsprake in hierdie
saak, is dit egter duidelik dat die howe geen mistasting begaan het nie.
Waarop hulle redenasie neerkom is in wese die volgende: in geval van 'n alibi
verweer is 'n beskuldigde persoon geregtig op ontslag as die alibi redelik
moontlik waar kan wees. By die beoordeling van hierdie vraag moet die
getuienis wat ter ondersteuning van die alibi aangebied is, egter nie in isolasie
beoordeel word nie, maar in die konteks van al die getuienis in die saak. Waar
die ander getuienis oorweldigend op die beskuldigde se betrokkenheid dui,
moet die getuienis rondom die alibi in effek ‘waterdig’ wees om 'n redelike
moontlikheid van twyfel te skep. Ooreenkomstig die bevinding van beide die
verhoorhof en die hof a quo is dít juis die posisie in hierdie saak.
[19] By beoordeling van die howe se slotsom is die aanvanklike vraag dus
of die Staat se saak werklik so sterk op die valsheid van die appellant se alibi
dui. Soos ek dit sien is die antwoord op hierdie vraag ‘ja’. Omdat die appellant
se advokaat op appèl toegegee het dat hy nie die teendeel kan argumenteer
nie, sal ek hierdie slotsom slegs kortliks motiveer.
[20] Volgens die appellant se verweer is dit klaagster se bewerings teen
hom 'n totale versinsel. Dit lei onmiddellik tot die vraag waarom sy juis vir hom
as teiken van haar valse beskuldigings sou uitkies. Dit is immers gemene
saak dat hy vir haar suster goed was, dat hulle sosiale vriende was wat geen
moeilikheid met mekaar gehad het nie en dat sy geen denkbare rede gehad
het om hierdie ernstige aanklag teen hom te versin nie. Wat meer is, omdat
die appellant se roetine aan die klaagster bekend was, moes sy geweet het
dat hy daardie tyd van 'n werksoggend na alle waarskynlikheid 30 kilometer
weg by sy werk in Alberton sou wees. Daarbenewens moes sy tog ook besef
het dat hierdie feit na alle waarskynlikheid deur die appellant se kollegas en
ander bevestig sou kon word. Sy teenwoordigheid in Vereeniging daardie
oggend, vyf minute van haar woning af, was immers bloot toevallig. Dit alles
maak dit feitlik ondenkbaar dat die klaagster op die appellant as slagoffer van
haar valse aanklag sou besluit.
[21] Dit lei tot die verdere vraag of, ten spyte van dit alles, die getuienis ter
stawing van die appellant se alibi nietemin voldoende is om redelike twyfel in
die gemoed van die beoordeelaar te skep. Beide howe benede het hierdie
vraag ontkennend beantwoord. Weer eens glo ek hulle was reg. Eerstens is
dit duidelik dat die sekuriteitstelsel by Dorbyl, veral wat die tyd van aankoms
by die perseel betref, vir manipulering vatbaar is. Tweedens dui die appellant
se hantering van die probleme rondom die strokie juis daarop dat hy tot
manipulasie en oneerlikheid in staat is wanneer hy dit nodig vind. So laat hy
op sy eie weergawe die afskrif van die strokie deur die polisie as waar
sertifiseer, sonder dat hy oor die oorspronklike beskik, terwyl hy weet dat dit
potensieel misleidend en derhalwe verkeerd is. Toe dit blyk dat die strokie om
een of ander rede van die boek, wat veronderstel is om 'n afdruk daarvan te
wees, verskil, bied hy 'n storie aan wat maar net 'n versinsel kan wees.
Uiteindelik kom ek dan tot dieselfde slotsom as die verhoorhof en die hof a
quo: dat die appellant se alibi verweer bo redelike twyfel verwerp moet word.
[22] Soos ek ter aanvang aangedui het, is namens die appellant in hierdie
hof vir die eerste keer die alternatiewe verweer van toestemming geopper. As
regsbasis vir hierdie betoog is veral gesteun op die volgende stelling van
Howie AR in S v York 2002 (1) SASV 111 (HHA) (para 19):
‘It is always, of course, for the prosecution to prove the absence of consent. This entails that
even if the defence, as here, is that no intercourse took place, the court must, in the
adjudicative process, be alive to the possibility that there might have been consent
nonetheless. What requires emphasis, though, is that without an evidential basis such a
possibility would be no more than speculative and one would be free to disregard it in coming
to one’s eventual conclusion. And it need hardly be said that an accused’s failure to allege
consent will be weighed in the scales when considering whether the postulated possibility is
reasonable or not.
[23] Dat 'n verweer van toestemming op 'n aanklag van verkragting in
beginsel kan slaag, selfs in 'n geval waar die beskuldigde persoon
gemeenskap met die klaagster ontken, staan vas (sien bv S v M 2006 (1)
SASV 135 (HHA)). Soos Howie AR egter in sy pas aangehaalde dictum
aandui, moet die redelike moontlikheid van toestemming uit die getuienis blyk.
Blote spekulasie is nie genoeg nie.
[24] As feitebasis vir die beroep op toestemming is onder meer gesteun op
'n betoog deur die staatsadvokaat in die hof a quo – wat nie in hierdie hof
herhaal is nie – dat, volgens haar evaluering van die klaagster se getuienis, 'n
beroep op toestemming 'n groter kans op sukses sou hê as die appellant se
alibi verweer. Dit spreek egter van self dat 'n hof nie gebonde is aan 'n
staatsadvokaat se evaluering van die getuienis nie. Die vraag bly steeds of
dié evaluering na die hof se oordeel geregverdig is. Blykens die transkripsie
van die staatsadvokaat se betoog in die hof a quo was haar afleiding van
moontlike toestemming gebaseer op haar siening dat die klaagster moes
besef het wat die appellant se bedoeling was toe hy die betrokke oggend aan
haar deur geklop het. Veral omdat hy in die verlede reeds te kenne gegee het
dat hy met haar gemeenskap wou hou. Nietemin het die klaagster die deur vir
hom oopgemaak. Selfs nadat hy dit duidelik gemaak het dat hy nie werklik
kom koffie drink het nie, het sy hom steeds nie die deur gewys nie. Dit
regverdig volgens die advokaat se redenasie die afleiding van 'n redelike
moontlikheid dat sy tot geslagsgemeenskap toegestem het.
[25] Ek stem nie saam met hierdie evaluering nie. Op die beste vir die
appellant is die klaagster se optrede vatbaar vir die afleiding dat sy gehou het
van die appellant se aandag en dat sy selfs bereid was om met hom te
flankeer. Tussen flankering en seksuele omgang is egter 'n hemelsbreë
verskil. Soos die klaagster immers self gesê het, het sy nooit kon dink dat
hierdie man, wat sy as 'n familievriend beskou het, met geweld seksuele
omgang aan haar sou opdring nie. Dit dui myns insiens daarop dat sy onder
die indruk verkeer het dat sy kon besluit waar om die streep te trek. Volgens
haar getuienis het die appellant hierdie streep geïgnoreer en dus sonder
toestemming met haar gemeenskap gehou.
[26] As verdere basis vir die verweer van toestemming is gesteun op die feit
dat die klaagster eers twee maande na die tyd en eers nadat haar man van
die storie gehoor het, 'n klagte by die polisie gelê het. Daarteenoor staan
egter die feit dat sy onmiddellik vir haar ma vertel het. Hierop was die
antwoord namens die appellant dat sy as ‘t ware versekering uitgeneem het
vir die gebeurlikheid dat haar man van haar owerspel kon uitvind. Dit is egter
blote spekulasie. Wat meer is, is hierdie spekulasie onversoenbaar met die
klaagster se reaksie na die gebeure waaroor beide haar moeder en die
sielkundige getuig het. Eweneens is dit onversoenbaar met die feit dat sy 'n
week later dieselfe bewerings teenoor haar huisdokter herhaal het.
Daarbenewens dui die spekulasie geen rede aan waarom die klaagster sou
dink dat haar owerspel op die lappe sou kom nie. Waarom sou sy dan hierdie
duur versekering uitneem ter verklaring van gebeure waarvan net sy en die
appellant bewus was?
[27] 'n Ander oorweging wat myns insiens op die totale onwaarskynlikheid
van die toestemmingsteorie dui is die appellant se reaksie toe hy van
verkragting beskuldig word. Waarom sou hy al die moeite doen om deur valse
getuienis 'n alibi op te bou eerder as om hom onmiddellik op toestemming te
beroep? Namens die appellant was die antwoord hierop dat hy steeds die
klaagster sou wou beskerm. Dit grens egter aan die belaglike. Hoekom sou hy
nou teen hoë koste vir homself 'n vrou wou beskerm wat reeds 'n valse
aanklag van verkragting teen hom by die polisie gelê het? Hieruit volg dit dat,
na my oordeel, die verweer van toestemming eweneens bo redelike twyfel
van die hand gewys moet word wat meebring dat die appèl teen die
skuldigbevinding op aanklag van verkragting, nie kan slaag nie. Hoewel ek tot
dusver eintlik uitsluitlik met die verkragtingsklag gehandel het, was die
verwere wat teen die aanklag van onsedelike aanranding geopper is presies
dieselfde. Bygevolg is dit duidelik dat die appèl teen hierdie skuldigbevinding
dieselfde pad moet volg.
[28] Wat betref die appèl teen die opgelegde vonnisse was dit uiteraard
hoofsaaklik gerig teen die vonnis van tien jaar gevangenisstraf vir die
verkragting. Teen die vonnis van ses maande gevangenisstraf vir die
onsedelike aanranding kon immers nouliks beswaar gemaak word. Blykens
die verhoorhof se uitspraak het hy die tien jaar gevangenisstraf opgelê uit
hoofde van die bepalings van Wet 105 van 1997. Ingevolge hierdie Wet was
die hof inderdaad verplig om, by gebreke aan wesenlike en dwingende
omstandighede wat 'n mindere vonnis sou regverdig, 'n minimum vonnis van
tien jaar gevangenisstraf op te lê. Na oorweging van al die omstandighede het
die verhoorhof tot die slotsom gekom dat geen sodanige omstandighede
bevind kan word nie. Soos die hof a quo is ek van oordeel dat daar geen
basis is waarop met hierdie bevinding ingemeng kan word nie. Hieruit volg dat
na my oordeel die appèl teen die vonnisse ook nie kan slaag nie.
[29] Derhalwe word die appèl teen sowel die skuldigbevindings as die
opgelegde vonnisse van die hand gewys.
………………..
F D J BRAND
APPÈLREGTER
Stem saam:
Van Heerden AR
COMBRINCK AR
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number: 600/06
In the matter between
LUKAS JACOBUS JURIE NORTJE
APPELLANT
en
DIE STAAT
RESPONDENT
From:
The Registrar, Supreme Court of Appeal
Date:
2007-11-09
Status:
Immediate
1.
Hierdie appèl, waarin die HHA uitspraak gegee het op
9 November 2007, was gerig teen die appellant se skuldigbevinding aan
verkragting en onsedelike aanranding, sowel as die vonnisse van tien
jaar en ses maande gevangenisstraf wat vir hierdie twee aanklagte,
onderskeidelik, opgelê is.
2.
Die
feite,
soos
bevind
deur
die
verhoorhof,
wat
die
skuldigbevindings ten grondslag gelê het, was dat die appellant op 23
Februarie 2000 die klaagster, met wie hy sosiaal bevriend was, in haar
huis op Vereeniging betas en uiteindelik verkrag het. In die Streekhof,
sowel as op appèl na die Transvaalse Hooggeregshof, was die appellant
se verweer een van 'n alibi; dat hy die betrokke oggend glad nie by die
klaagster se huis was nie maar op 'n besigheidsafspraak. In die HHA is
egter toegegee dat die alibi verweer tereg van die hand gewys is.
Nietemin is betoog dat die appèl behoort te slaag op grond daarvan dat
op die klaagster se eie weergawe, daar 'n redelike moontlikheid van
toestemming bestaan. Die HHA het egter bevind dat ook hierdie verweer
nie op die feite kan slaag nie. Gevolglik is die appèl teen die
skuldigbevindings van die hand gewys.
3.
Wat vonnis betref was die appèl hoofsaaklik gerig teen die vonnis
van 10 jaar gevangenisstraf vir verkragting wat opgelê is uit hoofde van
Wet 105 van 1997. Ingevolge hierdie wet was die streekhof inderdaad
verplig om, by gebreke aan wesenlike en dwingende omstandighede
wat 'n mindere vonnis sou regverdig, 'n minimum vonnis van 10 jaar
gevangenisstraf op te lê. Na oorweging van al die omstandighede het
die Streekhof tot die slotsom gekom dat daar geen sodanige
omstandighede
bevind
kan
word
nie.
Soos
die
Transvaalse
Hooggeregshof was die HHA van oordeel dat daar geen basis is waarop
met hierdie bevinding van die Streekhof ingemeng kan word nie.
Gevolglik is die appèl teen die vonnisse eweneens van die hand gewys.
|
2742
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
CASE NO: 842/2011
In the matter between:
THE OWNERS OF THE
MV ‘BANGLAR MOOKH' APPELLANT
and
TRANSNET LTD RESPONDENT
Neutral citation: The owners of the MV ‘Banglar Mookh’ v Transnet Ltd
(842/11) [2012] ZASCA 57 (30 March 2012)
Coram:
Farlam, Cachalia, Tshiqi, Wallis JJA et Plasket AJA
Heard:
21 February 2012
Delivered:
30 March 2012
Summary:
Vessel colliding with harbour wall while entering harbour –
alleged negligence of the pilot – approach to evidence – unsafe to rely unduly
on demeanour instead of the inherent probabilities – expert evidence
reconstructing the incident only reliable where the underlying facts on which it
is based are established – negligence not shown – negligent failure to retain
records
–
does
not
warrant
striking
out
defence.
_____________________________________________________________
ORDER
______________________________________________________________
On appeal from: Western Cape High Court, Cape Town (Binns-Ward J, sitting as
court of first instance):
„The appeal is dismissed with costs.‟
_____________________________________________________________
_
JUDGMENT
________________________________ ____________________________
FARLAM ET WALLIS JJA (CACHALIA, TSHIQI JJA ET PLASKET AJA
CONCURRING)
Introduction
[1] The appellant in this matter, the owners of the Banglar Mookh, the
Bangladesh Shipping Corporation, instituted an action in the Western Cape High
Court, Cape Town, exercising its admiralty jurisdiction, against the respondent,
Transnet Ltd, and the National Ports Authority of South Africa. They claimed
payment of the damages suffered on 5 September 2005 when their vessel, the MV
„Banglar Mookh‟, which was at the time being piloted by Mr Tadeusz Jan Grelecki,
an employee of the respondent, collided with the knuckle of the „A‟ berth at the
entrance to Duncan Dock in the Cape Town harbour. (It was subsequently agreed
between the parties that the respondent was the party which would be responsible if
the appellant were to establish a basis for liability for the damages sustained as a
result of the collision and the National Ports Authority of South Africa, which had
been cited as second defendant, took no part in the proceedings and no relief was
sought against it.)
[2] In its particulars of claim the appellant alleged that the cause of the collision
was the gross negligence of Mr Grelecki (whom we shall call in what follows „the
pilot‟). When the appeal was called in this court the appellant was granted leave to
amend its particulars of claim to allege recklessness.
[3] The appellant accordingly sought to prove that the collision between the
appellant‟s vessel and the knuckle had been caused by the recklessness or gross
negligence of the pilot. It did this in an attempt to circumvent the exemption from
liability enjoyed by the respondent in terms of item 10(7) of Schedule 1 to the Legal
Succession to the South African Transport Services Act 9 of 1989, which reads as
follows:
„The Company [i.e., the respondent] and the pilot shall be exempt from liability for loss or
damage caused by a negligent act or omission on the part of the pilot.‟
[4] In two High Court judgments, Yung Chun Fishery Co Ltd v Transnet Limited
t/a Portnet, an unreported judgment of the Western Cape High Court delivered on 1
September 2000 in case AC 30/97, and Owners of the MV Stella Tingas v MV
Atlantica & another (Transnet Ltd t/a Portnet & another, Third Parties) 2002 (1) SA
647 (D), SCOSA A 46(D), it was held that the exemption does not apply if the pilot‟s
acts or omissions were grossly negligent or reckless. When the Stella Tingas case
came before this court1 it assumed, without deciding, that „the exemption would not
apply if the pilot were found to have been grossly negligent‟ (see para 7 of the
judgment at 480 B–C).
[5] The appellant relied on the two High Court decisions to which we have
referred and submitted that the pilot in this case was reckless or grossly negligent
and accordingly that the exemption did not apply.
[6] The case came before Binns-Ward J in the court a quo.2 Although the learned
judge had, as he put it, „some reservations‟ whether item 10(7) had been properly
construed in the two cases mentioned earlier, the issue did not arise because he
held that the appellant had not succeeded in proving that the pilot had been guilty of
gross negligence. Having found that gross negligence on the part of the pilot had not
been proved, he held that the exemption contained in item 10(7) applied and
consequently dismissed the appellant‟s action, but gave the appellant leave to
1 Stella Tingas, MV: Transnet Ltd t/a Portnet v Owners of the MV Stella Tingas 2003 (2) SA 473 (A);
SCOSA A 59 (SCA).
2 The Owners of the MV ‘Banglar Mookh’ v Transnet Ltd [2010] ZAWCHC 485 (12 October 2010).
appeal to this court against his judgment.
[7] There were, as will appear more fully later, two conflicting versions of the
events which led to the collision, one in the evidence of Captain Shahidul Islam, the
master of the vessel, the other in the evidence of the pilot. The judge rejected the
pilot‟s version and accepted that of Captain Islam. He held that the pilot had been
negligent but not grossly negligent, hence the dismissal of the action.
[8] Mr MacWilliam SC, who appeared for the appellant, submitted, as was to be
expected, that the judge had correctly accepted Captain Islam‟s version of the
events leading up to the collision, but had erred in not holding that the pilot was
reckless or grossly negligent. He contended that the onus to establish that the pilot
had not been grossly negligent was on the respondent, with the result that the
judge‟s finding, „that he was not persuaded that it had been established that the pilot
was grossly negligent‟, amounted to a finding of absolution. This he submitted meant
that the principle that where a defendant fails to establish its defence, judgment must
be given in favour of the defendant, should have been applied: cf Arter v Burt 1922
AD 303 at 306. He also argued that the judge had erred in failing to uphold a
contention advanced at the end of the trial that, because the respondent had, despite
giving an undertaking to do so, failed to preserve the vessel tracking service (VTS)
records (which would have provided an objective and reliable record of what had led
up to the collision), the court should strike out the respondent‟s defence and give
judgment in favour of the appellant, effectively as if by default.
[9] Mr Wragge SC, who appeared for the respondent, submitted that the judge
had correctly rejected the contention that the respondent‟s defence should be struck
out because of its failure to preserve the VTS records. He also submitted that the
onus of proving that the exemption contained in item 10(7) did not apply was on the
appellant: consequently, the principle that absolution from the instance is not an
appropriate order in a case where the onus is on the defendant does not apply.
[10] Mr Wragge devoted the main part of his argument, however, to the
submission that the judge had erred in preferring Captain Islam‟s version of the
events to that of the pilot and that on the pilot‟s version he had not been negligent at
all, much less grossly negligent or reckless. He contended further that the judge had
misdirected himself on a number of material points and had adopted an incorrect
approach to the resolution of the factual disputes before him. He argued further that
in the circumstances this court is at large to decide the matter afresh on the record
and that it should dismiss the appeal on the basis that the pilot had not been
negligent.
The evidence
[11] In order to facilitate an understanding of the evidence the judge gave a helpful
summary in his judgment of what he called „the physical interrelationship of some of
the salient features around the harbour basin outside the entrance to Duncan Dock‟3.
This summary reads as follows:
„What the parties referred to as “the basin” is defined on its seaward aspect by the
breakwater on the north western side and by the North Wall, which is part of the seaward
wall of the Ben Schoeman Dock, to the south east. The breakwater runs out from the land at
an angle in a north easterly direction, while the North Wall runs outward from the seaward
boundary of the Ben Schoeman Dock in a north westerly direction, pointing towards the end
of the breakwater wall on the opposite side of the mouth of the basin. A vessel sailing in an
easterly direction so as to pass the breakwater from the west, as did the Banglar Mookh,
would ordinarily turn to starboard at an obtuse angle to cross the basin following the leading
line into Duncan Dock. The North Wall and the entrance to the Ben Schoeman Dock would
be on the vessel‟s port side as it crossed the basin; and the North Spur on its starboard side.
The part of the basin immediately outside the entrance to Duncan Dock is characterized by
the North Spur, which is a wall running out in a north easterly direction from the seaward
side of the A Berth wall of Duncan Dock and, on the southern aspect, by the South Spur,
being a wall running out in a generally north westerly direction from the end of the quay that
comprises the boundary between the southern edge of the Ben Schoeman Dock and what is
known as the Eastern Mole of Duncan Dock. The walls of the North Spur and the South Spur
define, in effect, an inner basin immediately outside the entrance to Duncan Dock. As
mentioned, the entrance to Duncan Dock is between the knuckle of the A Berth wall and the
knuckle of the Eastern Mole.‟
[12] The judge also set out in his judgment measurements of the distance between
3 A reduced copy of a chart depicting the area concerned, which was handed in at the trial, is
reproduced in the annexure to this judgment. The A Berth knuckle is marked F. G. on the chart and is
adjacent to A cargo shed.
the salient points furnished by the appellant‟s expert witness, Captain McAllister,
which were, with rare exceptions the same as or a little bit longer than those derived
from the charts. The judge used these measurements because, he said, the longer
distances favour the respondent. These measurements were as follows:
„(a)
from the end of the A Berth knuckle to the end of the breakwater 1071,5m
(b)
from the end of the breakwater to the end of the North Wall 722m
(c)
from the end of the breakwater to the end of the North Spur 851m
(d)
from the end of the North Wall to the end of the North Spur 509m
(e)
from the end of the North Spur to the end of the A Berth knuckle 230m
(f)
from the end of the North Wall to the end of the A Berth knuckle 676,3m
(g)
from the No. 4 buoy to the end of the A Berth knuckle 1180m.‟
[13] As a further guide to the understanding of the evidence the judge also gave
three examples, taken from a table produced in evidence, illustrating the distance a
vessel will cover travelling at various speeds. The examples were:
„at a constant speed of 5 knots a ship covers 154 m a minute; at 7 knots, 216m a minute and
at 9 knots, 278m a minute.‟
[14] The judge gave the following summary of the two conflicting versions of how
the collision occurred:
„On the plaintiff‟s version, which is founded on the evidence of the master of the vessel, the
pilot found himself obliged, during the crossing of the basin that lies inside the breakwater
but outside the entrances to the Ben Schoeman and Duncan Docks, to order the execution
of a turn hard to starboard because the vessel was approaching too close to one of the outer
structures of the harbour, identified on the charts as the “North Wall”. According to the
master, the effect of the turn hard to starboard was to then place the vessel on a course,
within the relatively narrow confines of the basin, which required a subsequent corrective
hard to port manoeuvre if the vessel was to avoid another hard structure, known as the
“North Spur”, on the opposite side of the basin. Captain Islam‟s evidence had it that while the
turn hard to port resulted in a successful clearance by the vessel of the North Spur the
vessel was, however, thereby put on the course that resulted in the glancing blow of the
starboard bow against the A berth knuckle when the ship passed into the Duncan Dock.
…
The defendant‟s version, established principally through the evidence of Pilot Grelecki, also
had the vessel turning sharply to starboard when it entered the basin after passing the
breakwater. On the defendant‟s version, this occurred involuntarily, due to the effect of
prevailing conditions, and was corrected by putting the vessel hard to port and back on the
leading line through the entrance to Duncan Dock. Grelecki‟s evidence is that because the
vessel was to be berthed alongside the Eastern Mole (also known as “landing wall 1”), which
would be to the portside as the vessel entered the Duncan Dock, he gave the helmsman
orders to move the wheel gradually to port as the ship approached the entrance to the dock.
According to Grelecki, he noticed, however, that the bow of the vessel instead started to
veer to starboard. He shouted orders of „hard to port‟ to correct this. He simultaneously
rushed over to the wheel from the position at which he had been standing, on the port side of
the bridge, only to find that the helmsman had swung it hard to starboard. Grelecki testified
that he had then pushed the helmsman aside and himself swung the wheel hard to port, but
too late to avoid the glancing collision with the A-berth knuckle.‟
[15] Although the VTS records were not retained and were thus not available at
the trial, a record of radio transmissions between the pilot, the masters of the two
tugboats involved and port control was available and a transcription was handed in
at the trial. It was accepted by the parties that the times reflected on this record were
not accurate. They were adjusted by Mr Kieron Cox, an expert who testified on
behalf of the appellant. Mr Cox‟s adjustments were predicated on the assumption
that the collision occurred at precisely 11h20, an assumption which was not
necessarily correct, although the collision did occur at approximately that time and
the approximation was a close one. The adjusted times, though not precisely
accurate, are, as the judge put it, „a true reflection of the relative times in abstract
vis-à-vis each other‟.
[16] The material portions of this transcript from the time when the pilot spoke to
Mr Le Blond on the aft tug until the forward tug was finally fast about seven minutes
after the collision, with the adjusted times inserted and, in brackets, the sound byte
length of some conversations, read as follows:
„11:08 (01:06)
Aft Tug:
Pilot Grelecki, Enseleni, good morning?
Grelecki:
Good morning Enseleni and good morning Pierre [Le Blond] is the forward
tug?
Aft Tug:
Ah no, I will be on the stern.
Grelecki:
Thank you very much. Right astern, right astern, Eastern mole 1, Eastern
Mole 1, port side to.
Aft Tug:
Righto, all received
Forward Tug:
How far is the …Pinotage forward tug?
Grelecki:
Good morning Pinotage, good morning Henk [Turkstra]. Centre Lead
forward, centre lead forward, landing wall 1, port side to, please
Forward tug:
I think I must check, but Port Control when they call on, they call say
landing wall 1
Grelecki:
Landing wall 1, landing wall 1
Forward tug:
Aye, Landing wall 1
Grelecki:
Landing wall 1, landing wall 1, port side to, Centre Lead forward, please
Forward tug:
Aye, aye.
11:18 to 11:19:32 (01:31)
Grelecki:
Forward tug are you fast?
Forward Tug:
Our messenger line going up Pilot
[inaudible]
[Period of silence in the recording. No transmissions]4
Person:
Harry Harry – copy
Grelecki:
Forward tug, Pull back, Pull back – forward tug bow to port (28 seconds
after start of communication)
Forward Tug:
Messenger line is still going up Pilot
Grelecki:
OK.
[Period of silence in the recording. No transmissions]
Grelecki:
Pull, pull, pull, pull! Forward tug bow to port
Forward Tug:
I haven‟t got the line up yet pilot
[Period of silence in the recording. No transmissions]
Grelecki:
Pull. Pull to port, pull! Make full to port (1:04 after start)
Person:
Harry
11:20 (Point of collision) (00:20)
Grelecki:
Bow full to port
Forward Tug:
The line is only going up now Pilot (6 second for whole transmission)
11:21 (00:55)
4 The transcript might otherwise suggest that this is a continuous conversation and convey a rising
concern on the part of the pilot. That would be unfair to him as after each order and the response that
the line is not yet up, there is an interval suggesting that he was expecting the line to go up before he
repeated the order. His tone of voice remains consistent throughout.
Grelecki:
Pull the bow to starboard now (Eh!) (an exclamation)
Forward tug:
Guys gone. Ran away from the bow. My wire isn‟t up yet Pilot. There‟s
nobody up there.
Grelecki:
Nobody up there, what must I do? (19 seconds into transmission)
11:22 (00:47)
…
Grelecki:
Are you fast? (17 seconds into transmission)
Forward tug:
I‟m not fast yet Pilot.
Grelecki:
Not fast yet
Aft tug:
I‟m fast aft (25 seconds into transmission)
Grelecki:
OK. Can you heave up the bow? Bow to starboard? Sorry stern to
starboard
Aft tug:
I know.
11:24 (00:27)
Grelecki:
The problem was that I gave the command “hard to port” and the
helmsman was keeping hard to starboard and I miss the point. Back to
the tugs I presume?
11:24 (00:27)
Grelecki:
The forward tug was not fast yet. They didn‟t get the heaving line. I was
alone.
Forward tug:
Aye. It‟s going up again. They all ran away and then it got looped behind
the fender. OK it‟s going up again.
Grelecki:
OK
11:27 (00:17)
Grelecki:
After tug stop please.
Aft tug:
Stop aft.
11:27 (00:30)
…
Grelecki:
Forward tug, forward tug stern to starboard please. The after tug, after
tug, stern to starboard.
Aft tug:
Stern to starboard
11:27 (00:32)
Grelecki:
Forward tug are you fast?
Forward tug:
It‟s up there, but we are waiting and they keep on telling us to wait. I don‟t
know what they‟ve got, what‟s happening up there.
Forward tug:
OK, we are finally fast.‟
(The transcript has been slightly amended after listening to the recording.)
[17] Two days after the collision Captain Islam completed a „casualty/accident
report‟ in terms of section 259 of the Merchant Shipping Act 57 of 1957, as
amended. The report he completed reads as follows:
„While under pilotage on entering the port of Cape Town, vsl came into contact with concrete
wall section A Berth knuckle vessel damaged at starboard side shell plating in way of fore
peak tank and no. 1 tween deck along length of approximately 18M. All damage above
waterline.‟
[18] On the same day he had an interview with Mr F Hartzenberg, the attending
surveyor, as part of an investigation into the collision conducted by the South African
Maritime Safety Authority (SAMSA). The surveyor recorded the following:
„The vessel made its way into port at 10:54. A wind of force 6 prevailed at the time. The
vessel was moving at 9 knots on entering the port. The harbour tugs were not connected to
the vessel at this time. The vessel collided with the knuckle at A-Berth at 11:18.
All this information was verbally furnished to the undersigned by the master of the Banglar
Mookh. This interview was held on 07 September 2005 at approximately 15:00. This event
occurred on 05 September 2005 at 11:18. If this office had been advised or notified earlier a
more valuable comment may have been possible.‟
The result of the SAMSA investigation was that no further action was required.
[19] On the day of the collision written reports were made by the pilot, the master
and chief engineer of the forward tug, which was trying to make fast on the bow of
the vessel (Messrs Turkstra and Stein), and the master of the aft tug which was
trying to make fast on the stern of the vessel (Mr Le Blond).
[20] Messrs Stein and Le Blond testified for the respondent, Mr Turkstra having
died before the trial.
The trial court‟s approach
[21] The judge summarised and discussed the evidence of Captain Islam and the
pilot at some length. It would unduly protract this judgment were we simply to quote
what he said in its entirety. The following is a synopsis that we trust does him justice.
We start with Captain Islam whose „description of the vessel‟s approach to the port
and the collision was not marked by any noticeable confabulation and was not upset
in cross-examination.‟
[22] The judgment said the following about Captain Islam‟s evidence. Captain
Islam said that he met the pilot when he came on board and handed him a pilot card
dealing with the vessel‟s specifications and performance. That reflected the sea
speeds of the vessel in knots when fully loaded as:
„Full ahead
9.0
Half ahead
7.5
Slow ahead
6.5
Dead slow ahead
4.5‟
He also said that he told the pilot that if the vessel was travelling at a speed higher
than 3 to 4 knots it was impossible to alter the engine movements from ahead to
astern without first stopping the engine. The pilot said that he was not given the pilot
card, but that Captain Islam told him that the vessel‟s slow ahead speed was 7.5
knots,5 which he did not accept. The judge discussed the evidence of the pilot in this
regard and found it to be inconsistent and improbable. He concluded from this that
his evidence6 that he took the vessel up the channel at 6 to 7 knots could not be
accepted and said that he was left with the impression that the pilot was in no
position to state the speed of the vessel in the approach channel with any degree of
reliability.
[23] The judge continued with Captain Islam‟s description of the vessel‟s journey
up the approach channel. He said in his evidence that the vessel proceeded up the
channel at half ahead and that the wind from the east tended to drive the vessel to
the eastern side of the channel, which the pilot controlled by small changes in speed
5 This was an error on his part. The pilot said that in his experience with this type of vessel he
suspected that the slow ahead speed would be 4½ knots but that the master told him that it was
between 6 and 7 knots.
6 Characterised by the judge as an assertion.
and the helm. Captain Islam said, on the basis of what was contained in the bridge
log, that the vessel passed the breakwater at 11h16. It was unclear what was meant
by this: whether it meant that the bow passed the breakwater or that the bridge came
abreast of it or that the entire vessel had passed this point. The judge recognised
that this would affect the calculations of the experts, but concluded that, as the
vessel‟s length was only 159 metres, it was unnecessary to resolve this. The captain
said that the hard to starboard manoeuvre, mentioned in the judge‟s summary of the
conflicting versions, was occasioned by a need to avoid a collision on the portside of
the vessel with the North Wall. He did not suggest that the vessel was proceeding
too fast at this stage, but claimed to have become anxious about its speed shortly
before the collision, when he says that he noticed it was reflected on the ship‟s
instruments as 9 knots. He was at all times aware of the danger of a collision with
the harbour walls.
[24] There was a difference between the master and the pilot over the former‟s
involvement during the passage up the channel. Captain Islam said that he was with
the pilot and engaged with him about the navigation of the vessel, while the pilot said
he showed no interest and was in conversation with another crew member on the
bridge. What is clear is that the master did not intervene at any stage, but claimed
that when a collision was imminent it was too late for him to do so. The judge did not
resolve this dispute but noted that, after the collision, the pilot „acted expeditiously
and appropriately to avoid the stern of the vessel also coming into collision with the
harbour structure‟. Lastly the judge noted the master‟s evidence that the helmsman
and duty officer were punctilious in complying with the pilot‟s orders. He specifically
denied that the helmsman had put the helm to starboard contrary to the pilot‟s order
and that the pilot had intervened and taken the helm himself to remedy that by
turning the vessel hard to port. He did however accept that the pilot had complained
about the helmsman both before and after the collision.
[25] Turning to the pilot the judge summarised and discussed his evidence as
follows. He started with the passage down the channel, which he said took place at a
speed of about 6 to 7 knots. He maintained a steady course with minor movements
of the wheel. When the vessel passed the breakwater it was in the middle of the
channel. At that stage he gave the order „full ahead‟ in order to counteract the swell
effect at the end of the breakwater, which tends to push the vessel to starboard. He
said that in his experience vessels of this type steered more easily at speed and that
the purpose of this order was to improve the handling of the vessel. Just past the
breakwater he linked up with the two tugs, which ordinarily wait for incoming vessels
at a point inside the breakwater. The tugs could not be made fast while crossing the
basin, which he said was due to the incompetence of the crew of the Banglar Mookh,
but this did not concern him as in eight cases out of ten, with vessels this size, they
only make fast inside the dock. The judge found this strange as it left unexplained
why the tugs should then wait inside the breakwater and why they had attempted to
make fast while the vessel was crossing the basin. He preferred the view of Captain
Woodend that it was preferable for the tugs to make fast while crossing the basin.
[26] Once the vessel crossed the breakwater and entered the basin it was
committed to entering the Duncan Dock.7 The pilot said that the vessel regained the
leading line into the dock, having corrected for the veer to starboard caused by the
swell at the end of the breakwater. It then proceeded smoothly across the basin
towards the entrance to the dock, maintaining its line by minor course changes of no
more than five to ten degrees either to port or starboard. When approaching the
entrance he gave an instruction for the vessel to commence a general and gradual
turn to port in order to enter the dock and berth at the Eastern Mole on the port side
of the dock entrance. He was disconcerted to realise that, notwithstanding his order,
the bow was turning to starboard. He rushed to the wheel and saw that the helm was
to starboard. He then grabbed the helm and turned hard to port. Whilst the vessel
started to correct itself it was too slow to avoid a glancing collision with the knuckle of
A berth. He then turned the helm hard to starboard and thereby brought the stern of
the vessel round and prevented the stern from colliding with the knuckle of A berth.8
[27] At this point in the judgment the judge evaluated the evidence of the pilot in
regard to the incident with the helmsman to which the pilot ascribed the collision. He
started with his demeanour and said the following:
„[41]
I have to say that I perceived that Grelecki was noticeably discomfited in the witness
7 Both experts agreed that this was so.
8 In effect what he described was the vessel pivoting around the point of the knuckle of A berth. The
bow collided with the knuckle but as the vessel then turned „into‟ the point of collision by turning hard
to starboard the stern moved away from the point of collision and further damage was avoided.
box during his evidence in chief when describing the vessel‟s approach across the basin to
the point of collision. He became more so under cross-examination. I also found his
description of events markedly vague. It is clear that the collision was a traumatic event in Mr
Grelecki‟s life. He showed every sign of still finding difficulty working through the experience
nearly five years after the event.
[42] His professed inability, during his evidence in chief, to recall whether the vessel had
been turned hard to starboard was perplexing and appeared to be inconsistent with the
answers counsel expected to elicit. As a matter of inherent probability the detail of the cause
of the incident would be deeply engrained in the witness‟s mind. On Grelecki‟s version it was
the alleged putting of the wheel to starboard, instead of steering to port, that was the
fundamental cause of the collision. If Grelecki had indeed seen the wheel swung hard to
starboard, I consider it most improbable that he would have forgotten the fact. Grelecki‟s
written report to the port authority made on the day of the collision or the day thereafter,
describes the wheel having been swung hard to starboard.‟
[28] The judge found it hard to credit that, after 20 minutes in which the vessel had
traversed the channel without any misunderstanding between the helmsman and the
pilot, there would at this crucial point be a mistake by the helmsman. He recognised
that in the period immediately after the collision this was what the pilot said on more
than one occasion. However he discounted this because he thought it inconsistent
with his evidence that the order to turn hard to starboard was given „only in reaction
to the bow having already noticeably veered to starboard‟ in other words „after the
helmsman had already steered the vessel in the wrong direction. He concluded by
saying:
„All in all Mr Grelecki‟s evidence in respect of the alleged error by the helmsman was vague
and inconsistent. As a result it falls to be rejected as unsatisfactory and unconvincing.‟
[29] The judge then dealt with the pilot‟s evidence of the speed of the vessel
across the basin. He found his answers on the information he had received from the
master inconsistent and regarded his estimate of the speed of the vessel across the
ground inconsistent with the information in the pilot card and that of Captain
McAllister. He concluded that the vessel must have been travelling faster than 7.5
knots while crossing the basin and may have been going significantly faster. He then
criticised the pilot for not taking up the conning position where he could see various
instruments that would have provided some assistance in keeping him informed of
the vessel‟s movements. Lastly he said that he found his evidence of the course that
the vessel took while crossing the basin unconvincing. He did so on the basis of
matters such as the pilot‟s unwillingness to concede that the vessel must have
crossed to the westward side of the approach line,9 and his difficulty in explaining
certain manoeuvres undertaken by the vessel in the course of its approach. He
thought that the description of the vessel‟s position at the time of the „emergency
caused by the helmsman‟s aberration‟ was incompatible with the distance the vessel
„must have covered‟ during the final two and a half minutes prior to the collision.
Lastly he thought that the pilot‟s insistence that the vessel was not on the side of the
channel furthest from the breakwater as it entered the basin was inconsistent with
his telling Captain Woodend that the vessel came down the channel steering a
course to put the number 4 buoy10 „fine on the port bow‟.
[30] The judge then briefly discussed and summarised the evidence of Mr Le
Blond, (which he said „contributed nothing material to assist in the determination of
liability in this case‟) and Mr Stein (about which he said that he did not consider it
necessary to say much). Whether this was a correct approach will be dealt with later
in this judgment.
[31] He then proceeded to discuss the evidence of the two experts, Captain
McAllister, who testified on behalf of the appellant, and Captain Woodend, who
testified on behalf of the respondent. „The essence of Captain McAllister‟s evidence‟,
said the judge „was that it is important that a pilot should not bring a vessel into port
at excessive speed.‟ He continued:
„Captain McAllister pointed out that while proceeding at a relatively high speed might give
rise to good steerage, it reduces the pilot‟s ability to control the vessel within the dangers
presented by the confines of a harbour. The pre-eminent duty of a pilot, so testified Captain
McAllister, is to keep the vessel under full control and to manage its progress in a pro-active,
rather than a re-active, manner.‟
[32] The judge‟s summary of Captain McAllister‟s evidence is set out in para [58]
of his judgment, which reads as follows:
9 Presumably he meant the leading line being the central line in the channel that is used by pilots as a
guide for vessels to follow when entering the Duncan Dock.
10 The buoy on the opposite side of the channel to the breakwater.
„On the basis of the prevailing weather conditions, the description provided by Captain Islam
and the cross-checking control afforded by the voice recordings, Captain McAllister opined
that the vessel had been brought up the easterly (seaward) side of the approach channel
with the use of a combination of speed and steering to starboard to counter the easterly drift.
In the witness‟s opinion the high speed of approach, coupled with the positioning of the
vessel to the eastern side of the approach channel as it arrived at the position at which a
turn to starboard was required to line up with the leading lights of the approach into the
Duncan Dock, resulted in a loss of control manifested in the vessel‟s drift towards the North
Wall on the eastern side of the basin, which necessitated reactive steps by the pilot in the
form of an increase of speed to improve steerage and a hard turn to starboard. The
limitations imposed by the physical confines of the basin required the last-mentioned
manoeuvre to be followed by a hard turn to port to avoid the vessel coming into collision with
the North Spur on the south western side of the basin.‟
[33] During the course of his evidence Captain McAllister submitted a series of
calculations that suggested that the average speed of the vessel from the time when
the pilot boarded her to the moment of the collision was in excess of seven knots.
Though the witness accepted that his calculations were not definitive he suggested
that they provided a useful guide, which corroborated his opinion that the pilot had
brought the vessel in at an excessive speed. He was not however willing to commit
himself definitively to a particular speed as being a „safe‟ speed to approach the port.
The witness also expressed the view that the failure of the tugs to make fast and be
in a position „to render timely assistance‟ was due to the fact that the pilot had
brought the vessel to the point of collision at an excessive speed.
[34] The judge concluded his summary of Captain McAllister‟s evidence as
follows:
„Captain McAllister impressed as an articulate and self-confident witness, who succeeded in
providing a rational and easily comprehensible foundation for the opinions which he
ventured. He candidly conceded that his approach was reconstructive in nature – that he
had worked backwards from the given fact of the collision to determine why it had happened.
In assessing the witness‟s opinion I have been astute to caution myself against the danger of
being led by it into judging the conduct of the pilot too stringently with the benefit of wisdom
after the event.‟
[35] The judge was less impressed by the evidence of the respondent‟s expert,
Captain Woodend. He listed what he called „a number of indications of a tendency by
Captain Woodend to tailor his opinion to support [the pilot‟s] evidence‟. The judge
also commented that he „seemed extremely reluctant, when pressed, to question the
reliability of what he had been told by [the pilot]; even in the context of the difficulties
posed for [the pilot‟s] version by the objectively established considerations of time
and distance‟.
[36] The judge summed up his assessment of Captain Woodend‟s evidence in the
following sentence:
„In my judgment the effect of Captain Woodend‟s evidence was undermined by an a priori
and generally inflexible presumption in favour of the factual correctness of [the pilot‟s]
version of events.‟
What is important to note about this conclusion is that its validity as a criticism of
Captain Woodend was entirely dependent upon the pilot‟s version being rejected. If it
should have been accepted then it is no criticism of Captain Woodend that he relied
on it. Captain Woodend had „fairly conceded‟, as the judge put it, „that his opinion
would have been different in certain respects were it to have been premised on the
acceptance of Captain Islam‟s evidence‟.
[37] The judge largely accepted the evidence of Captain Islam and Captain
McAllister and rejected that of the pilot and Captain Woodend. For the reasons
already canvassed above he rejected the pilot‟s evidence that the helmsman created
a situation of sudden emergency by disregarding his order to turn to port and instead
turned to starboard. He also rejected his evidence concerning the vessel‟s position in
the approach channel as it passed the breakwater. For that reason he rejected the
evidence of both the pilot and Captain Woodend regarding the swell effect on
passing the breakwater creating a veer to starboard and accepted the evidence of
Captain Islam and Captain McAllister that this was necessitated by the risk of
collision with the North Wall and the fact that the effect of a near gale force wind and
the swell was to set the vessel towards the eastern side of the channel. That he said
set it on a collision course with the North Spur on the western side of the channel
and, because of the speed at which the vessel was travelling, (which he assessed as
being at least 7 knots), the distance between the various harbour structures was too
little to slow the vessel‟s approach or avoid a collision. He held that the order „hard to
port‟ was given in order to avoid a collision with the North Spur, but said that it would
not affect matters if it was given to avoid a collision with the A berth knuckle and that
the pilot was aware at least three minutes prior to the collision that there was a
problem, as evidenced by his conversations with the tug masters. His conclusion
was that the pilot lost control over the vessel as a result of having approached at an
excessive speed. This he linked to the failure of the tugs to make fast before the
collision and their resultant inability to assist in preventing the collision.
Discussion
[38] As can be seen from this summary and the quoted extracts from his judgment
set out above the judge was strongly influenced in the conclusions to which he came
by (i) his impressions as to the demeanour in the witness box of Captain Islam and
the pilot and (ii) the opinions of Captain McAllister and in particular his estimates as
to the speed at which the vessel was travelling at various points of its approach to
the point of collision from the time it passed the breakwater. Before we say anything
further about his reliance on his demeanour findings and the appellant‟s expert‟s
reconstruction of what happened, it is necessary to say something about items of
evidence which the judge did not mention, either because he overlooked them or did
not consider them to be important.
[39] The first item of evidence to which we refer is the fact that unlike the pilot, who
shortly after the collision – less than five minutes according to the transcript – said
over the radio that he had given the command „hard to port‟ but that the helmsman
was keeping hard to starboard. From the outset the pilot accordingly blamed the
helmsman for the accident. Captain Islam in the reports he made two days after the
incident did not say anything about the collision being caused by the pilot. In the
statement he made in the casualty/accident report (quoted in para 17 above) the
account he gave was under a printed heading „Brief account of cause of
casualty/accident and any other relevant information …‟ In a box on the page above
the space for the account of the cause of the incident where information was sought
as to „the locality of ship where casualty/accident occurred‟ he had placed a tick
above the word „accident‟. When it was put to him in cross-examination that he had
not stated that it was the fault of the pilot he said:
„Ja no casualty happened, that‟s why no – there‟s no need here to description the reason.
There was no casualty (indistinct) on board the ship.‟11
[40] When pressed further on the point, when it was put to him that he was asked
to provide the cause of the accident and had not said it was the fault of the pilot, he
said, „no this is not necessary that it should be put there.‟ He proceeded, „This
(indistinct) describe this the cause of the collide with the A-berth knuckle, this was
the cause. This is a collision with the A-berth knuckle that was the collision of this
accident – this is the cause of the accident.‟ As Mr Wragge submitted this was a
disingenuous answer.
[41] When the SAMSA report was put to Captain Islam he stated that he gave
information to the surveyor but could not remember what he had said. This left
unexplained his failure to attribute blame to the pilot in a statement made shortly
after the collision to the functionary charged with investigating the collision. If the
position had truly been that the vessel was travelling too fast and narrowly avoided
colliding with both the North Wall and the North Spur it is remarkable that he did not
think to mention that.
[42] In our view the answer Captain Islam gave regarding the casualty/accident
report form and the fact that it appears that he made no allegation to the SAMSA
surveyor that the pilot was to blame for the collision were important facts which were
of relevance in deciding whether his version should have been preferred to that of
the pilot. However the judge did not mention them in his assessment of Captain
Islam‟s evidence.
[43] It will be recalled that the judge said that he did not consider it necessary to
say much about the evidence of Mr Stein, the engineer of the forward tug, the
Pinotage. There were in our view at least two aspects of Mr Stein‟s evidence which
were important and which the judge did not mention. The first was his evidence that
11 It is clear that Captain Islam, like the pilot, was not speaking in his home language and that explains
the slight incoherence of his answers. He was giving as his explanation for not blaming the pilot that
this was an accident and did not amount to a casualty, which can have a technical meaning in
maritime parlance. However that does not explain why he did not say that the pilot was responsible
for the accident.
if the vessel had been doing 9 knots he and Captain Turkstra would have noticed it
and would have informed the pilot that he was going too fast. As appears from the
transcript no-one at any stage told the pilot that he was going too fast and Captain
Islam‟s evidence was that until a late stage of proceedings he was not concerned
about the speed of the vessel. The second item of evidence to which we wish to
refer in this regard is Mr Stein‟s description of the difficulties experienced in the
attempts to make the Pinotage fast to the Banglar Mookh. He said in this regard that
after the crew of the Banglar Mookh dropped the leading line down the crew of the
Pinotage made it fast to the messenger and „then it was very, very slow in going up
and at times it was not moving at all and by the time the vessel went over to
starboard it was too late to do anything, we had to get out of the way.‟ This was
consistent with Captain Le Blond‟s observation and assessment of the quality of the
crew on the stern of the vessel.
[44] Mr Stein never suggested, nor was it put to him, that the reason his tug could
not be made fast to the appellant‟s vessel was, as the judge suggested in para [84]
of his judgement, that this was caused in part by the fact that „the speed and course
taken by the vessel hindered rather than assisted the process.‟ Had there been a
problem in either tug making fast, occasioned either by the speed of the vessel or
any unusual manoeuvres in the course of its passage, the probability is that this
would have been reflected in the radio conversations between the pilot and the tug
masters. Instead Captain Le Blond said that it was a „normal day at the office‟ until
the collision occurred and Mr Stein‟s evidence was that the only peculiarity was the
behaviour of the crew in assisting the Pinotage to make fast. This evidence was
disregarded by the judge. So was Captain Le Blond‟s evidence that when the
Banglar Mookh came down the channel towards where the tugs were waiting there
was nothing untoward because: „This is just a normal ship coming down the
channel.‟ He stressed that there was nothing unusual about its speed or its
movements, which was inconsistent with Captain Islam‟s evidence that it was on the
easterly side of the channel and at risk of colliding with the North Wall.
[45] The judge referred in his summary of Captain Islam‟s evidence to the fact
that Captain Islam said that the pilot had complained about the helmsman in
connection with the collision, both shortly before and after the collision. He
recognised that the radio transcript confirms a complaint after the collision, but then
commented that the nature of any complaints made before the collision was not
explored. Of greater importance and not considered in the judgment was that the
transcript clearly showed that on three occasions in the immediate aftermath of the
collision the pilot said that the helmsman disregarded his commands and turned the
helm to starboard and not to port. Apart from the passage already quoted, 23
minutes after the collision he said to port control: „„I told the wheelsman hard to port.
We were heading nicely, he repeated hard to port, but he was keeping all the time
hard to starboard, so I immediately stopped.‟ Immediately after this he told the two
tug masters that he had kept saying „hard to port, hard to port‟ and then noticed that
the helmsman was steering hard to starboard.‟
[46] In our view this evidence went a considerable way to undermine any
suggestion that the pilot‟s version was a contrivance and this should have been
taken into account before the conclusion was arrived at that the pilot‟s version was to
be rejected. The statements were made at a time when the pilot had not had an
opportunity to fabricate a version or collude with the two tug masters. If untrue the
master, helmsman and other crew of the Banglar Mookh were available to refute
them. In addition the pilot was not to know that the VTS records, which might reveal
a different picture, would become unavailable. Contemporaneous statements of this
character cannot simply be disregarded, but the judge did so without any
consideration of the improbability of the pilot being able to invent this story on the
spur of the moment. He rejected his evidence of this incident on three bases. First,
he thought the pilot was „visibly discomfited‟ in giving this evidence. Second, he
placed great store on the pilot‟s inability to remember whether the helmsman had
placed the helm hard to starboard and an impression he formed that this was not
what counsel expected. Third, he found the pilot‟s description of this incident in the
course of his evidence confusing.
[47] We will deal with the question of demeanour below. The judge‟s emphasis on
the pilot‟s inability to remember that the helm was put over hard to starboard, was,
as Mr Wragge correctly submitted, misplaced. The pilot was consistent in his
evidence that contrary to his instruction the helmsman had put the wheel over to
starboard. What he could not remember when in the witness box four and a half
years after the incident was whether the helmsman had put the wheel over hard to
starboard. In his conversation with the tug masters he had mentioned that the wheel
was hard to starboard and this was accepted. His unwillingness at the trial to say
definitely that this was what he observed redounds rather to his credit as a witness.
The judge found it improbable that he would be unable to recall this detail. That
suggests that it would be obvious visually. However, as the photographs show, the
wheel was little larger that a conventional steering wheel in a motor car with six
spokes protruding from the outer rim and no markings of the helm position. That
could only be read off the ship‟s instruments and, in a situation of emergency, there
was little time to observe those. When that is borne in mind the perceived
improbability disappears.
[48] We have already referred to the extent to which the judge relied on his
demeanour findings in coming to his conclusion on the facts. This court has on a
number of occasions in the past warned about the risks inherent in relying on
demeanour: see in particular the judgment of Harms JA in Body Corporate of
Dumbarton Oaks v Faiga 1999 (1) SA 975 (SCA) at 979 C–I, where some of the
decisions on the point are referred to.12 What is always important is to decide the
case in the light of what Harms JA called (at 979 I of the Dumbarton Oaks case) „the
wider probabilities‟. This required that Captain Islam‟s evidence be subjected to the
same close scrutiny as that of the pilot. Had that occurred no doubt the judge would
have taken account of his repeated statements that he could not remember pertinent
detail; his inconsistencies on certain aspects, such as between his description of the
way his crew performed and that of the tug masters; his unfamiliarity with the layout
and conditions at a port he was visiting for the first time and his lack of knowledge of
the proper way to con a vessel into the Duncan Dock.
[49] In assessing the wider probabilities a most important factor was the failure of
Captain Islam shortly after the incident to cast any blame on the pilot. The judge‟s
failure to have regard to this factor is a clear and, in our view, serious misdirection.
12 See further H C Nicholas, „Credibility of Witnesses‟ (1985) 102 SALJ 32 at 36 – 37, M M Corbett,
„Writing a Judgment‟ (1998) 115 SALJ 116 at 124 and Lord Bingham of Cornhill „The Judicial
Determination of Factual Issues‟ Current Legal Problems, Vol 58, 1 – 29, reprinted in his book The
Business of Judging at 8 – 11, esp at 9 where he said, „the current tendency is (I think) on the whole
to distrust the demeanour of a witness as a reliable guide to his honesty.‟
His failure to give proper weight to the pilot‟s complaints immediately after the
collision that the helmsman had disregarded his orders and steered hard to
starboard is likewise a serious misdirection. So too was his failure to give adequate
weight to the handicaps of language and the elapse of time in assessing the pilot‟s
demeanour.
[50] We referred earlier to the fact that the judge had relied to a considerable
extent on the expert opinion of Captain McAllister and in particular his reconstruction
of the speed of the vessel at various stages. This court has recently had occasion to
consider how reconstructions by experts, in particular in motor collision cases,
should be approached: see Biddlecombe v Road Accident Fund [2011] ZASCA 225
(30 November 2011). In para 9 the court pointed out that in some cases expert
evidence may provide „a definitive factual background against which to weigh the
merits of the eyewitness accounts of what occurred.‟ An example of this will be
where physical evidence, such as skid marks, location of debris, etc, is viewed in the
light of established scientific data. But as is pointed out in para 10 of the judgment
„(t)he expert tasked with reconstructing what occurred is often dependent for the
reconstruction not simply on the application of scientific principle to accurate data but
on calculations based on imperfect human observation. The fact that the
reconstruction rests on a potentially imperfect foundation is the reason for caution in
determining its evidential value‟.
[51] We do not think that Captain McAllister‟s reconstruction can be regarded as
having been based on accurate data – on the contrary we think that it rested on „a
potentially imperfect foundation‟. A number of aspects are not clear. The deck and
engine logs did not coincide and the assumption that the engine log could be taken
as reliable lacked a factual basis. Accordingly there was no clarity on the engine
speeds at different stages. To take but one example, the deck log said that the order
„full ahead‟ was given after passing the breakwater, whilst the engine log showed it
as having been given before passing the breakwater. The difference between the
two is one minute and that would materially affect the calculations. What was meant
by „past the breakwater‟? If that point was taken only once the vessel‟s
superstructure was past the end of the breakwater it reduced the distance to be
covered to the point of collision by around 10 per cent and the speed by between
one and two knots, from the 9 knots calculated by Captain McAllister to a little over
seven knots, which no-one described as too fast. The position of the vessel at the
various stages was not clear. What effect did the heading of the vessel have on the
calculation? Captain McAllister agreed that it was not possible to assess the speed
of the vessel as it passed the breakwater. Was the vessel on the easterly side of the
channel as it passed the breakwater? Captain Islam said it was and the judge
accepted this evidence and found that this was a result of an easterly set caused by
the wind and swell. But in coming to this conclusion he ignored the unchallenged
evidence of the respondent‟s expert, Captain Woodend, who had extensive
experience in piloting vessels entering the port of Cape Town,13 that the effect of
wind and tide at the point is to set the vessel to the west as described by the pilot
and not to the east, which is what mariners unfamiliar with the port would expect.
While the judge was correct in criticising his evidence because he was unwilling to
reject the pilot‟s version on certain issues, that criticism does not apply to his
evidence on this point. Here he was in any event not testifying as an expert but on
his experience as a pilot, which was that there is no easterly set in the entrance to
Table Bay if the wind and swell are coming from the west (as they were on the day of
the collision). If there was no easterly set and the vessel was more or less on the
leading line, subject only to minor course corrections as described by the pilot, then it
was also travelling significantly slower than Captain McAllister‟s calculations
suggested. The fact that the pilot came down the channel, well before reaching the
breakwater, with the number four buoy „fine on the port bow‟ (ie at an angle of up to
45 degrees from the port bow looking ahead), lends no support to Captain Islam‟s
evidence that the vessel was on the easterly side of the channel.14
[52] One last aspect of the judge‟s conclusions must be addressed. He found (and
counsel supported this in argument) that the order by the pilot to go hard to port was
an endeavour to avoid a collision with the North Spur and not an endeavour to avoid
colliding with the knuckle of A berth. An examination of the chart of the entrance to
13 He was not only an experienced pilot but was formerly the port captain in Cape Town. Neither
Captain McAllister nor Captain Islam had similar experience of local conditions as a pilot. Captain
McAllister had been the master on board container vessels that docked in the Ben Schoeman Dock
not Duncan Dock.
14 On any basis when the vessel came close to passing and passed the buoy it must have been broad
on the port beam. When the transition from „fine‟ to „broad‟ occurred would depend on the vessel‟s
position in the channel.
Duncan Dock demonstrates that this is highly improbable. These two points are only
230 metres apart. They are so situated in relation to one another that a vessel the
size of the Banglar Mookh (159 metres long) that successfully took evasive action to
miss the North Spur by going hard to port, would then be on a heading that would
take its bow clear of the knuckle of A berth. Once its stern cleared the North Spur its
bow would be only about 70 metres from the entrance to the dock and heading
across the face of the entrance. It would be more likely to collide port side on with
the entrance to the Duncan Dock adjacent to Pier 1 than with the knuckle of A berth.
Yet the collision was with the latter and involved a glancing blow with the starboard
bow of the vessel. That makes it probable that the action of going hard to port was
directed, as the pilot claimed, at avoiding the drift down on to the knuckle that started
before passing the North Spur, as a result of the vessel going to starboard from a
position near the leading line. That in turn is consistent with what both tug masters
said in their reports after the collision.15 Far from that being irrelevant as the judge
suggested it was strongly supportive of the pilot‟s evidence. In all the circumstances
we are satisfied that the judge erred in holding that Captain Islam‟s version was to be
preferred to that of the pilot.
[53] As we have endeavoured to indicate the judge misdirected himself in a
number of respects in his approach to the evidence, with the result that this court is
at large and obliged to decide the matter afresh on the record. In our view if the
evidence is approached correctly, without misdirection, it is clear that the pilot‟s
version, despite his weaknesses in giving evidence, was supported by most of the
probabilities and should not have been rejected. Accordingly, unless the point taken
by the appellant as a result of the respondent‟s failure to retain the VTS data and
records is a good one, the appeal must be dismissed on the simple ground that no
negligence on the part of the pilot was proved.
The unfair trial point
[54] We do not think that Mr MacWilliam‟s contention that the respondent‟s
defence should have been struck out, because it breached the undertaking to
15 Captain Turkstra said „the ship started to veer to starboard‟ and Captain Le Blond said ‟it took a
sheer to starboard‟. It is significant that both mentioned this in their reports without either of them
indicating that there had been sudden or unusual movements by the vessel prior to this point.
preserve the VTS records for production at the appropriate time should litigation
ensue, should be upheld.
[55] In response to a notice by the appellant in terms of Rules 35(3), (6) and (10),
in which the appellant sought production, inter alia, of the VTS records, the
respondent filed an affidavit dated 9 December 2009 and deposed to by Ms Lerato
Maboea, the legal manager for the National Ports Authority, Cape Town, in which
she dealt with the VTS records as follows:
„Regrettably, the recordings in question (to the extent that they existed) were lost when the
Port of Cape Town upgraded and replaced its vessel tracking system (“VTS”) in the first
quarter of 2006. In any event, I am advised that the data recording system previously in
operation had malfunctioned which would have prevented any copy of the data being made
and stored. In addition, I am further advised that the hard drive of the data recording system
previously in operation would override and update itself every 3 to 5 days.‟
[56] The appellant did not seek to cross-examine Ms Maboea on the contents of
her affidavit, nor did it apply at the outset of the trial to have the respondent‟s
defence struck out. Instead it participated fully in the trial and only raised the
contention presently under discussion in its argument at the end. At no stage did it
put the respondent on notice that it proposed to contend that Ms Maboea‟s affidavit
should not be accepted or that the records had been deliberately destroyed by the
respondent or the port authority. In the circumstances we think that this aspect of the
case must be approached on the basis that what she said was correct and that the
failure to preserve the records was inadvertent or accidental.
[57] Mr MacWilliam‟s main argument was based on the contention that the court
should follow the decision of the English Court of Appeal in Arrow Nominees Inc v
Blackledge [2000] EWCA Civ 200 (22 June 2000); [2000] 2 BCLC 167 CA; [2001]
BCC 591 (CA). In that case the Court of Appeal, reversing the decision of the court a
quo, held that the judge should have struck out a petition for relief against unfair
conduct by the majority shareholder of Arrow Nominees Inc and two of its directors.
The ground for doing so was that the petitioner, through its representative, had
forged documents in the course of discovery thereby preventing a fair trial of the
petition.
[58] In para 54 of his judgment Chadwick LJ (with whom Ward LJ, who also gave
a separate concurring judgment, and Roch LJ agreed) adopted an observation of
Millet J in Logicrose Ltd v Southend United Football Club Ltd (1998) Times, 5 March,
that:
„… the object of the rules as to discovery is to secure the fair trial of the action in accordance
with the due process of the Court; and that, accordingly, a party is not to be deprived of his
right to a proper trial as a penalty for disobedience of those rules - even if such disobedience
amounts to contempt for or defiance of the court - if that object is ultimately secured, by (for
example) the late production of a document which has been withheld.‟
Chadwick LJ then went on:
„But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that
any judgment in favour of the litigant would have to be regarded as unsafe, or where it
amounts to such an abuse of the process of the court as to render further proceedings
unsatisfactory and to prevent the court from doing justice, the court is entitled - indeed, I
would hold bound - to refuse to allow that litigant to take further part in the proceedings and
(where appropriate) to determine the proceedings against him. The reason, as it seems to
me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a
substantial risk of injustice. The function of the court is to do justice between the parties; not
to allow its process to be used as a means of achieving injustice. A litigant who has
demonstrated that he is determined to pursue proceedings with the object of preventing a
fair trial has forfeited his right to take part in a trial. His object is inimical to the process which
he purports to invoke.
Further, in this context, a fair trial is a trial which is conducted without an undue expenditure
of time and money; and with a proper regard to the demands of other litigants upon the finite
resources of the court. The court does not do justice to the other parties to the proceedings
in question if it allows its process to be abused so that the real point in issue becomes
subordinated to an investigation into the effect which the admittedly fraudulent conduct of
one party in connection with process of litigation has had on the fairness of the trial itself.
That, as it seems to me is what happened in the present case. The trial was “hijacked” by
the need to investigate which documents were false and what documents had been
destroyed.‟
[59] The Arrow Nominees case was subsequently considered by the Court of
Appeal in two decisions, both reported in [2010] 1 All ER, viz. Shah v Ul-Haq [2009]
EWCA Civ 542; [2010] 1 All ER 73 (CA) and Zahoor & others v Masood & others
[2009] EWCA Civ 650; [2010] 1 All ER 888 (CA). The Shah case concerned a
motorist, involved in an accident and entitled to recover damages for his injuries,
conspiring with a third party to bring a fraudulent claim against the defendant on the
basis that the third party was a passenger in the car at the time of the accident,
which she was not. In holding that this conduct did not deprive him of his right to
recover his own damages Smith LJ said (para 28):
„Everything that was said in the Arrow Nominees case related to the situation which arose in
the course of the trial, once it had become apparent that the petitioner‟s dishonesty was
such that a fair trial had become impossible.‟
Similar views were expressed in the Zahoor case. There both parties in complex civil
litigation were guilty of forgery and fraud in the presentation of their respective cases.
This emerged in the course of a twenty day trial. It was then argued, as it has been
here, that the claim should have been dismissed on the grounds of the claimant‟s
misconduct, but the trial judge declined to do so. On appeal Mummery LJ said, in giving
the judgment of the court:
„We accept that, in theory, it would have been open to the judge, even at the conclusion of
the hearing, to find that Mr Masood had forged documents and given fraudulent evidence, to
hold that he had thereby forfeited the right to have the claims determined and to refuse to
adjudicate upon them. We say "in theory" because it must be a very rare case where, at the
end of a trial, it would be appropriate for a judge to strike out a case rather than dismiss it in
a judgment on the merits in the usual way.
One of the objects to be achieved by striking out a claim is to stop the proceedings and
prevent the further waste of precious resources on proceedings which the claimant has
forfeited the right to have determined. Once the proceedings have run their course, it is too
late to further that important objective. Once that stage has been achieved, it is difficult see
what purpose is served by the judge striking out the claim (with reasons) rather than making
findings and determining the issues in the usual way … In a complex case (such as the
present) which requires a good deal of evidence before the fraud can be established to the
requisite standard of proof, it may be difficult to avoid a full trial.‟
[60] Four points emerge from these cases. First, the power is only exercised in the
case of fraud or dishonesty. Second, none of them go so far as to say that the power
to strike out on these grounds is available against a defendant, thereby affording the
plaintiff a victory by default, although it is possible, without the need to decide
whether it is permissible, to conceive of an extreme case where that might be done.
Third, only in an extreme case will it be exercised when the trial has run its course.
Fourth, it is only if a fair trial was prevented that, as Mr MacWilliam correctly
conceded, the point can be taken. Therefore, if the court concludes that the absence
of the VTS records did not prevent a fair trial, the point must fail.
[61] In our view it cannot be said that the trial was unfair. The appellant was able
to lead Captain Islam and its expert Captain McAllister. The radio transcripts were
available as were the ship‟s logs. The pilot gave evidence and was cross-examined,
as did the master of the aft tug and the chief engineer of the forward tug. Apart from
this a large amount of other relevant data was available including the reports made
by the master, the pilot, and those on the tugs, as well as a detailed hydrographic
chart of the locality where the collision occurred. The missing records might have
added greater certainty to the underlying facts on which the experts based their
evidence, but they would not necessarily have shown that the plaintiff should have
succeeded. In addition the loss of the records was at most due to negligence and not
due to any dishonesty or reprehensible conduct on the part of the defendant. In this
situation, the position is no different from that in any case where a document is lost
or an important witness dies or disappears without any means of recovering their
evidence. The parties must then make do with what is left to advance their
respective cases. The absence of the evidence does not make the trial unfair.
[62] For these reasons it is clear that the judge correctly dismissed this point.
Conclusion
[63] In the circumstances we are satisfied that the appeal must be dismissed with
costs. The following order is made:
The appeal is dismissed with costs.
I G FARLAM
JUDGE OF APPEAL
M J D WALLIS
JUDGE OF APPEAL
APPEARANCES
APPELLANT:
R W F MACWILLIAM SC
Instructed by Edward Nathan Sonnenbergs,
Cape Town;
Webbers Attorneys, Bloemfontein.
RESPONDENT:
M WRAGGE SC
Instructed by Webber Wentzel Attorneys,
Cape Town
McIntyre & Van der Post, Bloemfontein.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 March 2012
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
THE OWNERS OF THE mv ‘BANGLAR MOOKH’ v TRANSNET LTD
The Supreme Court of Appeal (SCA) today dismissed an appeal by the owners of the
Banglar Mookh (the appellant) against an order of the Western Cape High Court, Cape
Town dismissing the appellant’s claim against Transnet Ltd (the respondent) for payment
of damages suffered when their vessel, the MV ‘Banglar Mookh’, which was at the time
being piloted by an employee of the respondent (the pilot), collided with the knuckle at the
‘A’ berth at the entrance to Duncan Dock in the Cape Town harbour.
The appellant had alleged in its particulars of claim that the cause of the collision was the
gross negligence of the pilot. Before the high court there were two conflicting versions of
the events which led to the collision, one in the evidence of the master of the vessel who
testified on behalf of the appellant, the other in the evidence of the pilot who testified on
behalf of the respondent. The high court, relying on the demeanour of the witnesses of both
parties, rejected the evidence of the pilot as unsatisfactory and unconvincing. It also
rejected the evidence of the respondent’s expert witness on the basis that it was
‘undermined by an a priori and generally inflexible presumption in favour of [the pilot’s]
version of events’. It held that the version of the master of the vessel was to be preferred to
that of the pilot. It also accepted the evidence of the appellant’s expert witness. The high
court found the appellant’s expert witness to be ‘an articulate and self-confident witness’. It
held that the pilot had been negligent, but not grossly negligent. Item 10(7) of the Legal
Succession to the South African Transport Services Act 9 of 1989 exempts the respondent
from liability for loss or damage caused by a negligent act or omission on the part of the
pilot. Based on this item, the high court dismissed the appellant’s claim. It also dismissed
the appellant’s contention at the end of the trial that the high court should strike out the
respondent’s defence and give judgment in favour of the appellant for the respondent’s
failure, despite having given an undertaking to do so, to preserve the vessel tracking service
(VTS) records. With leave of the high court the appellant then appealed to the SCA.
In dismissing the appeal, the SCA held that the high court had erred in holding that the
version of the master of the vessel was to be preferred to that of the pilot. It held further that
the high court had misdirected itself in a number of respects in its approach to the evidence,
with the result that the SCA was at large and obliged to decide the matter afresh on the
record. It stated that if the evidence was approached correctly, without misdirection, it was
clear that the pilot’s version, despite his weaknesses in giving evidence, was supported by
most of the probabilities and should not have been rejected. Consequently, the SCA held
that no negligence on the part of the pilot had been proved. The SCA rejected the argument
of the appellant that the respondent’s defence should have been struck out; because it had
breached the undertaking to preserve the VTS records for production at the appropriate
time should litigation ensue. It held that the absence of the VTS records did not make the
trial unfair.
|
3214
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO 158/2007
In the matter between
TAKALANI FHETANI
Appellant
and
THE STATE
Respondent
Coram:
Nugent, Jafta JJA and Mhlantla AJA
Heard:
11 SEPTEMBER 2007
Delivered: 21 SEPTEMBER 2007
Summary: Sentence – s 22 of the Sexual Offences Act 23 of 1957
prescribes a maximum sentence of 6 years’ imprisonment with or without
a maximum fine of R12 000 – incompetent to impose imprisonment in
excess thereof for contravening s 14 of the Act.
Neutral citation: This judgment may be referred to as Fhetani v The
State [2007] SCA 113 (RSA)
___________________________________________________________
JAFTA JA
[1] This appeal was heard on 11 September 2007 and at the conclusion
of the hearing the following order was made:
‘1.
The appeal against sentence is upheld.
2.
The sentence imposed by the court below is set aside and
substituted with a sentence of 3 years’ imprisonment.
3.
The appellant must be released from prison immediately.’
It was stated at the time the order was made that the reasons for such
order would follow. These are the reasons.
[2] The appellant was arraigned in the Venda High Court on a charge
of rape, alternatively unlawful sexual intercourse with a girl below the
age of 16 years. He pleaded and the prosecutor accepted the plea of guilty
to the alternative charge. The trial court (Hetisani J) convicted and
sentenced him to 15 years’ imprisonment. He appeals against the
sentence with the leave of the court below.
[3] The court seems to have been under the impression that there were
facts before it that established that the appellant was guilty of rape and it
sentenced him accordingly. In its judgment the court said:
‘The court has to pass sentence which must be deterrent to others who may be
thinking of meeting girls in the evening, producing a knife and pulling them to empty
houses and rape them.’
Later in the judgment on the application for bail the court stated further
that:
‘Now your legal counsel has now come with your instructions that you ask that while
the appeal is being processed you need to be granted bail. Of course it is one of your
rights, but one will always consider that we have communities there today, no longer
the old communities which were fast asleep. Today’s communities are very much up
against people who have been convicted of offences like rape, and more particularly
the rape against minor children. One cannot imagine the horror with which the people
out there will see you now walking around and enjoying Christmas when they know
that you have perhaps spoiled the future of that poor child….’
[4] There was no basis for such findings because no evidence was led
at the trial. The court impermissibly relied on the summary of substantial
facts for its findings. The summary does not constitute evidence nor
admitted facts. Its sole purpose is to inform an accused about the nature
of the case he or she is facing by setting out material facts on which the
prosecution relies (S v Van Vuuren 1983 (1) SA 12 (A) at 21E).
[5] The approach adopted by the trial court in assessing punishment
has led to an excessively disproportionate sentence being imposed.
Punishing the appellant as if he had been convicted of rape violated his
right to a fair trial. It is a well-established principle of our law that the
sentence imposed must fit the nature of the offence of which the accused
was found guilty. Put differently, the severity of the sentence must not be
grossly disproportionate to the offence itself. An exemplary sentence such
as the one we are concerned with here, is not a fair and just punishment
because it is disproportionate to the true deserts of the offender. In
discouraging the imposition of such punishment this court in S v
Sobandla 1992 (2) SACR 613(A) said (at 617 f-g):
‘As to the magistrate’s view of the need for a strongly deterrent sentence, the peculiar
circumstances of the present case do not, in my assessment, suggest the risk of a
repeated robbery or housebreaking by the appellant. Essentially what the trial court
had in mind was, in the interests of the community, a sentence which would deter
others who might, given the prevalence referred to, contemplate similar serious
criminal conduct. Having regard to all the facts of the present matter, however, it
seems to me that appellant’s counsel (who appeared at the court’s request, and for
whose assistance we are grateful) was right in contending, in effect, that appellant was
sacrificed on the altar of deterrence, thus resulting in his receiving an unduly severe
sentence.’
[6] This does not mean that deterrence is no longer an object of
sentencing. In this matter it is unlikely that the appellant would commit
the same offence again. A severe sentence would only serve as a
deterrence to other would-be offenders who might contemplate having
sexual intercourse with girls below the age of 16 years. A sentence that is
intended to serve this purpose must not, however, be grossly
disproportionate to the offence of which an accused person was
convicted. Because a grossly disproportionate sentence does not only
violate the accused person’s right to a fair trial but also his or her right
not to be punished in a cruel, inhuman or degrading manner (S v Dodo
2001 (1) SACR 594 (CC) paras 35-39).
[7] Moreover, in sentencing the appellant the court below overlooked
the provisions of the Sexual Offences Act 23 of 1957 in terms of which
he was convicted. Section 14 thereof makes it an offence for a male
person to have sexual intercourse with a girl under the age of 16 years,
even if she consents to such intercourse. For this offence, section 22
prescribes a sentence of imprisonment for a period not exceeding six
years with or without a fine not exceeding R12 000 in addition to such
imprisonment.
[8] The court has, contrary to the clear provisions of s 22, imposed 15
years’ imprisonment thereby exceeding the maximum prescribed
sentence. Therefore, the sentence was not competent for the offence of
which the appellant was convicted.
[9] In view of the above misdirections we are entitled to interfere with
the sentence imposed. At the time of the trial the appellant was a 23-year-
old student. He was doing matric at school. The complainant was 15
years old when the offence was committed. There is no evidence to
suggest that she did not consent to having intercourse with the appellant.
It is unlikely that the prosecutor would have accepted the plea of guilty to
a lesser offence, if evidence that she did not consent existed. In assessing
punishment, we must also take into account the fact that the appellant has
been in prison since September 2002 to date (five years in total).
[10] The appellant has effectively served five years in prison – as we
were informed at the hearing of this appeal – even though he was granted
bail on 5 December 2002. He was unable to raise the bail money which
was fixed at an exorbitant amount of R10 000. At the hearing of the bail
application, his attorney informed the court that he could afford to pay the
sum of R4 000 which was in itself quite substantial when regard is had to
the fact that he was a student. Contrary to the principles applicable to the
fixing of the amount of bail, the trial judge fixed it at an amount which he
could clearly not afford to pay. Fixing bail at an excessive amount in a
case involving a poor person such as the present appellant, is tantamount
to a refusal.
[11] Before granting bail the trial court’s attention was drawn to the
error it had committed by imposing a sentence which exceeded the
maximum punishment prescribed for the offence. This manifestly
demonstrated good prospects of success in favour of the appellant.
During the hearing of that application, the court alluded to the fact that it
would take long for his appeal to be heard. Yet bail was fixed at an
amount he could not afford to pay. In S v Mohamed 1977 (2) SA 531 (A)
Trollip JA said (at 544H):
‘The means and resources of an accused are therefore an important, although not the
sole, criterion in fixing the amount of bail .... Hence, speaking very generally, I think
that if a court is minded in all the circumstances to release an accused on bail, it
should not fix an amount that is quite beyond his means and resources, otherwise that
would nullify its decision to release him.’
[12] In this case the exorbitant amount fixed coupled with the delays in
prosecuting the appeal have infringed the appellant’s right of appeal. He
ended up serving more time in prison than justified. As it appears from
the substituted sentence, he served two additional years without just cause
and in violation of his right to freedom.
[13] The delays in prosecuting the appeal were mainly caused by the
attorneys appointed by the Legal Aid Board for him, as he could not
afford legal representatives of his choice. He was granted leave on
5 December 2002 and the first step towards the prosecution of the appeal
was taken in January 2003. His attorney instructed adv Sikhwari to
prepare a notice of appeal. Nothing happened afterwards until May 2004
when the advocate returned the brief without the notice because he had a
dispute about fees with the Board. Meanwhile the attorney had taken
receipt of the record, consisting of 47 pages only, from transcribers on
24 July 2003. No explanation was given for this delay despite the fact that
s 316 of the Criminal Procedure Act 51 of 1977 requires such record to be
transmitted to the registrar of this court immediately after leave has been
granted.
[14] The next step taken by the attorney was to brief adv Snyman on
1 July 2004. He was instructed to draw heads of argument which he failed
to produce for a period of a year. His explanation for the failure is that he
was unable to carry out the instructions due to other work-related
commitments. It is not explained why he did not return the brief
immediately as he could not attend to it. In these circumstances I find the
explanation given by Snyman to be unsatisfactory. Although the
appellant’s attorney has deposed to an affidavit in support of the
application for condonation, he has furnished no explanation for the
delays occasioned by his inaction. This conduct by an officer of the court
is unacceptable, more so in circumstances of the present case.
[15] By providing legal representation in matters such as this the Board
is discharging one of the most important constitutional obligations
imposed on the state by our Constitution (s 35(3)). This obligation is
necessitated by the fact that the majority of people in this country are – as
the law reports inform us – poor and they cannot afford to pay for legal
representation. Poor service by lawyers appointed by the Board, which
lead to infringement of accused persons’ rights, does not constitute a
proper discharge of that obligation. As already indicated, the delays have
resulted in the appellant serving unjustifiably excessive time in prison. In
view of the fact that none of these delays were attributed to the appellant
and that the state did not oppose the application, we granted condonation
asked for.
[16] Having had regard to all factors relevant to sentence, it appeared to
us that a sentence of 3 years’ imprisonment was appropriate in the present
circumstances. It followed that the appeal had to succeed. For these
reasons the order referred to in para [1] above was issued.
____________________
C N JAFTA
JUDGE OF APPEAL
CONCUR:
)
NUGENT JA
)
MHLANTLA AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
21 September 2007
Status: Immediate
TAKALANI FHETANI v THE STATE
Please note that the media summary is intended for the benefit of the media and does not form part
of the judgment of the Supreme Court of Appeal
On 11 September 2007 the Supreme Court of Appeal (the SCA) set aside a sentence of 15 years’
imprisonment which was imposed by the Venda High Court on Mr Takalani Fhetani, for sleeping
with a girl under the age of 16 years. Fhetani was convicted of contravening s 14 of the Sexual
Offences Act 23 of 1957 which prohibits sexual intercourse with a girl under the age of 16 years
with her consent. It appears that Fhetani and the girl were lovers and that they spent the night
together on 18 June 2002. The mother of the girl laid a charge of rape with the police subsequent to
her daughter failing to return home.
Having pleaded guilty to the alternative charge of having sexual intercourse with a girl below the
age of 16 years, the High Court sentenced him to 15 years’ imprisonment, even though the Sexual
Offences Act prescribes a maximum sentence of 6 years for such offence. Afterwards he was
granted leave to appeal but bail was fixed at R10 000. He was unable to raise the bail money
because he was a matric learner at the time of the conviction in September 2002.
As a result of this and the delays caused by his Legal Aid Board attorneys, he spent 5 years in jail
before his appeal was heard by the SCA which reduced the sentence to 3 years’ imprisonment and
ordered his immediate release from jail.
|
2510
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 522/13
Not Reportable
In the matter between:
TSHAKWATA GERSON
FIRST APPELLANT
MATORO NTHATHENI COLBERT
SECOND APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Tshakwata v The State (522/13) [2014] ZASCA
(31
March
2014)
Coram:
Navsa, Theron and Petse JJA
Heard:
5 March 2014
Delivered:
31 March 2014
Summary:
Appeal against conviction and sentence on charge of murder. ─ Hearsay
evidence ─ statements made by two co-accused to a magistrate ─ not admissible ─
statements in any event in conflict. ─ Evidence insufficient to sustain a conviction.
ORDER
On appeal from: Limpopo High Court, Thohoyandou (Makgoba J sitting as court of
first instance):
The appeal is upheld and both the convictions and resultant sentences are set aside.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Petse JA (Navsa and Theron JJA concurring):
[1] The two appellants ─ together with four others who do not feature in this
appeal ─ were convicted in the Limpopo High Court (Makgoba J) on one count of
murder. Each was subsequently sentenced to imprisonment for life. They each
appeal against their convictions and resultant sentences with leave of the high court
(Ebersohn AJ).
[2] The appellants who were accused 5 and 6 at the trial (and their four co-
accused) pleaded not guilty and elected not to disclose the basis of their defence.
The death of the deceased was not in dispute. It appears that her death was as a
result of a ritual killing. This is evident from the extreme mutilation of the body. What
was in issue was the identity of the persons who caused her death. Several
witnesses were called to testify on behalf of the State. None gave evidence directly
implicating the appellants. During the course of the State’s case the State sought to
tender evidence of the statements alleged to have been made by accused 3 and 4
which, inter alia, it was submitted, incriminated the appellants. The State also sought
to tender evidence relating to pointings out that accused 3 and 4 were alleged to
have made. The admissibility of those statements and the pointings out was
contested by the affected accused on the grounds that they were not made freely
and voluntarily. Consequently a trial-within-a-trial was held to determine their
admissibility.
[3] At the conclusion of the trial-within-a-trial the high court ruled that the
statements were admissible. Following the admission of the statements the State
called two more witnesses, Mr Mutshelembele, who was employed at Mutale in the
Environmental Affairs Division and Captain Mphaphuli, the Investigating Officer. The
evidence of Mutshelembele was in substance aimed at discounting any possibility
that the deceased might have been killed by a crocodile. As to the evidence of the
investigating officer, the State sought to establish that the appellants were some of
the persons implicated in the statements made by accused 3 and 4.
[4] The admissible evidence tendered at the trial by the State was briefly to the
following effect. On 16 January 2001 the accused were, at different stages during the
day, seen at the homestead of Ms Maria Thivhuleli Ndou at Tshikundamalema
drinking traditional beer. Accused 1 and 2 were in the company of the deceased.
Later in the day the appellants and accused 3 and 4 who had been drinking together
left. I pause to record that accused 3 was married to the deceased. Before sunset
accused 1 departed and shortly thereafter accused 2 and the deceased who had
been drinking together also left. On 18 January 2001, Mr Josias Corombi Radzilani,
then residing at Tshikundamalema, discovered the deceased’s body floating in a
puddle of water next to a river and summoned the police who retrieved the body
which was subsequently identified by accused 3’s elder brother. On 24 January 2001
Doctor Akut conducted a post-mortem examination on the body of the deceased but
was unable to determine the cause of death because of the body’s advanced state of
decomposition and because of the number of major organs that were missing.
[5] As alluded to above, accused 3 and 4 made statements, the former to a
magistrate at Mutale and the latter both to a magistrate at Mutale and to Captain
Mphaphuli. In his statement accused 3, inter alia, said that on 16 January 2001 he
left his home in search of his wife, the deceased, when told that the deceased had
gone to the bar. When he arrived at the bar he did not find the deceased but
remained there drinking liquor until 17h00. Thereafter he left to return home with
accused 4 but discovered on arrival that the deceased was still not at home. He then
went to Murangwe where he drank more liquor together with accused 4. Later he left
with accused 4 and when they reached a river they found the appellants drinking. He
was called by accused 1 and then instructed (he does not state by whom) to
blindfold accused 4. He then heard a loud bang after which there was silence. He
and accused 4 left the scene to return home to sleep. This statement is meaningless
in that it does not connect any of the appellants with the killing of the deceased.
Indeed it does not connect anyone of them to any wrongdoing.
[6] In his statement, accused 4 starts off by saying that he ‘admits that he
directly participated in the killing of the deceased Vho-Mudangawe’, which, on the
face of it appears to be a confession to participating in a killing. However, later in the
statement he says the following:
‘[l] complied under duress or coercion. I have never seen or witness as to what was being
done to the deceased since my eyes were closed or shut.’
[7] It is noteworthy that, in the statement, there is reference only by surname to
individuals who were involved in ‘grabbing’ a deceased who is named in the terse
manner described in para 6 above. The surname of accused 3 does not appear in
the statement.
[8] In order to overcome the obvious problem relating to the identification of
participants, the State resorted to calling the investigating officer to explain who
accused 4 was referring to in his statement. The investigating officer testified that
accused 4 was referring to all the accused. There was no basis for permitting the
investigating officer to do so.
[9] All six accused did not testify at the trial. The high court placed much store on
the fact that the appellants (and their erstwhile co-accused) did not testify in their
defence. It held that the consequence of such failure was that the State’s case
against them remained unchallenged. Consequently, the high court concluded that
nothing militated against the acceptance of such evidence more particularly having
regard to the statements made by accused 3 and 4.
[10] Whilst the failure of the accused to testify may in appropriate circumstances
be a factor in deciding whether their guilt has been proved beyond a reasonable
doubt by the State, this is permissible only when the State has at least established a
prima facie case. (See eg S v Francis 1991 (1) SACR 198 (A) at 203f-i.) In this case
the State’s case came nowhere near establishing a prima facie case against the
appellants. Thus there was no need for the appellants to lead any evidence in
rebuttal. See eg S v Chabalala 2003 (1) SACR 134 (SCA) para 21. Accordingly the
failure of the appellants to testify at the trial did not avail the State in discharging the
onus resting upon it.
[11] If indeed the statement by accused 4 was a confession, as it purported to be,
it was not, in terms of s 219 of the Criminal Procedure Act 51 of 1997, admissible
against anyone other than himself. The problem, however, is that the statement
ultimately exonerates him and it is unclear who was named therein and, indeed, it is
difficult to establish what those ‘named’ actually did. There was no application or
ruling in terms of s 3(1) of the Law of Evidence Amendment Act 45 of 1988 to have
the statements admitted on any other basis. That they were admissible at all is highly
questionable. In any event, as demonstrated above, they are virtually meaningless
and do not contribute to the State’s case. Consequently, it is clear that the State
failed to prove the guilt of the appellants beyond a reasonable doubt.
[12] Faced with the foregoing insurmountable hurdles counsel for the State was
constrained to concede that the conviction of the appellants is plainly insupportable.
[13] Accordingly the appeal is upheld and both convictions and resultant
sentences are set aside.
_________________
X M PETSE
JUDGE OF APPEAL
APPEARANCES:
For the Appellants: M J Manhwadu
Instructed by:
Justice Centre, Thohoyandou
Justice Centre, Bloemfontein
For the Respondent: R J Makhera
Instructed by:
Director of Public Prosecutions, Thohoyandou
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
31 March 2014
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
TSHAKWATA and another v THE STATE
The Supreme Court of Appeal (SCA) today upheld the appeal of the appellants against their
convictions and related sentences imposed in the Limpopo High Court, Thohoyandou on a
charge of murder.
The issue before the SCA was whether the appellants had associated themselves with the
murder of the deceased who was the wife of one of their co-accused in the High Court. The
appellants were convicted on the basis of statements and pointings out that were made by two
of their co-accused. The affected two co-accused had contested the admissibility of the
statements and pointings out on the grounds that they were not made freely and voluntarily.
The high court ruled the statements and pointings out admissible.
At the main trial none of the six accused testified in their defence. There was no other
admissible evidence implicating the appellants in the commission of the murder. The high
court held that the failure of the appellants and their co-accused to testify meant that the
State’s case against them was unchallenged.
The SCA found that the statements made by the two co-accused were meaningless and in any
event conflicting. It went on to say that even if the statements were admissible, which was
highly questionable, they did not assist the State.
Consequently the SCA held that the conviction of the appellants were not sustainable. Hence
the appeal was allowed and convictions and the related sentences were set aside.
|
1258
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
NOT
REPORTABLE
Case number: 358/07
In the matter between:
LANCINO FINANCIAL INVESTMENT (PTY) LTD
FIRST APPELLANT
J H HATTINGH
SECOND APPELLANT
and
F J BENNET
FIRST RESPONDENT
MAJESTIC SILVER TRADING 94 (PTY) LTD
SECOND RESPONDENT
CORAM:
HARMS ADP, NUGENT, HEHER, VAN HEERDEN JJA et HURT
AJA
HEARD:
19 MAY 2008
DELIVERED:
30 MAY 2008
Summary:
Pleading – Exception upheld – Almost invariable practice for court to
give pleader opportunity to amend - Order for costs – Where separate
orders for costs made for separate aspects of the hearing, order must
indicate to taxing master how costs are to be apportioned.
Neutral citation:
Lancino Financial Investments (Pty) Ltd v F J Bennet (358/2007)
[2008] ZASCA 74 (30 MAY 2008)
_____________________________________________________________________
HURT AJA/
HURT AJA:
[1] The appellants instituted action against the respondents in the High Court of the
High Court Pretoria for an order for specific performance of an executory contract, and in
the alternative, for cancellation of the contract and damages. There was a second
alternative claim based on enrichment. The first respondent excepted to the claims and the
court upheld the exceptions in respect of the main and first alternative claims. An order was
granted in the following terms: -
'1.
That the exceptions in regard to claim 1 and also claim 2 in the alternative are upheld, with costs.
2.
That claim 1 and claim 2 in the alternative are both dismissed with costs.
3.
That the plaintiffs both or jointly or severally, the one paying the other to be absolved, are directed to
pay the aforesaid costs mentioned in order 1 and order 2 herein above, which costs shall include the
costs of senior counsel in both orders.
4.
That the exception in regard to the alternative claim 3 is dismissed with costs, which costs shall
include the costs of senior junior counsel.'
The appellants appeal, with leave of the court a quo, against the orders in paragraphs 1, 2
and 3. I will refer to the parties by their designations in the court a quo.
[2] The particulars of claim alleged that, in December 2003, the plaintiffs and the first
defendant concluded a contract (described as a 'samewerkingskontrak') concerning, inter
alia, the development of a township on a property (referred to as 'plot 62') owned by the
first defendant. (There were other aspects of co-operation which formed the subject matter
of the agreement, but they are not directly relevant to this judgment.) In regard to this
development, the plaintiffs pleaded that: -
‘7.3
Die Eerste Eiser en die Eerste Verweerder sal saamwerk om Hoewe 62 as 'n dorp te ontwikkel en die
erwe te verkoop, soos volg:
7.3.1
Die Eerste Verweerder sal die Eerste Eiser magtig om aansoek vir dorpstigting op Hoewe 62
te doen.
7.3.2
Die eerste Eiser sal alle kostes en uitgawes wat aan die aansoek om dorpstigting verbonde
is, betaal.
7.3.3
Indien die aansoek om dorpstigting suksesvol sou wees, sal –
(a)
die Eerste Eiser alle handelinge verrig wat nodig is om die dorp op Hoewe 62 te stig;
(b)
Die Eerste Eiser alle kostes wat aan die stigting van die dorp verbonde is, insluitend
die installasie van grootmaat- en interne dienste, betaal; en
(c)
Die betrokke vaste eiendom aan 'n nuwe maatskappy oorgedra word waarvan die
Eerste Eiser en die Eerste Verweerder elkeen 50% van die aandele sal hou, en
waarvan die Tweede Eiser en die Eerste Verweerder die alleen-direkteure sou wees.
7.3.4
Wanneer die dorpstigting voltooi is en die betrokke vaste eiendom in die naam van die
voormelde nuwe maatskappy geregistreer is, sal die erwe waaruit die dorp bestaan deur die
Eerste Eiser bemark word, ooreenkomstig verkoopkontrakte –
(a)
waarkragtens die verkoopprys van elkeen van die erwe aan die gemelde nuwe
maatskappy betaalbaar sou wees; en
(b)
wat voorts aan 'n maatksappy bekend as Sencon 1 (Edms) Bpk die eksklusiewe reg
sal gee om wonings op die erwe op te rig en wins uit die oprigting van die wonings te
maak; en
(c)
waarkragtens die Eerste Eiser geregtig sal wees om die aktevervaardiger wat die
registrasie van transport aan die kopers moet hanteer, te nomineer, en sal toesien
dat sodanige registrasie plaasvind.
7.3.5 Die koopprys wat deur die voormelde nuwe maatskappy aan die Eerste Verweerder betaalbaar
sal wees vir die verkryging van die betrokke vaste eiendom, word bereken as een helfte van die
som van die netto verkoopprys van elke erf aan die uiteindelike kopers daarvan, welke bedrag
deur die nuwe maatskappy aan die Eerste Verweerder afbetaal sal word deur middel van die
betaling van die ooreenstemmende gedeelte by registrasie van transport van die erwe in die
naam van die onderskeie kopers daarvan.
7.3.6 Wanneer die geheel van die bedrag wat aan die Eerste Verweerder betaalbaar is, oorbetaal is,
dra die Eerste Verweerder sy 50% aandeelhouding in die nuwe maatskappy aan die Eerste
Eiser oor, sodat die Eerste Eiser die alleen-aandeelhouer van die nuwe maatskappy word, en
die Eerste Verweerder bedank voorts as direkteur van die nuwe maatskappy. Die nuwe
maatskappy sou dan geen verdere verpligting gehad het nie.'
[3] To complete the relevant picture, it is alleged that the plaintiffs had discharged all
those obligations which had fallen due in terms of the contract up to 6 July 2005. However,
on that date, the first defendant transferred plot 62 to the second defendant pursuant to a
contract of sale. It is alleged that this act constituted a repudiation of the contract by the first
defendant, which the plaintiff is unwilling to accept. The plaintiff accordingly claims an order
for specific performance of the contract and demands that the first defendant be ordered to
perform all acts necessary to allow the first plaintiff to complete the application for approval
of the township development, and, upon the approval being granted, to put plot 62 at the
plaintiffs' disposal to enable the remainder of the contract to be carried out. As an
alternative claim (in the event of the court declining to grant the decree of specific
performance) the plaintiffs claim cancellation of the contract and damages amounting to
approximately R17 million. A large portion of this latter claim comprises damages allegedly
suffered by a company called Sencon (Pty) Ltd (the company referred to in paragraph
7.3.5) which, the plaintiffs allege, has suffered a loss as a result of being deprived of the
opportunity of the building that houses on plot 62. The plaintiffs allege that the second
plaintiff has taken cession of Sencon's claim in this regard.
[4] The first defendant excepted to the particulars of claim on three grounds, viz -
First, the agreement provided for the transfer of plot 62 to the new company for a purchase
price ('koopprys') equivalent to half the ultimate total purchase price of the erven in the
township. It purported, accordingly, to be an oral agreement for the alienation of land which
was invalid for want of compliance with section 2(1) of the Alienation of Land Act 68 of
1981.
Second, the stipulation in paragraph 7.3.4 relating to the securing, for Sencon, of the right
to build houses on the erven was a stipulatio alteri and, in the absence of an averment to
the effect that Sencon had accepted the relevant benefit, it would have acquired no rights
under the agreement and could therefore not have had a claim for damages which it could
cede to the plaintiff.
The third exception, which failed, need not be considered further, save in relation to the
order for costs.
[5] Counsel for the appellants, in his heads of argument, doggedly defended his
pleading against both exceptions. However, almost at the inception of his argument before
us, he conceded that the averments in connection with the terms of the agreement had
been neither accurately nor clearly pleaded. He also conceded that the exception to the
alternative claim for damages had been correctly upheld. In view of these concessions it is
not necessary to decide whether the first two exceptions were properly upheld. Having
made the concessions, counsel for the appellant shifted the thrust of his argument to the
issue of whether the order dismissing the main and alternative claims had been correctly
made. In this he found himself on firmer ground. It is apparent, if only from the plethora of
adjectives with which the pleader found it necessary to introduce paragraph 7, that clarity
has been sacrificed for breadth and, in all probability, so has accuracy. The contract
(assuming that a contract was, indeed, concluded) was plainly a complicated one. It
appears that the creation of a form of partnership was intended and that the first
defendant's contribution was to centre around plot 62. One must accept that more attention
to detail and a careful consideration of precisely how the parties intended to put their
agreement into effect may enable the plaintiffs, through their counsel, to formulate their
claims in clearer terms. Counsel for the first defendant submitted that the plaintiffs had
ample opportunity to amend their particulars of claim before judgment and, having failed to
do so, cannot now seek to rescue their position by amendment. That contention flies in the
face of what this court has referred to as 'the invariable practice' when an exception is
upheld. In Group Five Building Ltd v Government of the Republic of South Africa (Minister
of Public Works and Land Affairs) 1993 (2) SA 593 (A) at pp 602C to 604I, Corbett CJ set
out the reasons for not resorting to the 'drastic remedy' of dismissing a plaintiff's claim in
these circumstances, and in Rowe v Rowe 1997 (4) SA 160 (SCA) at p 167, Hefer JA said :
'. . . it is doubtful whether this established practice brooks of any departure, and . . . in the rare cases in which
a departure may perhaps be permissible, one expects to find the reasons in the Court's judgment.'
No such reasons were given by the judge a quo.
[6] I accordingly consider that the appeal against the upholding of the exceptions should
be dismissed, but that the appeal against the dismissal of the plaintiffs' action should be
upheld.
[7] That leaves only the issues concerning costs. It is necessary to comment on the
orders for costs which the judge a quo made in paragraphs 1, 2 and 4 of his order. Where a
court decides to make separate costs orders in relation to separate aspects of a hearing, it
is incumbent upon the judge, in the order, at least to give the taxing master guidance as to
what proportion of the total time each such aspect occupied, for without that information,
the taxing master will have no basis on which to make his allocation. The costs orders
made in paragraphs 1, 2 and 4 are accordingly defective in this regard. Moreover, it seems
from the judgment that the exception to the second alternative claim based on enrichment
could hardly have occupied a substantial portion of the hearing. In those circumstances, in
any event (considering that the first defendant was plainly the successful party) it is
doubtful whether the learned judge should have exercised his discretion to make a
separate costs order. However, absent a cross-appeal, the costs order cannot be varied in
favour of the respondent. Although the plaintiffs have been successful on appeal in relation
to the dismissal of their claims, in view of the concessions (wisely) made by their counsel
as to the exceptions themselves, I consider that the fairest result would be to make no
order as to the costs of the appeal.
[8] (a)
The appeal is allowed in part with no order as to costs;
(b)
The order of the court a quo is altered by the insertion of §4:
‘4.
The plaintiffs are given leave to amend their particulars of claim, the notice of
intention to amend in terms of Rule 28 to be delivered within 20 days of the
date of this judgment.’
…………………….
N V HURT
ACTING JUDGE OF APPEAL
Concur:
HARMS ADP
NUGENT JA
HEHER JA
VAN HEERDEN JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number: 358/07
In the matter between
LANCINO FINANCIAL INVESTMENT (PTY) LTD
FIRST APPELLANT
J H HATTINGH
SECOND APPELLANT
and
F J BENNET
FIRST RESPONDENT
MAJESTIC SILVER TRADING 94 (PTY) LTD
SECOND RESPONDENT
From: The Registrar, Supreme Court of Appeal
Date: 2008-05-
Status: Immediate
The Supreme Court of Appeal today partly upheld an appeal against a judgment in the
Pretoria High Court in which claims by the plaintiffs, Lancino Financial Investment (Pty) Ltd
and Mr J H Hattingh, had been dismissed on the ground that the claims as pleaded did not
make out a valid cause of action. The SCA upheld the finding that the claims did not make
out a valid cause of action, but set aside their dismissal which, instead, gave the plaintiffs
leave to amend them by no later than 27 June 2008. No order was made as to the costs of
the appeal.
|
431
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 200/2015
In the matter between:
THEMBANI MABASO
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Mabaso v The State (200/2015) [2016] ZASCA 29 (23 March 2016)
Coram:
Leach and Zondi JJA and Fourie AJA
Heard:
2 March 2016
Delivered:
23 March 2016
Summary: Pointing out by accused person in terms of s 218 of the Criminal Procedure
Act 51 of 1977 ─ flagrant disregard of accused’s constitutional right to legal
representation ─ unlawful production of a confession in the guise of a pointing-out ─
handwritten notes of pointing-out not read back to accused ─ notes not constituting
admissible probative material ─ conviction and sentence set aside.
ORDER
On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Sishi J
sitting as court of first instance):
The appeal is upheld and the conviction and sentence imposed pursuant thereto are
set aside.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Fourie AJA (Leach and Zondi JJA concurring):
[1] The appellant, Thembani Mabaso, was indicted in the KwaZulu-Natal
Division, Pietermaritzburg, on a charge of murder. He pleaded not guilty to the
charge. In his written statement in terms of s 115(1) of the Criminal Procedure Act 51
of 1977 (the CPA), he recorded that he had been interrogated and assaulted by
members of the South African Police Service, resulting in him making a formal
pointing-out to the police which was not done freely and voluntarily.
[2] At the commencement of the trial before Sishi J, the prosecutor informed the
court a quo as follows:
‘My lord, the only evidence that I have linking the accused to this offence is a pointing [out] to
which he refers, so we will have to proceed with a trial-within-a-trial when I get to the
evidence.’
[3] In the event, a trial-within-a-trial was held with several police officers and the
appellant testifying under oath. At issue was the admissibility of a pointing-out made
by the appellant to Captain E G van Rensburg (Van Rensburg) at Estcourt, KwaZulu-
Natal on 14 July 2005, during which the appellant made certain statements
amounting to a confession. At the conclusion of the trial-within-a-trial the pointing-out
evidence was ruled admissible and the main trial proceeded. The court a quo
subsequently convicted the appellant of murder, solely on the strength of the
utterances made by him during the course of the pointing-out.
[4] The trial court proceeded to sentence the appellant to imprisonment for life.
His application for leave to appeal was refused by the trial court but, on petition to
this court, he was granted leave to appeal against his conviction and sentence.
[5] It was common cause that the deceased had been murdered, having been
shot execution style while in his vehicle on the outskirts of Estcourt. There were no
witnesses to the murder, but some five months later a number of police officers,
members of the Serious and Violent Crime Unit at Cato Manor, arrived at the
appellant’s residence in Estcourt and arrested him on a count of murdering the
deceased. The appellant denied all knowledge of the murder, but was taken into
custody by the police who transported him to the Cato Manor Police Station, about
two hours away from Estcourt. The appellant travelled in a police vehicle with
Captain Dladla (Dladla), the arresting officer. According to Dladla the murder of the
deceased was not discussed at all during the journey. However, he testified that,
soon after their arrival at Cato Manor, the appellant suddenly indicated that he had
been involved in the murder of the deceased. According to Dladla he warned the
appellant that what he said amounted to a confession and therefore he was not
going to continue questioning him. Dladla then asked the appellant whether he would
be prepared to do a pointing-out in regard to the aspects that he had mentioned to
him. The appellant agreed.
[6] A strange feature of Dladla’s evidence was his failure to record the fact that
the appellant had allegedly given him this information. He said that his diary
contained a note to this effect, but he was unable to produce the diary. It is also
strange why, had the appellant provided Dladla with information regarding the
murder, which Dladla considered amounted to a confession, Dladla did not suggest
to the appellant that he should make a formal confession to a magistrate. He chose
rather to arrange a pointing-out by the appellant under the auspices of a member of
the police, Van Rensburg, stationed at the provincial headquarters in Durban. After
all, the purpose of a pointing-out under s 218(2) of the CPA is not to extract a
confession, but to obtain evidence of something pointed out by the accused or
discovered as a consequence of information given by the accused.
[7] Be that as it may, Van Rensburg conducted the pointing-out at Estcourt on 14
July 2005, with Inspector S C Zondo (Zondo) as the interpreter. A formal record of
the pointing-out was kept by Van Rensburg, which served as Exhibit E in the court a
quo. The document contains a number of prescribed questions to be put to the
person making the pointing-out and provides space for a written note of the actual
pointing out. At the outset, one asks why the appellant had developed this sudden
urge to do a pointing-out. The events following his arrest, as described by Dladla,
provide no indication why the appellant, after initially denying all knowledge of the
murder, would now wish to implicate himself by pointing out features related to the
murder. When the appellant was asked by Van Rensburg what was said to him by
the police when he was approached to do the pointing-out, he said that they had
asked if he can assist them with a pointing-out in the Estcourt area. This rather begs
the question as to why he had the sudden change of heart.
[8] Several entries made by Van Rensburg on Exhibit E tend to fuel one’s sense
of disquiet. Strangely enough, Van Rensburg not only recorded the date of the
pointing-out as 13 July 2005 (while it was 14 July 2005), but he also indicated that he
had met the appellant in person at the Estcourt Police Station, while it was in fact at
Cato Manor, whereafter they departed for Estcourt. Also, with regard to the right of
the appellant to consult a legal representative, the entries made by Van Rensburg
raise concern. When asked whether he wished to avail himself of legal
representation, the initial answer of the appellant was recorded as ‘N/A’ [not
applicable]. Then follows the following recordal by Van Rensburg:
‘Accused requests to speak to Mrs Mabaso at Estcourt Police Station to arrange money for
an attorney. But don’t want him now only for court.’
This indicates that the appellant wished to be assisted by a legal representative. It is
difficult to understand why he would have added that legal representation would only
be required at court. By all accounts the appellant is an intelligent person who was
on the brink of pointing out matters which could incriminate him, yet he refrains from
obtaining legal representation to protect his rights. I should add that, in his evidence,
the appellant reiterated that he wished to have immediate legal representation, but
that his request was refused.
[9] Exhibit E further records that the appellant was then asked whether he wished
to continue with the pointing-out. His answer is recorded as ‘yes’. However, the
following appears immediately thereafter:
‘[The] person requested again that he want to speak to Mrs Mabaso so that she knows that
he is arrested. Request was honoured.’
I should add that Mrs Mabaso is the sister-in-law of the appellant and that she is a
captain in the South African Police Service, stationed at Estcourt Police Station.
[10] It is alarming that Van Rensburg, well-knowing that the appellant wished to
contact Mrs Mabaso for the purpose of obtaining legal representation, then
proceeded with the pointing-out. Even more alarming, is the fact that the entry
‘request was honoured’ is incorrect. The entry conveys that the request to speak to
Mrs Mabaso was honoured at that point in time, however, it is common cause that
the appellant was only afforded an opportunity to speak to Mrs Mabaso after the
pointing-out had taken place. This amounted to a flagrant disregard of the appellant’s
constitutional right to legal representation.
[11] Van Rensburg kept handwritten notes of the pointing-out by the appellant.
The notes show that the appellant firstly pointed out a tuck shop where he and two
others drank some beer and then he pointed out another spot, saying ‘[h]ere the
mayor Mr Bhengu was shot’. Thereupon Van Rensburg asked him ‘who shot Mr
Bhengu?’ The appellant is recorded as answering ‘I did’. This constituted the
evidence upon which the appellant was found guilty of the murder of the deceased
(Mr Bhengu).
[12] As already mentioned, a pointing-out by an accused is regulated by s 218(2)
of the CPA. This subsection entitles the prosecution to adduce evidence of the
pointing-out by an accused notwithstanding that the pointing-out forms part of an
inadmissible confession. However, our courts have often warned that s 218(2) does
not authorise the production of a confession in the guise of a pointing-out. See S v
Mbele 1981 (2) SA 738 (A) at 743C; S v Magwaza 1985 (3) SA 29 (A) at 36 and Du
Toit et al Commentary on the Criminal Procedure Act (loose-leaf) vol 2 at 24-67.
[13] In this court the State correctly conceded that the circumstances giving rise to
the pointing-out, as well as the manner in which Van Rensburg questioned the
appellant and obtained the damning answer from him, constituted a confession being
elicited from him. The issue then becomes whether evidence of either the pointing-
out itself, without regard being had to the appellant’s answer to the question he was
asked, or such answer was admissible.
[14] In the light of the failure of the police to allow the appellant to obtain legal
advice from his sister-in-law before the pointing-out, serious doubt must exist as to
whether either the pointing-out or the appellant’s utterance was admissible in the
light of his right to a fair trial guaranteed by s 35(3) of the Constitution. This is
particularly so as we know that the following day, after seeing his sister-in-law, the
appellant refused to make a formal confession when taken to another senior police
officer to do so. The inference is irresistible that this was due to the advice she had
given him and that, if he had seen her before the pointing-out, he would have
remained silent or not done the pointing-out at all. Bearing that in mind, it can hardly
be said that the admission into evidence of the confession at the pointing-out, made
only after the appellant had been denied legal assistance and questioned by Van
Rensburg, was not detrimental to the administration of justice.1 In these
circumstances both the pointing-out and the confession probably fell to be excluded
under s 35(5) of the Constitution.
1 Cf S v Mthembu 2008 (2) SACR 407 (SCA) paras 25-26.
[15] But no final decision on that issue needs be taken as it is not the sole difficulty
facing the State. In keeping the written notes of the pointing-out, Van Rensburg was
assisted by the interpreter, Zondo. When considering these notes it has to be borne
in mind that the ipsissima verba of the appellant, recorded in English, is the product
of a translation by Zondo from isiZulu to English. This includes the crucial part of the
notes, which records the appellant as stating that he had shot Mr Bhengu, the
deceased. Van Rensburg testified that, upon the conclusion of the pointing-out, he
read the notes back to the appellant, with Zondo translating, and that the appellant
indicated that the notes were correct. Zondo, however, testified that they did not go
through the written notes with the appellant. When it was put to him that Van
Rensburg testified that he did read the notes back to the appellant with the
assistance of Zondo as the interpreter, the latter responded, ‘[n]o it never, it did not
happen’.
[16] If one has regard to the pointing-out record, and in particular questions 6, 7
and 8 dealing with the reading back of the pointing-out notes to the appellant, there
is no recordal of any reply to those questions by the appellant. This corroborates the
version of Zondo, namely that the handwritten notes of Van Rensburg were not read
back to the appellant. It follows that the appellant, who denied that he had made the
alleged incriminatory statements, at no stage confirmed the correctness of Van
Rensburg’s pointing-out notes. The result is that the handwritten notes of Van
Rensburg did not constitute admissible probative material. In fact, the notes
constituted no more than inadmissible hearsay statements. On this basis alone the
evidence of the confession allegedly made by the appellant ought not to have been
admitted.
[17] As the confession was the sole evidence against the appellant, and ought not
to have been admitted, he should not have been convicted. Therefore the appeal
must succeed.
[18] The following order is made:
The appeal is upheld and the conviction and sentence imposed pursuant thereto are
set aside.
________________________
P B FOURIE
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
C B Mann SC
Instructed by:
S P Mncwango and Associates, Durban
Ponoane and Associates, Bloemfontein
For Respondent:
D A Paver
Instructed by:
The Director of Public Prosecutions, Pietermaritzburg
The Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
23 March 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Mabaso v The State (200/2015) [2016] ZASCA 29 (23 March 2016)
The Supreme Court of Appeal today upheld the appeal of the appellant who had been convicted of
murder and sentenced to imprisonment for life by the KwaZulu-Natal High Court. The SCA held that
there had been a flagrant disregard of the appellant’s constitutional right to legal representation, as
well as the unlawful production of a confession in the guise of a pointing-out by the appellant. Fatal to
the case of the State was the fact that the handwritten notes made by the police officer in control of
the pointing out, had not been read back to the accused. Therefore these notes did not constitute
admissible probative material. In the result the SCA set aside the conviction of murder and the
sentence of imprisonment for life imposed upon the appellant.
--- ends ---
|
1280
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 530/07
NO PRECEDENTIAL INTEREST
In the matter between:
BRAND HOUSE (PTY) LTD APPELLANT
and
SASFIN BANK LTD RESPONDENT
BRANDHOUSE BEVERAGES (PTY) LTD APPELLANT
and
SASFIN BANK LTD RESPONDENT
Neutral citation:
Brand House v Sasfin Bank (530/2007) [2008] ZASCA 96
(16 September 2008).
Coram:
Cloete, Maya et Cachalia JJA
Heard:
8 September 2008
Delivered:
16 September 2008
Summary: Summary judgment. Appellants disclosing bona fide defence.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: High Court, Cape Town (Thring J sitting as court of first
instance).
The following orders are made:
(1)
The appeals are allowed, with costs.
(2)
The orders of the court below are set aside and substituted, with the
following orders:
(a)
Under CPD Case No: 2241/2007 (the Brand House claim):
‘(i)
The application for summary judgment is refused.
(ii)
Leave to defend the action is granted to the defendant.
(iii)
The costs of the summary judgment application are reserved.’
(b)
Under CPD Case No: 2242/2007 (Brandhouse Beverages):
‘(i)
Summary judgment is granted in the sum of R367 924.37
together with interest thereon at the rate of 15,5 per cent per
annum a tempore morae.
(ii)
Save as aforesaid, the application for summary judgment is
refused.
(iii)
Leave to defend the action for the balance claimed is granted to
the defendant.
(iv)
The costs of the summary judgment application are reserved.’
_____________________________________________________________
JUDGMENT
______________________________________________________________
CACHALIA JA (CLOETE, MAYA JJA CONCURRING)
[1] This judgment deals with two appeals against decisions by Thring J
given in the Cape High Court, whereby he ordered summary judgment, at the
instance of Sasfin Bank Ltd, against Brand House (Pty) Ltd in the sum of
R316 299.77 together with interest and costs, and against Brandhouse
Beverages in the sum of R1 024 773.36 also with interest and costs. These
appeals are with leave of the court below. It will be convenient to refer to the
appellants, where appropriate, individually as Brand House and Brandhouse
Beverages and, to the respondent, as Sasfin.
[2] The appellants, who appear to be associated companies, have
separate accounts with Sasfin arising from a cession agreement between
Sasfin and Clickrite Gauteng (Pty) Ltd in terms of which Sasfin took over
Clickrite’s claims against them. These claims relate to goods sold and
delivered by Clickrite to the appellants. The main issue before us (as in the
court below), concerns whether, in disputing Sasfin’s quantification of the
claim against each of Brand House and Brandhouse Beverages, they
disclosed a bona fide defence. In both cases the summons was supported by
a trade creditor’s statement, which set out how the amounts, for which
summary judgment was sought and granted, were calculated. In its particulars
of claim Sasfin averred that these statements reflect all of the amounts the
appellants have paid and that the balances accordingly represent the deficit,
ie the amounts still owing.
[3] The affidavits opposing summary judgment in the two matters,
deposed to by one Maria Christina Juul, who describes herself as the ‘Client
Liaison Officer’ of the appellants, are identical. In both, she pertinently denies
that the statements attached to the particulars of claim ‘are a full record of all
of the payments made’. To corroborate this allegation she attaches a
reconciliation statement which, she says, ‘reflects all payments made’ to
Sasfin. The clear implication of these statements is that payments over and
above those taken into account by Sasfin were made. It is contended on
behalf of the appellants that the information appearing in the reconciliation
statement reveals that Sasfin owes Brand House R155 600. 92, while
Brandhouse Beverages owes Sasfin R367 923.60. So Brandhouse
Beverages concedes that Sasfin is entitled to summary judgment in this
amount.
[4] In the court below, the learned judge found that as the author of the
reconciliation statement had not deposed to an affidavit, its contents for this
reason constituted hearsay evidence and were thus inadmissible. He also
found that the contents of the reconciliation statement were neither clear nor
readily intelligible and that there were discrepancies between it and Ms Juul’s
affidavits. He noted that all that the appellants were able to aver was that their
combined indebtedness did not exceed the sum of R212 322.65 and that they
were unable to specify the extent of each of their indebtedness to Sasfin.
(This amount was arrived at by deducting the R155 600.92 allegedly owed by
Sasfin to Brand House from the R367 923.60 which Brandhouse Beverages
concedes it owes to Sasfin.) And further, the judge observed that counsel,
who appeared on behalf of the appellants in the court below, was not able to
provide any further elucidation in argument. He thus held that these
shortcomings meant that the appellants had not established that either had a
bona fide defence to Sasfin’s claim.
[5] For present purposes it is not necessary to deal with the contents of
the reconciliation statement in any detail. I accept that the reconciliation
statement is not a model of clarity. And I can readily comprehend the judge’s
difficulty in deciphering the appellants’ quantification of the relevant amounts.
However, in this court, counsel for the appellants undertook a thorough
analysis of the reconciliation statement, both in their heads of argument and
during oral submissions in elucidation of Ms Juul’s opposing affidavit. Properly
understood the reconciliation statement shows the dates on which the
appellants allege that amounts of invoices Sasfin claims were outstanding,
were paid. Despite this counsel for Sasfin persisted in his submission that
neither Ms Juul’s affidavits nor the reconciliation statement indicated clearly
that the appellants had paid the full amounts owing. In my view the
submission is unmeritorious. Not only have the appellants now clearly and
fully explained their calculations but, by conceding that the amount of
R367 923.60 is owing by Brandhouse Beverages to Sasfin, have also
demonstrated their bona fides. In my view, this is sufficient to overcome the
threshold for resisting summary judgment.
[6] Concerning the finding by the court below that the reconciliation
statement attached to Ms Juul’s affidavit constituted inadmissible hearsay
evidence and also Sasfin’s submission that her designation does not suggest
that she has any personal knowledge of the facts, I am constrained to
disagree. She says in clear terms that she has personal knowledge of the
facts and even if she was not the author of the document she was able to
verify its contents. The reconciliation statement was therefore admissible. (Cf:
Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 424.)
[7] I turn to the question of costs. In the court below the appellants were
not represented by the same counsel as in the appeal. And the court’s
observation that counsel was not able to explain the payments reflected in the
reconciliation statement indicates that the appellants, by possibly failing to
present their case properly in the court below, may have been the authors of
their own misfortune. But the full facts of what occurred in the court below are
not before us. It is therefore appropriate to reserve the costs in that court and
counsel were agreed that such orders should be made in the event that the
appeals succeeded. However, it would have been clear to Sasfin, having
received the appellants’ heads of argument in the appeal, that Brand House
indeed raised a defence and Brandhouse Beverages a partial defence to its
claims. It must therefore bear the costs of having persisted in this appeal,
although the employment of two counsel was not in my view justified.
[8] The following orders are made:
(1)
The appeals are allowed, with costs.
(2)
The orders of the court below are set aside and substituted, with the
following orders:
(a)
Under CPD Case No: 2241/2007 (the Brand House claim):
‘(i)
The application for summary judgment is refused.
(ii)
Leave to defend the action is granted to the defendant.
(iii)
The costs of the summary judgment application are reserved.’
(b)
Under CPD Case No: 2242/2007 (Brandhouse Beverages):
‘(i)
Summary judgment is granted in the sum of R367 924.37
together with interest thereon at the rate of 15,5 per cent per
annum a tempore morae.
(ii)
Save as aforesaid, the application for summary judgment is
refused.
(iii)
Leave to defend the action for the balance claimed is granted to
the defendant.
(iv)
The costs of the summary judgment application are reserved.’
_________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT: J C BUTLER;
L A VAN DER WESTHUIZEN
INSTRUCTED BY: CLIFFE DEKKER INC; CAPE TOWN
CLAUDE REID INC; BLOEMFONTEIN
FOR RESPONDENT:
A SUBEL SC;
JT LOUW
INSTRUCTED BY: RELIHAN, MANAMELA & MAYER; JOHANNESBURG
LOVIUS BLOCK; BLOEMFONTEIN
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
16 September 2008
Status: Immediate
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal
BRAND HOUSE (PTY) LTD
v
SASFIN BANK LTD
The Supreme Court of Appeal (SCA) today allowed appeals by Brand House (Pty) Ltd
and its associated company Brandhouse Beverages (Pty) Ltd against decisions given
by the Cape High Court, whereby it ordered summary judgment at the instance of
Sasfin Bank Ltd in the sum of R316 299.77 and R1 024 773.36 respectively against
them.
The SCA found that Brand House and Brandhouse Beverages had presented sufficient
information before the court to justify their assertion that they had a bona fide defence
to Sasfin’s claims. But it found that Brandhouse Beverages had conceded that it owed
Sasfin an amount of R367 924.37, which represented part of the total amount claimed.
So the SCA granted summary judgment against Brandhouse Beverages in this
amount.
Brand House and Brandhouse Beverages were thus granted leave to defend Sasfin’s
actions against them. Sasfin was ordered to pay the costs of the appeal.
|
1539
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 036/08
AARON JONATHAN BROOKS
Appellant
and
THE MINISTER OF SAFETY AND SECURITY
Respondent
___________________________________________________________________
Neutral citation:
Brooks v Minister of Safety and Security
(036/08) [2008] ZASCA 141 (27 November 2008)
CORAM:
MPATI P, FARLAM and PONNAN JJA, KGOMO and
MHLANTLA AJJA
HEARD:
11 November 2008
DELIVERED:
27 November 2008
Summary:
Delict – liability of State - for loss of support in consequence of the
incarceration of the breadwinner
_________________________________________________________________________
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: The High Court (Cape Town) (HJ Erasmus J sitting as court of first
instance).
The appeal is dismissed with costs, including those consequent upon the
employment of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN JA (Mpati P, Farlam JA, Kgomo and Mhlantla AJJA concurring):
[1] This appeal has its genesis in events that formed the subject matter of
Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA). Those
events, which are offered as no more than a backdrop and which require no
elaboration at this stage, were succinctly set out by Nugent JA (para 1) as follows:
'Neil Brooks, who lived in Bothasig on the Cape Peninsula with his wife, Dawn, and their two
children, Nicole and Aaron, was fond of firearms. He owned a 9mm pistol and .38 revolver,
both of which he was licensed to possess in terms of s 3(1) of the Arms and Ammunition Act
75 of 1969. Brooks was also fond of alcohol, which he habitually consumed to excess. When
under its influence he was inclined to become aggressive and to abuse his family. On 21
October 1995 these various aspects of his life combined into tragedy. During the late
afternoon, after Brooks had been drinking at the family home, a domestic squabble erupted.
Brooks loaded both his firearms, placed a holster and more ammunition around his waist,
and confronted Dawn, who was then in the garage with the children. Brooks pointed the
cocked pistol at her, but she repeatedly pushed it away, and then he shot her. Although she
was injured Dawn managed to escape from the garage with Aaron and they sought refuge
across the road on the property of the respondent [Van Duivenboden]. Brooks then turned
on eleven-year-old Nicole, who remained trapped in the garage, and he shot and killed her
before following after Dawn. Meanwhile, Aaron, who was in possession of Dawn’s revolver,
had called on the respondent for assistance and had handed to him the revolver. The
respondent and his father went into the street to investigate, where they encountered Brooks
who began firing at them and at other neighbours who had come to investigate, with both
firearms. A bullet struck the respondent in the ankle as he attempted to flee and he
collapsed on the ground. Brooks found Dawn hiding in the respondent’s garage and he shot
her repeatedly until she was dead. He then returned to where the respondent had collapsed
and shot him in the shoulder before the respondent managed to ward him off by firing with
Dawn’s revolver. Ultimately the police arrived and Brooks was arrested. He is now serving a
long term of imprisonment for the crimes he committed that day.'
[2] The appellant is Aaron, the son of Neil Brooks. His grievance would appear to
lie against his father, but like Mr Van Duivenboden, he has chosen instead to sue the
State, represented by the respondent (the Minister of Safety and Security) for the
recovery of damages. The basis of this claim, once again like that of Van
Duivenboden, is that the police were negligent in failing to take the steps available to
them in law to deprive Brooks of his firearms. Had that been done, so it is postulated,
the tragedy would not have occurred.
[3] The particulars of claim allege:
'As a consequence of the shooting incident as aforesaid, the said Brooks was charged and
convicted of various offences, including murder, as a result of which he was given a
sentence of 20 years of imprisonment, which he still serves.
As a result thereof he has been rendered permanently unable to support Plaintiff as he
would otherwise have done.'
[4] Of the total amount claimed by the plaintiff, R168 000 lies in respect of 'loss of
support from his father' and R2 400 000 in respect of 'loss of a proper education
opportunity as a result of loss of support'. That portion of the plaintiff's particulars of
claim was met with an exception. Of the five grounds initially raised, the following
three – without the remaining two having been specifically abandoned – were
advanced in the court below: first, that no delict had been committed against the
appellant’s breadwinner; second, the respondent’s servants did not act wrongfully;
and, third, there was no causal nexus between the omission complained of and the
loss suffered. The second ground was upheld by H J Erasmus J in the High Court
(Cape Town), who issued the following order:
‘1
The exception to the plaintiff’s claim for loss of support and for loss of an education
opportunity arising from the incarceration of his father, Neil Brooks, is upheld with
costs, including the costs occasioned by the employment of two counsel.
The plaintiff is given leave, if so advised, to file amended particulars of claim within
one month.’
The judgment is reported as Brooks v Minister of Safety and Security 2008 (2) SA
397 (C). The present appeal is with the leave of the court below.
[5] The exception raises the issue of wrongfulness, which is a sine qua non of
Aquilian liability. Negligent conduct giving rise to damage is not per se actionable. It
is only actionable if the law recognises it as wrongful. As Brand JA stated in
Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA
138 (SCA) para 10:
'Negligent conduct manifesting itself in the form of a positive act causing physical damage to
the property or person of another is prima facie wrongful. In those cases, wrongfulness is
therefore seldom contentious. Where the element of wrongfulness becomes less
straightforward is with reference to liability for negligent omissions and for negligently caused
pure economic loss…. In these instances, it is said, wrongfulness depends on the existence
of a legal duty not to act negligently. The imposition of such a legal duty is a matter for
judicial determination involving criteria of public or legal policy consistent with constitutional
norms. ...'
Put somewhat differently: ‘The negligent causation of pure economic loss is prima
facie not wrongful in the delictual sense and does not give rise to liability for
damages unless policy considerations require that the plaintiff should be
recompensed by the defendant for the loss suffered’ (per Harms JA in Steenkamp
NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) para 1).
[6] At the outset it is necessary to investigate the nature and scope of the action
brought by the appellant. It is undoubtedly a claim by a dependant for loss of
support. According to existing South African law, such a claim is available to a
dependant against a person who has unlawfully killed a breadwinner, who was
legally liable to support him/her (Legal Insurance Company Ltd v Botes 1963 (1) SA
608 (A) at 614B). The nature of a dependant's claim, in contradistinction to a
damages action for bodily injuries, was dealt with by Corbett JA in Evins v Shield
Insurance Co Ltd 1980 (2) SA 814 (A) at 838H-839C in these terms:
‘In the case of an Aquilian action for damages for bodily injury . . ., the basic ingredients of
the plaintiff's cause of action are (a) a wrongful act by the defendant causing bodily injury,
(b) accompanied by fault, in the sense of culpa or dolus, on the part of the defendant, and (c)
damnum, ie loss to plaintiff's patrimony, caused by the bodily injury. The material facts which
must be proved in order to enable the plaintiff to sue (or facta probanda) would relate to
these three basic ingredients and upon the concurrence of these facts the cause of action
arises. In the usual case of bodily injury arising from a motor accident this concurrence
would take place at the time of the accident. On the other hand, in the case of an action for
damages for loss of support, the basic ingredients of the plaintiff's cause of action would be
(a) a wrongful act by the defendant causing the death of the deceased, (b) concomitant
culpa or (dolus) on the part of the defendant, (c) a legal right to be supported by the
deceased, vested in the plaintiff prior to the death of the deceased, and (d) damnum, in the
sense of a real deprivation of anticipated support. The facta probanda would relate to these
matters and no cause of action would arise until they had all occurred.'
[7] The action is sui generis and, as it was put by Innes CJ in Jameson's Minors v
Central South African Railways 1908 TS 575 at 583-4:
'Our law, while recognising no right of action on behalf of the deceased's estate, gives to
those dependent on him a direct claim, enforceable in their own names, against the wrong-
doer. This is a right not derived from the deceased man or his estate, but independently
conferred upon members of his family.'
An essential and unusual feature of the remedy, according to Corbett JA (Evins at
837H-838B)
‘ ... is that, while the defendant incurs liability because he has acted wrongfully and
negligently (or with dolus) towards the deceased and thereby caused the death of the
deceased, the claimant (the dependant) derives his right of action not through the deceased
or from his estate but from the facts that he has been injured by the death of the deceased
and that the defendant is in law responsible therefor. Only a dependant to whom the
deceased was under a legal duty to provide maintenance and support may sue and in such
action the dependant must establish actual patrimonial loss, accrued and prospective, as a
consequence of the death of the breadwinner. These principles are trite and require no
citation of authority.’
[8] The scope of the action is therefore clear - it is due to third parties who do not
derive their rights through the deceased or his/her estate but rather from the fact that
they have been injured by the death of their breadwinner and that the defendant is in
law responsible for such death (Union Government (Minister of Railways) v Lee 1927
AD 202). Here we have been invited to extend the common law action for damages
for loss of support to a person in the position of the appellant. That, it has been
submitted, would be an incremental step to ensure that our common law evolves in
accordance with the norms and values as reflected in our Constitution and the
judicial pronouncements of this court, particularly in Van Duivenboden.
[9] The first ingredient of a plaintiff's cause of action for loss of support is a
wrongful act by the defendant causing the death of the breadwinner. To satisfy that
requirement a plaintiff is required to prove: (a) a wrongful act by the defendant; (b)
the death of the deceased; and (c) a causal nexus between (a) and (b). It has been
argued that the considerations relied upon in Van Duivenboden in finding in favour of
the existence of a legal duty on the part of the police, apply with equal force to this
case and there is no good reason why that duty should not be extended to the
appellant. This hypothesis, as I shall endeavour to demonstrate, is plainly untenable.
[10] Notwithstanding a measure of overlapping, there is a basic difference
between a claim for loss of support and that available to a plaintiff who has suffered
bodily injury or sustained damage to his/her property as a result of the wrongful and
negligent (or intentional) conduct of the defendant. In the latter case the action lies
for a wrongful act committed in respect of the plaintiff's person or property and with
culpa (or dolus) vis-à-vis the plaintiff. The distinction, as Corbett JA pointed out in
Evins (at 839C – G), is significant. The facta probanda in a bodily injury claim differ
substantially from the facta probanda in a claim for loss of support. Proof of bodily
injury to the plaintiff is basic to one; proof of the death of the breadwinner is basic to
the other. Moreover, even where both claims flow from the same incident, each
cause of action may arise at a different time. The cause of action in respect of bodily
injury will normally arise at the time of the event giving rise to the claim, whilst the
cause of action for loss of support will arise only upon the death of the deceased
which may occur some considerable time later.
[11] That distinction is not purely theoretical in this case. It explains why Van
Duivenboden succeeded and the appellant must fail. Van Duivenboden’s claim was
one for compensation for bodily injuries sustained by him during the events giving
rise to the claim – the shooting incident. The appellant’s claim on the other hand is
located elsewhere. It is one for loss of support, which is alleged to have occurred in
consequence of the incarceration of the breadwinner. But that could hardly give rise
to a claim. Plainly, the deprivation of the breadwinner’s liberty, which renders him
incapable of supporting the appellant, is a consequence of the law simply having
taken its course. The breadwinner’s incarceration followed upon his arrest,
prosecution, conviction and sentence for the crimes that he had committed. The
lengthy period of imprisonment and the consequent deprivation of his liberty was
expressly sanctioned by law. Notwithstanding the undoubted hardship that this must
have caused the appellant, it can hardly give rise to an action for loss of support.
[12] It has been submitted that ‘the fact that the appellant’s father’s capacity to
support the appellant was extinguished, not by his death or injury, but by his
incarceration, makes no difference in principle’. In De Vaal v Messing 1938 TPD 34,
the court was asked to extend the dependant’s action from the case of fatal to non-
fatal injuries, in circumstances where the breadwinner was injured in a collision and
disabled to the extent of 75 per cent in his wage-earning capacity. It declined to do
so. It reasoned that it is clear that the breadwinner would in those circumstances be
entitled as against the wrongdoer to compensation for the full extent of the
diminution in his earning capacity and that any claim by his dependants would thus
be met by the simple answer that they had suffered no damage.
[13] In the present factual matrix, the claim is even more tenuous than that
encountered in De Vaal. Here, the breadwinner by his own intentional act has
rendered himself incapable of supporting his dependant. That notwithstanding, even
if one were to assume for present purposes in the appellant’s favour, that the
conduct complained of by the servants of the respondent is indeed wrongful, for as
long as the breadwinner is alive such conduct would only be wrongful vis-à-vis the
breadwinner and not the dependant. It follows that so long as a right of action exists
in a breadwinner there cannot also be a right of action in his/her dependants for loss
of maintenance (Tucker's Dependants v Sub Nigel G.M. Co. 1929 (13) PH J7
(WLD)). For, when the injured breadwinner himself/herself has a right to obtain
compensation for the injury suffered, the necessary proof that the dependants – who
look to their breadwinner for support and whose claim has not been extinguished –
have suffered loss owing to that injury cannot also be forthcoming. Quite obviously, if
both the dependant and the breadwinner were to be entitled to recover
compensation, the person causing the injury would be liable to pay compensation
twice over in respect of the same damage.
[14] One of the reasons advanced in De Vaal for refusing to extend the common
law dependant’s action to the plaintiff in that case was that such an extension would
produce the anomaly that a person in De Vaal’s position could, by his own
contributory negligence, create in favour of his dependants a cause of action that
would otherwise not exist in the absence of such negligence. As Greenberg J
pointed out (at 39):
‘… we would have the extraordinary result that in the case of a non-fatal injury, the other
party’s liability to the dependants is created by the bread-winner’s contributory negligence;
this conjures up the picture of a trial case in which the bread-winner in his evidence will
stoutly maintain that he too was to blame for the collision while the defendant will be equally
concerned to convince the Court that he alone is the culprit and that the injured was above
reproach.’
That anomaly would be exacerbated, where – as here – there is intentional
wrongdoing by the breadwinner, who by his own act has rendered himself incapable
of supporting his dependants.
[15] Of De Vaal v Messing, Schreiner JA stated:
‘ ... [t]hough it is not a decision of this Court [it] furnishes support for the view that, even in
the field of dependants’ action, the law takes a conservative view on the subject of the
expansion of the Aquilian remedy beyond what the authorities have recognised in the past.’
(Union Government v Ocean Accident and Guarantee Corporation Ltd 1956 (1) SA
577 (A) at 586H-587A).
[16] It is true that in matters of human behaviour we are often told not to judge by
results, but in law, when considering whether a contention is well-founded, the
absurdity of the results to which it will give rise is not an immaterial consideration.
That a person in the position of Brooks could by his own intentional wrongful act
create in favour of his dependants a cause of action that would not otherwise exist is
nothing short of preposterous; indeed in my view that would be a dangerous
proposition. After all it is a trite principle of our law, that a person should not be
allowed to benefit from his/her own wrongful act.
[17] Considerations of legal policy, coherence and consistency manifestly
informed the decision in De Vaal. And, whilst our system of law is a living system,
capable of adaptation to changing circumstances, I am not satisfied that jettisoning a
basic ingredient of the dependant’s action is warranted on the grounds that to do so
would be to keep in step with the prevailing attitudes of society. The remedy in its
present ambit is sui generis and anomalous and extending it to a person in the
position of the appellant would accentuate the anomaly as in this case – unlike in De
Vaal - not even bodily injury to the breadwinner can be shown. This court cannot
give its imprimatur to what is being sought here, as to do so would not be to extend
legal principle but to go counter to it. It follows that the appeal must fail.
[18] In the result the appeal is dismissed with costs, including those consequent
upon the employment of two counsel.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
R S van Riet SC
J H Roux SC
Instructed by:
Heyns and Partners Inc
Goodwood
Honey Attorneys
Bloemfontein
For Respondent:
A Schippers SC
R Jaga
Instructed by:
The State Attorney
Cape Town
The State Attorney
Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
27 November 2008
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Brooks v The Minister of Safety and Security
(036/2008) [2008] ZASCA 141 ( 27 November 2008)
Media Statement
During October 1995, Neil Brooks went on a shooting spree in Bothasig on the Cape Peninsula.
Those events formed the subject of the judgment of the Supreme Court of Appeal (SCA) in Minister of
Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA). Today the SCA dismissed an
appeal by his son Aaron Brooks, who had instituted proceedings in the Cape High Court against the
Minister of Safety and Security for the recovery of damages. The basis of his claim – like that of Van
Duivenboden – is that the police were negligent in failing to take steps available to them in law to
deprive Neil Brooks of his firearms. Had that been done, so it has been postulated, the tragedy would
not have occurred. The appellant alleges that as a consequence of the shooting incident his father
was sentenced to imprisonment for a term of 20 years, which he still serves. As a result thereof he
has been rendered permanently unable to support the appellant as he would otherwise have done.
Of the total amount claimed by the appellant, R168 000 is in respect of loss of support from his father
and R2 400 000 in respect of loss of a proper education opportunity as a result of loss of support.
That portion of the appellant's particulars of claim was met with an exception, which was upheld by
the Cape High Court. The High Court granted him leave to appeal to SCA. The nature of the
appellant's claim, according to the SCA, was one by a dependant for loss of support. According to
existing South African law, a basic ingredient of the dependant's action is the death of the
breadwinner. The SCA reasoned that Van Duivenboden's claim was one for compensation for bodily
injuries sustained by him during the events giving rise to the claim, namely, the shooting incident.
The appellant's claim on the other hand was located elsewhere. It was one for loss of support, which
is alleged to have occurred in consequence of the incarceration of the breadwinner. The SCA held
that that could hardly give rise to a claim, as the lengthy period of imprisonment and the consequent
deprivation of the breadwinner’s liberty was expressly sanctioned by law. Moreover, according to the
SCA, for as long as the breadwinner is alive, should it be proved that the conduct on the part of the
respondent's servants was wrongful, such conduct would only be wrongful vis-à-vis the breadwinner
and not the dependant. It followed, that so long as a right of action existed in a breadwinner, there
could not also be a right of action in his/her dependant's for loss of maintenance. The SCA
accordingly held that it would be nothing short of preposterous that a person in the position of Brooks
could by his own intentional wrongful act create in favour of his dependant a cause of action that
would otherwise not exist. It thus dismissed the appeal with costs.
--- ends ---
|
229
|
non-electoral
|
2018
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 13/2016
In the matter between:
MINISTER OF HOME AFFAIRS FIRST APPELLANT
DIRECTOR-GENERAL OF HOME AFFAIRS SECOND APPELLANT
and
FIREBLADE AVIATION PROPRIETARY LIMITED FIRST RESPONDENT
SOUTH AFRICAN REVENUE SERVICE SECOND RESPONDENT
DENEL SOC LIMITED THIRD RESPONDENT
Neutral citation:
Minister of Home Affairs & another v Fireblade Aviation Ltd &
others (13/2016) [2018] ZASCA 46 (28 March 2018)
Coram:
Wallis JA and Hughes AJA
Heard:
No hearing.
Delivered:
28 March 2018
Summary: Application for leave to appeal against judgment in High Court in application
proceedings – such to be dealt with under s 16(1)(a)(i) of the Superior Courts Act 10 of
2013 (the Act)– the fact that the High Court had granted an enforcement order in terms
of s 18(1) of the Act and that order has been upheld by the Full Court in an appeal
under s 18(4) does not make the application one for special leave to appeal in terms of
s 16(1)(b) of the Act – no reasonable prospects of success on appeal – application for
leave to appeal dismissed.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Potterill J sitting as court
of first instance:
Leave to appeal is refused with costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
WALLIS JA (Hughes AJA concurring)
[1] When this application for leave to appeal was placed before us in terms of
ss 17(2)(b) and (c) of the Superior Courts Act 10 of 2013 (the Act) the parties were at
one in saying that it was an application for special leave to appeal in terms of s 16(1)(b)
of the Act. We queried that by way of a letter addressed by the registrar to the parties’
attorneys. In reply, the attorney for the applicants accepted that it was in fact an
application for leave to appeal in terms of s 16(1)(a)(i) of the Act. The attorneys for the
first respondent (Fireblade) persisted in submitting that it was an application for special
leave to appeal, or alternatively was one that was closely akin to an application for
special leave. They contended that this latter meant that it is relevant to the
determination of the application that two courts have carefully considered and dismissed
the merits of the matter. Hence the need for this short judgment.
[2] Fireblade brought application proceedings before the Gauteng Division of the
High Court, Pretoria, seeking an order that the First Applicant, the Minister of Home
Affairs (the Minister), had granted its application for approval of an ad hoc international
customs and immigration component of a corporate fixed base aviation operation to be
conducted by officials of the Border Control Operational Co-ordinating Committee at
premises it had established within the precincts of O R Tambo International Airport.
Despite the opposition of the Minister the application succeeded before Potterill J and
an order was granted on 27 October 2017.
[3] An application for leave to appeal was heard on 1 December 2017 and dismissed
on 8 December 2017. On the same day Potterill J granted an order in terms of s 18(1)
of the Act that the operation of her earlier order was not suspended pending the
determination of the application for leave to appeal ‘as well as any subsequent
applications for leave to appeal that may be delivered by any of the other respondents
as well as any other appeal’. This order was the subject of an urgent appeal to the full
court in terms of s 18(4) of the Act. That appeal was dismissed on 14 December 2017.
[4] The reason the parties thought that this application for leave to appeal against
Potterill J’s original judgment was an application for special leave to appeal was the
following. Potterill J had dealt with the merits of the case initially and also when refusing
leave to appeal and granting the enforcement order. Her reasoning was scrutinised and
endorsed by the full court when hearing the s 18(4) appeal. Accordingly, so the parties
reasoned, and the respondent continues to reason, two courts have considered the
merits and an appeal to this court is therefore one that requires special leave to appeal.
[5] If incorrect this needed to be corrected because it affects the test to be applied
by this Court in determining the application for leave to appeal. It is incorrect because
the application before us is not an application to appeal against the decision of the full
court, but an application to appeal against the original judgment of Potterill J. As such it
is an application for leave to appeal against a decision of a single judge and falls under
s 16(1)(a)(i) of the Act. The test to be applied in terms of s 17(1) of the Act is therefore
whether the appeal would have reasonable prospects of success or whether there is
some other compelling reason why an appeal should be heard.
[6] We are satisfied that neither of these tests is satisfied in this case. Potterill J’s
grant of an order in favour of Fireblade was based upon two documents in which it was
recorded clearly and contemporaneously that on 28 January 2016 the Minister had
granted the approval sought and signed a letter to that effect to be forwarded to
Fireblade. The accuracy of these documents, one of which was a letter addressed
personally to the Minister, was not challenged at the time. Instead, when the third
respondent raised an issue, the Minister in his own handwriting noted that Fireblade be
informed that ‘the approval we granted them is also suspended’. The underlining was
his. His subsequent attempts to explain that he had not granted Fireblade the approval
it sought, but merely indicated that ‘the major stakeholders have indicated that the
project can go ahead’ were inconsistent with these documents and we cannot fault the
judge’s rejection of them, subsequently endorsed by the full court.1
[7] The other grounds advanced in support of the application for leave to appeal can
be disposed of shortly. The first was a contention that Fireblade applied for the
designation of its facility as a port of entry. That was rightly rejected on the basis of the
Minister’s own letter saying that the application did not involve the declaration of the
facility as a new port of entry. That was followed by a letter from Fireblade correcting the
nature of its application to one for ad hoc facilities within an existing port of entry viz O R
Tambo International Airport.
[8] The second additional ground in support of the application was a contention that
a decision by the Minister on 27 October 2017 to reject Fireblade’s application stood
until it had been set aside. Here the Minister is hoist by his own petard. The rejection of
his version of the events on 28 January 2016 led inexorably to the conclusion that
Fireblade’s application had been approved. He was therefore bound by that decision
unless and until a court set it aside and yet he brought no application to set it aside.2 It
therefore stood and was affirmed by the judgment of the high court. As the high court
pointed out in its judgment this rendered redundant the precautionary application by the
1 See Da Mata v Otto 1972 (3) SA 858 (A) and Platinum Holdings (Pty) Ltd v Victoria and Alfred
Waterfront (Pty) Ltd (2004) 8 CLR 231 (SCA) paras 14 and 15 for cases in which the inability to provide
any convincing explanation of contemporaneous documents led the court to reject evidence as untenable
without the need for oral evidence.
2 MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute
2014 (3) SA 481 (CC) paras 101-103; Department of Transport and Others v Tasima (Pty) Ltd [2016]
ZACC 39; 2017 (2) SA 622 (CC) paras 141-150.
first respondent to review and set aside that decision. The Minister cannot rely on his
own unlawful attempt to circumvent the decision he had lawfully made to grant
Fireblade’s application.
[9] The last contention in support of the application was that in granting the
application the Minister acted contrary to s 217 of the Constitution dealing with the
procurement by an organ of state of goods and services. But the grant of the application
did not involve an organ of state in procuring goods or services from Fireblade. It was
itself discharging its own statutory functions in regard to immigration control and
customs at an existing port of entry, to wit, O R Tambo International Airport. The fact
that for a provisional period Fireblade was to bear the cost of its doing so cannot alter
that fact.
[10] One further point that the applicants raise was the failure of the high court to deal
with a counter-application seeking declaratory relief in relation to the proper
interpretation of s 9A of the Immigration Act 13 of 2002 in respect of the Minister’s
powers to designate a place as a port of entry. This was clearly related to the issue
dealt with in para 7 of this judgment and for the reasons set out there this was not an
issue in dispute between the parties. It was accordingly not apt for determination in
proceedings between Fireblade and the Minister. In any event we do not think the
arguments put forward have any reasonable prospects of success.
[11] We are accordingly of the opinion that an appeal against Potterill J’s judgment
has no reasonable prospect of success. There is nothing to suggest that the issues
raised by the Minister are of such a nature as to warrant the grant of leave to appeal
notwithstanding the lack of prospects of success.
[12] The application for leave to appeal is dismissed with costs.
_______________________
M J D WALLIS
JUDGE OF APPEAL
Appearances:
Applicants: State Attorney,
Pretoria and Bloemfontein
First Respondents: Werksmans Attorneys, Johannesburg;
Symington & De Kok, Bloemfontein.
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2018
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Minister of Home Affairs v Fireblade Aviation Ltd [2018] ZASCA
46.
The SCA today dismissed an application for leave to appeal by the
Minister of Home Affairs against a judgment of the Gauteng Division of
the High Court, Pretoria. The case concerned the approval by the
Minister, at that time Mr Malusi Gigaba, of Fireblade Aviation’s
application for approval of an ad hoc international customs and
immigration component of a corporate fixed base aviation operation to be
conducted by officials of the Border Control Operational Co-ordinating
Committee at premises it had established within the precincts of O R
Tambo International Airport.
There was a dispute between the parties as to the proper test to be
applied in determining the application. This dispute was the reason for
the court departing from its usual practice of not furnishing detailed
reasons when dealing with applications for leave to appeal. The SCA
rejected a contention by Fireblade Aviation that the application was one
for special leave to appeal, where the test for granting leave is more
stringent, and held that what was required was for the applicant to show
that it had reasonable prospects of success on appeal, or that some other
compelling reason warranted the grant of leave to appeal.
Applying this less stringent test the court held that there were no
reasonable prospects of success on appeal. The issue was whether the
Minister had approved the application and conveyed that approval to
Fireblade Aviation at a meeting on 28 January 2016, but had thereafter
sought to suspend and withdraw that approval. The High Court held that
he had approved the application and that his denial that he had doe so
could not be accepted. The SCA held that there was no reasonable
prospect of the High Court’s rejection of the Minister’s evidence being
overturned on appeal. It rejected the contention that Fireblade Aviation
was seeking approval for a new port of entry into South Africa as that
was inconsistent with a letter from the Minister saying that the
application did not involve establishing a new port of entry. It also held
that the Minister could not rely on his purported withdrawal of consent to
the application as that was inconsistent with his prior approval of it.
There was no compelling reason to grant leave to appeal. The
application for leave to appeal was dismissed with costs.
|
2285
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 279/08
DR ROY BANE
First Appellant
DR K MICHALOWSKI
Second Appellant
DR HAYHURST
Third Appellant
DR BOWDEN
Fourth Appellant
DRS MORTON & PARTNERS
Fifth Appellant
and
MARCO D'AMBROSI
Respondent
Neutral citation: Bane v D'Ambrosi (279/08) [2009] ZASCA 98 (17
September 2009).
Coram:
BRAND, JAFTA, MAYA JJA et HURT, LEACH AJJA
Heard:
7 MAY 2009
Delivered:
17 SEPTEMBER 2009
Summary: Delictual damages - measure of – Plaintiff claiming loss of
earnings which would have accrued in United Kingdom – Plaintiff, as a result
of delict unable to work in United Kingdom and remaining in South Africa –
adjustment to measure of loss in sterling currency to allow for lower cost of
living in South Africa.
_____________________________________________________________
ORDER
______________________________________________________________
On appeal from: High Court, Cape Town (Van Zyl J and subsequently
Traverso DJP sitting as court of first instance).
1.
The appeal succeeds to the extent set out below:
1.1
Paragraph (b) of the order made by the court below on 31 January
2008 is amended to read:
'(i)
The value of the plaintiff's net past loss of earnings will be the difference
between GBP128 714 and ZAR 791 835;
(ii)
The value of the plaintiff's claim for future loss of earnings will be the
difference between GBP578 884 and ZAR 3 911 705;
(iii)
The exchange rate will be the one prevailing at noon on the date of payment.'
1.2.
Paragraph (c) of the said order is amended to read:
'Interest at the rate prescribed in terms of s1 of the Prescribed Rate of Interest Act,
55 of 1975, is payable by the defendants as follows:
(i) on the amount of R1 189 253,09 (past hospital and medical expenses) from
17 March 2004 to 31 January 2008;
(ii) on the amount of R400 000 (general damages) from 20 August 2007 to 31
January 2008;
(iii) on the expenditure incurred by the plaintiff, during the period between 6 April
2004 and 31 January 2008, on items categorised in the pleadings as 'future medical
and hospital expenses', from the date on which such expenditure was incurred to 31
January 2008;
(iv) on the capital amount of R2 434 630.09 (being the sum of the awards in
respect of past and future hospital and medical expenses and general damages)
from 31 January 2008 to date of payment;
(v) on the capital amount of the awards for past and future loss of earnings as
determined in paragraph (b) hereof, from 31 January 2008 to date of payment.'
2.
Save as aforesaid the appeal and the cross appeal are dismissed.
3.
The respondent is ordered to pay the appellants' costs of appeal and
the costs of the cross-appeal.
______________________________________________________________
JUDGMENT
______________________________________________________________
HURT AJA (BRAND, JAFTA, MAYA JJA et LEACH AJA concurring):
[1] 'The figure of justice carries a pair of scales, not a cornucopia.'1 The
principal issue in this appeal is whether the Cape High Court used the correct
notional implement in assessing its awards to the respondent for loss of
earnings and for future medical expenses in a claim for damages based on
negligence. The respondent instituted action against the appellants claiming
damages flowing from various negligent acts by the appellants in the course
of rendering medical and surgical services to him. The appellants conceded
liability to compensate the respondent and the action proceeded on the issue
of quantum only. Van Zyl J was asked to decide certain legal issues on the
basis of a stated case to enable the parties to narrow the ambit of the
evidence which would be necessary. These issues having been ruled on, the
matter came before Traverso DJP who made an award in respect of past
hospital and medical expenses, general damages and costs on 20 August
2007 and a further award (after directing that an actuary determine the
quantum of the claims for future medical expenses and future loss of
earnings) on 31 January 2008. Leave to appeal and to cross-appeal against
the judgments of both judges was granted by Traverso DJP.
[2] Compared to the complicated course followed in the litigation, the
issues in the appeal and cross-appeal are refreshingly narrow. To put them in
context it is necessary to sketch the factual background against which the
respondent made his claim. I think it is fair to say that the following was
common cause when the matter was argued before us. The respondent was
born in 1975 and, after completing his schooling and qualifying in various
training courses, he started work as a salesman for the office equipment
supplier, Canon, in Cape Town. He proved to have exceptional ability in this
1 Per Greenberg J in Innes v Visser 1936 WLD 44 at 45 to 46.
field. He was described by an erstwhile superior as having 'innate sales ability'
and outshone the majority of his co-employees. In 2000 he decided to
emigrate and applied for several posts in the United Kingdom. He attended a
number of interviews pursuant to these applications and received a large
number of job offers. He eventually accepted a position as an office
equipment salesman with the company Ikon, which is Canon's biggest
competitor in London. He planned to depart for London in January 2001 but,
since he had been experiencing persistent heartburn for some time, he
decided, in December 2000, to take medical advice with a view to curing the
condition. The advice was that he should undergo surgery to treat an
oesophageal hernia. He took this advice with catastrophic consequences as
far as his health and physical ability are concerned. It is not necessary to
outline these consequences because they have been carefully and
exhaustively dealt with in the proceedings in the court below and were not in
issue before us save in one very limited respect. It will suffice to say that the
medical and surgical treatment to which the respondent was subjected so
damaged him that he was constrained to cancel his plans to take up
employment with Ikon and, instead, decided to stay in South Africa to be near
to his family.
[3] The awards for loss of earnings involved a pounds sterling conversion.
That for past loss of earnings was to be the difference between £160 893 and
R791 835 and the future loss was fixed at the difference between £723 605
and R3 911 705, the exchange rate for both these conversions to be the one
prevailing at noon on the date of judgment. On the claim for future medical
expenses, Traverso J made an award of R845 377.
[4] The first issue on appeal concerns the question whether the award for
loss of earnings should incorporate a deduction based on the circumstance
that the cost of living in South Africa is lower than that in London (I shall refer
to this as 'the cost of living adjustment'). The second relates to the award of
future medical expenses, the appellants' contention being that the
respondent's compensation under this head should be limited to the present
day value of the additional premiums which the respondent is now, and will in
future be, obliged to pay to his medical aid because he is classified as a
chronic sufferer. The cross-appeal relates to whether Traverso DJP should
have made allowance, in her assessment of loss of future earnings, for future
increases in income and to whether the appellants should have been ordered
to pay interest on the award from the date of service of the summons upon
them.
The Awards for Loss of Earnings.
[5] It is common cause between the parties that the respondent would, but
for his misfortune, have lived and worked in London. Nor is there any dispute
as to the computation of the past and future loss of earnings as actuarially
discounted to their 'present-day values'. The appellants' complaint is that the
court below, in assessing the notional earnings in pounds sterling and
deducting therefrom the post-injury earnings in Rand (with an appropriate
directive as to the exchange rate to be applied), failed to take into account the
fact (both admitted and proved in evidence) that there is a substantial
difference between the cost of living in London a nd that in South Africa.
Without taking this into account, so the appellants contend, the respondent is
receiving the benefit of the higher salary which he would have received in
London, without having to cope with the increased cost of living that would
have been his lot if he had had to live there to earn it.
[6] To discuss the merits of this submission it is convenient, first, to trace
its course through the court below. After pleadings had closed and the parties
had complied with the prescribed pre-trial procedures, the appellants (as
defendants) admitted their liability to compensate the respondent, leaving as
the remaining issue in the trial the quantum of such compensation. Counsel
were apparently able to reach agreement on a number of the issues relating
to quantum, but remained at odds in regard to the questions of loss of
earnings and future medical expenses.
[7] Having thus considerably narrowed the issues between them, counsel
agreed to submit a stated case to the court in terms of rule 33(1). I have little
doubt that they jointly considered that the procedure which they adopted in
this regard was the most expeditious one and one which was in the interests
of their clients, but it was not in accordance with the rules and could have
resulted in prejudice to one or other (or perhaps both) of the parties. The
stated case was divided into two parts, the one relating to the issue
concerning the cost of living adjustment and the other to the issue concerning
future medical expenses. Each section contained an introductory paragraph
prefaced by the heading 'Factual Assumptions' and the words:
'The Court is requested to determine the legal issue on the basis of the following
factual assumptions (without any finding by the Court or concession by the parties
being made in this regard) . . .'
Rules 33(1) and 33(2) make it clear that the resolution of a stated case
proceeds on the basis of a statement of agreed facts. It is, after all, seen as a
means of disposing of a case without the necessity of leading evidence. The
case drafted by the parties, with both of them reserving their position with
regard to the factual 'assumptions', was plainly contrary to the basic object of
the rule and the procedure of asking the court to rule on the issues thus
defined was really tantamount to asking the court to give advice on possibly
abstract questions. In my view, Van Zyl J should have declined to rule on the
issues until each party had unequivocally accepted that it was bound by the
facts stated. Nevertheless, the learned judge grasped the nettle. Having
considered the arguments presented to him, he rejected the contention that
the cost of living adjustment should be taken into account for the purpose of
computing the claim for loss of earnings. At most, he said, the potential saving
in cost of living expenses might be relevant for the purposes of assessing
general damages or 'determining contingency deductions'.
[8] In argument before the court below, it seems that counsel tended to
focus on matters such as 'currency nominalism'2 and the relevance of a
plaintiff's standard of living and lifestyle to the computation of his loss of
earning capacity. The reasons for the conclusion reached by the learned
judge appear, I think, from the following passages in his judgment:
2 See paras 15 to 17 of the judgment of Van Zyl J, now reported as D'Ambrosi v Bane 2006
(5) SA 121 (C).
'However useful and interesting it may be to compare cost of living in different
countries or cities, such comparison must of necessity be based on any number of
variables. Chief among these must be the requirements and needs of the particular
individual residing and working in such country or city. He or she may choose to live
on a voluptuous or luxurious scale, spending his or her full allowance on living
expenses. On the other hand he or she may prefer to live frugally with a view to
saving as much as possible. Any attempt to quantify such living expenses would
inevitably be of a speculative or hypothetical nature, based, as it is, on uncertain and
frequently indeterminate factors.3
. . . . There are, in my view, no grounds clearly justifying the treatment of reduced
cost of living expenses as a benefit to be taken into account in assessing damages
for lost earnings. Nor do I believe that justice, fairness, reasonableness or policy
considerations require that it be so treated . . . At best for the defendant (sc
'appellants') it is a collateral benefit, which is irrelevant for purposes of determining
the quantum of loss of earnings or earning capacity.'4
The ruling which the learned judge made, read as follows:
'The cost of living differential between Johannesburg and London should not be
taken into account in assessing the plaintiff's claim for past and future loss of
earnings or earning capacity.'
Although he had mentioned, in the course of his judgment, that comparative
living costs might justify a contingency adjustment in the overall claim, I think
that the clear terms of the above ruling should be taken to have overridden
any such suggestion.
[9] The appellants gave notice of an application for leave to appeal against
this ruling, as well as against the one concerning future medical expenses.
After discussion, however, counsel agreed that the application would be
deferred until after judgment had been delivered in the action and it seems
that it was on this basis that counsel agreed that the evidence of the
appellants' witness, Dr C P van Walbeek, would be adduced before Traverso
DJP.5 Traverso DJP took the view (whether correctly or incorrectly, it is not
3 Para 35.
4 Para 39.
5 This agreement, I may say, was fortunate since its result was that evidence which, in my
view, is plainly relevant to a proper assessment of the claim for loss of earnings was placed
before the trial court notwithstanding the ruling on the 'stated case'.
necessary to decide) that she was bound by the ruling and did not consider
van Walbeek's evidence in arriving at her conclusion as to the amount to be
awarded.
[10] The contentions, alluded to by Van Zyl J in his judgment, against the
proposition that the evidence relating to the cost of living adjustment should
be considered for the purpose of assessment of loss of earnings fell, broadly,
into three categories. The first was the theory of 'currency nominalism' to
which reference was made in paras 15 to 20 of the judgment. The second
was that any attempt to compute the effect which differences in cost of living
might have on a London salary as opposed to a South African one would be
so beset by imponderables and speculation that it would be worthless.6 The
third was that the 'reduction' in the respondent's cost of living due to the
circumstance that he would not be moving to London, should not be treated
as a 'collateral benefit' which fell to be deducted from his loss.7
[11] I do not consider that the principle of currency nominalism has anything
to do with the enquiry. Indeed, as Mr van Riet, who appeared for the
appellants, was at pains to point out, the parties were ad idem that the past
and future loss of earnings should be assessed in pounds sterling and that the
resulting figure should be converted to rand at a fixed date. In the
circumstances, this principle had no bearing upon the appellants' contentions.
[12] The respondent's contention that it was futile to attempt to quantify the
effect which a difference in cost of living might have on a particular individual
because of differences in the lifestyle of individuals and the imponderables
associated with any attempt to predict the vagaries of economic parameters
such as cost of living, price indices and the like, plainly found favour with the
learned judge. The contention is, however, flawed in two respects. First,
because the computation of compensation for the loss of earnings must focus
on a plaintiff's earning capacity, what he does with his money after he has
earned it can hardly be relevant. Put into bluntly commercial terms, the
6 Paras 21 to 24, 38 and 39.
7 Paras 27 to 30, 32 to 34 and 39.
computation is about turnover, not profit. Secondly, the fact is that the courts
habitually have to grapple with problems of this nature where resort must be
had to estimates and speculation in order to arrive at a figure which the court
considers to be as fair as possible to both sides. This is clear from the well-
known and much-quoted dictum by Nicholas JA in Southern Insurance
Association Ltd v Bailey NO:8
'Any enquiry into damages for loss of earning capacity is of its nature speculative,
because it involves a prediction as to the future, without the benefit of crystal balls,
soothsayers, augurs or oracles. All that the Court can do is to make an estimate,
which is often a very rough estimate, of the present value of the loss.
It has open to it two possible approaches.
One is for the Judge to make a round estimate of an amount which seems to him to
be fair and reasonable. That is entirely a matter of guesswork, a blind plunge into the
unknown.
The other is to try to make an assessment, by way of mathematical calculations, on
the basis of assumptions resting on the evidence. The validity of this approach
depends of course upon the soundness of the assumptions, and these may vary from
the strongly probable to the speculative.
It is manifest that either approach involves guesswork to a greater or lesser extent.
But the Court cannot for this reason adopt a non possumus attitude and make no
award.'
This principle applies with equal force to the manner in which a judge is called
upon to deal with any aspect of the assessment of the loss of earnings – if it is
relevant to the assessment, he or she must make the best of the material
before the court, notwithstanding that the result may well be open to criticism.
I do not consider, therefore that the difficulties associated with making an
accurate assessment can properly or justifiably be regarded as a bar to the
application of the cost of living adjustment in this instance. If the
mathematically-based route to the assessment is effectively blocked by
unreliable assumptions and imponderables, then the judge must resort to the
less desirable alternative of applying a contingency factor or simply making an
estimate which he or she feels will do justice in the circumstances. The object
of the exercise is always to arrive at a fair award which compensates the
8 1984 (1) SA 98 (A) at 113 to 114.
plaintiff for his actual loss and does not 'punish' the defendant for his delict.
(See the judgment of Trollip JA in Santam Versekeringsmaatskappy v
Byleveldt 1973 (2) SA 146 (A) at 171 and 173 to 174.)
[13] It seems to me that it is erroneous to treat the cost of living adjustment
as a species of 'collateral benefit' – a concept which our courts have found
difficult to develop and justify along uniform and logical lines.9 As was
stressed by Trollip JA in Byleveldt, at p 173:
'[The] question is what, according to law, is the quantum of [the plaintiff's] economic
loss and not, is the defendant entitled to the benefit of any item? The defendant is
liable for neither more nor less than that quantum, irrespective of whether or not the
defendant gets any "benefit" in the process of fixing that quantum. Indeed, in that
context it is fallacious to speak about a 'benefit being conferred' on the defendant by
so reducing [the plaintiff's] loss of wages, for ex hypothesi the defendant was never
liable for the amount by which the loss is reduced . . .'
Whether one refers to a 'collateral benefit' (to the plaintiff) or a 'benefit to the
defendant' (arising from the fact that a deduction from the plaintiff's prima
facie loss is to be effected) is immaterial to the clear message in this passage
– the main exercise is to ascertain the extent of the plaintiff's actual loss.
[14] It follows from what I have said above that the grounds upon which Van
Zyl J decided that the cost of living adjustment should not be applied, did not
justify that conclusion. On the basis that she considered herself bound by the
ruling, even after Dr van Walbeek had given evidence,10 Traverso DJP
expressly refrained from considering that evidence or, indeed, the question
whether the cost of living adjustment should be made in any form. This court
is in as good a position as the court below was, to consider the evidence and
to decide whether, and to what extent, the cost of living adjustment should be
applied to the claim for loss of earnings.
9 See Zysset v Santam Ltd 1996 (1) SA 273 (C) at 278 to 279.
10 It is not necessary to consider whether Traverso DJP's view on this aspect was correct,
although I must say that if Van Zyl J would have had the power to reconsider his ruling once
the evidence had been adduced, then so did the learned Deputy Judge President.
[15] The essence of the computation of a claim for loss of earnings is to
compensate the claimant for his loss of earning capacity.11 As I have
indicated the emphasis in the argument presented to Van Zyl J by both sides
appears to have been upon the type of lifestyle and the living expenses
incurred by a typical plaintiff in the position of the respondent.12 When a court
measures the loss of earning capacity, it invariably does so by assessing what
the plaintiff would probably have earned had he not been injured and
deducting from that figure the probable earnings in his injured state (both
figures having been properly adjusted to their 'present day values'). But in
using this formulation as a basis of determining the loss of earning capacity,
the court must take care to make its comparison of pre- and post-injury
capacities against the same background. A simple example will demonstrate
where the danger lies in this regard. An employee is required to travel a
substantial distance each day in connection with his work. Instead of giving
him a separate travelling allowance or paying his travelling expenses, his
employer pays him an additional amount as salary. The amount is designed to
indemnify him against the additional expense he must incur to perform his
duties. The payment of it to him could hardly be said to be attributable to his
earning capacity. If he were to become injured and rendered unable to
perform that particular job any longer, thus dispensing with the need to travel,
he could hardly be heard to contend that the travelling allowance should be
included in the computation of his notional earnings for the purpose of
assessing his loss. To extend the concept to one a little closer to the case
under consideration: An employee is employed in South Africa and paid a
salary of RA. His employer requires him to move to London to do the same
work, but, to cater for the increased expense of living in London, fixes his
salary there at R(A+B). The employee could hardly contend that his earning
capacity had increased by the quantity B simply because he had moved to
11 Santam Versekeringsmaatskappy Bpk v Byleveldt 1973 (2) SA 146 (A) at 150; Dippenaar v
Shield Insurance Co Ltd 1979 (2) SA 904 (A) at 917; Southern Insurance Association v Bailey
NO 1984 (1) SA 98 at 111.
12 This was probably due to the manner in which the stated case was framed, viz
'That at all material times the cost of living expenses (sic) in the United Kingdom have been and will be
considerably higher than in South Africa;
That various agencies compile, on an annual basis, comparative figures regarding the relative cost of
living in many major cities around the world, which information is used inter alia to assist multinational
companies in determining cost of living allowances for expatriate or seconded workers.'
London. Once again it would be a case of the increase in salary being
primarily a form of indemnity against the extra expense which the employee
would be expected to encounter in order to maintain the standard at which he
was able to live in South Africa at a salary of RA. If such an employee were to
be the victim of a delict which rendered him unable to continue working, and if
he were consequently to return to South Africa, I do not think that it could be
contended, fairly, that the wrongdoer should be obliged to compensate him for
his loss of earnings based on the rate of his London income.
[16] The first question is whether the evidence of Dr van Walbeek was such
as to give the court a 'logical basis' for arriving at a quantitative assessment of
the effect of the London cost of living on the South African award to the
respondent. I regret to say that it was not. Dr van Walbeek's evidence was
aimed at proposing a method of formulating, quantitatively, the degree to
which the income of employees in London has been and will in future be
affected by the cost of living there and, thereafter, of factoring this into the
claim for loss of earnings so as to ensure that the respondent would not be
unduly benefited by being paid his compensation in South Africa. He
acknowledged that his approach involved a considerable amount of
speculation and, in the end, his evidence, as I understand it, left the court with
an array of suggestions as to how to co-ordinate the numerous variable
factors that are relevant to matters such as price indices, inflation and the
other ephemeral concepts in which economists deal. I do not consider that his
evidence can be treated, by any stretch of the imagination, as being
equivalent, for instance, to that of an actuary who performs his calculations on
the basis of mathematical formulae applied to fairly well-established patterns
of currency behaviour, mortality tables and the like. Although Mr van Riet
endeavoured to persuade us to use Dr van Walbeek's evidence as a basis for
calculating the degree of benefit which the respondent would derive if no
provision is made for the cost of living adjustment, I do not think that the court
should embark upon such an exercise. In other words, and applying the
second example discussed in para 16, above, there is not sufficiently cogent
evidence on which to attempt to quantify the 'B' factor in the example or, at
least, to identify the portion of that factor which could fairly be described as an
allowance to cater for the higher cost of living in London.
[17] What is clearly established by the evidence is that it is common
practice (and, indeed, the only sensible one) for companies to include a 'factor
B' in their salary structure in these circumstances. The evidence also
establishes that the same would apply to the commission structure for a
salesman such as the respondent. As I have indicated, however, the inability
to arrive at a quantitative assessment in this regard does not mean that the
court should ignore the circumstance that the loss of earning capacity is not
truly reflected by the difference between the discounted London earnings and
the South African figure. To do so would plainly be to ignore the metaphorical
scales and allow the respondent to receive more compensation than would be
necessary to make up for his lost earning capacity. In this situation, it
becomes necessary to resort to a 'contingency deduction' in an attempt to
offset any advantage which the respondent might otherwise derive from an
award in the form made by the court below. I should perhaps stress that, in so
resorting, the court can do little more than make the 'blind guess' to which
Nicholas J referred in Bailey. But at least this will have the effect of balancing
the scales to an extent and eliminating an anomaly from the computation of
the award. Traverso DJP incorporated a contingency deduction of 20 per cent
into her computation of the notional earnings in London. This was to cater for
the uncertainties associated with the respondent's prospects of making a
success of his London venture. This is a fairly robust reduction but it was
made without the cost of living adjustment in mind. In my view, a further
reduction of the notional past and future London income by 20 per cent should
go some way toward achieving a balanced award.
[18] The actuary, Mr Lowther, adjusted the computations of past and future
London earnings in accordance with directives given by Traverso DJP. He
arrived at a 'past' figure of £160 893 and a future one of £723 605. These
figures should each be reduced by a further 20 per cent, ie to £128 714 and
£578 884, respectively.
Future Medical Expenses
[19] The contention of the appellants is that since Medical Aid societies are
now statutorily obliged to accept all applicants as members13 – even those
with pre-existing health problems, they are now to be equated to national
health schemes in the English or European contexts. On the authority of
Zysset, Mr van Riet contends that the respondent's membership of the
Discovery Health Medical Scheme should no longer be regarded as a form of
'private indemnity insurance'. It could accordingly not be treated as res inter
alios acta and payments received from the health scheme should be treated
as a benefit to be deducted from the respondent's claim for future medical
expenses.14 Counsel's submission is that the claim for future medical
expenses should be restricted to the additional premiums which the
respondent will have to pay to his medical aid scheme because he is now
classified as a 'chronic sufferer'. This argument was rejected by Van Zyl J
when he ruled on the second issue in the stated case. As to counsel's attempt
to equate the statutory obligation upon medical aid societies to accept all
applicants as members to some sort of 'national health scheme' or 'social
insurance benefit', Van Zyl J pointed out that payments which the medical aid
was and is obliged to make to the respondent constitute the discharge by the
medical aid of contractual obligations flowing from the contract concluded
between it and the respondent. As such they constitute res inter alios acta
and the appellants cannot claim the benefit of them.15 I fully agree with the
learned judge's approach on this issue. Nor is there any substance in the
contention that the Medical Schemes Act has had the effect of creating
something akin to a social insurance benefit in South Africa. While it may be
obligatory for a medical scheme to accept anyone who applies to become a
member, there is no obligation on the public to take up such membership. It is
not for the appellants to dictate to the respondent as to how he should
structure his expenditure, and the fact that he is, for the present at least, a
member of a scheme does not mean that that arrangement will continue into
the foreseeable future. Moreover, it would be surprising if the scheme to
13 Section 29 (1) (n) of the Medical Schemes Act, 131 of 1998.
14 This was thoroughly dealt with by Scott J in Zysset.
15 Dippenaar v Shield Insurance Co Ltd 1979 (2) SA 904 (A) at 920; Standard General
Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 (A) at 42.
which he belongs does not provide for the principle of subrogation, which will
mean that the respondent will ultimately have to transfer any compensation
paid to him by the appellants to his medical scheme. It is not necessary,
however, to explore this aspect in any greater detail. The contention that the
award for future medical expenses should be modified in any way is without
substance.
The Cross-Appeal.
[20] As indicated earlier, there are two grounds of cross-appeal against the
judgment of Traverso DJP. The first is that the learned judge failed to make
any provision for future increases in income in computing the respondent's
notional future earnings in London. The basis upon which the future earnings
were computed was that the respondent's commission income would peak at
£43 200. After the learned judge had adjourned the matter to enable the
actuary to perform the additional calculations directed by her, the
respondent's counsel raised the issue that the revised calculations made no
allowance for 'promotional increases'. As Traverso DJP pointed out, however,
the question of promotion had never been part of the respondent's case.
Having regard to the nature of the work which the respondent would have
been performing and the commission basis on which he was to be mainly
remunerated, increases in his income would flow from increased commission.
The assumption in this regard was that, after the first few years he would
consistently achieve his 'commission target'. As Traverso DJP put it in regard
to counsel's submission:
'The only room for promotion in the field in which the plaintiff would have been
working, would have been if he was promoted from salesman to manager, and this
scenario was never addressed in evidence.'
This, in my view, is a complete answer to the respondent's contention about
future increases in his London income.
[21] The second issue arising out of the cross-appeal relates to the
respondent's contention that interest should accrue on the awards made by
Traverso DJP from the date of service of the summons in the action. Mr Irish
submitted that Traverso DJP had erred in holding, as she did in relation to his
submissions in this regard, that 'interest can never be claimable in regard to
loss of earnings and/or future medical expenses'. In stating the proposition so
categorically, it seems that the learned judge may have overlooked the
provisions of s 2A of the Prescribed Rate of Interest Act, 55 of 1975, but the
issue has virtually been disposed of by concessions made by Mr van Riet on
behalf of the appellants. These are that the parties have agreed:
(a)
that the appellants are liable for interest, at the rate prescribed in terms
of s 1(2) of Act 55 of 1975, on the claim for past medical and hospital
expenses from 17 March 2004 (being the date on which the appellants were
furnished with full particulars showing how that claim is made up); and
(b)
that the appellants will pay interest, at the said rate, on any expense
actually incurred prior to the date of judgment, in respect of any item
categorised in the pleadings as a 'future medical expense' from the date when
such expense was incurred.
It seems to me that the clearest way in which to provide for this agreement in
the order is to stipulate that these amounts are to gather interest separately
from the date agreed until the date of judgment and that they will then be
incorporated in the capital balance of the judgment debt on which interest will
be due from the date of judgment.
[22] In rejecting the contention that the other aspects of the claim should
carry interest from the date of service of the summons, Traverso DJP said:
'As this trial proved the damages suffered by the plaintiff, and the calculation thereof,
were complicated, and many of the underlying facts were only unravelled during the
course of the trial and, in addition, the plaintiff's claim was amended during the
course of the trial. . . . '
On this basis the learned judge decided that the respondent was only entitled
to interest from the date of judgment. Insofar as the claims for past and future
loss of earnings and general damages are concerned, her reasons for
declining to make the order sought by the respondent are convincing. The
lion's share of the evidence at the trial was clearly devoted to defining and
debating the principles applicable to the somewhat unusual position in which
the respondent found himself as a result of his inability to proceed with his
career plans. But Mr Irish contended that if the appellants had wished to
protect themselves against the running of interest in the face of what they
must have known would be a very substantial award (especially after they had
acknowledged liability), it was open to them to pay into court or make a tender
and the position would then have been governed by subsec 2A(4), which
provides that, in such circumstances, the running of interest is interrupted
between the date of tender and the date of acceptance or award. There is no
indication on the record that the appellants have taken a stance which has
prolonged the litigation. Indeed, it seems that the appellants did what they
could to crystallize the issues. They reached agreement with the respondent
on past medical expenses and they co-operated in trying to crystallise the
issues by way of the questionable procedure before Van Zyl J. Even if the
learned judge's attention was not particularly focused on the provisions of s
2A of Act 55 of 1975, and, more particularly subsec (5),16 I agree fully with her
reasons for declining the respondent's request in this instance.
[23] There remains one matter which I should mention before considering
the issue of costs. It relates to paragraph (b)(iii) of the order made by
Traverso DJP in connection with the exchange rate which is to apply when the
sterling currency is converted to rand for the purpose of fixing the claims for
loss of earnings. The learned judge ordered that the rate prevailing at noon on
the date of judgment was to be the rate used. Counsel are, however, agreed
that the correct rate will be that prevailing at the time of payment.
[24] As to the question of costs, the appellants have been successful on the
main issue, namely the computation of loss of earnings. It follows that they
should have their costs of appeal. The costs of the cross-appeal should follow
its result and there is no reason why the respondent should not pay the
appellants' costs in this connection.
[25] I make the following order:
1.
The appeal succeeds to the extent set out below:
16 Subsection (5) reads: 'Notwithstanding the provisions of this Act but subject to any other
law or an agreement between the parties, a court of law . . . may make such order as appears
just in respect of the payment of interest on an unliquidated debt, the rate at which such
interest shall accrue and the date from which such interest shall run.'
1.1
Paragraph (b) of the order made by the court below on 31 January
2008 is amended to read:
'(i)
The value of the plaintiff's net past loss of earnings will be the difference
between GBP128 714 and ZAR 791 835;
(ii)
The value of the plaintiff's claim for future loss of earnings will be the
difference between GBP578 884 and ZAR 3 911 705;
(iii)
The exchange rate will be the one prevailing at noon on the date of payment.'
1.2.
Paragraph (c) of the said order is amended to read:
'Interest at the rate prescribed in terms of s1 of the Prescribed Rate of interest Act,
55 of 1975, is payable by the defendants as follows :
(i) on the amount of R1 189 253,09 (past hospital and medical expenses) from
17 March 2004 to 31 January 2008;
(ii) on the amount of R400 000 (general damages) from 20 August 2007 to 31
January 2008;
(iii) on the expenditure incurred by the plaintiff, during the period between 6 April
2004 and 31 January 2008, on items categorised in the pleadings as 'future medical
and hospital expenses', from the date on which such expenditure was incurred to 31
January 2008;
(iv) on the capital amount of R2 434 630.09 (being the sum of the awards in
respect of past and future hospital and medical expenses and general damages)
from 31 January 2008 to date of payment;
(v) on the capital amount of the awards for past and future loss of earnings as
determined in paragraph (b) hereof, from 31 January 2008 to date of payment.'
2.
Save as aforesaid the appeal and the cross appeal are dismissed.
3.
The respondent is ordered to pay the appellants' costs of appeal and
the costs of the cross-appeal.
_______________________
N V HURT
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant:
R S van Riet SC
Instructed by
MacRobert Inc, Cape Town
Claude Reid Inc, Bloemfontein
Counsel for Respondent: D F Irish SC
A D Brown
Instructed by
Fairbridge, Arderne & Lawton Inc, Cape Town
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 648/08
No precedential significance
ACT COMPUTERS
Appellant
and
NVM BELEGGINGS & VERSEKERINGS ADVISEURS
Respondent
Neutral citation: Act Computers v NVM Beleggings (648/2008) 94 [2009]
ZASCA (17 September 2009)
Coram:
Mpati P, Lewis, Ponnan and Snyders JJA and Wallis
AJA
Heard:
3 September 2009
Delivered:
17 September 2009
Summary:
Appeal against order to repay moneys w
+here contract found to have been vitiated by material mistake: no mistake in
fact – contract embodied in written documents accepted
orally. Appeal upheld.
ORDER
On appeal from: High Court, Free State (Beckley and Rampai JJ sitting as a
full bench).
(a) The appeal is upheld with costs.
(b) The order of the court below is set aside and is replaced with:
‘The appeal is dismissed with costs.’
JUDGMENT
LEWIS JA (Mpati P, Ponnan and Snyders JJA and Wallis AJA concurring)
[1] This appeal turns on whether a contract between the parties, who
claimed to have different understandings as to its nature, was proved on the
terms alleged by the respondent. The appellant, ACT Computers (ACT),
contends that it rendered services to the respondent, NVM Beleggings &
Versekerings (NVM), and installed equipment necessary for the services at
ACT’s premises, but that the equipment remained its property. NVM, on the
other hand, maintains that it bought the equipment – a radio antenna used for
electronic communication.
[2] NVM is an investment agent and insurance broker in Kroonstad in the
Free State. ACT, also based in Kroonstad, supplies computer equipment and
services. The dispute between the parties arose because the sole proprietor
of NVM, Mr C P Booysen, complained, over several months, that the
equipment installed by ACT was not functioning adequately and that he and
his employees were unable to gain access to the internet and electronic
databases for its business. Booysen accordingly refused to pay ACT a
monthly subscription for internet connectivity. Mr H J Knepscheld of ACT
instructed employees of ACT to remove the antenna from NVM’s premises
several months after it had been installed. There was an ancillary dispute
about the alleged removal of computer programmes from NVM computers, in
respect of which damages were claimed, but that is not before us on appeal.
[3] After the antenna was removed from NVM’s premises NVM claimed, in
the magistrates’ court, Kroonstad, the repayment of what it alleged was the
purchase price of the antenna – the princely sum of R3 687.90. The court
granted absolution from the instance on the basis that the contract between
the parties was not proved. A full bench of the Free State High Court (Beckley
and Rampai JJ) upheld an appeal against the order, finding that there had
been an error as to the nature of the contract (error in negotio) which was
accordingly void, and that NVM was entitled to restitution of the R3 687.90
paid to ACT. ACT appeals against the order with the leave of the full bench.
[4] I shall deal first with the documents forming the basis of the contract as
pleaded by the parties. NVM itself alleged that the contract was partly written
and partly oral, attaching the written portions to the particulars of claim, and
ACT admitted that these documents were the written portions of the contract.
In my view, the documents are determinative of the dispute. They comprised
a letter attaching two quotations.
[5] On 25 August 2003 Knepscheld, on behalf of ACT, wrote to Booysen
proposing the installation of a cordless network ‘WiFi’ system for NVM. He
explained the various installation permutations and stated that because the
equipment was highly specialised, and was designed specifically for ACT, it
was not offered for sale.1
[6] The first quotation was for one ‘WiFi 100Mb Internet Link’, ‘Mounting &
Unit Installation’, ‘Panning & Fine Tune’, ‘Firewall & Routing’ and ‘Security &
Voice over IP Config’. The ‘Unit Price’ was R3 235, plus VAT of R452.90, the
total being R3 687.90. At the foot of the quotation were the words:
‘These prices are valid for 7 days only. Goods remain the property of ACT
Computers until fully paid. All goods carry a ONE YEAR carry-in warranty.’
[7] The second quotation was for internet connectivity at a monthly rate of
R570 including VAT. This quotation also carried the words stating that goods
remained the property of ACT unless fully paid for, a statement plainly
inappropriate for the monthly provision of internet connectivity. Equally plainly,
the words were printed routinely on all ACT’s quotations, irrespective of
whether they were for sales or services.
[8] Knepscheld’s evidence was that the written quotations were accepted
orally by Booysen, and the antenna was in fact installed. A tax invoice dated 8
October 2003 was sent to NVM for ‘Labour – WI-FI 100MN Internet link’ for
R3 687.90 (including VAT) and for ‘WiFi CONNECTION 08/10/03-31/10/03’
1 ‘Aangesien die toerusting hoogs gespesialiseerd is en spesifiek vir ACT opgestel word, word
dit nie te koop aangebied nie.’
for R379.68 (being for two-thirds of October). Payment by NVM of R4 515
was made by cheque to ACT on 18 November 2003. That, it appears, was in
respect of the invoice of 8 October and the monthly payment for internet
connectivity for November. NVM made no further payments to ACT.
[9] ACT workmen removed the antenna from NVM’s premises on 19
March 2004, following numerous complaints about the equipment and lack of
internet connectivity by Booysen, and constant attempts by ACT to resolve
the problems. An email sent by Booysen on the same day, 19 March, listed
the many problems that required attention and set out a suggested
readjustment of amounts claimed by ACT. Knepscheld responded, also on the
same day, questioning Booysen’s claims and stating that the only solution
was for ACT to remove the equipment (which it promptly did) and for NVM to
find another service provider in Kroonstad.
[10] NVM duly claimed the amount that it alleged it had paid for the antenna
removed by ACT. ACT’s defence to the claim was that the antenna was its
property which it was entitled to remove when it cancelled the contract with
NVM. Both Booysen and Knepscheld testified in the trial. Their versions of
what had been agreed differed as I have indicated. The trial court concluded,
because of that, that there was no contract, and therefore no breach of
contract. The court could thus, it reasoned, make no finding and granted
absolution from the instance.
[11] The high court, on appeal, came to a different conclusion, one not
advanced by ACT at all either in the trial or on appeal: that there was no
consensus and therefore no contract. It decided that because there were
different intentions as to the nature of the contract and its terms, the contract
was vitiated by error and that NVM was entitled to restitution of its payment of
R3 687.90.
[12] On appeal to this court NVM confirmed that the letter and quotations
set out the terms of the contract and were accepted orally by it. The only
argument advanced in support of its case was that the statement at the foot of
the quotation for the equipment and installation – that goods remained the
property of ACT until fully paid for – and that payment in full had been made,
meant that the antenna had been sold to it. But NVM also conceded that
these words, routinely used on ACT quotations, did not change the nature of
the contract, if it were for services, to one for sale. The reservation of rights in
the event of a sale clearly cannot mean that there was in fact a sale.
[13] NVM conceded also that the statement in the letter accompanying the
quotations that the equipment was not for sale clearly meant just what it said:
the equipment would be installed at the premises of NVM but would remain
ACT’s property. In my view, ACT proved that the contract was not one for the
sale of the antenna or anything else, but was rather one for the installation of
its own equipment and rendering of services. Accordingly, the trial court
should have dismissed NVM’s claim and not granted absolution from the
instance.
[14] It follows also that the decision of the court below – that there was
dissensus rendering the contract invalid, and that ACT should repay R3
687.90 to NVM – must be reversed.
[15] (a) The appeal is upheld with costs.
(b) The order of the court below is se aside and is replaced with:
‘The appeal is dismissed with costs.’
------------------------
C H Lewis
Judge of Appeal
Appearances:
For the Appellant:
P J T de Wet
Instructed by:
Grimbeek van Rooyen & Vennote
Kroonstad
Symington & de Kok
Bloemfontein
For the Respondent:
J Y Claasen SC
Instructed by:
Thabo Grimbeek
Kroonstad
Naude Attorneys
Bloemfontein
|
3196
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
REPORTABLE
Case number : 304/06
In the matter between :
DAVID SINCLAIR BARNETT
FIRST APPELLANT
PATRICIA STEPHANIE CANHAM NO
SECOND APPELLANT
STEPHEN HUGH CHURCH
THIRD APPELLANT
PETER CLOWES
FOURTH APPELLANT
JAMES KEVIN DOVETON
FIFTH APPELLANT
PETER GOSS
SIXTH APPELLANT
HILTON LLEWELLYN LANE
SEVENTH APPELLANT
ASHTON HENRY MARTIN
EIGHTH APPELLANT
RICHARD JEREMY REEN
NINTH APPELLANT
JACOB JOHN ROTHMAN
TENTH APPELLANT
WILLIAM TURTON
ELEVENTH APPELLANT
EDWARD LAWRENCE BARRY
TWELFTH APPELLANT
MICHAEL BERESFORD
THIRTEENTH APPELLANT
BRUCE DORNLEO
FOURTEENTH APPELLANT
R JOHN PICKERING
FIFTEENTH APPELLANT
NEVILLE DANSON TAYLOR
SIXTEENTH APPELLANT
and
THE MINISTER OF LAND AFFAIRS
FIRST RESPONDENT
THE MINISTER OF WATER AFFAIRS AND
FORESTRY
SECOND RESPONDENT
THE MINISTER OF ENVIRONMENTAL AFFAIRS
AND TOURISM
THIRD RESPONDENT
THE MEMBER OF THE EXECUTIVE COUNCIL
RESPONSIBLE FOR ECONOMIC AFFAIRS,
ENVIRONMENT AND TOURISM,
EASTERN CAPE PROVINCE
FOURTH RESPONDENT
CORAM :
HOWIE P, BRAND, JAFTA, MAYA et COMBRINCK JJA
HEARD :
20 AUGUST 2007
DELIVERED :
6 SEPTEMBER 2007
Summary:
Application for eviction from cottages built in coastal conservation area – based
on both Decree 9 of 1992 (Transkei) and wrongful possession in common law – plea of
prescription dismissed on principle of continuous wrong – PIE found not applicable because
cottages held not to be ‘homes’- other defences dismissed on the facts.
Neutral citation: This judgment may be referred to as Barnett v Minister of Land Affairs [2007]
SCA 95 (RSA)
JUDGMENT
________________________________________________________________
BRAND JA/
BRAND JA:
[1] The first three respondents are Cabinet Ministers representing three
different State Departments in the National Government. The fourth respondent
is the Member of the Executive Council for Economic Affairs, Environment and
Tourism in the Province of the Eastern Cape. The sixteen appellants are the
occupiers of sites and cottages on the Transkei Wild Coast in an area 13
kilometres north of Port St Johns and situated in the magisterial district of
Lusikisiki. I shall herein refer to the respondents collectively as ‘the Government’
and to the appellants as they were cited in the court a quo, ie ‘the defendants’.
[2] On the basis that the sites occupied by the defendants form part of State
land, the Government sought and obtained an eviction order against the
defendants (by Miller J) in the Mthatha High Court. The order also directed the
defendants to demolish and remove all structures built on the sites within four
months from date of the order, failing which the Government was authorised to
have the structures demolished and removed at the defendants’ expense. The
appeal against that judgment is with the leave of the court a quo.
[3] The sites are situated in an area which, until 27 April 1994, formed part of
the erstwhile Republic of Transkei. Since then, it falls under the jurisdiction of the
Provincial Government of the Eastern Cape. The cottages and other structures
were erected by the defendants from about mid 1994. The Government relied on
two causes of action, in the alternative. Its first cause of action was based on the
provisions of a decree promulgated by the President of the Transkei on 24 July
1992 described as Decree No 9 (Environmental Conservation) of 1992 which
came into operation on 1 January 1993 (‘the Decree’). For its alternative cause of
action the Government relied on the common law ground that the defendants
were in unlawful possession – or occupation – of State land.
[4] I shall soon return to the provisions of the Decree in more detail. Broadly
stated, however, its import was to proclaim all State land situated on the
landward side of the entire Transkeian coast within a strip of one kilometre above
the high water mark, a coastal conservation area. Inside the conservation area,
the Decree prohibited any development by anybody (including departments of
State) save under authority of a permit issued by the Department of Agriculture
and Forestry. Relying on the provisions of the Decree as its main cause of action,
the Government contended that because the defendants had no permit to
construct the cottages and other structures on the sites occupied by them, their
activities constituted unauthorised development within the coastal conservation
area, the consequences of which they were bound to remove.
[5] The defences raised by the defendants to these causes of action were
numerous and, at least some of them, rather difficult to understand. They led to a
trial lasting for many days and a record covering nearly four thousand pages. In
the course of time, some of these defences have wisely been jettisoned. Those
persisted in will best be understood against the background facts that follow. The
defendants are mostly well-to-do farmers and businessmen. They all reside in
the province of KwaZulu-Natal. Nonetheless, most of them had some association
with the Transkei Wild Coast which they visited regularly on vacation for a
number of years. Their settlement in the area started about one month after the
area again became part of South African soil, in April 1994. Their reason, so they
said, was because prior to that they were not allowed to occupy land which
formed part of the former Republic of Transkei. The timing of their settlement in
this exquisitely beautiful, virtually pristine part of nature, happened to coincide,
however, with a transition from one government to the other, when administrative
control in the area seems to have been, to say the least, in a state of flux.
[6] The procedure adopted by the defendants to obtain their occupancy was
essentially the same. This is hardly surprising. Those who came later simply
followed the precedent established by the success of the earlier ones. Broadly
stated, it happened like this: They first spoke to the local headman, Induna Torch
Hola, who is since deceased, and informed him of their wish to obtain a site on
the coast which they identified to him. The headman then took them to the chief
of the local tribe, Chief Mchilizwa Hanxa, who is also since deceased. Their
approach to the chief was mostly accompanied by a bottle of Commando brandy,
which appears to have been the strong drink of the chief’s choice. Once they
obtained the chief’s approval, he arranged for them to attend a meeting of the
Emtweni tribal authority, exercising jurisdiction in the area.
[7] Accompanied by the chief, they then attended a meeting of the tribal
authority. After the meeting had approved their request, they paid a ‘customary
fee’ of R200 to the tribal authority for which they were issued with a receipt. They
also received a rather curious document signed by the secretary of the tribal
authority and described as a ‘fishing site licence application’. According to the
heading of the document itself, it was to be submitted to the magistrate at
Lusikisiki. In substance the document conveyed to the magistrate a
recommendation by the tribal authority that the applicant cited be granted a
licence to conduct some fishing business on the proposed site. Why I referred to
the document as curious, is, of course, because it made no mention of the
defendants’ request for permission to occupy or to build a cottage on the site.
while, on the other hand, it referred to an application for a business licence which
the defendants never wanted.
[8] Armed with the receipt and the fishing site license application, the
defendants then made their way to the magistrate’s court building in Lusikisiki.
However, they did not go to the magistrate, as instructed by the contents of the
application form, but to an official in the Department of Agriculture, Mr Dumisane
Ntete, who happened to have his office in the same building. Arrangements were
then made with Ntete to meet at the chosen site together with Chief Hanxa and
members of the local community. It appears that Ntete always had a measuring
tape with him when he attended these meetings. Yet the measuring tape was
never used. The sites were not actually measured, but rather vaguely identified
by Ntete with reference to certain landmarks and physical features. Nor were the
sites ever surveyed or their exact dimensions recorded or mapped.
[9] The chief then asked the members of the local community present, who
on occasion numbered up to one hundred people, whether they had any
objection to the site being allocated to the defendant concerned. No objections
were ever raised. After that, the chief granted his permission for structures to be
built on the site, which signalled the end of the formalities. Festivities then started
where beer, brandy and food, supplied by the defendants in ample quantities,
were enjoyed by all. The only thing that happened thereafter was that some of
the defendants – though not all of them – annually paid the sum of R20 by way of
a local tax and a general levy to the Receiver of Revenue in Lusikisiki, whose
office also happened to be in the same building as the Magistrate’s Court.
Receipts were issued for these payments and a record kept by means of a so-
called cardex filing system, identifying each defendant with reference to his own
tax number.
[10] Two of the defendants testified that on an occasion when they went to pay
their annual taxes at the Magistrate’s Court building they happened to meet one
of the magistrates. They then used the opportunity to ask him whether there was
anything more they had to do in order to secure occupation of their sites. His
response was something to the effect that they had done all they were required
to do and that ‘nobody could take their piece of heaven away from them’.
[11] In response to the defendants’ declarations of trust in the validity of the
permission they received from the chief, the tribal authority and – on two
occasions from the magistrate, by conduct, as it were – the Government relied on
the evidence of Mr James Feely. Feely was employed between 1989 and 2000
by the departments – first of the former Transkei Government and then of the
Eastern Cape Provincial Government – that took administrative responsibility for
the area. According to his testimony – undisputed in this regard – the allocation
of residential sites and sites for recreation as well as land destined for agricultural
use in the area, was governed at the time by the provisions of Proclamation No
26 of 1936 read with the Transkei Agricultural Development Act 10 of 1966
(Transkei).
[12] According to these statutory enactments, residential sites could only be
allocated in areas earmarked for residential purposes. Because the sites
occupied by the defendants did not form part of any residential area, no one was
authorised to permit the occupation or the erection of buildings on these sites.
Moreover, s 4 of the 1936 Proclamation provided that, within residential areas,
permission to reside could only be granted by the magistrate of the district and
only to a ‘person domiciled in the district, who has been duly authorised thereto
by the Tribal Authority’. It follows that neither the chief nor the tribal authority
could allocate residential sites. They could only make recommendations to the
magistrate and, in any event, only in respect of persons domiciled in the district.
In terms of s 5, occupation for recreational purposes could only take place with
the permission of the Minister of the Interior and subject to such conditions and
to the payment of such rental or other charges as he of she might approve. In
sum, Feely’s evidence was that the permission relied upon by the defendants,
was plainly devoid of any validity.
[13] Feely also laid the factual foundation for the Government’s main cause of
action which relied on s 39 of the Decree. The relevant part of the section
provides:
’39(1) There is hereby established on the landward side of the entire length of the seashore,
excluding any national park, national wildlife reserve, municipal land, seaside resort, site
occupied in terms of Proclamation No 174 of 1921 or Proclamation No 26 of 1936, privately
owned land and lease hold land, a coastal conservation area 1 000 metres wide measured –
(a)
in relation to the sea, as distinct from a tidal river and tidal lagoon, from the high-water
mark;
(b)
. . .
(2)
Notwithstanding anything in any other law or in any condition of title contained, no person
(including any department of State) shall within the coastal conservation area, save under the
authority of a permit issued by the Department [of Agriculture and Forestry] in accordance with
the plan for the control of coastal development approved by the resolution of the Military
Council –
(a)
clear any land or remove any sand, soil, stone or vegetation;
(b)
. . .
(c)
erect any building.
. . ..’
And then follows a list of other prohibited activities, such as the construction of
roads, etc, which were admittedly carried out by the defendants, both on their
individual sites and in the area generally.
[14] It is not in dispute that, despite the cessation of the Republic of Transkei
as an independent country, the Decree remained in force by virtue of s 229 of the
Interim Constitution, Act 200 of 1993, in the area where it previously found
application. Likewise undisputed, is the fact that, pursuant to the provisions of
s 235(8) of the Interim Constitution, the administration of s 39 of the Decree had
been assigned to Feely’s employer of late, to wit, the Department of Economic
Affairs, Environment and Tourism of the Eastern Cape Province. Feely was
convinced that the sites occupied by the defendants form part of the coastal
conservation area. They were clearly situated within a zone one kilometre from
the sea and, so he testified, not inside any of the areas pertinently excluded by
s 39(1) such as national parks, seaside resorts, etc. Yet, he said, not one of the
defendants – or, for that matter, anybody else – applied for a permit from any of
the successive authorities that he worked for, to carry out the activities
enumerated in s 39(2) that they had performed.
[15] Feely conceded in cross-examination that no overall plan for coastal
development was ever approved by resolution of the Military Council as
envisaged by s 39(2). The development plan in existence at the time, he
explained, was the Transkei Coastal Development Control Plan of 1979.
According to this plan, the defendants’ sites were outside any of the prescribed
nodes destined for development, Though a new development plan was in the
process of preparation for approval, that plan had never been finalised before the
demise of the Military Council. Feely’s department thus continued to work on the
1979 plan. If someone had applied for a permit under s 39(2) – which no-one did
– Feely’s assumption was that his department would have made use of the 1979
plan.
[16] The Government also relied on the expert evidence of Mr Warrick Pierce,
who carried out an investigation into the environmental impact of the defendants’
activities in the area. In response, the defendants tendered the expert evidence
of Dr James Granger who was involved in a similar study. This gave rise to a
rather lengthy debate between these two experts, the relevance of which, I must
confess, I find difficult to understand. What the experts agreed upon was that the
impact of some of the defendants’ activities was significant and that it will endure
for a long time to come. In this regard, they both referred, by way of example, to
the harm caused by the gaining of access to cottages by means of four-wheel
driven vehicles via the beach and across frontal dunes; the impact on dunes
caused by the construction of cottages too close to the high-water mark; the
damage caused by the clearing of the coastal forest; and the visual disturbance
caused by the erection of structures to an otherwise pristine landscape. What the
two experts also seemed to agree on, was that no proper and effective
rehabilitation could take place for so long as the defendants’ cottages remain.
The dispute between them seemed to turn mainly on the extent to which the
environmental impact of the defendants’ activities can be remedied or
ameliorated through rehabilitative measures, once all the structures had been
demolished and removed from the sites. As I have indicated, however, I cannot
see how the resolution of this debate, one way or the other, could make any
difference to the outcome of this case.
[17] Dr Granger also introduced a further topic which then became a recurring
theme in the evidence of the defendants themselves. It related to the benefits
received by the local residents from the settlement by the defendants in the area
and the concomitant hardship that they would suffer if the defendants were
compelled to leave. In the promotion of this theme, the defendants also relied on
the results of a social impact study commissioned on their behalf. In sum, the
results of this study showed that unemployment is a serious problem in the area;
that many of the local inhabitants have no cash income at all and that they
represent what was described as the ‘poorest of the poor’. According to those
responsible for the study, the consensus among members of the local community
was that they substantially benefited from the presence of the defendants in the
area. Examples of these benefits included the employment of local residents as
domestic workers, as security guards and as construction workers on the building
sites; assistance rendered by the defendants in the erection of a school and a
water tank for the community; and the provision by the defendants of emergency
transport and care. In the event the study showed that this resulted in
considerable local support for the defendants’ continued presence in the area, as
was confirmed by those members of the community who were called to testify on
behalf of the defendants.
[18] Against this background I can now turn to those defences persisted in by
the defendants on appeal. First among these is the special plea of prescription.
The starting point of the defendants’ argument in support of this plea relied on
s 12(3) of the Prescription Act 68 of 1969. In terms of this section, the defendants
argued, the prescription period – of three years provided for in s 11(d) –
commenced to run, at the latest, when the Government acquired knowledge of
the ‘identity of the debtor and of the facts from which the debt arose’. The ‘debt’
under consideration, so the argument went, is the vindicatory relief that the
Government sought to enforce. The identities of the defendants and the facts
from which the vindicatory claims against them arose, so the argument
proceeded, were known to the Government at the latest by early 1996. Thus, the
argument concluded, the claims relied upon by the Government became
prescribed long before summons in the matter was issued and served in
December 2000.
[19] In my view it is fair to say that the Government was aware of the identities
of the defendants and of the facts upon which its claims against them rely, more
than three years before the present action was instituted. I am also prepared to
accept that the vindicatory relief which the Government seeks to enforce
constitutes a ‘debt’ as contemplated by the Prescription Act. Though the Act does
not define the term ‘debt’, it has been held that, for purposes of the Act, the term
has a wide and general meaning and that it includes an obligation to do
something or refrain from doing something (see eg Electricity Supply
Commission v Stewarts & Lloyds of SA (Pty) Ltd 1981 (3) SA 340 (A) at 344F-G
and Desai NO v Desai 1996 (1) SA 141 (A) at 146H-J). Thus understood, I can
see no reason why it would not include a claim for the enforcement of an owner’s
rights to property (see also eg Evins v Shield Insurance Co Ltd 1979 (3) SA 1136
(W) 1141F-G).
[20] In considering the special plea of prescription, the postulation is, of
course, that the allegations underpinning the Government’s claim had in fact
been established. Broadly stated, it must therefore be accepted for the
prescription issue that the defendants’ occupation of their sites constitutes a
contravention of both the Decree and the common law. Departing from this
premise, the answer to the prescription defence is, in my view, to be found in the
concept which has become well-recognised in the context of prescription, namely
that of a continuous wrong. In accordance with this concept, a distinction is
drawn between a single, completed wrongful act – with or without continuing
injurious effects, such as a blow against the head – on the one hand, and a
continuous wrong in the course of being committed, on the other. While the
former gives rise to a single debt, the approach with regard to a continuous
wrong is essentially that it results in a series of debts arising from moment to
moment, as long as the wrongful conduct endures (see eg Slomowitz v
Vereeniging Town Council 1966 (3) SA 317 (A); Mbuyisa v Minister of Police,
Transkei 1995 (2) SA 362 (T); Unilever Bestfoods Robertsons (Pty) Ltd v Soomar
2007 (2) SA 347 (SCA) para 15).
[21] In Slomowitz (at 331F-G) this court accepted the description of a
continuous wrong as one which ‘is still in the course of being committed and is
not wholly past’. In applying this description, the defendants’ wrongful conduct
relied upon by the Government must, in my view, be classified as a continuous
wrong, in contrast with a single wrongful act. For their contention to the contrary,
the defendants sought to rely mainly on the decision in Radebe v Government of
the Republic of South Africa 1995 (3) SA 787 (N) 803D-804G. I believe, however,
that Radebe is distinguishable on its facts. What Radebe claimed was the setting
aside of an alleged wrongful expropriation and the consequent transfer of his
immovable property to the Government, which was the defendant in that case.
What the court held was that a deprivation of ownership based on a single act of
expropriation did not constitute a continuous wrong and that, because the single
wrongful act that Radebe relied upon had occurred more than three years ago,
his claim had become prescribed. Where the present case differs from Radebe,
as I see it, is that the Government’s claim is not for the setting aside of a single
act of deprivation of possession which happened wholly in the past, but
effectively for an order terminating wrongful conduct which is still in the course of
depriving it of the possession of its property. Thus understood, the Government’s
position is, in my view, no different from that of the plaintiff in South African
Railways & Harbours v Fisher’s Estate 1954 (1) SA 337 (A) which was succinctly
described as follows by Centlivres CJ at 342B-D:
‘The plaintiff’s case is not that the defendant wrongfully entered upon the land but that the
defendant was at the time of service of the summons (not at any time prior to that date) in
wrongful possession of land of which it is the registered owner. That is all it has to prove in order
to succeed in its action. As far as its claim is concerned, what occurred in the past is
irrelevant . . ..’
[22] A further argument raised by the defendants for the first time in this court,
was that even if their wrongful occupation of the sites must be regarded as a
continuous wrong, the same cannot be said of their building activities on the
sites. That, they argued, can only be described, with reference to every individual
structure, as a single wrongful act committed wholly in the past. In consequence,
so their argument went, even though the Government’s claim for their eviction
from the sites may still be enforceable, its further claim that they be held
responsible for the demolition and removal of all structures erected by them, had
been extinguished by prescription three years after the Government acquired
notice of these structures. I do not agree with this argument. On the
Government’s case as pleaded, the continued existence and occupation of the
structures by the defendants constituted part and parcel of their wrongful
occupation of the sites. To my way of thinking, the result is that the existence and
occupation of the structures form part of the continuous wrong perpetrated by the
defendants. It follows that, in my view, the special plea of prescription cannot be
sustained.
[23] As to the merits, the first defence raised by the defendants went to the
Government’s locus standi. Essentially it was based on the contention that the
Government had failed to establish its alleged ownership of the land on which the
sites are situated. The appropriate starting point in considering the validity of this
contention is, in my view, to be found in the unequivocal testimony of Feely, on
behalf of the Government, that the defendants’ sites indeed formed part of State
land. The defendants relied, however, on a concession by Feely in cross-
examination that he never consulted the Deeds Registry. Though this is so, Feely
seems to have been justified in his inference, shared by at least some of the
defendants, that that remote part of the Transkei Wild Coast has never been held
in private ownership. It also appears to have been common cause that the area
formed part of unsurveyed land. In the event, the legal principle to be applied is
that, since all land originally belongs to the State, land which has never been
transferred into private ownership remains State land (see eg Cape Town Town
Council v Colonial Government and Table Bay Harbour Board (1906) 23 SC 62
at 69; LAWSA (1st reissue) Vol 14 para 21). Moreover, Feely also testified, and
this was not contested, that the land in the immediate vicinity of the defendants’
sites had been administered since time immemorial as State land under the
provisions of the 1936 Proclamation. In the circumstances, I find no merit in this
defence.
[24] As to the Government’s case based on the provisions of the Decree, the
defendants raised a twofold defence. Firstly, they maintained that the sites
occupied by them were excluded from the coastal conservation area created by
s 39(1) because it formed part of municipal land. Their second defence was that
s 39(2) of the Decree never took effect because the overall development plan
contemplated in this section had never been approved by the Military Council.
[25] The defence that the sites fell within the excluded category of municipal
land was in turn based on a twofold hypothesis. Firstly, it assumed that the
expression ‘municipal land’ must, in the context of s 39(1) be understood to refer
to land falling under municipal jurisdiction as opposed to land owned by a
municipality. The second assumption was that the sites were indeed subject to
the jurisdiction of some unknown municipality. The first assumption is, in my
view, unfounded. The meaning of the expression contended for by the
defendants is clearly not the natural one. When the Decree refers to ‘State land”
it patently means land owned by the State. That much was conceded by the
defendants. Why, it may then, in my view, rightfully be asked, would the meaning
of the same expression change without warning when it refers to a municipality
instead of the State? What s 39(1) plainly sought to exclude from the ambit of its
operation – admittedly in a somewhat circuitous way – was land not owned by
the State. In the process it referred, inter alia, to ‘privately-owned land’ and
‘municipal land’. In this context the latter expression must, in my view, be
understood to mean land owned by a municipality.
[26] The assumption that the sites were indeed subject to the jurisdiction of
some or other municipality, is, in my view, equally untenable. It was based on the
supposition that when the 1996 Constitution came into operation on 4 February
1997, every nook and cranny of the national territory immediately and
automatically became subject to the jurisdiction of a municipality, albeit that the
identification of the municipality concerned might not in all instances have been
practically possible. As the basis for this rather surprising notion, the defendants
relied on s 151(1) of the Constitution 108 of 1996, which provides that:
‘The local sphere of Government consists of municipalities, which must be established for the
whole of the territory of the Republic.’
[27] I do not believe, however, that the section is capable of supporting the
notion contended for by the defendants. In fact, if that was the meaning of the
section, it would make a nonsense, for example, of the contemplation in s 155 of
the Constitution, that the establishment of municipalities and their boundaries
would take place in terms of national and provincial legislation to be promulgated
at some future date (see eg, Local Government: Municipal Demarcation Act 27 of
1998). Absent any direct evidence that the remote part of the Transkei Wild
Coast where the sites are situated became subject to the jurisdiction of some
municipality, that inference cannot, in my view, be justified. I therefore
conclude that there is no merit in the defence that the sites occupied by the
defendants were excluded from the coastal conservation area and thus from the
ambit of the provisions of the Decree.
[28] The further defence, that the Decree did not come into operation, because
the Military Council never adopted an overall development plan, is, in my view,
equally devoid of substance. The mere fact that, in the absence of an overall
plan, no permit authorising development could be issued under s 39(2), does not
mean that the prohibition pronounced by s 39(2) could simply be ignored. The
main operative part of the section was the prohibition. A permit would constitute
an exception. Quite clearly the operative part could function without any
exception. That distinguishes the present case from the facts of Pharmaceutical
Manufacturers Association of South Africa: In re Ex Parte President of the
Republic of South Africa 1999 (4) SA 788 (T) – on which the defendants sought
to rely – where the operation of the whole Act depended on subordinate
legislation not yet in existence. It may be that the applicant for a permit would
have to seek a mandamus against the Military Council – or its successor –
compelling the approval of an overall plan. Or, maybe such an applicant could
take the department on review for refusing the permit on the basis of the 1979
plan, as Feely suggested. But, since no single defendant applied for such permit,
these are not issues we have to decide.
[29] As to the Government’s alternative claim based on wrongful possession of
State land, the first defence raised by the defendants was one of consent. The
onus to prove the validity of that consent, in my view, rested on the defendants. It
follows from the statement by this court in Dreyer and another NNO v AXZS
Industries 2006 (5) SA 548 (SCA) para 4, that:
‘A party who institutes the rei vindicatio is required to allege and prove ownership of the thing.
Since one of the incidents of ownership is the right to possession of the thing, a plaintiff who
establishes ownership is not required to prove that the defendants’ possession is unlawful. In that
event, the onus to establish any right to retain possession will rest on the defendant, as long as
the plaintiff does not go beyond alleging ownership.’
[30] I do not think it unfair to say that the defendants did not even come close
to discharging this onus. On the contrary, even if the Government were to bear
the onus, it had, in my view succeeded in establishing the absence of any
valid consent. The defendants did not deny that the right to occupy uninhabited
land in the area was governed by ss 4 and 5 of Proclamation 26 of 1936. Even a
perfunctory reading of these sections reveal that the consent of the tribal
authority and the chief, relied upon by the defendants was plainly of no validity.
As to the tacit consent of the magistrate in which some of the defendants placed
their trust, it is equally clear that, in terms of s 4, the magistrate could only grant
permission to reside to persons domiciled in the district of his jurisdiction and
then only in an area reserved for residential purposes. Because the defendants
clearly failed to meet these two requirements, any consent by the magistrate, be
it tacit, express or otherwise, would be equally invalid. The proposition put
forward for the first time in this court, that when the magistrate granted his tacit
consent, he must be taken to have acted on behalf of the Minister of the Interior
under s 5, was clearly no more than an afterthought. The suggestion was never
pleaded by the defendants nor put to any of the Government witnesses in cross-
examination and, in any event, appears to be devoid of any factual basis.
Whatever the magistrate intended to do, it is clear that he never purported to
grant the formal – and conditional – permission contemplated by s 5, on behalf of
the Minister.
[31] At the stage of argument in the trial court, the defendants raised the
further defence that they were protected in their occupation by s 2(1) of the
Interim Protection of Informal Rights Act 31 of 1996. In this regard they
contended that their right to occupy the sites constituted an ‘informal right to land’
as defined in paras a(i) and (a)(ii) of s 1 of the Act. In terms of these paragraphs,
the ‘informal right to land’ protected by s 2(1) includes ‘(a) the occupation of land
in terms of (i) any tribal, customary or indigenous law or practice of a tribe; and
(ii) the custom, usage or administrative practice in a particular area or
community.’
[32] The short answer to this defence is, in my view, that, on the evidence
presented, the ‘rights’ relied upon by the defendants – whatever they were – had
never before been granted to non-residents in the area until the defendants came
on the scene. It follows, in my view, that the defendants did not even come close
to establishing the ‘custom’ or ‘practice’ on which they sought to rely. In the
result I am of the view that this defence cannot succeed.
[33] What remains to be considered is the defendants’ contention that the
Government’s claim for their ejectment, both in terms of the Decree and under
the common law, was constrained by the provisions of the Prevention of Illegal
Eviction from and Unlawful Occupation of Land Act 19 of 1998, that has long
since become better known in legal vernacular as ‘PIE’. Departing from this
premise, the defendants’ argument was that the Government had to satisfy the
provisions of s 4(7) of PIE. In terms of this section an eviction order may only be
granted if the court ‘is of the opinion that it is just and equitable to do so, after
considering all the relevant circumstances . . ..’
[34] Thus based on the presumed application of PIE, the defendants
developed an argument which eventually constituted the cornerstone of their
case, namely, that the Government had failed to establish that, in all the
circumstances, it would be just and equitable to evict them from their sites. In
fact, it was the argument, so it seems, which prompted the greater part of the
evidence presented by and on behalf of the defendants at the trial.
[35] Adverting to this evidence, the defendants advanced considerations such
as the following in support of their plea that it would be unfair and unjust to evict
them from their sites:
(a)
Their historical connections with and affinity for the Transkei Wild Coast,
coupled with the fact that they were for a long time precluded from any title to the
land, which they visited from childhood, because of the racial policies of the pre-
constitutional South Africa.
(b)
They took occupation openly and without stealth or force, of vacant State
land held in trust for local tribes who consented to and endorsed the defendants’
occupation.
(c)
It was held out to them by various officials and entities involved in the
administration of the area, that they could occupy the sites and build their
cottages.
(d)
The consideration that the impact of their occupation on the environment
was not as far reaching as suggested by the Government.
(e)
Their eviction would result in their losing the money, time and labour
invested in buildings on the sites – which varied from R30 000 to R300 000.
(f)
The benefits attained by the local inhabitants through the defendants’
occupation and the concomitant hardship the inhabitants will suffer if the
defendants are ordered to leave.
(g)
The consideration that the state of apartheid will effectively be
reintroduced if all white residents are evicted from the area.
[36] Apart from disputing the veracity of some and the weight to be attributed
to the other considerations advanced by the defendants, the Government’s
contention was that, the balancing act of deciding what is just and fair requires
that regard should also be had to countervailing factors such as the following:
(a)
The defendants are all literate and sophisticated people. The documents
that were issued to them purported to be applications for licences to conduct a
fishing business on the sites and not the permission to build holiday cottages
which they sought. Though these applications were addressed to the magistrate,
they went to the agricultural officer. The dimensions of the sites were determined
in the most cavalier fashion. Despite these glaring incongruities and despite the
inherent unlikelihood that one could acquire the right to perpetual occupation of a
site on the coast for a sum as paltry as R200, the defendants chose to make no
enquiries about the applicable legislation. The inference to be drawn from this,
the Government contended, is that the defendants deliberately closed their eyes;
that they simply did not want to know what the true position was.
(b)
The defendants built their cottages, in direct contravention of the law, in an
ecologically sensitive area. By all accounts the impact of their activities on this
virtually pristine environment was significant and will endure for a long time to
come.
(c)
The defendants did not build in an area reserved for residential purposes,
where the local residents lived, but instead created a white enclave.
(d)
The benefits derived from their occupation by the local community, the
Government contended, are overstated by the defendants; are in any event
limited to a few of these residents; and are only enjoyed during the relatively
short periods when the defendants are there on vacation.
[37] On balance, I tend to agree with the Government’s argument that
considerations of fairness and equity do not favour the defendants’ continued
stay. But, as I have said, this whole debate had been introduced by the
defendants on the basis of the expressly stated hypothesis that the provisions of
PIE has a bearing on the case. Thus the pivotal question is whether PIE does in
fact apply. It is to that question I now turn. I believe it can be accepted with
confidence that PIE only applies to the eviction of persons from their homes.
Though this is not expressly stated by the operative provisions of PIE, it is borne
out, firstly, by the use of terminology such as ‘relocation’ and ‘reside’ (in ss 4(7)
and 4(9)) and, secondly, by the wording of the preamble, which, in turn
establishes a direct link with s 26(3) of the Constitution (see eg Ndlovu v Ngcobo
2003 (1) SA 113 (SCA) para 3). The constitutional guarantee provided by s 26(3)
is that ‘no-one may be evicted from their home, or have their home demolished,
without an order of the court made after considering all the relevant
circumstances’.
[38] This leads to the next question: can the cottages on the sites that were put
up by the defendants for holiday purposes be said to be their homes, in the
context of PIE? I think not. Though the concept ‘home’ is not easy to define and
although I agree with the defendants’ argument that one can conceivably have
more than one home, the term does, in my view, require an element of regular
occupation coupled with some degree of permanence. This is in accordance, I
think, with the dictionary meanings of: ‘the dwelling in which one habitually lives;
the fixed residence of a family or household; and the seat of domestic life and
interests’ (see eg The Oxford English Dictionary 2ed Vol VII). It is also borne out,
in my view, by the following statement in Beck v Scholz [1953] 1 QB 570 (CA)
575-6:
‘The word ‘home’ itself is not easy of exact definition, but the question posed, and to be answered
by ordinary common sense standards, is whether the particular premises are in the personal
occupation of the tenant as the tenant’s home, or, if the tenant has more than one home, as one
of his homes. Occupation merely as a convenience for . . . occasional visits . . . would not, I
think, according to the common sense of the matter, be occupation as a “home”.’
[39] Moreover, within the context of s 26(3) of the Constitution – and thus
within the context of PIE – I believe that my understanding of what is meant by a
‘home’ is supported by Sachs J, speaking for the Constitutional Court, in Port
Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) para 17,
where he said:
‘Section 26(3) evinces special constitutional regard for a person’s place of abode. It
acknowledges that a home is more than just a shelter from the elements. It is a zone of personal
intimacy and family security. Often it will be the only relatively secure space of privacy and
tranquillity in what (for poor people, in particular) is a turbulent and hostile world. Forced removal
is a shock for any family, the more so for one that has established itself on a site that has become
its familiar habitat.’
[40] These sentiments cannot, in my view, apply to holiday cottages erected
for holiday purposes and visited occasionally over weekends and during
vacations, albeit on a regular basis, by persons who have their habitual dwellings
elsewhere. Thus I conclude that for purposes of PIE, the cottages concerned
cannot be said to be the defendants’ ‘homes’. Their ‘homes’ are in KwaZulu-
Natal. Consequently I hold the view that PIE finds no application. This finding
renders it unnecessary and indeed inappropriate to resolve the debate as to what
outcome would be dictated by justice and equity. Finally, the defendants sought
an extension of the four month period which the court a quo afforded them to
demolish and remove their structures from the sites. Again, however, this relief
was sought on the basis of PIE – this time under the provisions of s 4(8) of the
Act. Because of my view that PIE does not apply, I do not believe we can accede
to this request.
[41] For these reasons, the appeal is dismissed with costs, including the costs
occasioned by the employment of two counsel.
………………………..
F D J BRAND
JUDGE OF APPEAL
Concur:
HOWIE P
JAFTA JA
MAYA JA
COMBRINCK JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number: 304/06
In the matter between
DAVID SINCLAIR BARNETT
FIRST APPELLANT
PATRICIA STEPHANIE CANHAM NO
SECOND APPELLANT
STEPHEN HUGH CHURCH
THIRD APPELLANT
PETER CLOWES
FOURTH APPELLANT
JAMES KEVIN DOVETON
FIFTH APPELLANT
PETER GOSS
SIXTH APPELLANT
HILTON LLEWELLYN LANE
SEVENTH APPELLANT
ASHTON HENRY MARTIN
EIGHTH APPELLANT
RICHARD JEREMY REEN
NINTH APPELLANT
JACOB JOHN ROTHMAN
TENTH APPELLANT
WILLIAM TURTON
ELEVENTH APPELLANT
EDWARD LAWRENCE BARRY
TWELFTH APPELLANT
MICHAEL BERESFORD
THIRTEENTH APPELLANT
BRUCE DORNLEO
FOURTEENTH APPELLANT
R JOHN PICKERING
FIFTEENTH APPELLANT
NEVILLE DANSON TAYLOR
SIXTEENTH APPELLANT
and
THE MINISTER OF LAND AFFAIRS
FIRST RESPONDENT
THE MINISTER OF WATER AFFAIRS AND
FORESTRY
SECOND RESPONDENT
THE MINISTER OF ENVIRONMENTAL AFFAIRS
AND TOURISM
THIRD RESPONDENT
THE MEMBER OF THE EXECUTIVE COUNCIL
RESPONSIBLE FOR ECONOMIC AFFAIRS,
ENVIRONMENT AND TOURISM,
EASTERN CAPE PROVINCE
FOURTH RESPONDENT
From:
The Registrar, Supreme Court of Appeal
Date:
2007-09-06
Status:
Immediate
On 6 September 2007 the SCA dismissed the appeal of Barnett and 15
others (Appellants) against the Minister of Land Affairs and 3 others (the
Government).
The matter arose from the occupation by the appellants of sites and
cottages on the Transkei Wild Coast, 13 kilometres north of Port St
Johns. The Government sought and obtained an order for their eviction
in the Mthatha High Court on the dual basis that the sites occupied by
them were situated in a nature conservation area and that it formed part
of State land. The order directed the defendants to remove all structures
built on the sites within four months of the order, failing which the
Government was authorised to have the structures demolished and
removed at the appellants’ expense.
Though various defences were raised by the appellants, they
concentrated on two of these on appeal. Firstly, they relied on the
approval of their occupation by the Chief of the local tribe and the tribal
authority having jurisdiction in the area. Secondly, they contended that
the Government had failed to establish that their eviction would be just
and equitable as envisaged by the provisions of the Prevention of Illegal
Eviction from the Unlawful Occupation of Land Act 19 of 1998 (better
known in legal parlance as PIE). As to the first defence, the SCA
essentially found that, on a proper construction of the legislative
enactments in operation in the Transkei at the time, neither the local
chief, nor the tribal authority could validly approve the occupation and
the building of cottages in the area where the sites are situated. As to
the defence based on PIE, the SCA found that PIE only applies to the
eviction of persons from their homes and that, since the cottages on the
sites were put up and used by the appellants for holiday purposes, they
did not qualify as ‘homes’, with the result that PIE found no application at
all.
|
3158
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 295/06
In the matter between:
ROAD ACCIDENT FUND
Appellant
and
PEDRO ERNESTO MONJANE
Respondent
Coram
:
SCOTT, CAMERON, CLOETE, MAYA JJA et
THERON AJA
Date of Hearing
:
4 MAY 2007
Date of delivery
:
18 MAY 2007
Summary: An employee who sustains an ‘occupational injury’ as defined in Act 130 of
1993 will have no claim under the Road Accident Fund Act 56 of 1996 if the wrongdoer
is his or her employer.
Neutral Citation: This judgment may be referred to as Road Accident Fund v Monjane
[2007] SCA 57 RSA.
SCOTT JA/…
SCOTT JA:
[1] The appellant is the Road Accident Fund, a juristic person established
in terms of s 2 of the Road Accident Fund Act 56 of 1996 (‘the RAF Act'). The
respondent (the plaintiff in the court below) instituted action in the Pretoria
High Court against the Fund for the payment of damages in the
sum of
R417 600 in respect of injuries he sustained in consequence of the negligent
driving of a motor vehicle by Mr Michael Duarte. The circumstances in which
his injuries were sustained are set out in paragraph 3 of his amended
particulars of claim, which reads:
‘On or about the 22nd day of May 1997 and at approximately 11 am and at the Krugersdorp
Market, Krugersdorp, Gauteng Province, the plaintiff was engaged in the loading of
vegetables on a certain motor vehicle with registration number GZT056T driven by one
Michael Duarte when the said driver suddenly and without warning and with reckless
disregard for the presence and safety of the plaintiff pulled away or put his said truck in
motion causing the plaintiff to fall from the said vehicle.’
The Fund filed a special plea in which it averred that on 22 May 1997 the
plaintiff’s employer was the driver of the vehicle concerned and that even if
the plaintiff’s injuries were caused by the former’s negligent driving the Fund
was not liable to the respondent in law –
‘. . . because in terms of Section 19(a) of the Road Accident Fund Act, Act 56 of 1996 [the
Fund] shall not be obliged to compensate any person for any loss or damage for which
neither the driver nor the owner of the motor vehicle concerned would have been liable [and]
in terms of Section 35(1) of the Compensation for Occupational Injuries and Diseases Act 130
of 1993, no action shall lie by the Plaintiff (as employee) against the said insured driver (the
employer).’
The matter came before Shongwe J who, at the request of the parties,
ordered that the special plea be dealt with first. No evidence was adduced but
the parties reached agreement on the facts necessary for the determination of
the special plea. They were: (a) that the respondent was ‘a pedestrian’ at the
time of the accident (by which the parties presumably intended to convey that
the respondent was not ‘being conveyed in or on the motor vehicle concerned’
within the meaning of s 18 of the RAF Act); (b) that he was in the employ of
Duarte and was carrying out his duties in pursuance of that employment when
the accident occurred; and (c) that Duarte was solely to blame for the
accident. After hearing argument and reserving judgment Shongwe J
dismissed the special plea with costs, but subsequently granted the Fund
leave to appeal to this court.
[2] Before dealing with the issues raised in the special plea it is necessary
to outline the relevant statutory provisions.
[3] Section 17 of the RAF Act imposes on the Fund (or an agent) an
obligation ‘to compensate any person (the third party) for any loss or damage
which the third party has suffered as a result of any bodily injury to himself or
herself . . . caused by or arising from the driving of a motor vehicle by any
person at any place within the Republic, if the injury or death is due to the
negligence or other wrongful act of the driver or of the owner of the motor
vehicle . . .’ . Where the identity of the driver or owner has been established
(as in the present case) this obligation is stated in s 17(1)(a) to be ‘subject to
this Act’. The sections that follow contain a number of qualifications to the
general obligation imposed in s 17.
[4] In terms of s 18(1) and (2) the Fund’s liability is limited in certain
specified circumstances where the third party was at the time of the
occurrence being conveyed in or on the motor vehicle concerned. Section
18(2) is relevant. It provides for a limitation of the Fund’s liability:
‘where the loss or damage contemplated in section 17 is suffered as a result of bodily injury to
or death of any person who, at the time of the occurrence which caused that injury or death,
was being conveyed in or on the motor vehicle concerned and who was an employee of the
driver or owner of that motor vehicle and the third party is entitled to compensation under the
Compensation for Occupational Injuries and Diseases Act, 1993 (Act No 130 of 1993), in
respect of such injury or death’.
[5] In terms of s 19 the liability of the Fund (or agent), as contemplated in s
17, is excluded altogether in certain circumstances. Of relevance is s 19(a). It
provides that the Fund shall not be obliged to compensate any person in
terms of s 17 for loss or damage –
‘for which neither the driver nor the owner of the motor vehicle concerned would have been
liable but for section 21.’
Section 21, in turn, provides that when a third party is entitled under section
17 to claim from the Fund or agent, ‘that third party may not claim
compensation in respect of that loss or damage from the owner or from the
person who so drove the vehicle, . . . unless the Fund or such agent is unable
to pay the compensation’.
[6] Section 35(1) of the Compensation for Occupational Injuries and
Diseases Act 130 of 1993 (‘COIDA’) precludes an employee from recovering
damages from his or her employer in respect of an ‘occupational injury’. The
section reads:
‘No action shall lie by an employee or any dependant of any employee for the recovery of
damages in respect of any occupational injury or disease resulting in the disablement or
death of such employee against such employee’s employer, and no liability for compensation
on the part of such employer shall arise save under the provisions of this Act in respect of
such disablement or death.’
‘Occupational injury’ is defined in s 1 to mean ‘a personal injury sustained as a
result of an accident’. ‘Accident’, in turn, is defined as ‘an accident arising out
of and in the course of an employee’s employment and resulting in personal
injury, illness or death of the employee.’
[7] Against the background I turn to the contentions of the parties. The
appellant’s defence raised in the special plea is simply that on the basis of the
agreed facts it is not liable to the respondent (ie the third party) for
compensation in terms of s 17 of the RAF Act because, by virtue of s 35(1) of
COIDA, the respondent’s employer, Duarte, being the driver whose
negligence caused the accident, would not have been liable to the
respondent; and in terms of s 19(a) of the RAF Act, the Fund is not obliged to
compensate a third party for loss or damage for which neither the driver nor
the owner of the motor vehicle concerned would have been liable but for s 21.
[8] As I understand the contention advanced on behalf of the respondent –
and seemingly accepted by the court a quo – it is this. Section 18(2) of the
RAF Act does not create a new right of action against the Fund; it serves
merely to qualify or limit the Fund’s liability under s 17. That limitation, it is
argued, relates solely to the situation where the third party is conveyed ‘in or
on the motor vehicle concerned’ and accordingly s 18(2) contemplates that a
third party will have an unlimited claim where he or she was not being
conveyed in or on the motor vehicle concerned even though the vehicle was
owned or being driven at the time by the third party’s employer. I pause to
observe that this argument would no doubt be correct if it were not for the
provisions of s 19(a), read with s 35(1) of COIDA. The respondent contends,
however, that if s 19(a) of the RAF Act were to be construed so as to preclude
an action against the Fund in every case where the vehicle concerned was
owned or driven by the third party’s employer regardless of whether the third
party was being conveyed in or on the vehicle, the effect would be to render
meaningless the limitation contained in s 18(2). Accordingly, so it was
contended, s 19(a) had to be strictly construed so as not to exclude the
liability of the Fund in a case such as the present.
[9] The argument is unsound. The effect of s 18(2), when read with s 19(a)
(and s 35(1) of COIDA) is that the limited claim contemplated in s 18(2) will lie
against the Fund when the wrongdoer, whether the driver or the owner of the
vehicle concerned, is not the third party’s employer. In such a case the claim
is limited but not precluded. It is only when the wrongdoer is the third party’s
employer that the claim is precluded. In such a case the claim will be
precluded regardless of whether or not the third party is being conveyed in or
on the motor vehicle concerned, provided only that the injury sustained by the
third party is an ‘occupational injury’ as defined in COIDA. The effect of s
19(a), read with s 35(1) of COIDA, is therefore not to render s 18(2)
meaningless.
[10] The same argument which was advanced by the respondent in the
present case was advanced in Mphosi v Central Board for Co-operative
Insurance Ltd1 in relation to para (aa) of the second proviso to s 11(1) of the
Motor Vehicle Insurance Act 29 of 1942, being the equivalent of the present s
18(2) of the RAF Act.2 In rejecting it, Botha JA at 646B gave as an example of
when the paragraph would be applicable, the case where A, the owner of the
insured motor vehicle, lets the vehicle to B, an employer of labour, to transport
his workers from one place to another, and one or more of the workers are
injured in an accident arising out of the negligence of the owner of the vehicle
for having let a dangerously defective vehicle to B. In such a case (as the
learned judge pointed out in relation to the provisions of the 1942 Act) the
injured workers would be entitled to compensation under COIDA but their
common law action for damages would not be precluded by s 35(1) of that
Act. They would accordingly be entitled to proceed against the Fund, but
subject to the limitation imposed by s 18(2) of the RAF Act.
[11] It follows that the respondent’s answer to the special plea cannot
prevail and the appeal must succeed.
[12] It is no doubt so that where an ‘occupational injury’ is sustained in the
context of a motor accident s 35(1) of COIDA may on occasions have
seemingly unfortunate consequences. The reason is that the basis upon
which compensation is determined under COIDA differs markedly from that
under the
RAF Act. The effect of s 35(1) is to deprive an employee of his or her
common-law right of action to claim damages from an employer. But COIDA
substitutes a
system which has advantages for an employee not available at common law.3
The RAF Act, like COIDA, constitutes social legislation but it caters for a
1 1974 (4) SA 633 (A).
2 The first proviso to s 11(1) of the 1942 Act is the equivalent of the present s 19(a); s 13 of
the 1942 Act is the equivalent of the present s 21 and s 7(a) of the Workmen’s Compensation
Act 30 of 1941 is the equivalent of s 35(1) of COIDA.
3 The constitutionality of s 35(1) of COIDA was upheld in Jooste v Score Supermarket Trading
(Pty) Ltd 1999 (2) SA 1 (CC).
different situation. Inevitably, as in the present case, there will be some
overlapping of the areas covered by each and provision is made for an injured
party in certain circumstances to claim under both Acts.4 But ultimately,
however, a line must be drawn and where that is to be is essentially a
question of policy for the legislature to decide. Section 19(a) of the RAF Act,
read with s 35(1) of COIDA, indicates where that line has been drawn: an
employee who sustains an ‘occupational injury’ in the context of a motor
accident will have no claim under the RAF Act if the wrongdoer is his or her
employer. This was recognised by this court as long ago as 1974 in Mphosi’s
case. It is a well-established rule of construction that the legislature is
presumed to know the law, including the authoritative interpretation placed on
its previous enactments by the courts. Significantly, the legislature has in a
series of subsequent enactments retained in substance the statutory
provisions upon which Mphosi’s case was decided.5 It must be accepted,
therefore, that the construction placed upon them correctly reflects the policy
of the legislature.
[13] The appeal is upheld with costs. The order of the court a quo is set
aside and the following order is substituted in its place:
‘The special plea is upheld with costs.’
__________
D G SCOTT
4 See eg s 18 (2) of the RAF Act and s 36 of COIDA.
5 Compulsory Motor Vehicle Insurance Act 56 of 1976; Motor Vehicle Accidents Act 84 of
1986; Multilateral Motor Vehicle Accidents Fund Act 93 of 1989.
JUDGE OF APPEAL
CONCUR:
CAMERON JA
CLOETE
JA
MAYA
JA
THERON
AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
ROAD ACCIDENT FUND AND P E MONJANE
CASE NO 295/06
From :
The Registrar, Supreme Court of Appeal
Date:
18 May 2007
Status:
Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today upheld an appeal against a decision of
the High Court, Pretoria, which had held that a worker who sustained
injuries in a motor accident caused by the negligence of his employer was
entitled to recover compensation under both the Road Accident Fund and
the Compensation for Occupational Injuries and Diseases Act.
The facts were that the worker, Mr Pedro Monjane, fell off a truck and was
injured while loading vegetables when his employer, Mr Michael Duarte,
suddenly and without warning set the truck in motion.
It was common cause that the injury sustained by Mr Monjane was an
‘occupational injury’ within the meaning of the Compensation Act although
it was sustained in the context of a motor accident. The SCA held that on a
proper construction of the two Acts it was clear that where the negligent
party in a motor accident was the claimant’s employer, the claimant was
entitled to compensation under the Compensation Act only and not also
under the Road Accident Fund.
The court noted that although it might seem unfair to confine a claimant to
compensation under the Compensation Act, both Acts constituted social
legislation and it was up to Parliament as a matter of policy to decide where
to draw the line between the areas covered by the two Acts. In certain
limited circumstances a degree of overlapping was permitted and an
injured workman could claim under both Acts, but it was quite clear that
where the negligent party was the claimant’s employer Parliament had
decided that the claim was to be limited to compensation under the
Compensation Act.
- - - ends - - -
|
1902
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 534/10
In the matter between:
MATOLWANDILE BONGA MDA Appellant
and
THE LAW SOCIETY OF THE CAPE OF GOOD HOPE Respondent
Neutral citation: Mda v The Law Society of the Cape of Good Hope
(534/2010) [2011] ZASCA 145 (26 September 2011).
Coram:
Brand, Cachalia, Malan, Majiedt and Seriti JJA
Heard:
15 September 2011
Delivered:
26 September 2011
Summary:
The authority of council of the Law Society to inspect, under
s 70(1) of the Attorneys Act 53 of 1979, ‘any book, document,
record or thing’ pertaining to a practice, or to inspect the
‘accounting records’ under s 78(6) framed widely – not limited
only to documentary material pertaining to specific complaint
against practitioner.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Eastern Cape High Court, Mthatha (Petse ADJP and Miller J
sitting as full bench):
(1)
The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Brand, Malan, Majiedt and Seriti JJA concurring):
[1] This is an appeal against an order of a full bench of the Eastern Cape
High Court sitting at Mthatha (Petse ADJP, Miller J concurring) ordering the
appellant, Mr Matolwandile Bonga Mda, to make the accounting records of his
attorney’s practice available for inspection by the Law Society of the Cape of
Good Hope. The appeal comes before us with leave of the high court. The
circumstances under which the Law Society asserts a right to inspect Mr Mda’s
records are these.
[2] Mr Mda has not had a happy relationship with the Law Society. He has, on
fifteen occasions, been found guilty of unprofessional conduct pursuant to
internal disciplinary proceedings conducted in terms Rule 15 of the Rules of the
Law Society of the Cape of Good Hope. The Law Society is considering
instituting disciplinary proceedings against him for five other matters. One of
these relates to a complaint arising from a claim that Mr Mda was instructed to
pursue on behalf of Mr Dlokweni against the Road Accident Fund (the RAF) in
about 1996. In 2005, Mr Dlokweni lodged a complaint with the Law Society
against Mr Mda regarding his claim. This was after Mr Dlokweni had learnt that
the RAF had paid his claim to Mr Mda three years earlier, in 2002, and Mr Mda
could not account for the money. At Mr Dlokweni’s instance the Law Society
wrote to Mr Mda to establish what had happened, but received no satisfactory
response.
[3] Early in April 2006 Mr Mda informed the Law Society that he could not
locate Mr Dlokweni’s file. He promised to respond by 21 April 2006, but failed to
do so. He then gave another undertaking to answer the query by 14 July 2006.
Again, no response was forthcoming. The Law Society wrote further letters – the
last on 4 January 2007 – but elicited no response. When he did finally answer, on
24 August 2007, the Law Society was still not satisfied with his explanation.
[4] On 11 July 2007 the Law Society addressed a letter to Mr Mda to inform
him that a ‘forensic audit’ of his practice was to be conducted as envisaged in
s 70(1), and s 78(5) of the Act, and that PDP Pretorius Dondashe (the auditors)
had been authorised to do this. It explained that this was required to satisfy itself
that the practice was keeping proper accounting records in compliance with
s 78(4), and to decide whether or not disciplinary proceedings under s 70(1) were
warranted. Mr Mda requested information on the ambit of the investigation. On
15 August 2007 the Law Society answered by letter informing him that four other
complaints by his clients against him were being considered, in addition to Mr
Dlokweni’s. The first two complaints concerned an alleged failure on his part to
respond to requests for information from his clients to provide progress reports to
them about their matters; the third was that he had allegedly not paid arrear rates
and taxes to a municipality in respect of a property despite having promised to do
so; and the last complaint concerned a matter involving the transfer of a property
for which he had received an instruction ten years earlier, but had allegedly not
reported on its progress, and then resisted attempts by the complainant to have
the file removed from him.
[5] Mr Mda avers that he attended to all these complaints and that there is no
basis for a wide-ranging investigation into the affairs of his practice. Despite
adopting this stance he initially appeared willing to assist the auditors with their
investigation, but then demurred. The Law Society demanded his co-operation,
threatening to institute proceedings to compel him to co-operate if necessary.
With no adequate response forthcoming from him, the Law Society launched the
proceedings that are the subject of this appeal.
[6] The essential dispute before the high court, as before us, concerns the
ambit of the investigation that the Law Society may undertake. Mr Mda accepts
that the five complaints in issue, if proved, could amount to ‘unprofessional,
dishonourable or unworthy conduct’ as the Act envisages. But, he contends, the
Law Society may only demand information concerning the five complaints
mentioned above: it may not conduct a general forensic audit of his practice for
the purpose of enquiring into allegations of misconduct on his part. In support of
his contention he submits that ss 70(1) and 78(5), upon which the Law Society
purports to rely to conduct a wide-ranging investigation into the affairs of his
practice, do not authorise this. Instead, so the submission goes, s 70(1) permits
the Law Society only to inspect material pertaining to specific complaints against
him, and s 78(5), only to inspect accounting records concerning his trust account
– nothing else. It is therefore necessary to consider the ambit of these provisions.
[7] Law Societies have, among their objects, the responsibility to uphold the
integrity of practitioners1 and ensure that the standards and control of their
professional conduct2 are maintained. This task falls to a council, which runs the
affairs and exercises the powers of a society.3 Among the powers given to a
council to achieve these objects is s 71, which sanctions an enquiry into
allegations of ‘unprofessional or dishonourable or unworthy conduct’ on the part
of a practitioner. To decide whether or not an enquiry should be held a council
1 Section 58(e).
2 Sections 58(f) and (g).
3 Section 60.
may use s 70(1)4 to inspect ‘any book, document, record, or thing’ pertaining to a
practice. There is no limit to the ambit of the inspection.
[8] A council may also, under s 78(5)5, satisfy itself that a practitioner’s trust
accounts are in order by inspecting the ‘accounting records’ of the practice. In
this regard it must be noted that s 78(6)(d)6 makes clear that ‘accounting records’
is of wide import and includes ‘any record or document’ under the custody and
control of a practitioner relating to the practice. So whether a council is
considering a possible professional misconduct enquiry under s 70(1), or the
supervision of a practitioner’s trust accounts under s 78(5), both provisions
expressly permit the council to inspect all the records and documents concerning
the practice. It is on this basis that the high court found that the Law Society was
entitled to conduct the envisaged inspection.
[9] In my view the high court was correct in its conclusion. Concerning
Mr Mda’s submission that s 70(1) permits a council to inspect documentary
material pertaining only to specific allegations of misconduct, this cannot be so.
As I have indicated above, the section does not limit a council’s authority when it
is deciding whether or not to hold a misconduct enquiry. However, once the
4 ‘Council's power of inspection
(1) A council may for the purposes of an enquiry under section 71 or in order to enable it to
decide whether or not such an enquiry should be held, direct any practitioner to produce for
inspection, either by the council itself or by any person authorized thereto by the council, any
book, document, record or thing which is in the possession or custody or under the control of
such practitioner and which relates to his practice or former practice.’
5 ‘Trust accounts . . .
(5) The council of the society of the province in which a practitioner practises may by itself or
through its nominee, and at its own cost, inspect the accounting records of any practitioner in
order to satisfy itself that the provisions of subsections (1), (2), (2A), (3) and (4) are being
observed, and, if on such inspection it is found that such practitioner has not complied with such
provisions, the council may write up the accounting records of such practitioner and recover the
costs of the inspection or of such writing up, as the case may be, from that practitioner.’
6 ‘(6) For the purposes of subsections (4) and (5), 'accounting records' includes any record or
document kept by or in the custody or under the control of any practitioner which relates to –
(a) . . .
(b) . . .
(c) . . .
(d) his practice.’
council has decided to hold an enquiry, ss 71(2)(a)(i) and (ii) require any person
who is summoned to testify to produce any documentary material that has a
bearing on the subject matter of the enquiry.7 Section 71(2) is concerned only
with documentary material that may be relevant to an enquiry. Section 70(1), on
the other hand, has a specific purpose, which is to place a council in a position to
decide whether or not to hold an enquiry. This is why the legislature permitted a
broader inspection under s 70(1) than it did under s 71(2).
[10] There is also no merit in Mr Mda’s objection to the Law Society relying on
s 78(5), which he maintains may be used only to police trust accounts, and not to
investigate misconduct. If this contention were correct it would mean that a
council may not request documentary material regarding any allegation of
misconduct when it concerns a practitioner’s failure to keep proper accounting
records, which is absurd. This is why s 78(6) in terms authorises inspection of
more than merely the ‘accounting records’ of a practice.
[11] Moreover, the facts of this case demonstrate why Mr Mda’s objection to
the Law Society’s use of the relevant provisions is untenable. One of the
allegations against Mr Mda is that he may have misappropriated monies that
were due to Mr Dlokweni. On the face of it this allegation, if proved, would
amount to a failure to keep proper accounts under s 78, and also to misconduct
as envisaged in s 71. It would also be a criminal offence. In addition, as I have
mentioned, Mr Mda has four other complaints pending against him and a dubious
disciplinary record. There are, therefore, clear grounds for the Law Society to
7 Section 71(2)(a)(i) reads: ‘Enquiry by council into alleged cases of unprofessional or
dishonourable or unworthy conduct . . .
(2) (a) For the purposes of an enquiry under subsection (1), a council may –
(i) under the hand of the president or the secretary of its society, summon any person who in the
opinion of the council may be able to give material information concerning the subject matter of
the enquiry or who is believed by the council to have in his possession or custody or under his
control any book, document, record or thing which has any bearing on the subject matter of the
enquiry, to appear before it at a time and place specified in the summons, to be interrogated or to
produce that book, document, record or thing, and may retain for inspection any book, document,
record or thing so produced; . . .’
invoke both ss 78(6) and 70(1), so that a thorough inspection of his practice may
be conducted.
[12] For all these reasons the appeal must fail. The appeal is, therefore,
dismissed with costs.
_____________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
T M Ntsaluba
Instructed by:
Jolwana Mgidlana Inc, Mthatha
Nonxuba Inc, Bloemfontein
For Respondent:
A A Brink (Attorney)
J F Heunis & Associates, Mthatha
Webbers 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
26 September 2011
STATUS: Immediate
MDA V THE LAW SOCIETY OF THE CAPE OF GOOD HOPE (534/10)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today dismissed the appeal with costs.
The appeal was against an order of a full bench of the Eastern Cape High Court,
sitting at Mthatha (Petse ADJP, Miller J concurring) ordering the appellant to make
his accounting records of his attorney’s practice available for inspection by the Law
Society of the Cape of Good Hope.
The essential issue before the SCA concerned the ambit of the investigation that the
Law Society may undertake, in terms of s 70(1) of the Attorneys Act 53 of 1979. The
appellant contended that the Law Society may not conduct a general forensic audit
of his practice for the purpose of enquiring into allegations of misconduct on his part.
In support of the latter contention the appellant submitted that ss 70(1) and 78(5),
upon which the Law Society purported to rely to conduct a wide-ranging
investigation into the affairs of his practice, do not authorise this. Instead, he
submitted, s 70(1) permits the Law Society only to inspect material pertaining to
specific complaints against him, and s 78(5), only to inspect accounting records
concerning his trust account, nothing else. The SCA stated that whether a council is
considering a possible professional misconduct enquiry, under s 70(1), or the
supervision of a practitioner’s trust accounts, under s 78(5), both provisions
expressly permit the council to inspect all the records and documents concerning the
practice. The SCA disagreed with the appellant’s submission on s 70(1), stating that
the section has a specific purpose, which is to place a council in a position to decide
whether or not to hold an enquiry, which is why the Legislature permitted a broader
inspection under s 70(1) than it did under s 71(2). The SCA held that there was also
no merit in the appellant’s objection to the Law Society relying on s 78(5), for if his
contention were correct it would mean that a council may not request documentary
material regarding any allegation of misconduct when it concerns a practitioner’s
failure to keep proper accounting records, which would be absurd. This is why the
section authorises inspection of more than merely the ‘accounting records’ of the
practice. There were clear grounds for the Law Society to invoke both ss 78(6) and
70(1), so that a thorough inspection of the appellant’s practice could be conducted
and the SCA dismissed the appeal with costs.
-- ends --
|
3767
|
non-electoral
|
2022
|
`
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 1017/2020
In the matter between:
SANDILE BIYELA
APPELLANT
and
MINISTER OF POLICE
RESPONDENT
Neutral citation:
Biyela v Minister of Police (1017/2020) [2022] ZASCA
36 (01 April 2022)
Coram:
PETSE AP, DLODLO JA, MUSI, MATOJANE and MOLEFE
AJJA
Heard:
15 February 2022
Delivered:
This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the
Supreme Court of Appeal website and release to SAFLII. The
date and time for hand-down is deemed to be 09h45 on
01 April 2022.
Summary: Delict – unlawful arrest and detention – inadmissible hearsay evidence
can form the basis of a reasonable suspicion by a peace officer.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court Pietermaritzburg (Koen J
et Bezuidenhout J concurring, with Mngadi J dissenting sitting as court of appeal):
The appeal is upheld with costs.
The order of the court a quo is set aside and replaced by the following:
‘The appeal is dismissed with costs.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Musi AJA (Petse AP and Dlodlo JA and Matonjane and Molefe AJJA concurring):
[1] This appeal, which is with the special leave of this Court, concerns the arrest
and detention of the appellant, Mr Sandile Biyela. The controversy to be determined
is whether his arrest and detention by members of the South African Police Service
(SAPS) were unlawful.
[2] The appellant successfully instituted action against the respondent, the Minister
of Police, in the Durban Magistrate’s Court for unlawful arrest and detention. Judgment
was granted in his favour in the sum of R160,000 with interest plus costs.
[3] The respondent was aggrieved by the outcome and appealed to the KwaZulu-
Natal Division of the High Court, Pietermaritzburg. After the two judges to whom the
appeal was initially allocated could not agree, a third judge joined the bench to hear
the appeal afresh and resolve the deadlock. The majority (Koen et Bezuidenhout JJ)
upheld the appeal, however, Mngadi J dissented and concluded that he would have
dismissed the appeal.
[4] Before traversing the facts of this matter, I pause to deal with a preliminary issue
that was raised by the appellant. In his amended particulars of claim, the appellant
alleged that on Friday, 18 May 2012 at Durban Central, he was arrested without a
warrant by members of the SAPS for the offence of intimidation. He was, thereafter,
detained at the Durban Central Police Station and appeared in court on Monday, 21
May 2012. The case against him was postponed and he was released.
[5] The respondent’s plea was a bare denial which had the effect that it was
accepted that the appellant had the onus to prove his arrest and detention. That being
the case, the appellant assumed the duty to begin. During his cross-examination,
counsel for the respondent put to him that he was indeed arrested by members of
SAPS. Since that statement conflicted with the plea, counsel for the appellant
objected.
[6] The court adjourned for the parties to discuss the issue. They resolved the issue
and the respondent applied to amend his plea. In the amendment the respondent
admitted that the appellant was arrested without a warrant on 18 May 2012, in the
area of Warwick Avenue, by members of the SAPS and that he was detained until
Monday, 21 May 2012. The respondent amplified its plea by setting out factual
allegations that purportedly led to the arrest and detention of the appellant. The
magistrate allowed the amendment.
[7] Although the appellant testified first, the matter was nevertheless conducted
with the common understanding that the onus of proving that the arrest and detention
were lawful rested on the respondent. The court a quo described the bare denial as a
‘tactical denial to avoid the defendant (respondent) attracting the onus to begin’.
Before us, counsel for the appellant argued that the appellant was prejudiced by this
‘tactical plea’ because it rendered his trial unfair. He submitted that the trial was unfair
because the appellant had to testify first and that the trial was conducted on the
understanding that the onus was on the appellant to prove both his arrest and
detention.
[8] It is unacceptable for a party to plead a bare denial in the face of straightforward
and undeniable allegations against such party. It goes without saying that a trial by
ambush is unfair; courts should be very slow to allow a party to mount a case at trial
other than the one that the party has pleaded. In Minister of Safety and Security v
Slabbert1 it was stated that:
‘The purpose of pleadings is to define the issues for the other party and the court. A party has
a duty to allege in the pleadings the material facts upon which it relies. It is impermissible for
a plaintiff to plead a particular case and seek to establish a different case at trial.’2 (Footnote
omitted.)
[9] In this matter, the respondent pleaded a bare denial and persisted with such
denial in circumstances where it obviously knew that the information at its disposal is
incongruent with such plea. This must be so because the statements of the
respondent’s witnesses that were disclosed to the appellant clearly show that the
appellant was arrested by members of the SAPS.
[10] The matter was set down, on approximately six occasions, for a pre-trial hearing
before a magistrate. The respondent failed to attend all the pre-trial conferences. The
respondent’s failure to attend the pre-trial conferences compounds its egregious
abuse of court process. The issue relating to the bare denial could have been raised
and addressed at the pre-trial stage. The respondent’s conduct was totally
unacceptable and must be deprecated.
[11] However, having regard to the total circumstances of this case, the stage at
which the issue was discovered and addressed and the manner in which the trial was
subsequently conducted, I am not convinced that the prejudice was of such a nature
that it should vitiate the entire proceedings. I now turn to the facts.
[12] Warrant Officer Sithole (Sithole) and Constable Ngcobo (Ngcobo) testified that
on 18 May 2012 they were on duty in the Durban Central Business District (CBD).
Earlier in the day, taxi drivers had marched to the offices of the eThekwini Metro Police
in order to hand over a memorandum protesting the impoundment of their vehicles.
1 Minister of Safety and Security v Slabbert [2009] ZASCA 163; (2010) 2 All SA 474 (SCA).
2 Ibid para 11.
[13] At approximately 14h20 they received a report from Constable Saunders
(Saunders), who was monitoring CCTV cameras, about the occupants of a white
minibus taxi who were engaged in unlawful activities at the Warwick Avenue Triangle.
They were given the location and registration number of the taxi. They drove to
Warwick Avenue where they saw the taxi and activated their police vehicle’s siren in
order to stop the taxi. It stopped and the occupants were asked to alight from the taxi.
Sticks, stones and a rubber hammer were found in the taxi or in the possession of
some of the passengers. All 12 males who were in the taxi were arrested and taken to
the Durban Central Police Station.
[14] Sithole testified that Saunders had informed them, via their radio, that the
occupants of the white taxi ‘just smashed a DTM bus’ and jumped into the taxi and
drove in a northerly direction on Warwick Avenue. They rushed to the scene where
they stopped the taxi. He and Ngcobo jumped out of the car in which they were
travelling, went to the taxi and instructed the driver to alight. He identified himself,
explained the reason for stopping the taxi and requested permission to search the
driver. He was granted permission. Nothing illegal was found in the driver’s
possession.
[15] He then requested the driver to accompany him to the left side of the taxi and
opened the sliding door. The occupants were requested to alight from the vehicle and
once they were outside, he searched the taxi and found concrete stones and sticks
that were abandoned. They arrested all the males for intimidation and public violence
and requested their colleagues to come to the scene with a police van. They came
and 12 people were transported to the police station while they followed the police van
in their own vehicle. Sithole denied that the police van executed zig-zag manoeuvres
on the road on the way to the police station, which was one of the allegations levelled
against them.
[16] Likewise, Ngcobo testified that Saunders had informed them that a group of 12
males alighted from a taxi, pelted a bus with stones and forced the passengers to
alight from the bus after which they climbed back into the taxi and drove off. When he
saw the taxi for the first time there were males hanging out of the windows of the taxi
with sticks in their hands. He testified that before they stopped the taxi, they called
Saunders in order to verify that it was indeed the taxi that they were supposed to stop.
He confirmed.
[17] After stopping the taxi, Sithole searched the occupants of the taxi while Ngcobo
was observing. Although he could not recall exactly what was found, he said that
Sithole found a rubber hammer, sticks and stones in the taxi. All the males were
informed that they were going to be arrested for public violence and malicious injury
to property. After their arrest they were transported to the police station in a police van.
[18] Constable Rajen Saunders testified that he is stationed at the Durban Central
Police Station, but was stationed at the Metro CCTV room at the time. His duties
entailed monitoring CCTV for crime or related incidents. He would then report any
crime or incidents to radio control who would then be put into direct contact with the
vehicle on the ground and communicate with the police officers in the vehicle. His job
also entails downloading any camera footage of an incident. He confirmed that he was
on duty on 18 May 2012. However, he could not recall any incident that occurred on
that day. During cross- examination, he confirmed that he could not recall the incident
referred to by Sithole and Ngcobo. At some stage, he categorically stated that no
report was ever given as testified to by both Sithole and Ngcobo.
[19] Detective Constable Zikhalala, who was the investigating officer in respect of
the criminal case testified that he took a warning statement from the appellant. The
appellant informed him that ‘he will make a statement at court’.
[20] For his part, the appellant testified that he is a tractor operator. On 18 May 2012,
he went to work and thereafter went to town to buy groceries. He stays in Kwa-Mashu
and commutes by taxi. Between 15:00 and 16:00, he went to the taxi rank and boarded
a taxi together with approximately 12 other males. While seated, he saw that the area
at the taxi rank was full of police officers. Whilst the taxi was still stationary, the police
approached it. They opened the taxi door, grabbed him and pulled him out of the taxi.
He fell and the police hit, kicked and swore at him.
[21] They pulled him up and hurled him into a police van. There were other persons
in the van. Whilst driving to the police station the police allegedly executed zig-zag
manoeuvres which had the effect that they were being hurled from one side of the van
to the other and bumping into each other. Once they arrived at the police station, they
were told to sit on the floor. When he enquired why he was arrested, the police swore
at him and placed him in the police cells until the Monday when he was released. This
was his first brush with the law. He was very traumatised by the incident and consulted
a doctor after the incident.
[22] In the court of first instance, the magistrate made terse and unsubstantiated
credibility findings. She found that because Sithole and Ngcobo based their arrest on
the information received from Saunders, no reliance could be placed on their
testimonies, especially when ‘considering their contradictions as well’. She did not
elaborate on these contradictions. Rather, she found that ‘on the evaluation of the
evidence and the legal position the entire arrest depended solely on the evidence of
radio command, which the court found inadmissible … hence I find that the defendant
failed to discharge the onus.’
[23] The majority, in the court a quo, found that the magistrate erred in concluding
that the information that qualified to be considered whether a reasonable suspicion to
arrest existed, had to be evidence which would be admissible in a court of law. They
properly characterised the issue and said the following:
‘The issue is not whether there is evidence admissible in a court available to the arresting
officer, but whether there was information available which would cause him to reasonably
suspect the suspect of having committed the relevant offence. The reasonableness
requirement therefore extends inter alia to the reliability or accuracy of the information upon
which an arrest is founded, including the quality and ambit thereof.’
[24] Having properly characterised the nature of the enquiry, the majority had regard
to the credibility of the witnesses. They concluded that they ‘had no hesitation in
accepting the evidence of Sithole as corroborated in every material respect by Ngcobo
as more probable.’ They found that there is no reason why the police officers would
fabricate their testimonies relating to the taxi being in motion and them stopping it by
activating the siren of their vehicle, if that did not occur.
[25] They found that the appellant’s version that the police van in which they were
being transported drove in a reckless zig-zag manner to the police station can safely
be rejected, because it is improbable that the police would do so in a built-up area, in
full view of the public and their colleagues who were following them.
[26] The majority concluded that the court of first instance misdirected itself by not
having regard to the information available to the arresting officers to establish a
reasonable suspicion at the time of the arrest. If it had done so, the majority concluded,
it would have found that the arrest of the appellant was lawful.
[27] The minority found that the arresting officer must prove the basis of his or her
suspicion. He or she must prove what he or she observed which caused him or her to
reasonably suspect, and, if not based on his or her observation, he or she must prove
the information he or she had which caused him or her to formulate the suspicion. The
learned judge characterised the enquiry as follows:
‘In this case the issue is not that the report as contained in an inadmissible evidence (sic). In
this case the police failed to produce the report when the matter was tried before the trial court.
They did not fail to produce it because it was inadmissible, it did not exist.’
[28] The learned judge reasoned that in his view the issue was not whether the
information relayed to the arresting officers afforded sufficient grounds to form a
reasonable suspicion. Rather, the issue was whether the arresting officers could prove
that they had formed a suspicion and that the suspicion was reasonable without
producing the information on which they allegedly formed the suspicion. He concluded
that the case was decided on the basis of the respondent’s failure to discharge the
onus to justify the arrest because there was a failure to produce the report on which
the arrest was based.
[29] Counsel for the appellant contended that the testimonies of Sithole and Ngcobo
were inadmissible hearsay and that the court of first instance was correct in finding
that for that reason the respondent did not discharge the onus of proving that the arrest
was lawful. Counsel on behalf of the respondent, on the other hand, argued that the
court a quo was correct in its characterisation of the nature of the enquiry as well as
the credibility of the witnesses.
[30] Section 40(1)(b) of the Criminal Procedure Act3 provides:
‘A peace officer may without warrant arrest any person –
(a)
who commits or attempt to commit any offence in his presence;
(b)
whom he reasonably suspects of having committed any offence referred to in schedule
1, other than the offence of escaping from lawful custody; …’
[31] In order to prove that the arrest was lawful, the respondent has to prove that:
(i)
the arresting officer was a peace officer;
(ii)
the arresting officer entertained a suspicion;
(iii)
that the suspect to be arrested committed an offence referred to in schedule 1;
and
(iv)
the suspicion rested on reasonable grounds.4
[32] It is common cause, in this matter, that the arrest was effected by a peace
officer. It is further common cause that the appellant was allegedly suspected of having
committed a Schedule 1 offence. The only controversies in this matter are whether
the arresting officers could have formed a reasonable suspicion based on hearsay
evidence and the credibility of the arresting officers.
[33] The question whether a peace officer reasonably suspects a person of having
committed an offence within the ambit of s 40(1)(b) is objectively justiciable.5 It must,
at the outset, be emphasised that the suspicion need not be based on information that
would subsequently be admissible in a court of law.
[34] The standard of a reasonable suspicion is very low. The reasonable suspicion
must be more than a hunch; it should not be an unparticularised suspicion. It must be
based on specific and articulable facts or information. Whether the suspicion was
reasonable, under the prevailing circumstances, is determined objectively.
3 Criminal Procedure Act 51 of 1977.
4 Duncan v Minister of Law and Order 1986 (2) SA 805 (A) at 818G – H.
5 Minister of Law and Order and Others v Hurley and Another 1986 (3) SA 568 (A) at 579H.
[35] What is required is that the arresting officer must form a reasonable suspicion
that a Schedule 1 offence has been committed based on credible and trustworthy
information. Whether that information would later, in a court of law, be found to be
inadmissible is neither here nor there for the determination of whether the arresting
officer at the time of arrest harboured a reasonable suspicion that the arrested person
committed a Schedule 1 offence.
[36] The arresting officer is not obliged to arrest based on a reasonable suspicion
because he or she has a discretion. The discretion to arrest must be exercised
properly.6 Our legal system sets great store by the liberty of an individual and,
therefore, the discretion must be exercised after taking all the prevailing circumstances
into consideration.
[37] The mere fact that Saunders could not recall that he made the report is not
dispositive of the matter. The absence of his recollection does not signify the absence
of a report made by him. If the testimonies of the recipients of the report are credible,
and it is clear that they genuinely acted on the information received from Saunders,
there would be nothing wrong in concluding that the suspicion was reasonable under
the circumstances because they received it from a credible source. That source was
one of their own colleagues specifically tasked with monitoring CCTV cameras in order
to report to them, in real-time, the scene of the crime, the kind of crime committed and
a description of the person or persons who committed the crime.
[38] I, therefore, agree with the majority’s characterisation of the issues and its
conclusion that a reasonable suspicion can, depending on the circumstances, be
formed based on hearsay evidence, regardless of whether that evidence is later found
to be admissible or not. Furthermore, I agree with the conclusion that the court of first
instance erred in its conclusion that the police officers could not form a reasonable
suspicion because such suspicion was based on inadmissible hearsay evidence.
6 Groenewald v Minister van Justisie 1973 (3) SA 877 (A) at 883G.
[39] However, the majority did not upset or criticise the magistrate’s credibility
findings. They did not point out any factual misdirection committed by the magistrate.
Neither did they state that the magistrate’s credibility findings were wrong or
insupportable. They did not comment, at all, on any of the magistrate’s credibility
findings and they did not state on which ground they were at large to interfere with the
magistrate’s credibility findings. This was a misdirection because the majority did not
have regard to the entrenched principles pertaining to a court of appeal’s powers to
interfere with the credibility findings of a trial court.7
[40] The court a quo downplayed the materiality of the contradictions and omissions
in the testimonies of Sithole and Ngcobo. That they contradicted each other as to the
exact content of the report that was made by Saunders is beyond question. They both
testified that when they followed the taxi, they saw men brandishing or holding sticks
but during cross-examination they could not explain whether they saw one or more of
the occupants of the taxi brandishing or wielding sticks.
[41] During cross-examination, Sithole testified that he searched the occupants of
the taxi and found some carrying sticks and some carrying stones. When he was
pressed to indicate how many were carrying sticks and how many were carrying
stones, he said that he could not recall. He then conceded that he could not recall
whether it was one stick or more than one stick. He also did not make mention of any
of the occupants of the taxi carrying a rubber hammer. It was also pointed out to him
by counsel for the appellant, that in his statement made immediately after the arrest
he stated that all the occupants in the taxi were involved in damaging the bus and that
they also damaged police vehicles with the registration numbers and letters BRH567B
and BRB112B. He conceded, without satisfactory explanation, that he did not mention
this aspect in his evidence-in-chief. It was also put to him that he previously testified
in other trials relating to the same incident and that in those trials he did not mention
that police vehicles were damaged or a rubber hammer was found in the possession
of one of the taxi’s occupants.
7 Rex v Dhlumayo and Another 1947 (2) SA 677 (A) at 705.
[42] Ngcobo did not mention that Sithole first spoke to and searched the taxi driver
before he (ie Sithole) went to the left side of the vehicle. Ngcobo testified that before
they stopped the taxi, they verified with Saunders whether it was indeed the correct
vehicle. Yet, this was not mentioned in his statement. Ngcobo conceded during cross-
examination that this was a very important aspect which he omitted from his statement.
It was then put to him that he embellished his testimony in order to give it an aura of
truthfulness. It was also pointed out to him that Sithole did not mention anything about
the verification of the identity of the taxi before it was stopped.
[43] In this matter the respondent’s case faced insurmountable obstacles. First,
Saunders could not recall that he made the report to his colleagues, and at some stage
he said that he made no such report. The recorded CCTV footage, if it ever existed at
all, is also irretrievably lost. Secondly, Sithole and Ngcobo contradicted each other on
material issues. In my view, the majority downplayed the contradictions in the
testimonies
of
the
last-mentioned
witnesses.
Additionally,
these
material
contradictions undermined the credibility of their evidence.
[44] The majority did not criticise the gravamen of the appellant’s testimony. Instead,
they, for the most part, referred to and over-emphasised peripheral issues. The court
of first instance concluded that the appellant’s evidence was ‘straightforward and clear
with little or no contradictions’. This finding cannot be faulted. There was therefore no
tenable basis to justify interference with those findings. Indeed, none is discernible
from the majority judgment of the court a quo.
[45] In my judgment the court a quo should have concluded that the respondent did
not prove that the appellant was arrested lawfully. Therefore, this appeal ought to
succeed. And there is no reason why costs should not follow the result.
[46] The quantum determined by the court of first instance was not challenged.
Thus, no more need be said about it in this judgment.
[47] I accordingly make the following order:
The appeal is upheld with costs.
The order of the court a quo is set aside and replaced by the following:
‘The appeal is dismissed with costs.’
________________________
C MUSI
ACTING JUDGE OF APPEAL
APPEARANCES:
For appellant:
S Khan SC
Instructed by:
Seelan Pillay & Associates, Durban
Webbers, Bloemfontein.
For first respondent:
N D Myeni
Instructed by:
State Attorney, Durban
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:
01 April 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does
not form part of the judgments of the Supreme Court of Appeal
Biyela v Minister of Police (1017/2020) [2022] ZASCA
Today the Supreme Court of Appeal (SCA) upheld an appeal from the KwaZulu-Natal Division
of the High Court, Pietermaritzburg (high court).
The appellant successfully instituted action against the respondent in the Durban Magistrate’s
Court (court a quo). Judgment was granted in the appellant’s favour. However, the respondent
was aggrieved by the outcome and appealed to the high court, which upheld the appeal. The
matter was subsequently appealed and proceeded to the SCA.
The matter concerned the appellant’s arrest by the respondent and revolved around the question
whether such arrest was lawful. The appellant happened to have been in the midst of a
confrontation between police and members of the public while he was traveling by taxi. Some
of the occupants of the taxi were suspected of having been involved in acts of intimidation and
public violence, and were correlated to the aforementioned incidents by way of closed-circuit
television (CCTV) cameras. These CCTV cameras were manned by police officers who relayed
any observed criminal, or suspected criminal, activity to police officers on the ground.
The taxi in question was observed by CCTV as being involved in nefarious activities. The
police officers caused the occupants to alight from the vehicle, arrested them and proceeded to
keep them in police cells upon the reasonable suspicion that they were the ones responsible for
the nefarious acts attributed to the taxi, as observed by the CCTV cameras. The question was,
accordingly, whether a reasonable suspicion existed which justified the officers’ arrest of the
suspects.
The high court had regard to the credibility of the witnesses and had no reason to doubt the
veracity of the police officers’ conduct. The majority concluded that the court a quo misdirected
itself by not having regard to the information available to the arresting officers to establish a
reasonable suspicion at the time of arrest. This Court, however, considered with emphasis
whether the police officers could have formed a reasonable suspicion based on hearsay
evidence, being the CCTV information, and whether the police officers’ testimonies were
credible.
This Court agreed with the high court’s characterisation of the issues at hand and similarly
concluded that the court a quo erred in its conclusion that the police officers could not have
formed a reasonable suspicion justifying the arrest. However, this court found that the high
court, in turn, misdirected itself by not having had regard to the court a quo’s credibility
findings and that no misdirection by the court a quo was indicated by the high court. Had the
high court done this, a host of concerns would have amounted to the conclusion reached by this
Court that the respondent had not proven that the arrest was lawful.
In the result, this Court upheld the appeal and replaced the order of the court a quo with one
dismissing the appeal.
--------oOo--------
|
3256
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number: 640/06
In the matter between:
THE MEC FOR EDUCATION,
WESTERN CAPE PROVINCE
Appellant
and
EDITH STRAUSS
Respondent
CORAM:
SCOTT, MTHIYANE, CLOETE, HEHER JJA
and MALAN AJA
HEARD:
12 NOVEMBER 2007
DELIVERED:
28 NOVEMBER 2007
Summary: South African Schools Act 84 of 1996 – s 60 - Compensation for
Occupational Injuries and Diseases Act 130 of 1993 (COIDA) – s 35 – educator
doing part-time discus training injured – whether s 35(1) of COIDA applicable
Neutral citation: MEC for Education v Strauss [2007] SCA 155 (RSA)
________________________________________________________________
MALAN AJA:
[1] This is an appeal with leave of the court a quo against the judgment of
Van Zyl J sitting in the Cape High Court in which he dismissed with costs the
defendant’s special plea and ordered the defendant to pay the costs of a Rule
33(4) application and the costs of the postponement of the hearing on 30 May
2006.
[2] The appellant, the defendant in the court a quo, is the Member of the
Executive Council for Education in the Western Cape. The respondent, the
plaintiff in the court a quo, was an educator1 employed at the Paarl Girls’ High
School. The plaintiff instituted proceedings against the defendant, the governing
body of the school and two medical doctors claiming damages arising from an
incident that occurred on 12 February 2001 while she was engaged in training
learners at the school to throw the discus. She was struck on the forehead just
above the left eye by a discus thrown by a learner participating in the training
session and sustained serious injuries as a result. Her claim against the
governing body and the two medical doctors was subsequently withdrawn and
she proceeded against the defendant only.
[3] The plaintiff was employed by the governing body of the school, a public
school,2 pursuant to a written contract effective from 1 January 2001 in
1 An ‘educator’ is defined in s 1 of the South African Schools Act 84 of 1996 (the ‘Act’) as
meaning ‘any person, excluding a person who is appointed to exclusively perform extracurricular
duties, who teaches, educates or trains other persons or who provides professional educational
services, including professional therapy and education psychological services, at a school’.
2 Section 1 of the Act. Every public school is ‘a juristic person, with legal capacity to perform its
functions in terms of this Act’ (s 15). Governance of a public school is vested in its governing
body which ‘may perform only such functions and obligations and exercise only such rights as
accordance with the provisions of s 20(4) of the Act (and not by the Head of
Department in terms of the Employment of Educators Act 76 of 1998). In terms of
her contract of employment the plaintiff accepted the professional authority of the
principal. It is alleged that the plaintiff was obliged to ‘carry out lawful requests
and/or instructions of the school principal and/or the governing body relating,
inter alia, to educational activities, including sports training or coaching at the
school’. She was obliged to provide assistance in respect of extra curricular
activities as instructed by the principal without any additional compensation.
Clause 4.3 of her contract provides:
‘Die werknemer sal bystand verleen ten opsigte van buite-kurrikulêre aktiwiteite soos deur die
Hoof aan hom/haar opgedra sonder enige addisionele vergoeding.’
[4] The incident is alleged to have occurred while the plaintiff was an educator
at the school and
‘acting upon the lawful instructions of the school principal conveyed to the plaintiff by the sports’
head, to train or coach learners in discus throwing, for which the plaintiff would be remunerated
by the governing body as an independent trainer.’ (Paragraph 9 of the particulars of claim).
In this paragraph a contract of employment other than the contract annexed to
the particulars of claim is referred to.
[5] The plaintiff’s claim against the defendant is founded on the latter’s own
alleged negligence and also, by virtue of s 60 of the Act, on the negligence of the
principal of the school or its governing body. As to the defendant’s own
negligence, it was alleged, for example, that the defendant failed to provide
safety nets around the discuss circle (paragraph 10.4) and also that he failed to
ensure that nets were provided by the principal, the governing body or the school
prescribed by the Act’(s 16(1)). The professional management of the school is in the hands of the
principal, ex officio a member of the governing body (s 23(1)), who carries on his duties under the
authority of the Head of Department (s 16(3)). The functions of governing bodies are set out in s
20.
(paragraph 10.5). As to the plaintiff’s reliance on s 60, it was alleged that the
‘school principal, governing body and/or Head of Department’ failed to ensure
that educators and sports trainers or coaches were able to carry out their
functions in an environment where the risk of injury was eliminated (paragraph
10.6) or that they failed to take reasonable steps such as the provision of safety
nets to prevent injury to the plaintiff (paragraph 10.7).
[6] Section 60 of the Act provides:
‘(1) The State is liable for any damage or loss caused as a result of any act or omission in
connection with any educational activity conducted by a public school and for which such public
school would have been liable but for the provisions of this section.
(2) The provisions of the State Liability Act, 1957 (Act 20 of 1957), apply to any claim under
subsection (1).
(3) Any claim for damage or loss contemplated in subsection (1) must be instituted against the
Member of the Executive Council concerned.’
[7] The plaintiff pleaded that in terms of s 60(1) the State is liable for any
damage or loss caused as a result of any act or omission in connection with any
educational activity conducted by a public school and for which such public
school would have been liable but for the provisions of the said section and
added that any action had to be instituted against the defendant.
[8] In the course of his judgment Van Zyl J said that ‘any liability ascribed to
the defendant, in his official capacity as the member of the executive council who
was responsible for education in the Western Cape, would not arise from any
negligence on his part. It could arise only from the provisions of section 60(1) …
on which the plaintiff has in any event placed reliance’. I do not agree. Section
60, although wide in scope, has a limited purpose: it exempts the school or its
governing body from liability for damage or loss caused ‘as a result of an act or
omission in connection with any educational activity’ and transfers liability to the
State. Public education is the responsibility of the State. Hence the legislature
intended the State to be liable for damage or loss caused by an act or omission
resulting from an educational activity for which the school would otherwise have
been liable. The section, however, does not preclude claims a person may have
against the State based on other grounds such as in this case where reliance is
also placed on the defendant’s own negligence and he is cited as a wrongdoer.
The section simply does not deal with such other claims. (I express no view on
the merits or otherwise of this claim.)
[9] The activity the plaintiff was allegedly engaged in clearly falls within the
description of ‘educational activity’ used in s 60(1). Van Zyl J correctly came to
this conclusion: the plaintiff was acting as alleged on the lawful instructions of the
school officials. The liability transferred must furthermore result from ‘an act or
omission in connection with any educational activity’. The acts or omissions
alleged by the plaintiff in paragraph 10 of her particulars of claim and attributed to
the principal, the governing body or the principal are all acts or omissions ‘in
connection with any educational activity’, liability for which would be transferred
to the State had the school been liable. By pleading s 60 of the Act the plaintiff
intended to hold the State liable not only as a wrongdoer but also by virtue of the
liability thus transferred.
[10] The defendant filed a special plea contending that s 60 did not avail the
plaintiff. Two grounds were relied on. The first was that the plaintiff was
appointed in terms of s 20(4)3 of the Act which provides that a public school may,
subject to the Act, the Labour Relations Act 66 of 1995 and any other applicable
law, establish posts for educators and employ educators additional to the
establishment determined by the Member of the Executive Council in terms of s
3(1) of the Employment of Educators Act 76 of 1998. In terms of s 20(10) s 60 is
3 Section 20(4): ‘(4) Subject to this Act, the Labour Relations Act, 1995 (Act 66 of 1995), and any
other applicable law, a public school may establish posts for educators and employ educators
additional to the establishment determined by the Member of the Executive Council in terms of
section 3 (1) of the Educators' Employment Act, 1994.’
not applicable where the act or omission complained of relates to the contractual
responsibility of the school as an employer towards its staff.4 The plaintiff’s claim
lies in delict and the defendant correctly did not persist with this contention. The
second ground relied upon is s 35(1) of the Compensation for Occupational
Injuries and Diseases Act 130 of 1993 (COIDA) which precludes an action by an
employee for the recovery of damages against his or her employer, as a
consequence of which the defendant is not liable for any damage for which the
governing body would not have been liable. Although the special plea is
somewhat inelegantly worded, s 35(1) was relied upon in argument both in this
and the court a quo as an independent ground apart from the provisions of s 20
(4) of the Act.
[11] COIDA came into operation on 1 March 1994 providing for a system of no-
fault compensation for employees who are injured in accidents that arise out of
and in the course of their employment or who contract occupational diseases. A
compensation fund is established5 to which employers are required to contribute6
and from which compensation and other benefits are paid to employees.7
Employees meeting the requirements of the Act are entitled to the benefits
provided for and prescribed by COIDA.8 COIDA
‘supplants the essentially individualistic common-law position, typically represented by civil claims
of a plaintiff employee against a negligent defendant employer, by a system which is intended to
4 Section 20(10) reads: ‘Despite section 60, the State is not liable for any act or omission by the
public school relating to its contractual responsibility as the employer in respect of staff employed
in terms of subsections (4) and (5).’ See LUR vir Onderwys en Kultuur, Vrystaat v Louw en n
Ander 2006 (1) SA 192 (SCA) para 7.
5 Section 15.
6 Section 87.
7 Section 16.
8 Section 22.
and does enable employees to obtain limited compensation from a fund to which the employers
are obliged to contribute.’ 9
[12] At common law10 an employee has to show that his or her employer acted
negligently thereby risking a finding that he or she was contributorily negligent.
The employee claiming common-law damages from the employer would also
bear the risk of the employer’s insolvency or his inability to meet a judgment
debt. While the employee ran the risk of an adverse cost order if he or she was
unsuccessful, a common-law action might lead to his or her recovering
substantially more by way of damages than under the compensation provided by
COIDA. Section 35 abolished an employee’s common-law right to claim
damages. Section 35 COIDA is headed ‘Substitution of compensation for other
legal remedies’ and provides as follows:
‘(1) No action shall lie by an employee or any dependant of an employee for the recovery of
damages in respect of any occupational injury or disease resulting in the disablement or death of
such employee against such employee's employer, and no liability for compensation on the part
of such employer shall arise save under the provisions of this Act in respect of such disablement
or death.’
[13] Prior to the date of the trial the defendant filed an application in terms of
Rule 33(4) for an order that the special plea raised questions of law which might
conveniently be decided before any evidence was led and separately from any
other issue, and directing that all further proceedings be stayed until such
questions had been resolved. Van Zyl J granted the application holding that the
special plea should be decided separately and that no evidence was required for
this purpose. I agree with this ruling. He, however, ordered the defendant to pay
the costs of the application and of the postponement of the trial on 30 May 2006
and dismissed the special plea with costs. He expressed the view that any
9 Jooste v Score Supermarket Trading (Pty) Ltd 1999 (2) SA 1 (CC) para 15.
10 Jooste v Score Supermarket Trading (Pty) Ltd above para 13.
liability of the defendant could only have arisen from the provisions of s 60(1) of
the Act and said that COIDA
‘is certainly relevant in that the plaintiff was, at the relevant time, an employee who personally
suffered an occupational injury, with resultant disablement, in an accident arising out of and in the
course of her employment. She would hence, under normal circumstances and provided she
complies with any requirements for a valid claim, qualify for compensation from the
Compensation Fund in terms of such Act. This does not mean, however, that the liability of the
State in terms of section 60(1) of the Act is excluded, or even restricted, by such claim.’
He said of s 60:
‘It is abundantly clear that the section was intended to have a particularly wide and far-reaching
ambit. The State unconditionally accepts liability for “any damage or loss” resulting from “any act
or omission” relating to “any educational activity” conducted by the public school and respect of
which that school would be liable if it were not for the provisions of this section. This constitutes
general liability, with the State stepping into the shoes of the school and taking over its
responsibility towards any party who or which might have suffered loss or damage as a result of
such act or omission.’
And added:
‘Indeed, the only reference to another statute in section 60 occurs in section 60(2), which
stipulates that the provisions of the State Liability Act 20 of 1957 apply to any claim against the
State in terms of section 60(1). This leads to the almost irresistible inference that no reference to
any other statute or law was intended. If the legislature had intended section 60(1) to be subject
to the provisions of section 35(1) of COIDA … it would undoubtedly have said so.’
[14] The plaintiff alleged in her particulars of claim that she was obliged to
carry out lawful instructions of the principal or governing body relating to
educational activities, including sports training or coaching at the school. She
alleged further, in paragraph 9 of her particulars of claim (quoted in paragraph 4
above) that the incident occurred when the plaintiff was engaged in the training
or coaching of learners in throwing the discus for which she was to be
remunerated as an independent trainer. It follows that the incident fell within the
definition of an ‘accident’ as defined in COIDA.11 This is so whether the incident
occurred within the course and scope of the plaintiff’s employment in terms of her
written contract of employment pursuant to s 20(4) of the Act12 or within the
course and scope of her employment as an independent trainer as alleged in
paragraph 9 of the particulars of claim. In both cases she was an ‘employee’ and
the governing body, acting on behalf of the school, her ‘employer’. In this regard
Van Zyl J correctly observed that it mattered not whether the plaintiff’s agreement
to render services as an independent or outside trainer could be classified as an
amendment to her contract of employment or as an additional agreement: in
rendering coaching services she was on her own pleaded version acting on
instructions of the principal conveyed to her by the head of sport at the school
and thus acting within the course and scope of her employment.
[15] It is correct, as Van Zyl J observed, that s 60(1) has a particularly wide
and far-reaching ambit. He, however, added that if it had been the intention of the
legislature to exclude the provisions of s 35 COIDA from its scope the legislature
would have expressly so provided. This observation was made in the context of
11 Section 1 defines it as ‘an accident arising out of and in the course of an employee's
employment and resulting in a personal injury, illness or the death of the employee.’
12 Section 1 COIDA contains the relevant definitions: 'employee' means ‘a person who has
entered into or works under a contract of service or of apprenticeship or learnership, with an
employer, whether the contract is express or implied, oral or in writing, and whether the
remuneration is calculated by time or by work done, or is in cash or in kind, and includes - (a) a
casual employee employed for the purpose of the employer's business …’. The plaintiff was
remunerated as an independent trainer (cf ER24 Holdings v Smith NO and Another 2007 (6) SA
147 (SCA) para 10). An 'employer' ‘means any person, including the State, who employs an
employee …’. The plaintiff is an ‘educator’ (see s 1(1) of the Act and s 1 of the Employment of
Educators Act 76 of 1998) and the ‘public school’ is her employer in terms of the s 3(4) of the
latter Act.
the question whether the reference to ‘any other applicable law’ in s 20(4) of the
Act includes a reference to COIDA. The argument, however, loses sight of the
express words of s 60(1) which renders the State liable only in circumstances
where the school would have been liable - 'and for which such public school
would have been liable'. If a school as employer would not have been liable to an
employee by virtue of the provisions of s 35 COIDA neither would the State be in
terms of s 60. This conclusion can be reached without reference to s 20(4) of the
Act and the question whether COIDA is included in the words ‘any other
applicable law’. COIDA provides for compensation for employees and s 35(1)
expressly excludes liability on the part of the employer for damages in respect of
any occupational injury or disease resulting in disablement or death. Since the
school is not liable to the plaintiff liability cannot be attributed to the State in
terms of s 60(1).13 It follows that the special plea to the plaintiff’s particulars of
claim should be upheld in so far as she relies on s 60 of the Act. Nothing in s 36
of COIDA militates against this conclusion. Indeed, s 36 allows both a claim for
damages against a third party, ie a party other than the employer, as a
wrongdoer and also a claim for compensation in terms of COIDA.
[16] In his judgment in the court a quo Van Zyl J awarded the costs of the Rule
33(4) application to the plaintiff remarking that the application was unnecessary
‘in that the issue of evidence was irrelevant for purposes of considering the
special plea’. He added: ‘In fact such application bordered on an abuse of the
procedure of this court and might even have justified a punitive order as to costs
had Ms Williams generously not insisted on such order.’ I do not agree. The
parties were in agreement that the special plea should be dealt with separately
but could not agree whether evidence was required in respect of the issues
raised in it. Van Zyl J was satisfied that the special plea could be decided
separately and that no evidence was required for that purpose. In other words,
on this issue, he found in favour of the defendant but nevertheless gave an
13 Cf Road Accident Fund v Monjane [2007] SCA 57 (RSA) para 12.
adverse costs order against him. It is not apparent from his judgment why he
described the application as one that bordered on an abuse of procedure. The
only basis advanced in this court is the statement by the plaintiff’s attorney that
she ‘had omitted to include in the minute [of the pretrial conference of 12 May
2005] … that the parties agree to disagree on the issue of oral evidence and that
the court be asked for a ruling at the commencement of the hearing on whether
the special plea should be disposed of by way of argument or after the adduction
of evidence.’ Whether such an agreement was reached is in dispute but there is
no suggestion that the approach to the court to determine the issue would have
had to take any particular form. In the circumstances it was prudent of the
defendant, given the on-going dispute whether evidence was required to
adjudicate the special plea, to approach the court formally by way of notice of
motion. The founding affidavit properly summarises the pleadings and respective
contentions of the parties. It shows that the defendant requested the consent of
the plaintiff for the disposal of the legal questions as early as 5 May 2006 failing
which an application would be made. The plaintiff’s attorney agreed to the
separation in a letter of 10 May 2006 but voiced her disagreement whether the
matter could be disposed of without evidence. As I have said, there is a dispute
of fact on what was agreed upon at the pretrial conference. However, the
plaintiff’s case is not that it was agreed that an informal application without the
need for a notice of motion and affidavit would be sufficient: the alleged omission
in the minutes of the pretrial conference merely refers to the fact that the court
would be ‘asked’ at the commencement of the hearing. How the court was to be
‘asked’ was, even on the version of the plaintiff’s attorney, not agreed. The
learned judge a quo was satisfied after ‘reading the papers and hearing initial
argument’ that the matter could be disposed of without oral evidence. The
defendant cannot be faulted for having elected to bring a formal application for a
separation. The relief prayed for in the application was granted. Costs of the
application should therefore have followed the result and as the court a quo
misdirected itself this court is at large to substitute such an order on appeal.
[17] A replying affidavit was clearly necessary and there can be no argument
that the comprehensive answering affidavit which was filed on the afternoon
before the trial was late, and entitled the defendant to the costs of the
postponement on 30 May 2006.
The following order is made:
(1)
The appeal is upheld with costs including the costs of two counsel;
(2)
Paragraphs 1 and 2 of the order of the court a quo are set aside and
replaced with the following:
‘(a) The special plea is upheld with costs including the costs of two
counsel and the plaintiff’s claim based on s 60 of the South African
Schools Act 84 of 1996 is dismissed;
(b) The plaintiff is ordered to pay the costs of the Rule 33(4) application
and of the postponement on 30 May 2006, including the costs of two
counsel.’
_________
Malan AJA
Acting Judge of Appeal
Concur:
Scott JA
Mthiyane JA
Cloete JA
Heher JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Date:
28 November 2007
Status:
Immediate
The MEC for Education, Western Cape Province v E Strauss
On 28 November 2007 the Supreme Court of Appeal gave judgment in MEC for Education
Western Cape v Edith Strauss upholding a special plea against the claim of an educator
at the Paarl Girls’ High School who was injured while she was engaged in training learners
at the school to throw the discus. Her claim was dismissed in so far as it was based on
section 60 of the South African Schools Act 84 of 1996 which renders the State liable for
any damage or loss caused as a result of any act or omission in connection with any
educational activity conducted by a public school and for which such public school would
have been liable but for the provisions of the section. Ms Strauss was at the time of the
incident in the employ of the school and in terms of section 35 of the Compensation for
Occupational Injuries and Diseases Act 130 of 1993 a claim arising from an accident such
as occurred in this case against an employer by an employee is excluded and the
employee’s claim is limited to compensation under this Act. The SCA expressed no view
on the merits of Ms Strauss’ claim against the Member of the Executive Council for
Education in the Western Cape based on the Member’s own failure to provide a safe
school environment where she could perform her duties as an educator including sports
training or coaching of learners in terms of her employment contract without any undue
risk of harm befalling her.
--- end ---
|
1925
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 639/2010
In the matter between:
THABO MOFUTSANYANA DISTRICT
MUNICIPALITY APPELLANT
and
STEYN-ENSLIN & VENNOTE FIRST RESPONDENT
RUDNAT (PTY) LTD SECOND RESPONDENT
AFGRI (PTY) LTD THIRD RESPONDENT
Neutral citation: Thabo Mofutsanyana District Municipality v Steyn-Enslin
(639/2010) [2011] ZASCA 168 (29 September 2011)
Coram:
Mthiyane, Heher, Maya, Bosielo and Majiedt JJA
Heard:
12 September 2011
Delivered:
29 September 2011
Summary: Regional Services Levy in terms of Act 109 of 1985 ─
Whether municipality entitled to demand a statement of account,
debatement or other substantiating documents from a defaulting levy
payer ─ if not, whether common law should be developed under s 39(2) of
the Constitution to vest it with such right.
______________________________________________________________________
ORDER
____________________________________________________________
On appeal from: Free State High Court, (Bloemfontein) (Mocumie J
sitting as court of first instance):
The appeal is dismissed with costs, save that the appellant may, if so
advised, within 30 days hereof give notice of intention to amend its
particulars of claim.
____________________________________________________________
JUDGMENT
MTHIYANE JA (HEHER, MAYA, BOSIELO and MAJIEDT JJA
CONCURRING):
[1] This appeal is against the decision of the Free State High Court
(Mocumie J) upholding an exception by the first, second and third
respondents (the respondents) to the appellant’s particulars of claim, in
which the appellant sought against the respondents, who were registered
regional services levypayers, an order requiring them to submit to it a true
and proper statement of account; the debatement thereof and other
substantiating documents. The issue raised on exception is a narrow one,
namely whether the appellant’s demand for the submission of such
accounts and the debatement thereof has any basis in law. The attack upon
the appellant’s cause of action, as pleaded, is that the appellant as a
municipal council is not vested with powers to estimate levies or demand
debatement of accounts from levypayers, who are in default. That power
resides with the Commissioner of the South African Revenue Service.1
[2] In its particulars of claim the appellant claimed the following relief:
‘1.
That the defendant be ordered to render to the plaintiff within sixty (60) days
from the date of the order, a true and proper statement of account together with
substantiating documents reflecting the correct;
(a)
total amount of all remuneration paid or which became payable by the defendant
to any employee;
(b)
total amount of all drawings taken by defendant;
(c)
total sum of all income or amounts received by or accrued to the defendant in
relation to any leviable transaction or consideration as defined2 including but not
limited to the sale and/or letting of goods or fixed property, the rendering of any service
and/or the gross amounts received from a financial enterprise during any and every
month, effective from 1 March 2000, any remuneration was so paid or so became
payable, any drawings was so taken or any income was so received or so accrued as
contemplated in paragraph 9(1)(a) and (b) of R340/1987.
2.
That the defendant be ordered to debate the said account with the plaintiff within
sixty (60) days from the time such account was rendered in terms of prayer 1 above.
3.
Payment to the plaintiff of whatever amount appears to be due to the plaintiff
upon debatement of the account.
4.
Payment of the amount of R 33 104,46 (Rudnat CC) / R184 081,29 (Steyn
Enslin et al) / R184 081,29 (Afgri Pty Ltd), in the event of the defendant’s non-
compliance with prayers 1, 2 and 3 above;
5.
Payment of interest on the aforesaid amount in prayer 3 or 4 above at a rate of:
(i)
10.5% per annum from 1 July 2006 till 31 October 2006;
(ii)
11% per annum from 1 November 2006 till 28 February 2007;
(iii)
12% per annum from 1 March 2007 till 29 February 2008;
(iv)
14% per annum from 1 March 2008 till date of payment.’
1 See s 12(1A)(dA)(iii) and (iv) of the Regional Services Council Act 109 of 1985.
2 See paragraph 1 of the regulations promulgated under R340/1957.
[3] The respondents excepted to the particulars of claim on the basis that
the facts pleaded did not sustain a valid cause of action. They contend that
the legislature has not vested the appellant with powers to estimate levies
or demand an account or debatement of it from levypayers who are in
default.
[4] The appellant’s response was that if the appellant as a municipal
council had no such powers, the common law ought to be developed in
terms of s 39(2) of the Constitution to vest them with such powers.
[5] The high court accepted the respondents’ contention that no cause of
action had been disclosed in the appellant’s particulars of claim and upheld
the exception. The appellant was granted leave to appeal to this court, but
confined to the question of whether it was necessary for the common law to
be developed in terms of s 39(2) of the Constitution to vest a municipal
council with powers enabling it to demand delivery of a statement of
account from levy payers and defendants in litigation and the debatement
thereof as an extension of the procedural remedy in litigation. This would
essentially amount to an extension of the statutory obligation of a
levypayer to provide a declaration of its business and to provide monthly
returns in respect of the calculation of its liability.
[6] The issue on appeal, as set out in the heads of argument, was
whether the appellant’s claim that the respondents should account, debate
and pay the levies due to the Regional Council Service, had any basis in
law. During argument the appellant changed tack and confined itself to the
right to press for a return rendered by the respondents who, it argued, were
obliged to submit it in terms of regulation 9(4).3 Counsel for the appellant
further argued as follows: The right to claim levies includes the right to
have the return rendered by a levypayer in terms of regulation 9(4). The
appellant requires the return in order to determine the amount of levies
owing to it by the respondents. The scheme of the regulations is such that if
a levypayer failed to submit a return, the council is entitled to make an
assessment of what is owed to it. If regulation 13(1), (discussed below),
forbids the submission and production of the taxpayer’s books, records,
accounts or other documents, at the instance of the council, the court
should use its common law power to order the payer, to furnish the return.
If the common law is deficient, it should be developed in terms of s 39(2)
of the Constitution, to vest the court with the power to order a reluctant
levypayer to submit such a return.
[7] It was never the appellant’s case, on the pleadings, that it required
the submission of a return by the respondents. The appellant’s claim, as
indicated in particulars of claim to which exception was taken, was for a
statement of account, debatement of it and other documents reflecting the
amounts owing to the appellant. What hindered the appellant in its demand
for the production of the required documents was regulation 13(1) which
reads as follows:
‘13
Powers of council and Commissioner
(1)
A council shall be responsible for the administration of the provisions of this
Schedule, but shall not be empowered to require any person to produce any books,
records, accounts or other documents in relation to any regional services levy and
regional establishment levy or to require any levypayer to substantiate any return
submitted by him in connection with any such levy.’
3 Calculation and payment of Regional Services Levy and Regional Establishment Levy GN R340, 17
February 1987.
[8] On the case as pleaded, especially having regard to the fact that the
matter came before the high court on exception,4 the appeal cannot succeed
in light of the provision of regulation 13(1).
[9] Upon realising the difficulties posed by regulation 13(1), the
appellant resorted to demanding, not a statement of accounts and
debatement but a ‘return’. In this regard regulation 9 is relevant. It
provides:
‘(3)
Every payment of regional services levy or regional establishment levy shall be
accompanied by a return in such form as the council may determine.
(4)
Every person who is registered as a levypayer under the provisions of paragraph
10, shall within the period allowed by subparagraph (1) or (2) furnish the council with
the return referred to in subparagraph (3) in respect of every month or other period, as
the case may be, whether or not any relevant levy is payable in respect of such month or
period.’
[10] The respondents do not dispute that the appellant was entitled to the
return in terms of regulation 9(4) but submit that this was not the
appellant’s pleaded case. Their contention is borne out by the pleadings.
Had it been otherwise the matter might have ended without the present
appeal. There is nothing preventing the appellant from seeking a
mandamus in respect of the return. The respondents conceded as much in
argument.
[11] However, during argument it also became clear that the appellant is
not sure what amount, if any, is owing to it by the respondents. The
dilemma in which the appellant found itself was that it no longer has the
power to estimate the amount of levy owing to it. The regulation which
empowered it to do so, (regulation 11(1)) was struck down by this court in
4 Burger v Rand Water Board & another 2007 (1) SA 30 (SCA) para 4.
City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd 2010 (3)
SA 589 (SCA) as being invalid for inconsistency with the empowering
provisions. Regulation 11(1) read as follows:
‘Where any registered levypayer has failed to furnish any return referred to in paragraph
9(4) within the relevant period allowed, the council concerned may estimate the amount
of any levy which, in its opinion, is probably payable in respect of the relevant month or
period, and may make an assessment of the amount of the unpaid levy.’
[12] The mere submission of a return would consequently not prove a
certain solution to the appellant’s difficulties. In the circumstances the
statute provides the remedy viz an assessment by the Commissioner in
terms of regulation 13.
[13] The argument in favour of the development of the common law in
terms of s 39(2) of the Constitution, though not abandoned, was not
pressed by counsel for the appellant. I think Mocumie J, in her short pithy
judgment, handled the question of whether the common law should be
developed in a sound and judicious way. I cannot fault this aspect of her
judgment. The law on the subject is perfectly clear. A municipal council is
not empowered to assess levies owed to it. If it wishes to have them
assessed it has to request the Commissioner to conduct an assessment as
required by regulation 13. There is no valid reason for this court to develop
the common law when the wording of the legislation on the subject is clear
and sufficient. To do so would be to embark on overzealous judicial reform
against which the Constitutional Court has warned (Carmichele v Minister
of Safety and Security 2001 (4) SA 938 (CC) para 55).
[14] It follows that there is no merit in the appeal and, in my view, the
exception was correctly upheld by the high court.
[15] In the result the following order is made:
The appeal is dismissed with costs, save that the appellant may, if so
advised, within 30 days hereof give notice of intention to amend its
particulars of claim.
___________________
K K MTHIYANE
JUDGE OF APPEAL
APPEARANCES
For Appellant:
KJ Kemp SC (with him C Ploos van
Amstel SC)
Instructed by:
Podbielski Mhlambi Inc, Welkom
Honey Attorneys, Bloemfontein
For 1st, 2nd and 3rd Respondents:
FWA Danzfuss SC
Lovius Block, Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
29 September 2011
STATUS: Immediate
THABO MOFUTSANYANA DISTRICT MUNICIPALITY V STEYN-
ENSLIN (639/2010) [2011] ZASCA 168 (29 SEPTEMBER 2011)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today dismissed the appeal with costs,
save that the appellant may, if so advised, within 30 days hereof give notice of
intention to amend its particulars of claim.
The appeal was against the decision of the Free State High Court, Bloemfontein
(Mocumie J) upholding an exception by the respondents to the appellant’s
particulars of claim, in which the appellant sought against the respondents, who
were registered regional service levypayers, an order requiring them to submit to it a
true and proper statement of account; the debatement thereof and other
substantiating documents.
The issue raised on appeal was a narrow one, namely whether the appellant’s
demand for the submission of such accounts and the debatement thereof had any
basis in law. The respondents excepted to the particulars of claim on the basis that
the facts pleaded did not sustain a valid cause of action. They contended that the
legislature has not vested the appellant with powers to estimate levies or demand an
account or debatement of it from levypayers who are in default. The appellant’s
response was that if the appellant as a municipal council had no such powers, the
common law ought to be developed in terms of s 39(2) of the Constitution of the
Republic of South Africa, 1996, to vest them with such powers.
The SCA reiterated that the issue on appeal, on the pleadings, was whether the
appellant’s claim had any basis in law but that during argument the appellant
changed tack and confined itself to the right to press for a return rendered by the
respondents. The SCA stated that it was never the appellant’s case, on the
pleadings, that it required the submission of a return by the respondents. The SCA
averred that what hindered the appellant in its demand for the production of the
required documents was regulation 13 which forbids the submission and production
of the taxpayer’s books, records, accounts or other documents, at the instance of the
council. The SCA held that the appeal cannot succeed in the light of the provision of
the latter regulation. The respondents did not dispute that the appellant was entitled
to the return but submitted that this was not the appellant’s pleaded case. Their
contention was borne out by the pleadings. The SCA stated that there was nothing
preventing the appellant from seeking a mandamus in respect of the return, which
the respondents conceded in argument. However, during argument it also became
apparent that the appellant was not sure of the amount, if any owing to it by the
respondents. The dilemma in which the appellant found itself was that it no longer
had the power to estimate the amount of the levy owing to it. As the regulation which
empowered it to do so was struck down by the SCA in City of Tshwane Metropolitan
Municipality v Cable City (Pty) Ltd 2010 (3) SA 589 (SCA) as being invalid for
inconsistency with the empowering provisions. The SCA stated that the mere
submission of a return would consequently not prove a certain solution to the
appellant’s difficulties. The SCA held that in the circumstances the statute provides
the remedy viz an assessment by the Commissioner in terms of regulation 13. As to
the development of the common law in terms of s 39(2) of the Constitution the SCA
held that there was no valid reason for it to develop the common law when the
wording of the legislation on the subject is clear and sufficient. To do so, it held,
would be to embark on overzealous judicial reform against which the Constitutional
Court has warned. Accordingly the SCA held that there was no merit in the appeal
and the exception was correctly upheld by the high court.
|
2283
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 643/08
THE MINISTER OF SAFETY AND SECURITY
First Appellant
XOLISA DLAKAVU
Second Appellant
and
DIDEKA FLORENCE MADYIBI
Respondent
___________________________________________________________________
Neutral citation:
Minister of Safety and Security v Madyibi (643/08) [2009]
ZASCA 95 (17 September 2009)
CORAM:
BRAND, VAN HEERDEN, PONNAN, MAYA JJA
and TSHIQI AJA
HEARD:
20 August 2009
DELIVERED:
17 September 2009
CORRECTED:
SUMMARY:
Delict – loss of support – wrongfulness – police negligently
failing to dispossess sergeant of official firearm – sergeant taking his own life with
firearm – claim for loss of support by dependants – wrongfulness established
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: The High Court, Transkei Division (Petse ADJP sitting as court of
first instance).
The appeal is dismissed with costs, such costs to include those consequent upon the
employment of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
VAN HEERDEN and PONNAN JJA (BRAND and MAYA JJA, and TSHIQI AJA
concurring):
[1] On 21 January 2003, Sergeant Pumzile Madyibi (the deceased), who during
his lifetime was the husband of the respondent, Dideka Florence Madyibi, shot and
injured the latter and thereafter took his own life with a state issue firearm that had
been allocated to him as a member of the South African Police Service for use even
when not on duty. Pursuant to the shooting, Ms Madyibi instituted action, both in her
personal capacity as also on behalf of the four minor children born of her union with
the deceased, against the Minister of Safety and Security and Superintendent Xolisa
Dlakavu, the station commissioner of the station to which the deceased had been
attached (the first and second appellants, respectively, in this court).1
1 By the time the appeal came to be heard, Ms Madyibi had regrettably passed away. By then, one of
her children had obtained majority and, by virtue of an order of the Mthatha High Court, a certain
Nombeko Elizabeth Gwadiso was substituted for Ms Madyibi to prosecute the claim on behalf of the
remaining three minor children in these proceedings. Nangamso Madyibi, the major son, was in terms
[2] In her summons Ms Madyibi alleged that the shooting and commission of
suicide by the deceased were caused by the negligence of Dlakavu and/or other
policemen in that he and/or they had failed to dispossess the deceased of his official
firearm, despite having become aware, over a protracted period of time, that the
deceased was unfit to possess a firearm inasmuch as:
(i)
he had previously repeatedly threatened to shoot Ms Madyibi, had pointed a
firearm at her and had threatened violence towards her and other members of
the SAPS;
(ii)
Dlakuvu and/or other policemen knew that the marriage relationship between
the deceased and her had significantly deteriorated, that the family life of the
deceased was anything but stable, and that the deceased had manifested
suicidal tendencies.
Moreover, so the summons alleged, he and/or other policemen had failed to take
steps to protect Ms Madyibi from being injured by the deceased when they could and
should have done so, or to report the violent conduct of the deceased to their
superiors within the SAPS. Accordingly, so it continued, Dlakavu and other
policemen, who should have foreseen the deceased’s wrongful conduct and the
consequent loss, had a legal duty to protect her and the minor children, which they
had breached.
[3] Even though the claims were initially disputed, at the conclusion of a trial
which lasted several days before Petse ADJP in the Mthatha High Court, the typed
transcript of the proceedings records:
of this order substituted for Ms Madyibi in respect of ‘his part of the claim for loss of support’. Nothing
however turns on that and before us no opposition was raised to the substitution.
'MR MBENENGE [Counsel for the Appellants]:
. . . .Having dealt with that portion of the
claim in so far as it relates to the alleged negligence, which is as I have pointed out, now no
longer in dispute, then the defendants accordingly concede Claim A, if I may remind Your
Lordship, Claim A relates to general damages that are said to have been suffered by the
plaintiff consequent upon the shooting incident.
COURT:
Yes.
MR MBENENGE:
So Claim A in its entirety is no longer being resisted. Then for now
Your Lordship should allow us to say nothing about Claim B, Claim C in so far as it relates to
the plaintiff suing in her representative capacity, is also being conceded. Let me say that
again, M'Lord.
COURT:
Conceded?
MR MBENENGE:
Yes
COURT:
Thank you.
MR MBENENGE:
In other words plaintiff's claim for loss of support, her personal claim
for loss of support is not conceded, [what] is being conceded is the claim brought by the
plaintiff for and on behalf of the minor children . . . So much for Claim C. Then, M'Lord,
flowing from that is the fact that the defendants made no concession with regard to the
plaintiff's . . . Claim B. Then finally the defendants do not dispute being liable for costs of suit
hitherto or up to and including today, that is costs of the hearing, the liability aspect.'
Later, and in order to further clarify the position Mr Mbenenge stated:
'Your Lordship will realise that what the defendants were doing in fact, was to place on
record that which is not being resisted anymore. Less – it was less of making an offer to the
plaintiff as seems to have been understood, so the understanding really is that we stand up
to record what it is that is no longer being resisted.'
On the day that the matter was argued, counsel for the appellants informed
the trial court that the appellants also admitted liability for Ms Madyibi’s claim for loss
of support in her personal capacity. Thus all that remained of the lis between the
parties was Claim B, being Ms Madyibi's claim for loss of income and her impairment
of earning incapacity.
[4] After taking some time to consider the matter, Petse ADJP handed down a
fully reasoned judgment in which he issued the following order:
'1
The First Defendant [the Minister of Safety and Security] is held liable to compensate
the Plaintiff [Ms Madyibi] both in her personal and representative capacities for such
damages as the Plaintiff may prove to have suffered in respect of the following:
1.1
pain and suffering, loss of amenities of life, past and future medical and hospital
expenses;
1.2
loss of support;
1.3
loss of earning capacity.
The First Defendant shall . . . pay all the costs of suit incurred to date of this order.'
[5] Thereafter, as the learned judge in the court below put it – 'To my utter
amazement ..., it came to my attention that the defendants had filed an application
for leave to appeal against part of my judgment'. Petse ADJP nevertheless ultimately
granted leave to the appellants to appeal to this court against that part of his
judgment relating to Ms Madyibi's claim for loss of support, both in her personal as
also in her representative capacities.
[6] In persuading the court below to grant leave, the submission was that the
issues of negligence and wrongfulness had in error been conflated by counsel on
behalf of the appellants. Accordingly, so the submission went, the element of
wrongfulness not having been proved by Ms Madyibi, the court below ought not to
have found in her favour.
[7] On appeal it was argued that the distinction between negligence and
wrongfulness had clearly been overlooked by the court below, with the result that
those issues had been conflated. Accordingly, so the argument proceeded, the
concessions that had been made by counsel pertained only to negligence and did
not embrace wrongfulness. In the result, there remained a live issue for
determination by the court below, as also before us on appeal. All of that we shall
assume, without deciding, in favour of the appellants.
[8] As best as we can discern the appellants' case, it is that the present matter is
indistinguishable from that of Brooks v Minister of Safety and Security 2009 (2) SA
94 (SCA). In our view, however, counsel's reliance on Brooks is entirely misplaced
for the following reasons. First, in this case the deceased died by his own hand,
unlike the breadwinner in Brooks who was very much alive but had been rendered
unable to support his dependant as a result of his incarceration in consequence of
the law having taken its course. Second, suicide is not a crime, while the
breadwinner in Brooks had, on the other hand, rendered himself incapable of
supporting his dependant by perpetrating a most heinous crime. There were thus
strong policy reasons in that case that militated against recognising a claim there.
Third, in Brooks a basic ingredient for the dependant's action, namely the death of
the breadwinner, was absent. Fourth, at the risk of stating the obvious, for as long as
the breadwinner was alive, conduct, even were it to have been found to be wrongful,
would only have been wrongful vis-à-vis the breadwinner and not the dependant –
thus, for as long as the breadwinner had a right of action, there could also not have
existed a separate and independent right of action in the dependant for loss of
support.
[9] It follows that, given the admittedly negligent conduct one encounters here,
the appeal must fail: in our view, the conduct complained of was plainly wrongful and
considerations of public or legal policy consistent with our constitutional norms would
certainly demand the imposition of a legal duty in a matter such as this (see, for
example, Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006
(3) SA 138 (SCA) para 10; Steenkamp NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121 (CC) paras 39 and 41).
[10] In the result the appeal is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
_________________
B J VAN HEERDEN
JUDGE OF APPEAL
_________________
V N PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
S M Mbenenge SC
P h s zilwa
Instructed by:
The State Attorney
c/o Jolwana Mgidlana Inc.
Mthatha
The State Attorney
Bloemfontein
For Respondent:
N Dukada SC
M n Hinana
Instructed by:
V V Msindo and Associates
Mthatha
Ponoane Attorneys
Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
The Minister of Safety and Security & another v Madyibi
(643/08) [2009] ZASCA 95 (17 September 2009)
Media Statement
Today the Supreme Court of Appeal ('SCA') dismissed an appeal by the Minister of Safety and Security and
one other against a judgment of Petse ADJP in the Transkei High Court, which allowed a claim for loss of
support by the widow and children of a police sergeant who had used his state issue firearm to shoot and
injure his wife and thereafter to take his own life.
On 21 January 2003, Sergeant Pumzile Madyibi (‘the deceased’) shot and injured his wife and thereafter
took his own life with a firearm that had been allocated to him as a member of the South African Police
Service for use even when not on duty. His widow, Ms Dideka Madyibi, thereafter instituted action, both in
her personal capacity as well as on behalf of the four minor children born of her marriage with the
deceased, against the Minister of Safety and Security and Superintendent Xolisa Dlakavu, the station
commissioner of the station to which the deceased had been attached. She claimed general damages,
damages for loss of income and impairment of earning capacity, and damages for loss of support for both
herself and her minor children. All these claims succeeded in the Transkei High Court.
Ms Madyibi alleged that the shooting and commission of suicide by the deceased were caused by the
negligence of the police who had failed to dispossess the deceased of his official firearm despite their
knowledge, gained over a protracted period of time, that: the deceased had previously repeatedly
threatened to shoot his wife, had pointed a firearm at her and had threatened violence towards her and
other members of the SAPS; that the marriage relationship between the deceased and his wife had
deteriorated significantly and that his family life was anything but stable; and that the deceased had
manifested suicidal tendencies.
The only issue on appeal was whether the conduct of the police, in failing to remove the deceased’s official
firearm from him in these circumstances, was wrongful for the purposes of his dependants’ claim for loss of
support. The SCA held that the conduct complained of was plainly wrongful and that considerations of
public or legal policy consistent with our constitutional norms certainly demanded the imposition of a legal
duty on the police in a matter such as this one.
--- ends ---
|
4074
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 459/2022
In the matter between:
LIMPOPO PROVINCIAL COUNCIL OF THE
SOUTH AFRICAN LEGAL PRACTICE COUNCIL
APPELLANT
and
CHUEU INCORPORATED ATTORNEYS
FIRST RESPONDENT
CHUPJANA LEKOLOANA CHUEU
SECOND RESPONDENT
THABO MILTON CHUEU
THIRD RESPONDENT
BRIAN KINGLY KEABETSOE KOOPEDI
FOURTH RESPONDENT
CHARLES KGOMOTSO TSOKU
FIFTH RESPONDENT
SEKGAPINYE TSETSEWA
SIXTH RESPONDENT
PHELADI RAESIBE GWANGWA
SEVENTH RESPONDENT
PASCALIA NONHLANHLA MATHIBELA
EIGHTH RESPONDENT
TSOKU CHUEU INCORPORATED
ATTORNEYS
NINTH RESPONDENT
Neutral citation: Limpopo Provincial Council of the South African Legal Practice
Council v Chueu Incorporated Attorneys and Others (459/22)
[2023] ZASCA 112 (26 July 2023)
Coram:
SALDULKER,
NICHOLLS
and
CARELSE
JJA
and
NHLANGULELA and MALI AJJA
Heard:
8 May 2023
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. Publication was made on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be at 11h00 on 26 July 2023.
Summary: Civil procedure – Legal Practice Act 28 of 2014 – whether financial
misconduct of one director of law firm invokes liability of all directors – every
director has a fiduciary duty towards the company of which it is a director –
ignorance of financial matters when faced with allegations of misappropriation does
not absolve other directors.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Naude AJ,
sitting as court of first instance):
The appeal is upheld with no order as to costs.
The order of the high court is set aside and replaced with the following:
‘1
The third to eighth respondents are suspended from practicing as
attorneys for a period of six months pending the finalisation of investigations
into their conduct as directors of the first respondent, failing which the
suspension will lapse.
The third to eighth respondents are ordered to hand over and deliver
their certificates of enrolment as legal practitioners to the Registrar of the
Limpopo Division of the High Court, Polokwane within 7 days from date of
this order.
In the event of the third to eighth respondents failing to comply with
the terms of the order granted in paragraph 2 above, within 7 days from date
of this order, the Sheriff of the district in which the third to eighth respondents’
certificates of enrolment are found, is authorised and directed to take
possession of the said certificates and to hand them to the applicant.
The Director of the Limpopo Provincial Council of the applicant,
Khomotso Matsaung, or any person nominated by her, and/or the Director of
the Gauteng Provincial Council of the South African Legal Practice Council,
Johan van Staden, or any person nominated by him, is appointed curator bonis
to administer and control the trust accounts of the third to eighth respondents,
including accounts relating to insolvent and deceased estates and any deceased
estate and any estate under curatorship connected with the respondents’
practices as legal practitioners, including the separate banking accounts
opened and kept by the third to ninth respondents at any bank in the Republic
of South Africa in terms of section 86(1) and (2) of the Legal Practice Act 28
of 2014, in which monies from such trust banking accounts have been invested
by virtue of the provisions of the said subsections, or in which monies in any
manner have been deposited or credited (the said accounts being hereafter
referred to as “the trust accounts”), with the following powers and duties:
4.1
immediately to take possession of the third to eighth respondents’
accounting records, records, files and, subject to the approval of the Board of
Control of the Legal Practitioners Fidelity Fund, to sign all forms and
generally operate the trust accounts, but only to such extent and for such
purpose as may be necessary to bring to completion current transactions in
which the third to eighth respondents were acting at the date of this order.
4.2
subject to the approval and control of the Board of Control of the Legal
Practitioners Fidelity Fund and where monies had been paid incorrectly and
unlawfully from the undermentioned trust accounts, to recover and receive
and, if necessary in the interests of persons having lawful claims upon the trust
account(s) and/or against the third to ninth respondents in respect of monies
held, received and/or invested by the respondents in terms of section 86(1)
and (2) and/or section 86(3) and/or section 86(4) of the Legal Practice Act 28
of 2014 (hereinafter referred to as “trust monies”), to take any legal
proceedings which may be necessary for the recovery of money which may
be due to such persons in respect of incomplete transactions, if any, in which
the third to eighth respondents were and may still have been concerned and to
receive such monies and to pay the same to the credit of the trust account(s);
4.3
to ascertain from the third to eighth respondents’ accounting records
the names of all persons on whose account the third to eighth respondents
appear to hold or to have received trust monies from (hereinafter referred to
as “trust creditors”) and to call upon the third to eighth respondents to furnish
them, within 30 (thirty) days of the date of service of this order or such further
period as they may agree to in writing, with the names, addresses and amounts
due to all trust creditors;
4.4
to call upon such trust creditors to furnish such proof, information
and/or affidavits as they may require, to enable them, acting in consultation
with, and subject to the requirements of, the Board of Control of the Legal
Practitioners Fidelity Fund, to determine whether any such trust creditor has
a claim in respect of monies in the trust account(s) of the respondents and, if
so, the amount of such claim;
4.5
to admit or reject, in whole or in part, subject to the approval of the
Board of Control of the Legal Practitioners Fidelity Fund, the claims of any
such trust creditor or creditors, without prejudice to such trust creditor’s or
creditors’ right of access to the civil courts;
4.6
having determined the amounts which she considers are lawfully due
to trust creditors, to pay such claims in full, but subject always to the approval
of the Board of Control of the Legal Practitioners Fidelity Fund;
4.7
in the event of there being any surplus in the trust account(s) of the third
to eighth respondents after payment of the admitted claims of all trust creditors
in full, to utilise such surplus to settle or reduce (as the case may be), firstly,
any claim of the Legal Practitioners Fidelity Fund in terms of section 86(5) of
the Legal Practice Act 28 of 2014 in respect of any interest therein referred to
and, secondly, without prejudice to the rights of the creditors of the
respondents, the costs, fees and expenses referred to in paragraph 10
hereunder, or such portion thereof as has not already been separately paid by
the third to eighth respondents to the applicant, and, if there is any balance left
over after payment in full of such claims, costs, fees and expenses, to pay such
balance, subject to the approval of the Board of Control of the Legal
Practitioners Fidelity Fund, to the third to eighth respondents, if they are
solvent, or, if the third to eighth respondents are insolvent, to the trustee(s) of
the third to eighth respondents’ insolvent estates;
4.8
in the event of there being insufficient trust monies in the trust banking
account(s) of the third to eighth respondents, in accordance with the available
documentation and information, to pay in full the claims of trust creditors who
have lodged claims for repayment and whose claims have been approved, to
distribute the credit balance(s) which may be available in the trust banking
account(s) amongst the trust creditors, alternatively to pay the balance to the
Legal Practitioners Fidelity Fund;
4.9
subject to the approval of the chairman of the Board of Control of the
Legal Practitioners Fidelity Fund, to appoint nominees or representatives
and/or consult with and/or engage the services of legal practitioners, counsel,
accountants and/or any other persons, where considered necessary, to assist
them in carrying out their duties as curators; and
4.10 to render from time to time, as curators, returns to the Board of Control
of the Legal Practitioners Fidelity Fund showing how the trust account(s) of
the third to eighth respondents has/have been dealt with until such time as the
Board of Control of the Legal Practitioners Fidelity Fund notifies them that
they may regard their duties as curators terminated.
That the third to eighth respondents immediately deliver their
accounting records, records, files and documents containing particulars and
information relating to:
5.1
any monies received, held or paid by the third to eighth respondents for
or on account of any person while practicing as an attorney;
5.2
any monies invested by the third to eighth respondents in terms of
section 86(3) and/or section 86(4) of the Legal Practice Act 28 of 2014;
5.3
any interest on monies so invested which was paid over or credited to
the third to eighth respondents;
5.4
any estate of a deceased person or an insolvent estate or an estate under
curatorship administered by the third to eighth respondents, whether as
executor or trustee or curator or on behalf of the executor, trustee or curator;
5.5
any insolvent estate administered by the third to eighth respondents as
trustee or on behalf of the trustee in terms of the Insolvency Act 24 of 1936;
5.6
any trust administered by the third to eighth respondents as trustee or
on behalf of the trustee in terms of the Trust Property Control Act 57 of 1988;
5.7
any company liquidated in terms of the Companies Act 61 of 1973 read
together with the provisions of the Companies Act 71 of 2008, administered
by the third to eighth respondents by or on behalf of the liquidator;
5.8
any close corporation liquidated in terms of the Close Corporations Act
69 of 1984, administered by the third to eighth respondents as or on behalf of
the liquidator; and
5.9
the third to eighth respondents’ practices as legal practitioners of the
Limpopo Division of the High Court, Polokwane, to the curators so appointed,
provided that, as far as such accounting records, records, files and documents
are concerned, the third to eighth respondents shall be entitled to have
reasonable access to such records, but always subject to the supervision of
such curator or their nominee.
Should the third to eighth respondents fail to comply with the
provisions of the preceding paragraphs of this order on service thereof upon
them or after a return by the person entrusted with the service thereof that he
or she has been unable to effect service thereof on the third to eighth
respondents (as the case may be), the Sheriff for the district in which such
accounting records, records, files and documents are, be empowered and
directed to search for and to take possession thereof, wherever they may be,
and to deliver them to such curator.
That the curator shall be entitled to:
7.1
hand over to the persons entitled thereto all such records, files and
documents provided that a satisfactory written undertaking had been received
from such persons to pay any amount, either determined on taxation or by
agreement, in respect of fees and disbursements due to the firm;
7.2
require from the persons referred to in paragraph 7.1 to provide any
such documentation or information which they may consider relevant in
respect of a claim or possible or anticipated claim, against them and/or the
third to eighth respondents and/or the third to eighth respondents’ clients
and/or the Legal Practitioners Fidelity Fund in respect of money and/or other
property entrusted to the third to eighth respondents. Provided that any person
entitled thereto shall be granted reasonable access thereto and shall be
permitted to make copies thereof;
7.3
publish this order or an abridged version thereof in any newspaper they
consider appropriate; and
7.4
wind-up the third to eighth respondents’ practices in the event that they
consider it appropriate.
The third to eighth respondents are hereby removed from office as:
8.1
executor of any estate of which the third to eighth respondents have
been appointed in terms of section 54(1)(a)(v) of the Administration of Estates
Act 66 of 1965 or the estate of any other person referred to in section 72(1);
8.2
curators or guardians of any minor or other person’s property in terms
of section 72(1) read with section 54(1)(a)(v) and section 85 of the
Administration of Estates Act 66 of 1965;
8.3
trustees of any insolvent estate in terms of section 59 of the Insolvency
Act 24 of 1936;
8.4
liquidators of any company in terms of section 379(2) read with section
379(e) of the Companies Act 61 of 1973 read together with the provisions of
the Companies Act 71 of 2008;
8.5
trustees of any trust in terms of section 20(1) of the Trust Property
Control Act 57 of 1988;
8.6
liquidators of any close corporation appointed in terms of section 74 of
the Close Corporations Act 69 of 1984; and
8.7
administrators appointed in terms of section 74 of the Magistrates’
Court Act 32 of 1944.
The third to eighth respondents are hereby ordered and directed, jointly
and severally, to:
9.1
pay in terms of section 87(2) of the Legal Practice Act 28 of 2014, the
reasonable costs of the inspection of the accounting records of the
respondents;
9.2
pay the reasonable fees of the auditor engaged by the applicant;
9.3
pay the reasonable fees and expenses of the curator, including travelling
time;
9.4
pay the reasonable fees and expenses of any person(s) consulted and/or
engaged by the curator as aforesaid; and
9.5
pay the expenses relating to the publication of this order or an
abbreviated version thereof.
If there are any trust funds available, the third to eighth respondents
shall within 6 (six) months after having been requested to do so by the
curators, or within such longer period as the curators may agree to in writing,
satisfy the curators, by means of the submission of taxed bills of costs or
otherwise, of the amount of the fees and disbursements due to them (third to
eighth respondents) in respect of their (former) legal practices, and should
they fail to do so, they shall not be entitled to recover such fees and
disbursements from the curators without prejudice, however, to such rights
(if any) as they may have against the trust creditor(s) concerned for payment
or recovery thereof.
A certificate issued by a Director of the Legal Practitioners Fidelity
Fund shall constitute prima facie proof of the curators’ costs and that the
Registrar be authorised to issue a writ of execution on the strength of such
certificate in order to collect the curators’ costs.
The third to eighth respondents shall during the period of suspension
comply with the provisions of sections 84(1) and 85 of the Legal Practice Act
28 of 2014.
The third to eighth respondents are ordered to pay the costs of this
application, jointly and severally, the one paying the other to be absolved.’
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Nicholls JA (Saldulker and Carelse JJA and Nhlangulela and Mali AJJA
concurring):
[1] On 25 October 2021, the Limpopo Division of the High Court, Polokwane
(the high court) dismissed an urgent application for the suspension of various legal
practitioners, brought by the statutory regulator, the Limpopo Provincial Council of
the South African Legal Practice Council (the Limpopo LPC), the appellant before
us. The first respondent is Chueu Incorporated Attorneys (the firm), the law firm of
which the second to eighth respondents were directors. The Limpopo LPC sought to
suspend the second to eighth respondents from practising as attorneys for a period
of 18 months pending the finalisation of a disciplinary enquiry into the alleged
misconduct of the respondents, and certain interim relief related thereto.
[2] At the time, the firm was facing a final liquidation application. The high court,
by agreement, granted an order of suspension against the second respondent for a
period of 12 months, pending the finalisation of investigations into his conduct and
disciplinary proceedings against him. It dismissed the application for the suspension
of the other directors. This prompted the Limpopo LPC to bring an application for
leave to appeal in respect of the other six directors, the third to eighth respondents.
The high court dismissed the application for leave to appeal, and granted a punitive
costs order against the Limpopo LPC. Special leave to appeal was sought, and
granted, by this Court.
[3] At the heart of this appeal is the question of the liability of all the directors of
a law firm, when the financial misconduct has allegedly been committed by only one
of the directors.
[4] Legal practitioners are obliged to conduct themselves with the utmost
integrity and scrupulous honesty. Public confidence in the legal profession is
enhanced by maintaining the highest ethical standards. A lack of trust in the legal
profession goes hand in hand with the erosion of the rule of law. The Legal Practice
Act 28 of 2014 (the LPA) replaced the Attorneys Act 53 of 1979 and came into
operation on 1 November 2018. Like its predecessor, the objects of the LPA are,
inter alia, to promote and protect the public interest and to enhance and maintain
appropriate standards of professional and ethical conduct of all legal practitioners.1
As such, the Limpopo LPC is not an ordinary litigant, but generally acts for the
public good. Legal proceedings brought by the Limpopo LPC in this regard are sui
generis,2 and the disciplinary powers of the high court over the legal practitioners
are founded in its inherent jurisdiction as the ultimate custos morum of the legal
profession.3
[5] In terms of the LPA, practitioners may establish private companies to conduct
their legal practice, subject to certain conditions. Section 34(7) provides:
‘A commercial juristic entity may be established to conduct a legal practice provided that, in terms
of its founding documents-
(a)
. . .
(b)
. . .
(c)
all present and past shareholders, partners or members, as the case may be, are liable jointly
and severally together with the commercial juristic entity for-
(i)
the debts and liabilities of the commercial juristic entity as are or were contracted
during their period of office; and
(ii)
in respect of any theft committed during their period of office.’
In this regard, the third to eighth respondents do not deny their liability for the debts
of the firm, but contend that they should not be subjected to disciplinary measures
for the financial misconduct of another director, the second respondent.
1 Section 3 of the Legal Practice Act.
2 Hepple and Others v Law Society of The Northern Provinces [2014] ZASCA 75; [2014] 3 All SA 408 (SCA) para
9.
3 26(4) Lawsa 3 ed para 77. See also General Council of the Bar of South Africa v Matthys 2002 (5) SA 1 (E) para
4(1).
[6] The firm, which had been registered as a partnership since 1998, was
incorporated in 2014. According to the second respondent, it was handling
approximately 6 000 files, with an estimated gross value of R6.2 billion, when the
application for suspension was launched. The firm specialised in personal injury
matters. It had four offices, in Lephalale, Pretoria, Polokwane and Mahikeng, all of
which operated independently of each other. The second respondent was the
‘managing director’ of the firm and in charge of the overall finances of the firm.
During the relevant period, the third to eighth respondents were directors of the firm,
operating at different locations. The third and fifth respondents worked at the
Pretoria office. The fourth, seventh and eighth respondents were stationed at
Lephalale, and the sixth respondent at Polokwane.
[7] During 2020/2021, various complaints from members of the public were
received by the Limpopo LPC. These were to the effect that the firm had represented
them in litigation against the Road Accident Fund (the RAF), collected monies from
the RAF, but failed to pay it over; that the firm had failed to account for monies
claimed and received from the RAF; and, had failed to respond to communications
or deal properly with clients’ instructions in this regard.
[8] The first complaint, by Ms Puleng Jowie Mugwena, was that the client had
been awarded R377 522.91 plus costs by the high court, but no account had been
rendered and no monies paid to her. The second complaint, by Ms Rebone Evelina
Motlhabane and lodged with the Limpopo LPC on 9 October 2020, was by a client
of the third respondent in Lephalale who was awarded R1 251 978.25 by the high
court. She received a statement that an amount of R938 983.69 was due to her after
the deduction of fees. She did not receive any payment. The third complaint, by Mr
Pakiso Aron Boye, also emanating from the Lephalale office, was in regard to an
award of R857 602 that had been ordered by the high court. The RAF had paid the
firm, but no account was rendered to the client and no payment made to him. The
fourth and fifth complaints were made by Mr Serole Gift Mapaya and Ms Tumelo
Enny Makoti respectively, both clients of the Lephalale office. The former related
to monies which had been claimed and paid out by the RAF, but were not accounted
for, nor paid over to the clients. Ms Makoti stated that she had instructed the firm to
pursue a claim against the RAF for R8 100 000 which they had taken over from
another attorney. The firm did not respond to her queries and did not account to her.
The claim subsequently became prescribed.
[9] In addition to the above, the Limpopo LPC was informed by the Gauteng LPC
about a complaint received from the RAF, that it had erroneously made a duplicate
payment to the firm. This resulted in an overpayment to the firm in an amount of
R29 043 606.64, which monies, instead of being repaid to the RAF, had been
appropriated by the firm.
[10] The matter was referred to the Investigating Committee of the Limpopo LPC,
which found evidence of numerous breaches of the code of conduct including,
inter alia, failure to account accurately and timeously; failure to respond to
complainants’ communications; failure to deal properly with instructions of clients;
failure to comply with the directives of the Limpopo LPC; failure to exercise proper
control and supervision over staff; failure to report to the LPC; and dishonest and
irregular conduct on the part of a trust practitioner in relation to the handling of trust
monies.
[11] Charges were then formulated against the directors of the firm, the second to
eighth respondents. On the day of the disciplinary hearing, the directors did not
arrive, although an advocate was present who purported to act for them. The
respondents did not answer the complaints against them, which had grown to 26 in
number by the time that the Limpopo LPC instituted action in September 2021.
[12] On receipt of the trust accounts of the firm, the Limpopo LPC’s investigation
team ascertained that there was an amount in trust of R8 006 186.94 on 15 May
2021. This was reduced to R5 545 013.84 on 1 September 2021. Bearing in mind the
duplicate payment of the RAF, and without taking into account the various
complaints of non-payment, the Limpopo LPC concluded that there was a substantial
trust deficit of at least R25 825 699.89. This pointed, prima facie, to a
misappropriation of trust funds.
[13] As a result, the Limpopo LPC launched an urgent application for the
suspension of all the directors of the firm. It founded its jurisdiction in terms of s 43
and s 44(1) of the LPA. Section 44(1) empowers a high court to adjudicate upon
matters concerning the conduct of a legal practitioner, a candidate legal practitioner
or a juristic entity.4 Section 43 provides for the LPC to institute urgent legal
proceedings in the high court to suspend a legal practitioner from practice, if a
disciplinary body is satisfied that the legal practitioner has misappropriated trust
monies.5
4 Section 44(1) provides that ‘[t]he provisions of this Act do not derogate in any way from the power of the High Court
to adjudicate upon and make orders in respect of matters concerning the conduct of a legal practitioner, candidate
legal practitioner or a juristic entity’.
5 Section 43 provides that ‘[d]espite the provisions of this Chapter, if upon considering a complaint, a disciplinary
body is satisfied that a legal practitioner has misappropriated trust monies or is guilty of other serious misconduct, it
must inform the Council thereof with the view to the Council instituting urgent legal proceedings in the High Court
to suspend the legal practitioner from practice and to obtain alternative interim relief’.
[14] The application was defended. The common thread running through the
defences of the third to eighth respondents was that their shareholding, if any, was
minor, and as individuals they had nothing to do with the firm’s finances. This
aspect, they alleged, was entirely within the knowledge and control of the second
respondent. They were not provided with financial statements, were not consulted
in respect of major decisions and did not receive any distributions of profit. The
respondents were aware of the duplicate payment of R29 million by the RAF, but
either assumed that it had been satisfactorily attended to, or when they did not
receive a proper explanation, resigned from the firm.
[15] The third and fifth respondents stated that during the course of 2014, and
without their knowledge, the second respondent unilaterally decided to incorporate
the existing partnership into a company. No shareholder agreement was entered into,
and they were merely issued with shareholders’ certificates. In effect, they were
nothing more than ‘salaried employees’ and were treated as such. When they did not
receive a satisfactory explanation from the second respondent, the third and fifth
respondents resigned from the firm on 1 February 2021 and immediately founded a
new firm, the ninth respondent, which took over all the active files, amounting to
500, which they had been handling for the firm. They assert that they were
intentionally kept in the dark about the affairs of the firm and themselves lodged a
complaint against the second respondent on 21 May 2021.
[16] The sixth respondent stated that he was appointed as a director on 30 April
2011, with a 4 percent shareholding. He resigned on 1 February 2021 to form his
own firm. He was a ‘director and employee’ and was responsible only for litigation.
[17] The seventh respondent stated that she joined the firm on 21 August 2017 as
a ‘salaried director’ with the title Director: Core Business. Her role was to ensure
that the litigation strategy of the firm was aligned; to manage the performance of the
attorneys; and to ensure synergy between the support staff and the professional staff.
She remained a director of the firm.
[18] The fourth respondent and eighth respondent claim that they were not
directors. In the same breath, they describe themselves as ‘salaried directors’, taking
up those positions in May 2015 and October 2016 respectively. They state that they
were not practising for their own account and were not allowed to receive trust
monies from the public.
[19] The respondents did not deal with the merits of the application, although some
raised points of a technical nature. It was argued that the requirements of an interim
interdict had not been met and that the chairperson of the Limpopo LPC had no
authority to launch the proceedings.
[20] This last point in limine was upheld by the high court, which found that the
resolution to launch the proceedings was fatally defective, in that it was signed only
by the chairperson of the Limpopo LPC. It held that the issue was not whether the
chairperson had the necessary authority to act, but whether the institution of
proceedings was authorised by the Council. The high court found that the Limpopo
LPC had failed to produce any evidence that the other members of the Council had
authorised the institution of proceedings, in that no attendance register was attached,
nor were confirmatory affidavits filed. In concluding that there was no authorisation,
the high court placed reliance on Corbett J’s judgment in Griffiths & Inglis (Pty) Ltd
v Southern Cape Blasters (Pty) Ltd.6
[21] Since then, the issue of authority has been dealt with in a number of decisions
of this Court.7 The position is now established that the manner to challenge the
authority of a litigant is to utilise rule 7(1) of the Uniform Rules of Court.8 The
original understanding of rule 7(1) was that it only applied to the mandate provided
to attorneys.9 However, this Court in Unlawful Occupiers, School Site v City of
Johannesburg10 (Unlawful Occupiers), citing Eskom v Soweto City Council11 and
Ganes and Another v Telecom Namibia Ltd,12 held that the remedy for a respondent
who wishes to challenge the authority of a person allegedly acting on behalf of the
purported applicant is provided for in rule 7(1).13
[22] In Unlawful Occupiers, the founding affidavit of the deponent was confined
to stating that he was ‘. . . duly authorised by delegated power to bring this
application . . .’. This purported authorisation was challenged by the respondent. In
reply, the deponent produced a resolution of the municipal council, in consultation
with the director for legal services, authorising him to launch the proceedings. This
6 Griffiths & Inglis (Pty) Ltd v Southern Cape Blasters (Pty) Ltd [1972] 4 All SA 269 (C); 1972 (4) SA 249 (C) at 252,
where it was stated that in the paragraph dealing with a letter, drafted by the managing director and terminating the
contract that gave rise to the dispute before the court, no mention was made that the contents of the said letter had
been discussed with and approved by the board of directors.
7 Ganes and Another v Telecom Namibia Ltd [2004] 2 All SA 609 (SCA); 2004 (3) SA 615 (SCA); Unlawful
Occupiers, School Site v City of Johannesburg 2005 (4) SA 199 (SCA); [2005] 2 All SA 108 (SCA).
8 Rule 7(1) provides that ‘. . . the authority of anyone acting on behalf of a party may, within 10 days after it has come
to the notice of a party that such person is so acting, or with the leave of the court on good cause shown at any time
before judgment, be disputed, whereafter such person may no longer act unless he satisfies the court that he is
authorised so to act, and to enable him to do so the court may postpone the hearing of the action or application’.
9 A C Cilliers, C Loots and H C Nel The Civil Practice of the High Court and Supreme Court in South Africa Vol 1
at 268.
10 Unlawful Occupiers, School Site v City of Johannesburg 2005 (4) SA 199 (SCA); [2005] 2 All SA 108 (SCA).
11 Eskom v Soweto City Council 1992 (2) SA 703 (W).
12 Ganes and Another v Telecom Namibia Ltd [2004] 2 All SA 609 (SCA).
13 Unlawful Occupiers, School Site para 14.
Court found that there was rarely any motivation for deliberately launching an
unauthorised application. In any event, once a resolution, or other document proving
authority, had been produced that is where the challenge ends.
[23] Although the high court upheld the point in limine, it went on to deal with the
merits of the matter on the basis that the interests of justice dictated that the matter
be finalised. Nonetheless, its finding on the question of authority cannot be allowed
to stand. It is at odds with the principle set out in Unlawful Occupiers.
[24] Regarding the merits, the high court proceeded to set out the three stage
inquiry for determining whether a person was ‘fit and proper’. The first leg is to
establish whether, on the facts, the offending conduct has been proven on a balance
of probabilities; the second is whether the person is a fit and proper person, taking
into account the misconduct; and the final leg is whether the person should be
suspended from the roll or struck from the roll. The high court found that every
complaint related to the second respondent and no complaint was brought directly
against the other respondents, whose suspension was sought ‘merely’ because they
were directors of the firm at some point. On this basis, the high court found that the
threshold for the first factual leg of the inquiry had not been met and thus it was
unnecessary to inquire further.
[25] The high court found further that all the allegations related to the second
respondent and the ‘extremely general allegations’ of the Limpopo LPC did not refer
to the other respondents at all. It held that because the suspension of the third to
eighth respondents was sought merely because they were directors at one stage of
the firm’s existence, the Limpopo LPC had failed to pass the first factual leg of the
inquiry. It was therefore unnecessary to enquire whether they were fit and proper to
practise, taking into account their conduct, and, if not, whether they should be
suspended from practice.
[26] Every director has a fiduciary duty towards the company of which it is a
director. To plead ignorance of financial matters, when faced with allegations of
misappropriation, does not absolve a director.14 It has been emphasised over the
years that legal practitioners cannot escape liability by contending that they had no
responsibility for the keeping of the books of account or the control and
administration of the trust account.15 As this Court stated in Hepple v Law Society of
the Northern Provinces,16 for an attorney to explain trust deficits on the grounds that
he or she had no involvement in the financial affairs of the firm ‘is no defence at all’.
[27] Abdication of responsibilities does not absolve legal practitioners of their
duties. As far back as Incorporated Law Society, Transvaal v K and Others,17 the
court cautioned attorneys who attempted to excuse their conduct on the basis that
they were responsible for other work in the firm, and did not concern themselves
with the books of account. In that matter, as here, a particular individual in the firm
was tasked with handling the books of account. The court stated:
‘Every attorney must realise that it is a fundamental duty on his part, breach of which may easily
lead to his being removed from the roll, to ensure that the books of the firm are properly kept, that
there are sufficient funds at all times to meet the trust account claims, and that when he makes the
14 Hepple and Others v Law Society of The Northern Provinces [2014] ZASCA 75; [2014] 3 All SA 408 (SCA) para
21.
15 Hewetson v Law Society of the Free State [2020] ZASCA 49; [2020] 3 All SA 15 (SCA); 2020 (5) SA 86 (SCA)
para 56; Hepple v and Others Law Society of the Northern Provinces [2014] ZASCA 75; [2014] 3 All SA 408 (SCA)
para 14; Malan v Law Society of the Northern Provinces [2008] ZASCA 90; 2009 (1) SA 216 (SCA); [2009] 1 All
SA 133 (SCA) paras 27-28.
16 Hepple para 21.
17 Incorporated Law Society, Transvaal v K and Others [1959] 2 All SA 24 (T); 1959 (2) SA 386 (T) at 391cited with
approval in Hewetson para 55.
declaration required for fidelity fund purposes there is no doubt that that declaration is truly and
honestly made.’18
[28] In addition, the respondents were constrained to concede that the concept of
‘a salaried director’ is not one found in the Companies Act of 2008 or the LPA. Once
a legal practitioner is appointed as a director, whatever the factual terms of the
arrangement may be, they bear full responsibility for the finances of the firm.
[29] At this stage, the inquiry is not whether the legal practitioner is ‘fit and
proper’. This is the inquiry to be undertaken when final relief is sought. If it is found
that the legal practitioner is not fit and proper, the court then has a discretion on what
sanction to impose. All that is necessary at this stage is that sufficient facts have been
shown to justify an interim suspension.
[30] The requirements for an interim interdict are well known and do not bear
repetition.19 On the facts of this case, there can be no doubt that the offending
conduct in respect of the financial affairs of the firm has been established. On their
own version, the third to eighth respondents, by playing no role whatsoever in
respect of the accounting and financial affairs of the firm, were in dereliction of their
duties as directors. All that is required from the Limpopo LPC is to show a
prima facie right, even if open to some doubt. Here, it could be argued that the
Limpopo LPC established a clear right because there was no refutation of the firm’s
misdeeds, only a denial of responsibility for those misdeeds, which, in respect of
18 Ibid.
19 The requirements for the granting of an interim interdict are: (i) a prima facie right, albeit open to some doubt; (ii)
irreparable harm if the interdict were not to be granted; (iii) the balance of convenience in favour of granting the
interdict; and (iv) that the applicant has no alternative remedy.
directors, is no defence at all. The balance of convenience favours the regulatory
body, which has no alternative means of performing its oversight functions.
[31] The parties proceeded on the premise that the interim order was appealable.
In the exercise of its discretion, an appeal court is not bound by the conclusions of
the high court in the granting of interim interdicts and may depart from the high
court’s order on any grounds that it feels are necessary.20 This is self-evidently a
matter which requires the intervention of this Court. Such applications are brought
by the regulatory body for the protection of the general public against malfeasance
of legal practitioners. In many respects, the orders granted are final in effect. The
dismissal of the application in respect of the third to eighth respondents prevented
the Limpopo LPC from playing its oversight role over legal practitioners.
[32] Interim applications for the suspension of a legal practitioner pending an
investigation are generally undesirable if the suspension sought is for a lengthy
period. Such applications should be launched only where there is no other means of
safeguarding the public from the alleged malfeasance of a legal practitioner. An
interim order for suspension has a very grave impact on the professional life of a
legal practitioner, who would nonetheless be severely prejudiced if exonerated at the
end of an investigation by the LPC.
[33] The Limpopo LPC seeks an order for a period of suspension of 18 months
pending an investigation into the affairs of the third to ninth respondents. The order
granted against the second respondent on 25 October 2021, by agreement, was for a
period of 12 months. This was almost twenty one months ago. The Limpopo LPC
20 Hix Networking Technologies CC v System Publishers (Pty) Ltd and Another [1996] 4 All SA 675 (A); 1997 (1) SA
391 (A) at 402B-C.
has had ample opportunity in the intervening period to conduct its investigations into
the finances of the firm and those of the second respondent who, it is common cause,
controlled the finances of the firm. The order granted against the second respondent
gave the Limpopo LPC far reaching powers to take control of the trust account of
the firm and all the accounting records of the second respondent. This means that
the investigative work by the LPC must be largely completed. All that remains is for
the LPC to take over and investigate those files which were taken by the respective
directors when they left the firm. Six months ought to be more than adequate for this
purpose. As far as the ninth respondent is concerned, it is common cause that the
active files of the third and fifth respondents were transferred to it upon
incorporation. To that extent an order should also be granted against the ninth
respondent. The Limpopo LPC should proceed with final relief against the
respondents, if indicated, at the earliest opportunity.
[34] What remains is the issue of costs. When the Limpopo LPC applied to the
high court for leave to appeal the judgment, its application was dismissed with costs
on the attorney and client scale. This, said the high court, was because the Limpopo
LPC ‘used a personal and emotional attack in its notice of application for leave to
appeal against the respondents and the court’.
[35] This comment was presumably a reference to paragraphs 2.1 and 3.2 of the
Limpopo LPC’s notice of appeal, in which the third to eighth respondents were
referred to as ‘thug-like Practitioners, who continue to engage in Subterfuge, whilst
obfuscating and detracting everyone’s attention from the fact that they have grossly
brought the profession into disrepute through their unlawful thieving conduct’.
[36] The notice of appeal went on:
‘3.2.
The Learned Judge should have also recognised the fact that in spite of all the obfuscating
resorted to by the Third to the Eighth Respondents, no amount of obfuscating and resorting to
subterfuge, could undo the fact that these Respondents had indeed violated the Legal Position, and
all such subterfuge and obfuscation, were indicative of the fact that these practitioners were so
lacking in insight regarding their duty to the public that they could not, and should not have been
allowed to continue to practice law, since to allow them to do so as the Learned Judge has done,
constitutes a gross dereliction of duty, which no other reasonable Court will allow to stand.’
Such language ill befits the watchdog of the legal profession and has no place in a
notice of appeal.
[37] It is also necessary to mention the manner in which the record in this matter
was prepared. This, too, has a bearing on the costs of the appeal. All that was
required for the adjudication of the appeal was the notice of motion and founding
affidavit, the answering affidavits of the respondents, the replying affidavits and the
judgment of the high court on the merits and on the leave to appeal. These documents
amount to 386 pages (to which a few annexures referred to in the heads of argument
should be added). Instead, the Court was saddled with a record of 1427 pages put
together in an entirely haphazard fashion with the notice of motion commencing on
page 470.
[38] The LPC is the regulator of the profession. Of all litigants, one would have
expected assiduous compliance with the rules of this Court by the Limpopo LPC.
Rule 8(7) of the Supreme Court of Appeal (SCA) Rules directs litigants to prepare a
core bundle consisting of the material documents in a case, preferably in a
chronological sequence. In terms of SCA rule 8(9), whenever a decision of an appeal
is likely to hinge exclusively on a portion of the record, the appellant is obliged to
request the respondents consent to omit the unnecessary parts of the record. This was
not done. The Court may make a special costs order if no request was made or if
either of the parties acted unreasonably.21 For this reason, I am of the view that the
Limpopo LPC should not be entitled to the costs of the appeal.
[39] In the result, the following order is made:
The appeal is upheld with no order as to costs.
The order of the high court is set aside and replaced with the following:
‘1
The third to eighth respondents are suspended from practicing as
attorneys for a period of six months pending the finalisation of investigations
into their conduct as directors of the first respondent, failing which the
suspension will lapse.
The third to eighth respondents are ordered to hand over and deliver
their certificates of enrolment as legal practitioners to the Registrar of the
Limpopo Division of the High Court, Polokwane within 7 days from date of
this order.
In the event of the third to eighth respondents failing to comply with
the terms of the order granted in paragraph 2 above, within 7 days from date
of this order, the Sheriff of the district in which the third to eighth respondents’
certificates of enrolment are found, is authorised and directed to take
possession of the said certificates and to hand them to the applicant.
The Director of the Limpopo Provincial Council of the applicant,
Khomotso Matsaung, or any person nominated by her, and/or the Director of
the Gauteng Provincial Council of the South African Legal Practice Council,
Johan van Staden, or any person nominated by him, is appointed curator bonis
to administer and control the trust accounts of the third to eighth respondents,
including accounts relating to insolvent and deceased estates and any deceased
21 See for example Siyangena Technologies (Pty) Ltd v PRASA and Others [2022] ZASCA 149; [2023] 1 All SA 74
(SCA); 2023 (2) SA 51 (SCA) paras 48-51.
estate and any estate under curatorship connected with the respondents’
practices as legal practitioners, including the separate banking accounts
opened and kept by the third to ninth respondents at any bank in the Republic
of South Africa in terms of section 86(1) and (2) of the Legal Practice Act 28
of 2014, in which monies from such trust banking accounts have been invested
by virtue of the provisions of the said subsections, or in which monies in any
manner have been deposited or credited (the said accounts being hereafter
referred to as “the trust accounts”), with the following powers and duties:
4.1
immediately to take possession of the third to eighth respondents’
accounting records, records, files and, subject to the approval of the Board of
Control of the Legal Practitioners Fidelity Fund, to sign all forms and
generally operate the trust accounts, but only to such extent and for such
purpose as may be necessary to bring to completion current transactions in
which the third to eighth respondents were acting at the date of this order.
4.2
subject to the approval and control of the Board of Control of the Legal
Practitioners Fidelity Fund and where monies had been paid incorrectly and
unlawfully from the undermentioned trust accounts, to recover and receive
and, if necessary in the interests of persons having lawful claims upon the trust
account(s) and/or against the third to ninth respondents in respect of monies
held, received and/or invested by the respondents in terms of section 86(1)
and (2) and/or section 86(3) and/or section 86(4) of the Legal Practice Act 28
of 2014 (hereinafter referred to as “trust monies”), to take any legal
proceedings which may be necessary for the recovery of money which may
be due to such persons in respect of incomplete transactions, if any, in which
the third to eighth respondents were and may still have been concerned and to
receive such monies and to pay the same to the credit of the trust account(s);
4.3
to ascertain from the third to eighth respondents’ accounting records
the names of all persons on whose account the third to eighth respondents
appear to hold or to have received trust monies from (hereinafter referred to
as “trust creditors”) and to call upon the third to eighth respondents to furnish
them, within 30 (thirty) days of the date of service of this order or such further
period as they may agree to in writing, with the names, addresses and amounts
due to all trust creditors;
4.4
to call upon such trust creditors to furnish such proof, information
and/or affidavits as they may require, to enable them, acting in consultation
with, and subject to the requirements of, the Board of Control of the Legal
Practitioners Fidelity Fund, to determine whether any such trust creditor has
a claim in respect of monies in the trust account(s) of the respondents and, if
so, the amount of such claim;
4.5
to admit or reject, in whole or in part, subject to the approval of the
Board of Control of the Legal Practitioners Fidelity Fund, the claims of any
such trust creditor or creditors, without prejudice to such trust creditor’s or
creditors’ right of access to the civil courts;
4.6
having determined the amounts which she considers are lawfully due
to trust creditors, to pay such claims in full, but subject always to the approval
of the Board of Control of the Legal Practitioners Fidelity Fund;
4.7
in the event of there being any surplus in the trust account(s) of the third
to eighth respondents after payment of the admitted claims of all trust creditors
in full, to utilise such surplus to settle or reduce (as the case may be), firstly,
any claim of the Legal Practitioners Fidelity Fund in terms of section 86(5) of
the Legal Practice Act 28 of 2014 in respect of any interest therein referred to
and, secondly, without prejudice to the rights of the creditors of the
respondents, the costs, fees and expenses referred to in paragraph 10
hereunder, or such portion thereof as has not already been separately paid by
the third to eighth respondents to the applicant, and, if there is any balance left
over after payment in full of such claims, costs, fees and expenses, to pay such
balance, subject to the approval of the Board of Control of the Legal
Practitioners Fidelity Fund, to the third to eighth respondents, if they are
solvent, or, if the third to eighth respondents are insolvent, to the trustee(s) of
the third to eighth respondents’ insolvent estates;
4.8
in the event of there being insufficient trust monies in the trust banking
account(s) of the third to eighth respondents, in accordance with the available
documentation and information, to pay in full the claims of trust creditors who
have lodged claims for repayment and whose claims have been approved, to
distribute the credit balance(s) which may be available in the trust banking
account(s) amongst the trust creditors, alternatively to pay the balance to the
Legal Practitioners Fidelity Fund;
4.9
subject to the approval of the chairman of the Board of Control of the
Legal Practitioners Fidelity Fund, to appoint nominees or representatives
and/or consult with and/or engage the services of legal practitioners, counsel,
accountants and/or any other persons, where considered necessary, to assist
them in carrying out their duties as curators; and
4.10 to render from time to time, as curators, returns to the Board of Control
of the Legal Practitioners Fidelity Fund showing how the trust account(s) of
the third to eighth respondents has/have been dealt with until such time as the
Board of Control of the Legal Practitioners Fidelity Fund notifies them that
they may regard their duties as curators terminated.
That the third to eighth respondents immediately deliver their
accounting records, records, files and documents containing particulars and
information relating to:
5.1
any monies received, held or paid by the third to eighth respondents for
or on account of any person while practicing as an attorney;
5.2
any monies invested by the third to eighth respondents in terms of
section 86(3) and/or section 86(4) of the Legal Practice Act 28 of 2014;
5.3
any interest on monies so invested which was paid over or credited to
the third to eighth respondents;
5.4
any estate of a deceased person or an insolvent estate or an estate under
curatorship administered by the third to eighth respondents, whether as
executor or trustee or curator or on behalf of the executor, trustee or curator;
5.5
any insolvent estate administered by the third to eighth respondents as
trustee or on behalf of the trustee in terms of the Insolvency Act 24 of 1936;
5.6
any trust administered by the third to eighth respondents as trustee or
on behalf of the trustee in terms of the Trust Property Control Act 57 of 1988;
5.7
any company liquidated in terms of the Companies Act 61 of 1973 read
together with the provisions of the Companies Act 71 of 2008, administered
by the third to eighth respondents by or on behalf of the liquidator;
5.8
any close corporation liquidated in terms of the Close Corporations Act
69 of 1984, administered by the third to eighth respondents as or on behalf of
the liquidator; and
5.9
the third to eighth respondents’ practices as legal practitioners of the
Limpopo Division of the High Court, Polokwane, to the curators so appointed,
provided that, as far as such accounting records, records, files and documents
are concerned, the third to eighth respondents shall be entitled to have
reasonable access to such records, but always subject to the supervision of
such curator or their nominee.
Should the third to eighth respondents fail to comply with the
provisions of the preceding paragraphs of this order on service thereof upon
them or after a return by the person entrusted with the service thereof that he
or she has been unable to effect service thereof on the third to eighth
respondents (as the case may be), the Sheriff for the district in which such
accounting records, records, files and documents are, be empowered and
directed to search for and to take possession thereof, wherever they may be,
and to deliver them to such curator.
That the curator shall be entitled to:
7.1
hand over to the persons entitled thereto all such records, files and
documents provided that a satisfactory written undertaking had been received
from such persons to pay any amount, either determined on taxation or by
agreement, in respect of fees and disbursements due to the firm;
7.2
require from the persons referred to in paragraph 7.1 to provide any
such documentation or information which they may consider relevant in
respect of a claim or possible or anticipated claim, against them and/or the
third to eighth respondents and/or the third to eighth respondents’ clients
and/or the Legal Practitioners Fidelity Fund in respect of money and/or other
property entrusted to the third to eighth respondents. Provided that any person
entitled thereto shall be granted reasonable access thereto and shall be
permitted to make copies thereof;
7.3
publish this order or an abridged version thereof in any newspaper they
consider appropriate; and
7.4
wind-up the third to eighth respondents’ practices in the event that they
consider it appropriate.
The third to eighth respondents are hereby removed from office as:
8.1
executor of any estate of which the third to eighth respondents have
been appointed in terms of section 54(1)(a)(v) of the Administration of Estates
Act 66 of 1965 or the estate of any other person referred to in section 72(1);
8.2
curators or guardians of any minor or other person’s property in terms
of section 72(1) read with section 54(1)(a)(v) and section 85 of the
Administration of Estates Act 66 of 1965;
8.3
trustees of any insolvent estate in terms of section 59 of the Insolvency
Act 24 of 1936;
8.4
liquidators of any company in terms of section 379(2) read with section
379(e) of the Companies Act 61 of 1973 read together with the provisions of
the Companies Act 71 of 2008;
8.5
trustees of any trust in terms of section 20(1) of the Trust Property
Control Act 57 of 1988;
8.6
liquidators of any close corporation appointed in terms of section 74 of
the Close Corporations Act 69 of 1984; and
8.7
administrators appointed in terms of section 74 of the Magistrates’
Court Act 32 of 1944.
The third to eighth respondents are hereby ordered and directed, jointly
and severally, to:
9.1
pay in terms of section 87(2) of the Legal Practice Act 28 of 2014, the
reasonable costs of the inspection of the accounting records of the
respondents;
9.2
pay the reasonable fees of the auditor engaged by the applicant;
9.3
pay the reasonable fees and expenses of the curator, including travelling
time;
9.4
pay the reasonable fees and expenses of any person(s) consulted and/or
engaged by the curator as aforesaid; and
9.5
pay the expenses relating to the publication of this order or an
abbreviated version thereof.
If there are any trust funds available, the third to eighth respondents
shall within 6 (six) months after having been requested to do so by the
curators, or within such longer period as the curators may agree to in writing,
satisfy the curators, by means of the submission of taxed bills of costs or
otherwise, of the amount of the fees and disbursements due to them (third to
eighth respondents) in respect of their (former) legal practices, and should
they fail to do so, they shall not be entitled to recover such fees and
disbursements from the curators without prejudice, however, to such rights
(if any) as they may have against the trust creditor(s) concerned for payment
or recovery thereof.
A certificate issued by a Director of the Legal Practitioners Fidelity
Fund shall constitute prima facie proof of the curators’ costs and that the
Registrar be authorised to issue a writ of execution on the strength of such
certificate in order to collect the curators’ costs.
The third to eighth respondents shall during the period of suspension
comply with the provisions of sections 84(1) and 85 of the Legal Practice Act
28 of 2014.
The third to eighth respondents are ordered to pay the costs of this
application, jointly and severally, the one paying the other to be absolved.’
________________________
C HEATON NICHOLLS
JUDGE OF APPEAL
Appearances
For the appellant:
C Georgiades SC (with P W Makhambeni)
Instructed by:
AM Vilakazi Tau Incorporated Attorneys, Polokwane
Lovius Block Incorporated, Bloemfontein
For the third, fifth and
ninth respondents:
G N Naudé SC (with G T Kyriazis)
Instructed by:
Hansen Incorporated Attorneys, Pretoria
Phatshoane Henney Attorneys, Bloemfontein
For the fourth, sixth and
eight respondents:
M R Maphutha (with A Seshoka)
Instructed by:
Matotola Tseleng Attorneys, Polokwane
Tsetsewa Incorporated Attorneys, Polokwane
Duba Attorneys, Bloemfontein
For the seventh respondent: C T Malatji
Instructed by:
Zikalala Attorneys, Polokwane
Mphahlehle & Makhumbila 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:
26 July 2023
Status: Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form
part of the judgments of the Supreme Court of Appeal
Limpopo Provincial Council of the South African Legal Practice Council v Chueu Incorporated
Attorneys and Others (459/22) [2023] ZASCA 112 (26 July 2023)
Today, the Supreme Court of Appeal (SCA) upheld an appeal with no order as to costs against the
decision of the Limpopo Division of the High Court, Polokwane (per Naude AJ) to dismiss an urgent
application for the suspension of various legal practitioners, brought by the statutory regulator, the
Limpopo Provincial Council of the South African Legal Practice Council (the Limpopo LPC), the
appellant. The first respondent was Chueu Incorporated Attorneys (the firm), the law firm of which the
second to eighth respondents were directors.
The Limpopo LPC sought to suspend the second to eighth respondents from practising as attorneys for
a period of 18 months pending the finalisation of a disciplinary enquiry into the alleged misconduct of
the respondents, and certain interim relief related thereto. The high court, by agreement, granted an
order of suspension against the second respondent for a period of 12 months, pending the finalisation
of investigations into his conduct and disciplinary proceedings against him. It dismissed the application
for the suspension of the other directors.
At the heart of the appeal was the question of the liability of all the directors of a law firm, when the
financial misconduct had allegedly been committed by only one of the directors.
The facts of the matter were as follows. The firm specialised in personal injury matters. The second
respondent was the ‘managing director’ of the firm and in charge of the overall finances of the firm.
During the relevant period, the third to eighth respondents were directors of the firm, operating at
different locations. During 2020/2021, various complaints from members of the public were received
by the Limpopo LPC. These were to the effect that the firm had represented them in litigation against
the Road Accident Fund (the RAF), collected monies from the RAF, but failed to pay it over; that the
firm had failed to account for monies claimed and received from the RAF; and, had failed to respond
to communications or deal properly with clients’ instructions in this regard. A complaint was received
from the RAF that it had erroneously made a duplicate payment resulting in an overpayment to the
firm, which monies, instead of being repaid to the RAF, had been appropriated. The matter was referred
to the Investigating Committee of the Limpopo LPC, which found evidence of numerous breaches of
the code of conduct. On receipt of the trust accounts of the firm, the Limpopo LPC concluded that there
was a substantial trust deficit of at least R25 825 699.89. This pointed prima facie to a misappropriation
of trust funds. As a result, the Limpopo LPC launched an urgent application for the suspension of all
the directors of the firm. It founded its jurisdiction in terms of s 43 and s 44(1) of the Legal Practice Act
28 of 2014 (the LPA).
The SCA found, firstly, that a point in limine raised by the respondents that the chairperson of the
Limpopo LPC had no authority to launch the proceedings was incorrectly upheld by the high court. The
SCA found that the finding by the high court on the question of authority was at odds with the principle
set out in Unlawful Occupiers, School Site v City of Johannesburg 2005 (4) SA 199 (SCA); [2005] 2
All SA 108 (SCA).
Regarding the merits, the SCA found that once a legal practitioner was appointed as a director, they
bore full responsibility for the finances of the firm. Abdication of responsibilities did not absolve legal
practitioners of their duties. It had been emphasised over the years that legal practitioners could not
escape liability by contending that they had no responsibility for the keeping of the books of account or
the control and administration of the trust account.
The SCA found further that, on the facts, there was no doubt that the offending conduct in respect of
the financial affairs of the firm had been established. On their own version, the third to eighth
respondents, by playing no role whatsoever in respect of the accounting and financial affairs of the firm,
were in dereliction of their duties as directors. The Limpopo LPC established a prima facie, if not clear
right, because there was no refutation of the firm’s misdeeds, only a denial of responsibility for those
misdeeds, which, in respect of directors, was no defence at all. The balance of convenience favoured
the regulatory body, which had no alternative means of performing its oversight functions. Thus,
sufficient facts had been shown to justify an interim suspension.
With regard to costs, the SCA was of the view that the Limpopo LPC was not entitled to the costs of
the appeal. This was because the unnecessarily voluminous record filed by the appellant did not comply
with the rules of the SCA, and thus called for a special costs order.
~~~~ends~~~~
|
2263
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 268/2008 & 269/2008
DAVID FELDMAN N.O. Appellant
and
EMI MUSIC SA (PTY) LTD / EMI MUSIC PUBLISHING
SA (PTY) LTD Respondent
Neutral citation:
Feldman v EMI Music (268/2008) [2009] ZASCA 75 (1
June 2009)
Coram:
Farlam, Brand, Maya, Mhlantla JJA and Hurt AJA
Heard:
22 May 2009
Delivered:
1 June 2009
Summary:
Co-author of work of joint authorship not entitled to sue
for all damages resulting from infringement without joining
other co-authors or making out a case for such
entitlement.
___________________________________________________________
ORDER
On appeal from:
Witwatersrand Local Division (Jajbhay J sitting as court of
first instance.)
The appeal against the upholding of the first exception is dismissed.
Save as set out in paragraph 1, the appeal succeeds.
The respondent is ordered to pay the appellant’s costs of appeal, such
costs to include the costs of two counsel.
The order of the court below is altered to read:
'(a)
The first exception is upheld.
(b)
Paragraphs 3 to 12 of the particulars of claim are struck out.
(c)
The plaintiff is given leave to amend the particulars of claim by notice
of amendment delivered within 21 days of the date of this order.
(d)
Save as ordered in paragraph (a), the exceptions are dismissed.
(e)
The plaintiff is ordered to pay the costs of the exceptions.'
The period of 21 days in para 4 (c) is to run from the date of the
delivery of this judgment.
JUDGMENT
HURT AJA (Farlam, Brand, Maya and Mhlantla JJA concurring):
[1] The appellant, who is the executor in the deceased estate of the well-
known singer, Brenda Fassie, instituted two actions in the Witwatersrand
Local Division of the High Court, claiming relief based on copyright. The
defendant in the first action (and the respondent in the first of the appeals) is
EMI Music Publishing (Pty) Ltd ('EMI Publishing') and, in the second, EMI
Music (Pty) Ltd ('EMI Music'). The respondents delivered notices to cure
vagueness and embarrassment in terms of Rule 23(1) of the Uniform Rules of
Court and, no response to these notices having been received from the
appellant, notices of exception were duly delivered. The cases were dealt with
as one by Jajbhay J for the purposes of deciding them. The learned judge
upheld the exceptions with costs and gave the appellant leave to amend the
particulars of claim within 21 days. This appeal comes before us with the
leave of the court below.
The Infringement Claims ('The First Exception').
[2] The particulars of claim in each matter commenced with a claim for
damages based on copyright infringement. The appellant claimed to have
joint ownership of the copyright in 157 works listed in an annexure to the
summons. With four exceptions1 the works listed (being music and lyrics for
so-called 'pop songs') are works in which the late Ms Fassie collaborated with
others to compose them. They are accordingly works of 'joint authorship' as
defined in s1 of the Copyright Act 98 of 1978 ('the Act'). Having made the
necessary averments to establish that the works are entitled to copyright
protection, the particulars of claim in the EMI Publishing action proceed as
follows:-
'4.
From and subsequent to 1980, the Defendant continuously, until the present
time, without the licence of the Plaintiff or any of the persons referred to in
paragraph 3.1.1.1 above (sc the joint authors), and whilst the exclusive right
to do so vested in the Plaintiff and the said persons:
[reproduced, published and made adaptations of the works and purported to
grant licences to third parties to perform similar acts]2
5.
In the premises, the defendant, during the said period, infringed the copyright
in respect of the said works, referred to in paragraph 3 above.
6.
The defendant at all relevant times bore knowledge of the fact that such
conduct constituted an infringement as aforesaid.
7.
The Defendant received royalties for performing the acts set out in paragraph
4 supra.
8.
The damages suffered by the Plaintiff constitute the reasonable royalty that
would have been payable by a licensee in respect of the work.
9.
The plaintiff has no knowledge of the extent of the royalties the Defendant
received as aforestated.
1 In which Ms Fassie was stated to be the sole composer/author of the music and lyrics.
2 This is a précis of the detailed allegations of conduct which constituted copyright
infringement.
10.
In order to determine the amount of a reasonable royalty, having regard to the
provisions of section 24(1B) of the Copyright Act, the Plaintiff will seek an
order directing that an enquiry be held.'
[3] The relief sought in respect of the infringement claim is an order for
damages equivalent to the royalties which would reasonably have been
payable by a licensee of the copyright and an enquiry aimed at establishing
the amount of such royalties. There is a further prayer for what are sometimes
referred to as 'punitive damages' based on the provisions of s 24 (3) of the
Act.3
[4] The particulars in the EMI Music action are almost identical to those set
out above, save that the date of inception of the alleged acts of infringement
in paragraph 4 is 1993, the words 'and/or fees' appear after the word
'royalties' in paragraph 7 and the words 'and that the defendant be ordered to
pay to the Plaintiff the amount found to be due pursuant thereto' appear after
the words 'an inquiry to be held' at the end of paragraph 10. These variations
are not material to the issues raised by the first exception in either action.
[5] The notices of exception taken to the claims based on infringement,
after recounting the nature of the copyright relied upon by the appellant, state
that:
'4.
The claims pursued by the plaintiff in this action are claims founded upon
copyright ownership.
5.
The plaintiff has not indicated that any of the joint authors listed in Annexure
A to the particulars has ceded or otherwise made over their copyright to
Fassie. It is accordingly unclear on what basis the plaintiff has the requisite
locus standi to sue on his own.
3 'Where in an action under this section an infringement of copyright is proved or admitted,
and the court having regard, in addition to all other material considerations, to
(a)
the flagrancy of the infringement; and
(b)
any benefit shown to have accrued to the defendant by reason of the
infringement,
Is satisfied that effective relief would not otherwise be available to the plaintiff, the court shall
in assessing damages for infringement have power to award such additional damages as the
court may deem fit.
6.
The particulars are accordingly vague and embarrassing, alternatively lack
averments necessary to sustain the cause of action, and the defendant is
accordingly unable to plead thereto.'
This will be referred to as 'the first exception'.
[6] Before dealing with the parties' respective contentions, it will be
convenient to refer briefly to the law concerning joint authorship of works
protectable by copyright. Section 21(1)(a) of the Act states that:
'Subject to the provisions of this section, the ownership of any copyright conferred by
section 3 or 4 on any work shall vest in the author or, in the case of a work of joint
authorship, in the co-authors of the work.'
Section 3 of the Act confers copyright on, inter alia, any literary or musical
work of which the author or any one of the joint authors is a South African
citizen or is domiciled or resident in the Republic at the time that the work is
composed. It is not in dispute that the late Ms Fassie and her co-authors in
this case qualify under the section. Although subsections 22(1) and 22(5)
equate copyright to movable property for the purpose of dealing with
transmission of the rights by way of 'assignment, testamentary disposition or
operation of law', there are features of co-ownership of copyright which differ
from co-ownership of movables. Thus, for instance, one co-owner of copyright
does not have the right, without the consent of the other(s), to exploit the
rights comprising his copyright.4 As to the proportions in which individual co-
authors are entitled to share in the proceeds of the copyright, much will
depend, in each instance, on the basis on which the co-authors have agreed
to collaborate to produce the work. It is clear from the definition of a 'work of
joint authorship',5 however, that in the absence of agreement between the co-
authors, the share of each will be an undivided one. In this regard Copinger
and Skone James6 suggest that the circumstances surrounding the creation
of the work will generally be relevant to a decision as to the respective share
for which each co-author qualifies. In the absence of clear contrary indications
4 O H Dean Handbook of South African Copyright Law p1-30A; K Garnett, G Davies, G
Harbottle Copinger and Skone James on Copyright 15 ed p 288.
5 'work of joint authorship means a work produced by the collaboration of two or more
authors in which the contribution of each author is not separable from the contribution of the
other author or authors'.
6 Op cit pp 287 to 288.
as to the parties' intention, it is suggested, the co-authors will each be taken to
hold an equal, undivided share as 'tenants in common'. It seems that this is
the position under the Act, but it is not necessary for the purposes of this
judgment to investigate this aspect further. What is clear, and what was not in
dispute in argument before us, is that one co-author cannot ordinarily claim
the whole proceeds of any exploitation of a work of joint authorship. It must
follow that, in invoking the provisions of section 24(1A) of the Act as a basis
for quantifying his or her claim for damages, a co-author suing individually for
damages for infringement or their surrogate under the section will be
restricted to the portion of the 'reasonable royalty' to which he or she would
have been entitled if the work had been duly licensed.
[7] The debate about the first exception in the court below appears to have
focused on a contention that the infringement claims were excipiable because
the appellant had not joined the joint authors in the action. Jajbhay J referred
to various authorities to the effect that a joint owner should join his co-
owner(s) in litigation concerning the joint property. As authority for the
proposition that non-joinder may be raised as a matter for exception, the
learned judge referred to Collin v Toffie 1944 AD 456, and Smith v Conelect
1987 (3) 689 (W). Apart from noting that Tindall JA in Collin stated that a point
of non-joinder may be taken on exception, but only if it is expressly referred to
in the exception,7 it is not necessary to consider whether the decision by
Jajbhay J of the first exception on the basis of joinder was correct in law. An
excipient is obliged to confine his complaint to the stated grounds of his
exception. As in Collin, the exceptions here contain no mention of non-joinder.
They accordingly fell to be decided on the grounds taken, namely that the
particulars did not contain averments which founded the claim for relief. Nor,
in arguing the appeals, did counsel for either party present argument based
on the ground of non-joinder.
[8] Mr Gautschi, who appeared with Mr Smit for the appellant, submitted
that, on a fair reading of the particulars of claim, it was implicit that the plaintiff
7 p 467.
was only claiming his pro rata share of the 'reasonable royalty' contemplated
in section 24(1A). I think that such an interpretation of the particulars would
involve more than just a 'fair reading' of the claims – it would involve
interpolating presumptions and a measure of speculation into the particulars.
On the basis set out in para 7, a plaintiff will not be entitled to the whole of the
'reasonable royalty' accruing from a work of co-authorship unless, at the time
of the creation of the work, there was an agreement between the co-authors
that the plaintiff was to be entitled to all the fruits of the work or, of course,
unless the plaintiff had taken cession of the rights of his co-author(s). The
matter is complicated in a case such as this where a substantial number of
the works are alleged to be the product of more than two authors. The short
answer to the question raised by the exception is simply that the averments in
the particulars of claim, read fairly, are silent as to the basis upon which the
plaintiff contends that he is entitled to the 'damages' which he claims. As to
the claim for 'punitive damages', I consider that such damages would
ultimately have to be assessed as a lump sum figure which would have to be
shared pro rata by the co-authors. The defendant in this situation would be
exposed to substantial prejudice if he were to be ordered to pay the plaintiff
the total amount of such damages but still remain exposed to a similar claim
by one or more of the other co-authors. The absence of averments relating to
the plaintiffs share of the copyright accordingly has the effect of rendering the
claim for 'punitive damages' excipiable as well, on the basis submitted in the
exceptions..
The Exceptions Based on Vagueness ('The Second Exception').
[9] Each defendant relied upon an exception based on the contention that
the claim for damages was vague and embarrassing for want of particularity
as to the royalties allegedly received by the defendants from the acts of
infringement. (These will hereinafter be referred to as 'the second exception'
in each case.) Jajbhay J upheld these exceptions. In response to the
submission on behalf of the plaintiff that s 24(1B) of the Act expressly
provides for an enquiry as to what would be a reasonable royalty 'for the
purposes of determining the amount of damages', the learned judge said:
'Section 24 (1B) of the Copyright Act contemplates and permits an enquiry into the
quantum of damages only, and not into the existence of an act of infringement. Proof
of infringement of copyright, in respect of which the plaintiff bears the onus, is a pre-
requisite to any entitlement to invoke the enquiry provisions of section 24 (1B). It is at
the level of proof of infringement that the plaintiff's particulars fail. Consequently, the
provisions of section 24(1B) offer no assistance to the plaintiff against this exception.'
There was no basis, in the circumstances of these cases, to assess the
appellant's prospects of proving what is alleged. The appellant alleged that
the respondent, in each action, received royalties from the acts of
infringement and that he has no knowledge of their extent. Section 24(1B)
was obviously inserted into the Act to cover just such a contingency. I may
say that Mr Liebowitz, for the respondents, wisely did not press his
contentions in this regard with any discernible degree of enthusiasm. The
appeal against the upholding of the second exception in each case must
therefore succeed.
Mutually Contradictory Averments ('The Third Exception').
[10] The third basis upon which the exception was framed in each case was
the mutually contradictory allegations concerning the current ownership of the
copyright. In the EMI Music matter, after setting out, in paras 1 to 12, the
claim based on infringement, the particulars contain a second claim, not
pleaded in the alternative, in which the appellant relies on the conclusion by
Ms Fassie of a number of so-called 'performance agreements'. The claim is
that EMI Music failed in its obligations, in terms of these agreements, to
render regular, accurate and proper accounts of what it had received and
what was due to Ms Fassie and her estate. The notice of exception alleged
that the appellant's claim, in para 3 of the particulars, to ownership of the
copyright and the allegation in para 12 that there were no licensees of the
works was inconsistent with the contention that Ms Fassie had entered into
what were effectively assignments and/or licensing agreements. This
exception was upheld by the court below but abandoned by EMI Music shortly
before the appeal was argued. In the EMI Publishing action the claim for
contractual royalties was specifically pleaded in the alternative to the
infringement claim. Jajbhay J held that the particulars were vague and
embarrassing and that EMI Publishing was prejudiced thereby
'more particularly in that the defendant is unable to know whether to come to court to
meet a case based on ownership of copyright vesting in the plaintiff, or to meet a
case based on ownership of copyright vesting in the defendant, and a consequent
claim for royalties and a statement and debatement of account. These two claims are
mutually destructive of one another . . .'.
[11] It is not necessary to refer to authority for the proposition that a plaintiff
is entitled to rely on mutually contradictory averments in his particulars of
claim, provided that it is clear from the manner of pleading them that he is
only relying on the one in the event that the other is not sustainable. In this
instance one might well have expected that the claim based on contract would
be relied on as the main claim and that the claim for damages would be
pleaded in the alternative, eg in the event of the claim on contract failing. But
the circumstance that the contractual claim is pleaded in the alternative to that
for infringement damages does not detract from the fact that it is clear to the
reader of the particulars that the claims are relied upon in the alternative. That
the defendant will be required to come to court to meet one of two alternative
claims is certainly no basis for a finding that the defendant is embarrassed or
prejudiced. This exception should accordingly have been dismissed.
[12] In the result the appeals succeed only insofar as the second and third
exceptions are concerned. Mr Leibowitz submitted that since both parties had
had a measure of success in the appeal, there should be no order as to the
costs in this court. However, it was necessary for the appellant to come to this
court to have the second and third exceptions set aside and on that basis the
appellant should have the indemnity of a costs order.
[13] In each case, the following order is made:
1.
The appeal against the upholding of the first exception is dismissed.
2.
Save as is set out in paragraph 1, the appeal succeeds.
3.
The respondent is ordered to pay the appellant’s costs of appeal, such
costs to include the costs of two counsel.
4.
The order of the court below is altered to read:
(a)
The first exception is upheld.
(b)
Paragraphs 3 to 12 of the particulars of claim are struck out.
(c)
The plaintiff is given leave to amend the particulars of claim by notice
of amendment delivered within 21 days of the date of this order.
(d)
Save as ordered in paragraph (a), the exceptions are dismissed.
(e)
The plaintiff is ordered to pay the costs of the exceptions.
5.
The period of 21 days in para 4(c) is to run from the date of delivery of
this judgment.
____________________________
NV HURT
ACTING JUDGE OF APPEAL
Appearances:
For Appellant:
JR Gautschi SC
M Smit
Instructed by:
Feldman & Nance Kivell Johannesburg
Lovius Block Bloemfontein
For Respondent:
David Leibowitz
Instructed by:
Rosin Wright Rosengarten Johannesburg
Claude Reid Inc Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
1 June 2009
STATUS:
Immediate
D Feldman N.O. v EMI Music SA (Pty) Ltd / EMI Music Publishing SA (Pty)
Ltd (268 & 269/2008)[2009] ZASCA 75 (1 June 2009)
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal
The SCA today dismissed an appeal by the executor of the estate of the late Brenda
Fassie against a decision by the Johannesburg High Court in which an exception to a
claim for damages for infringement of musical and literary works of which Ms Fassie
was a joint author was upheld. The SCA held that the claims were correctly found to
be lacking in an essential averment as to their proportions in which Ms Fassie and her
co-authors were entitled to share in the relevant copyrights.
|
4065
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 550/2022
In the matter between:
FREEDOM UNDER LAW (RF) NPC
APPELLANT
and
JUDICIAL SERVICE COMMISSION
FIRST RESPONDENT
NKOLA JOHN MOTATA
SECOND RESPONDENT
Neutral citation:
Freedom Under Law v Judicial Service Commission and Another
(Case no 550/2022) [2023] ZASCA 103 (22 June 2023)
Coram:
PONNAN, MOCUMIE and SCHIPPERS JJA and KATHREE-
SETILOANE and MASIPA AJJA
Heard:
11 May 2023
Delivered:
22 June 2023
Summary:
Section 177 of the Constitution – removal of judge from office – Judicial
Conduct Tribunal finding Judge guilty of gross misconduct – no justification for the
Judicial Service Commission (JSC) rejecting the findings and conclusion of the Judicial
Conduct Tribunal – matter remitted for it to be dealt with by the JSC in terms of s 20(4)
of the Judicial Service Commission Act 9 of 1994.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Nhlangulela
DJP, sitting as court of first instance):
The appeal is upheld, and the cross appeal is dismissed, in each instance with
costs, including those of two counsel.
The order of the court below is set aside and substituted by:
‘1. The application succeeds with costs, including those of two counsel.
2. The matter is remitted to the first respondent for it to be dealt with in terms of
Section 20(4) of the Judicial Service Commission Act 9 of 1994.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Ponnan JA (Schippers JA and Kathree-Setiloane AJA concurring):
‘The judge is the pillar of our entire justice system, and of the rights and freedoms
which that system is designed to promote and protect.’1
[1] As Lord Phillips observed in Re Chief Justice of Gibraltar:
‘A summary of the standard of behaviour to be expected from a judge was given by Gonthier
J when delivering the judgment of the Supreme Court of Canada in Therrien v Canada
(Ministry of Justice) and another [2001] 2 SCR 3:
“The public will therefore demand virtually irreproachable conduct from anyone performing a
judicial function. It will at least demand that they give the appearance of that kind of conduct.
They must be and must give the appearance of being an example of impartiality,
independence and integrity. What is demanded of them is something far above what is
demanded of their fellow citizens.”
While the highest standards are expected of a judge, failure to meet those standards will not
of itself be enough to justify removal of a judge. So important is judicial independence that
removal of a judge can only be justified where the shortcomings of the judge are so serious
1 Moreau-Berube v New Brunswick (Judicial Council) [2002] 1 SCR 249; 2002 SCC 11 at 286 (Moreau-
Berube).
as to destroy confidence in the judge’s ability properly to perform the judicial function. As
Gonthier J put it at paragraph 147 of the same case:
“. . . before making a recommendation that a judge be removed, the question to be asked is
whether the conduct for which he or she is blamed is so manifestly and totally contrary to the
impartiality, integrity and independence of the judiciary that the confidence of individuals
appearing before the judge, of the public in its justice system, would be undermined, rendering
the judge incapable of performing the duties of his office.”’2
That is the issue that confronts us in this appeal – namely, whether the conduct
encountered here is of such a kind as to render the second respondent, Judge Nkola
John Motata, incapable of performing the duties of his office.
[2] In the early hours of 6 January 2007, Judge Motata attempted to execute a U-
turn whilst driving his vehicle along Glen Eagles Road in Hurlingham, Johannesburg,
when he reversed into the boundary wall of a residential property owned by Mr Richard
Baird. Having been informed telephonically of the incident by Mr Lucky Melk, the
tenant of the property, Mr Baird arrived at the scene, whereafter he contacted the
police. Whilst waiting for the police to arrive, Mr Baird took a number of photographs
of the vehicle and of the driver, Judge Motata, who was still seated behind the steering
wheel in the driver’s seat.
[3] In the course of those events, Judge Motata became involved in a verbal
altercation with Mr Baird. Mr Baird formed the view that Judge Motata was inebriated.
When two female officers of the Johannesburg Metropolitan Police Department (the
JMPD) arrived at the scene Judge Motata refused to co-operate with them. When one
of the officers, Ms Paulina Mashilela, informed him that she would arrest him, he
responded that he would not be arrested by a female officer. She also suspected that
he was under the influence of alcohol. The two female JMPD officers had to call for
assistance. The two male officers, who responded, encountered similar resistance,
but they eventually managed to handcuff Judge Motata, remove him from his car and
arrest him.
[4] Using his mobile phone, Mr Baird recorded some of the events as they
unfolded. Those recordings are telling. They reveal Judge Motata making racist
2 Re Chief Justice of Gibraltar [2009] UKPC 43 paras 30 and 31.
utterances, resorting to profanities and employing derogatory language, the most
notable of which ran thus:
‘JUDGE MOTATA: Yes, but you know all of you, let me tell you most of us this is our world, it
is not the world of the boers. Even if they can have big bodies, South Africa is ours.
WITNESS 1: But sir, the problem is you drove into his wall.
JUDGE MOTATA: Even if I can drive into it I will pay it. It is not a problem that I can pay for
the wall but he must not criticize me. There is no boer who will criticize me, (indistinct) what
he thinks.
WITNESS 1: But Mr you of the law person.
JUDGE MOTATA: Yes I am the man of the law, I am saying if I knocked his wall. . .
(intervenes).
WITNESS 1: Do you know the law of. . . (intervenes).
JUDGE MOTATA: Yes I know the law. Let me go to the law. I do not care about him. Yes he
must not look at me as a black man. Let me go before the law. That is how much I owe him
for the wall which I broke down.
WITNESS 1: But then it is not good to insult him.
JUDGE MOTATA: Fuck him, fuck him, he must not insult me. I say fuck him. Anybody who
insults me, I say fuck you.’
[5] Following upon the events of 6 January 2007, Judge Motata was charged with:
(i) a contravention of s 65(1)(a) of the National Road Traffic Act 93 of 1996, namely
driving a motor vehicle whilst under the influence of intoxicating liquor, and, in the
alternative, with two further statutory contraventions under that Act (count 1); and, (ii)
defeating the ends of justice, and, in the alternative, with having resisted arrest in
contravention of s 67(1)(a) of the South African Police Act 68 of 1995 (count 2). He
pleaded not guilty to all the charges. However, on 2 September 2009, and following a
trial, he was convicted by the Regional Division of the Magistrates’ Court, Pretoria (the
trial court) of the main charge on count 1 and acquitted on both the main and
alternative charges on count 2.
[6] The trial court found that much of Mr Baird’s testimony about Judge Motata’s
voice, manner of speech and uncooperativeness was borne out by the recordings. It
was further satisfied that, given Judge Motata’s proven speech, physical and mental
impairment, as also his general conduct shortly after the collision, the only reasonable
inference was that Judge Motata was indeed under the influence of intoxicating liquor
at the time that he drove his vehicle into the wall. Judge Motata’s appeal against his
conviction to a Full Bench of the Gauteng Division of the High Court, Pretoria (the
appeal court) failed.3
[7] On 29 November 2010, the appeal court confirmed his conviction. The appeal
court found it ‘extremely improbable that any High Court judge in his or her sober
senses would use the kind of foul language used by the appellant in the presence of
– to him – unknown members of the public and police officers – some of whom being
women’. Likewise, the appeal court found that it was ‘extremely improbable that any
High Court judge in his or her sober senses would make the kind of racist remarks
uttered by [Judge Motata] in public’.
[8] In a country with a lively press, the media, perhaps anxious for copy, did not
shrink from reporting on both the events at Mr Baird’s home and the ensuing criminal
trial. Over time, three complaints came to be lodged against Judge Motata with the
first respondent, the Judicial Service Commission (JSC). The first was a complaint by
the Catholic Commission for Justice and Peace lodged on 8 January 2007 (the CCJP
complaint). It requested the JSC to investigate ‘Judge Motata’s actions which, if
accurately reported . . . bring disgrace on him, the judiciary and undermine public
respect’.
[9] The second, which was lodged on 5 July 2008 by AfriForum,4 ‘officially
request[ed] the [JSC] to initiate the process in terms of [s] 177 of the Constitution . . .
in order to remove [him] permanently from his position as judge because of his gross
racist misconduct’ (the AfriForum complaint). The AfriForum complaint alleged that
Judge Motata had made ‘crass racist remarks regrading whites’ and that:
‘A judge should be able to act in the interest of all communities without any prejudice. Any
judge who makes himself guilty of racist conduct, like Judge Motata according to the audio
recording did, therefore has no place on the judges’ bench. Such a judge betrays the public’s
confidence in the judicial system.’
3 Motata v S (A345/2010) [ZAGPJHC] 134 (29 November 2010).
4 AfriForum is an association incorporated not for gain in terms of s 21 of the Companies Act 61 of 1973.
[10] The third complaint was lodged by Mr Gerrit Pretorius SC, a senior advocate at
the Pretoria Bar (the Pretorius SC complaint). On 6 April 2011, he wrote to the JSC:
‘I expected the Judicial Service Commission (“JSC”) to have taken judicial notice of the
completely unacceptable conduct of the honourable Mr Justice Motata. As far as I can
ascertain, it is the first time that a sitting judge is mentioned in a legal publication (Juta’s Digest
of South African Law 4 March 2011 page 4) as a convicted accused. I respectfully submit that
this is sufficient reason why the learned judge should no longer be a judge. Added to this are
his public protestation that he was not drunk, never recanted, and the finding of the trial court,
confirmed on appeal, that this statement was untrue, as well as his wholly unacceptable drunk
tirades.
To the extent that it is necessary to have an independent complaint, I submit this complaint. I
apologise for its lateness.’
[11] On 10 May 2011, Pretorius SC amplified his complaint as follows:
‘All I want to add to my original written complaint is that I have yet to meet anyone who does
not regard the Judge’s conduct as wholly inappropriate and incompatible with the office of a
Judge. His conduct not only caused the office to be the object of ridicule, but his false denial
that he was drunk strikes at the heart of the judiciary’s integrity. It is one thing for an accused
person to put the State to the proof of its case. It is entirely a different position for a Judge to
publicly state a fact which he knows is false, build a defence on such an untruth and then
accuse witnesses of manipulating evidence and being racist.’
[12] All three complaints were considered by the Judicial Conduct Committee (the
JCC) of the JSC on 14 May 2011. The Pretorius SC complaint was noted, but not
considered at that time because it had not been under oath. Nothing came of the CCJP
complaint because the JCC took the view that it was a general invitation to conduct an
investigation and that it, like the Pretorius SC complaint, was also not under oath. With
regard to the AfriForum complaint, the JCC decided in terms of s 16(4)(b) of the
Judicial Service Commission Act 9 of 1994 (the JSC Act) that the complaint, if
established, would prima facie indicate gross misconduct by Judge Motata and
accordingly recommended that it be investigated by a Judicial Conduct Tribunal (the
Tribunal). On 22 May 2011, Pretorius SC deposed to an affidavit in compliance with s
14(3)(b) of the JSC Act, in which he confirmed the facts set out in his letters dated 6
April and 10 May 2011.
[13] Judge Motata unsuccessfully sought, on procedural grounds, to forestall
consideration of the AfriForum complaint by the Tribunal. According to the presiding
judge who heard the application, Judge Motata had alleged that ‘as Parliament had
not approved a Code of Judicial Conduct there was no basis upon which [he] could be
charged with misconduct and . . . therefore demanded that the [JSC] should “stop the
process” in connection with the complaints of misconduct and allow [him] to resume
his duties immediately’.5 Those arguments did not find favour with the court and his
application was accordingly dismissed.
[14] The JCC considered the Pretorius SC complaint at a hearing held on 5 October
2012. And, after hearing submissions from both Pretorius SC and Judge Motata’s legal
representatives, the JCC decided that the complaint, if established, would also, prima
facie, indicate gross misconduct on the part of Judge Motata. The JCC thus
recommended that this complaint should also be investigated and reported on by a
Tribunal.
[15] Based on the recommendations of the JCC, the JSC resolved, on 16 October
2012, to request the Chief Justice to appoint a Tribunal to investigate the complaints.
The Tribunal was appointed on 4 March 2013. It consisted of Judge President AN
Jappie (as chairperson), Justice NC Dambuza, a Judge of the Supreme Court of
Appeal, and Mr A Lax, an attorney of the High Court of South Africa.
[16] Judge Motata once again instituted legal proceedings. This time, he sought,
again on technical grounds, to challenge aspects of the JSC Act. This challenge too
was ultimately unsuccessful.6 It was dismissed on 30 December 2016. In the course
of dismissing the application with costs, the presiding judge observed: ‘[Judge Motata]
has delayed launching this application. This application is surprisingly sparse on facts’.
The learned judge added:
‘[101] Third: [Judge Motata] fails to account not only for his criminally proven conduct but also
his reasons for delaying this application. Furthermore, the material omissions in his
5 Motata v Minister of Justice and Constitutional Development and Others [2012] ZAGPPHC 196 para
6.
6 Motata v Minister of Justice and Constitutional Development and Another [2016] ZAGPPHC 1063.
submissions call for an explanation. He is no ordinary litigant. As a member of the judiciary he
remains accountable for his acts and omissions.’
. . .
‘[104] To paraphrase the Constitutional Court in Nkabinde: In conclusion, I would be failing in
my duty if I did not take this opportunity to emphasise that it is in the interests of justice that
the matter of the complaint against the applicant should be dealt with and concluded without
any further delay. The events that gave rise to the complaint occurred in 2007. Nine years
later, the matter has not been finalised. It is in the interests of justice that this matter be brought
to finality.’
Judge Motata then sought direct access to the Constitutional Court, which was refused
on 17 May 2017.
[17] After conducting a hearing, at which Mr Kallie Kriel, on behalf of AfriForum,
Pretorius SC and Judge Motata testified and, after having considered the record of the
criminal trial and appeal proceedings, the Tribunal concluded that Judge Motata’s
conduct constituted gross misconduct and recommended to the JSC that the
provisions of s 177(1)(a) of the Constitution be invoked.
[18] On 16 April 2018, the JSC wrote to AfriForum, Pretorius SC and Judge Motata
to furnish them with a copy of the Tribunal report and invited submissions or written
representations. On 2 May 2018, AfriForum submitted representations. Judge
Motata’s representations followed two days later. On 2 June 2018, the JSC convened
to deliberate on the Tribunal report. It resolved to set up a committee ‘to draft a report
on behalf of the [JSC]. Once the report has been produced, it will be examined and [a]
final decision will be taken’.
[19] By the time the JSC met again to consider the matter on 1 October 2018, three
reports had been prepared by the committee. The following is recorded:
‘44.
Thus, after lengthy debate, and while concerns regarding the procedural propriety of
the entire process stemming from Smuts SC’s involvement therein were still on the table, the
JSC conducted a vote by secret ballot in respect of the following issue:
44.1
“Whether the JSC should accept the finding of the Judicial Conduct Tribunal that Judge
Motata has rendered himself guilty of gross misconduct, as envisaged in section 177 of the
Constitution.”
45.
The outcome of that vote was as follows:
45.1
“Total number of votes received, yes six. No eight. Total number of votes cast fifteen,
total number of abstentions one, total number of spoilt votes, zero. Minority votes received
yes. The JSC will not accept the finding of the Judicial Conduct Tribunal that Judge Motata
has rendered himself guilty of misconduct as envisaged in section 177 of the Constitution.”
46.
The JSC then turned to discuss, inter alia, what (if any) finding of misconduct should
be made against Judge Motata in respect of the AfriForum and Pretorius SC complaints, what
sanction would be appropriate, and how (and by whom) the report on the JSC’s decision would
be prepared. These discussions continued until 2 October 2018. By this stage, however, the
decision not to recommend Judge Motata’s impeachment had already been made.’
[20] On 10 October 2019, the JSC convened to finalise the matter. The JSC’s report
of its decision consists of four parts: (a) A summary of the JSC’s findings and decision
entitled ‘Decision of the [JSC] in the Matter of Judge Nkola John Motata’ dated 10
October 2019 (the majority decision); (b) a Majority Report, comprising three
submissions (the majority report); (c) a Separate Concurring Opinion; and, (d) a
Minority Report (the minority report). The majority decision, which was signed by the
Chief Justice, inter alia, reads:
‘6.
After much deliberation, the majority of the JSC decided to reject the JCT’s
recommendation. The majority of the JSC finds that Judge Motata’s conduct did not
constitute gross misconduct.
7.
A minority dissented. They agreed with the recommendation of the JCT.
8.
The majority of the JSC considered that it was not necessary for the JSC to revisit the
criminal conviction and the reasons articulated therein by the Court.
9.
However, the majority of the JSC was disturbed by the manner in which the complaint
of misleading the court was generated. It has transpired that Advocate Izak Smuts SC,
who was at the time a member of the JSC, approached the ostensible complainant,
Advocate Gerrit Pretorius SC, and requested him to lodge the complaint on the
grounds that the AfriForum complaint was seemingly “insufficient” to secure a guilty
finding.
10.
What is of concern is not so much that Advocate Smuts SC was the source of the
complaint. In terms of the applicable law, any person, including a member of the JSC,
may lodge a complaint. However, Advocate Smuts SC failed to disclose his role as the
originator or instigator of the complaint. Furthermore, Advocate Smuts SC sat in and
actually chaired the deliberations of the JSC, which resolved to refer the matter to the
JCT. This he did after the Chief Justice and the President of the SCA had deliberated
at length on the issue of bias or perceived bias. Smuts SC contributed to the debate.
He had a clear obligation to disclose and recuse himself.
11.
Such conduct was in breach of one of the principles of justice which offers protection
against bias or perceived bias. The Pretorius complaint can accordingly not stand.
12.
As to whether this irregularity would operate to taint the entire proceedings was a
matter of some debate which was left unresolved. There can be no doubt that, but for
the intervention of Advocate Smuts SC, the “Pretorius complaint” would not have
arisen, alternatively, would have been dealt with differently.
13.
It was the view of the majority of the JSC that in spite of the above and due to the
public importance of this matter, the facts that led to the conviction still needed to be
taken into account despite the procedural flaw identified above. In any event that flaw
relates to only one complaint, that of Pretorius SC.
14.
The conduct that led to his conviction and sentence by the criminal Court amounts to
misconduct. More specifically, the majority of the JSC found that the racially loaded
utterances made by Judge Motata were unbecoming of a Judge, notwithstanding the
majority’s acceptance that his responsibility was diminished by his proven intoxication
and provocation in the form of the alleged use of the k-word by the owner of the house.’
[21] The majority of the JSC thus rejected the Tribunal’s recommendation. It found
Judge Motata guilty of misconduct simpliciter and imposed a fine of R1 152 650.40 to
be paid to the South African Judicial Education Institute.
[22] On 21 July 2020, the appellant, Freedom Under Law (FUL), issued an
application out of the Gauteng Division of the High Court, Johannesburg (the high
court) to review and set aside the JSC’s decision of 10 October 2019, and to substitute
that decision with a finding that Judge Motata is guilty of gross misconduct as
contemplated in s 177(1)(a) of the Constitution, alternatively, for the matter to be
remitted to the JSC to be decided afresh taking into account the findings of the court.
FUL contended that Judge Motata’s conduct constituted gross misconduct, which
warranted his removal from office in terms of s 177 of the Constitution. It submitted
that the JSC’s decision to the contrary was irrational, unreasonable, unlawful and
accordingly unconstitutional and invalid. FUL raised six grounds of review.
[23] The high court rejected all of FUL’s grounds of review. It dismissed the review
application based on the AfriForum complaint; remitted the determination of the
Pretorius SC complaint to the JSC for a decision to be made thereon; and, ordered
each party to pay its own costs. In a written judgment delivered on 12 April 2022, the
high court (per Nhlangulela DJP) issued the following order:
‘[48]
In the result the following order shall issue:
1. The review application based on the Afriforum Complaint is dismissed.
2. The determination of the Pretorius Complaint is remitted back to the First Respondent for a
decision to be made thereon in terms of s20 of the JSC Act 9 of 1994.
3. Each party to pay its own costs of the application, including those incurred in the application
for condonation.’
[24] FUL applied for leave to appeal, and the JSC applied for leave to cross-appeal
paragraph 48(2) of the high court judgment. Both applications succeeded. Leave was
granted to this Court. Judge Motata did not participate in the proceedings either in this
Court or the one below.
[25] Parenthetically, it is necessary to make three observations: First, the
composition of the JSC did not remain constant when the matter was discussed.
Despite several changes in its composition as the matter progressed, the JSC simply
picked-up its deliberations whence previously left off. Second, the JSC chose to
oppose both the application in the high court and the appeal before this Court. This,
despite the evident difficulty that the matter had occasioned it; having split eight to six,
with one abstention. Moreover, there had been serious dissensus within its own ranks.
It is thus somewhat surprising that it resolved to defend the majority decision, instead
of simply abiding the decision of the courts. Third, and, this links to the second, having
resolved to oppose the application, its Secretary, Mr Chiloane, deposed to the
answering affidavit that came to be filed in opposition to the application. Although he
was not a member of the JSC and could not have participated in any of the
deliberations or decision-making, he asserted that ‘the facts . . . are within my personal
knowledge and are, to the best of my knowledge and belief, both true and correct’.
[26] Unsurprisingly, in its replying affidavit, FUL challenged that assertion:
‘10. The JSC’s answering affidavit is deposed to by Mr Chiloane. Mr Chiloane speaks widely,
broadly and with alleged authority about what the JSC decided, what its reasons and
reasoning were, what motivated it to act in a particular way and what factors it took into
account. Mr Chiloane is not a member of the JSC or the JSC majority which took the Decision
and issued the submissions which formed the basis of the Decision. He is simply not in a
position to speak with personal knowledge to any of the issues on which he professes to
express a factual view. Almost the entirety of his affidavit is hearsay and falls to be
disregarded.’
[27] Had the JSC merely participated with a view to placing the record of its
deliberations before the court to assist it in its consideration of the matter, there could
hardly have been any objection to Mr Chiloane deposing to an affidavit for that
purpose. Not so, once it had decided to oppose the application. As a lay witness it was
simply not open to him to depose to all manner of opinion evidence. Mr Chiloane’s
affidavit was not accompanied by even a single confirmatory affidavit from any of those
persons with personal knowledge of the facts. The high court approached the
evidential material proffered by Mr Chiloane in his affidavit as if it constituted proof of
the truth of the matter so asserted. In that, as counsel for the JSC accepted at the bar
in this Court, it erred. For my part, I am willing to pass over the issue, because on the
view that I take of the matter, even on the JSC’s own showing, the decision of the
majority does not survive scrutiny.
[28] In my view, the matter can be disposed on a far narrower footing than that
foreshadowed in the papers. Accordingly, it hardly seems necessary, for the present,
to define the nature of the power exercised by the Tribunal or the extent to which the
JSC may have been bound by its findings. The JSC appears to accept that whatever
the standard, it was not simply at large to ignore the findings of the Tribunal or to depart
from the conclusion reached by the Tribunal for flimsy, speculative or unsustainable
reasons.
[29] Nor, for the same reason, does it seem necessary to essay a definition of gross
misconduct. Perhaps, Justice Stewart’s famous observation (of hard-core
pornography in Jacobellis v Ohio): ‘I could never succeed in intelligibly doing so. But I
know it when I see it . . .’7, is apposite. Properly construed, the case sought to be
advanced by the JSC is that it was justified in: (i) rejecting the Pretorius SC complaint;
7 Jacobellis v Ohio 378 US 184.
and, (ii) departing from the findings of the Tribunal insofar as the AfriForum complaint
is concerned. The matter thus reduces itself to whether, for the reasons given by the
JSC, it was justified in either ignoring or deviating from the findings and approach of
the Tribunal.
[30] Of the Pretorius SC complaint, the high court held, in agreeing with the JSC,
that:
‘(a) Error of law with regard to the Pretorius Complaint:
It is common cause that the JSE considered the Pretorius Complaint without deciding its
merits. Instead, it dismissed it on the ground of procedural irregularity arising from a failure by
Smuts SC, the member of the [JSC], to disclose that he, not Pretorius SC, was the author of
the complaint. The JSC’s rejection of the complaint was founded on proven perception of bias,
it being a legally recognised objection.
Ms Steinberg SC submitted that this Court may itself dispose of the Pretorius Complaint
without remitting it back to the JSC for consideration in terms of the JSC Act. Mr Maleka SC
held the opposite view which I happen to share. However, more needs to be said about this
issue. A remittal is not the proper remedy, but a re-lodgement of the complaint, if so advised,
is an appropriate remedy under the circumstances. If the so called Pretorius Complaint should
have been lodged as a complaint of Smuts SC, that must have been clearly stated at the
lodgement stage. Mr Pretorius SC disavowed authorship of the complaint when he appeared
before the JCT. In that sense, arguably, the filing of the complaint by Mr Pretorius SC is not
the act that initiated the investigation of the complaint (the trigger) – See Langa v Hlophe at
417. It should have been Mr Smuts SC, but who unfortunately still remains in the dark. Until
such time when he does show up, it cannot be said that the JSC had a duty to consider his
complaint. The decision to exclude ought not to be reduced into the act of avoidance on the
part of the JSC to consider and make findings on the complaint that complied with s 14(1).
[31] As I see it: First, on the facts there can be no reasonable apprehension of bias.
Second, the involvement of Smuts SC is legally irrelevant. Third, it may not have been
open to the JSC to dismiss the complaint without a consideration of the merits.
[32] As to the first: the JSC was wrong in concluding that there was a reasonable
apprehension of bias on the part of the JSC. Smuts SC’s involvement was confined to
one preliminary step in the complaint process. The Pretorius SC complaint had been
referred in terms of s 16(1) of the JSC Act to the Committee to determine whether it
should be investigated by a Tribunal. The Committee, comprising Moseneke DCJ,
Musi JP and Pretorius J, decided in terms of s 16(4) of the JSC Act, to recommend
that the complaint should be investigated by a Tribunal. Smuts SC was involved in the
next step of the process. He was the chair of a 11-member JSC (which included the
DCJ and various JPs) that decided in terms of s 19(1) to accept the recommendation
of the Committee to appoint a Tribunal.
[33] That was sum total of Smuts SC’s involvement. He was not part of the Tribunal
that heard the complaint in terms of s 26(1)(a) and (b). He was also not part of the JSC
that considered the Tribunal’s report and made the final decision in terms of s 20(4)
and (5) of the JSC Act. It might well have been improper for Smuts SC not to disclose
that he had prompted Pretorius SC to lay the complaint, but that did not taint the
hearing of the complaint by the Tribunal or the decision of the JSC. Those who took
those decisions were not biased and could not be reasonably suspected of bias.
[34] As to the second: much like a public prosecution, the public interest in the
effective disciplining of a judge and the maintenance of judicial independence
demands that the focus of the enquiry should be on the merits of the complaint, not its
provenance. In this context, this Court has held that even an ulterior purpose should
not vitiate a prosecution that was well founded on the merits.8 The JSC resorted to
‘accusing the accuser’, instead of considering and engaging with the allegations of
wrongdoing. Courts should be slow to countenance such a strategy. The JSC’s refusal
to determine the merits of the Pretorius SC complaint defeats the very purpose of the
powers given to it to discipline judges and, in so doing, to protect the public’s
perception of the integrity of the judiciary. As this Court held in Nkabinde and Another
v Judicial Service Commission and Others (Nkabinde), where the applicant had
applied to set aside the referral of the complaint based on procedural unfairness,
‘[i]nvalidating the complaint would infringe upon the rights of the complainants . . . and
impact negatively on the image of the judiciary’.9
8 National Director of Public Prosecutions v Zuma [2009] ZASCA 1;2009 (2) SA 277 (SCA); [2009] All
SA 277 (SCA) para 37.
9 Nkabinde and Another v Judicial Service Commission and Others [2016] ZASCA 12; [2016] 2 All SA
415 (SCA); 2016 (4) SA 1 (SCA) para 87.
[35] As to the third: it is not clear when precisely the JSC took the view that the
Pretorius SC complaint was no longer on the table. The record reveals that until the
split between the majority and minority on the question as to whether or not Judge
Motata’s conduct rose to the level of gross misconduct, no formal decision had been
taken that it be excluded. Only after that split, so it would seem, did the majority resolve
to exclude it. But, that surely must call into question the basis on which the JSC split
and whether it was simply open to the majority to thereafter exclude the complaint.
What is more, by the time the majority resolved to exclude the Pretorius SC complaint,
one Commissioner had already chosen to abstain (in itself rather remarkable).
[36] There may be something to be said for FUL’s submission that the JSC Act does
not permit the JSC to simply refuse to consider the Tribunal’s report on this or any
other score. The JSC had already decided in terms of s 19(1) to request the Chief
Justice to appoint the Tribunal to hear the complaint. It may accordingly not have been
open to the majority to have taken the view that the Pretorius SC complaint ‘should
not have been before the JCT in the first place’. This, because the decision to appoint
the Tribunal stood and, until set aside, had consequences.10 That is why, in Nkabinde,
the appellants had to apply to the high court for an order setting aside the decision of
the JSC to refer the complaint and appoint a Tribunal in terms of s 19(1) of the JSC
Act.
[37] Section 20 of the JSC Act does not appear to contemplate that the JSC may
refuse to consider the Tribunal’s report on the basis that the complaint was invalid. On
the contrary, s 20(2) prescribes that ‘the Commission must consider’ the Tribunal’s
report and the respondent’s submissions and s 20(3) prescribes ‘the Commission must
make a finding as to whether the respondent is suffering from an incapacity; is grossly
incompetent; or is guilty of gross misconduct’.
[38] The question of the initiator of the complaint is thus irrelevant. Section 14(1) of
the JSC Act provides that ‘any person’ may submit a complaint. This means that Smuts
SC could have laid the complaint himself, in his capacity as a member of the
Committee. If it comes to the JSC’s attention that the conduct of a judge might threaten
10 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] 3 All SA 1 (SCA).
public confidence in the judiciary, it is arguably incumbent on it to itself initiate and
determine the complaint. After all, the purpose of disciplinary proceedings is to protect
the standing of the judiciary in the eyes of the public.
[39] In any event, as this Court has held: ‘the JSC should properly and lawfully deal
with every complaint of gross misconduct by a judge that may threaten the
independence and impartiality of the courts and may justify the removal of that judge
from office. Should it shirk its duty, as it is alleged to have done in this case, it can
have grave repercussions for the administration of justice.11
[40] With respect to the high court, it erred in its finding that the JSC cannot hear
the complaint unless the initiator of the complaint, Smuts SC, ‘shows up’ (whatever
that is intended to mean). Contrary to the finding of the high court, Pretorius SC did
not ‘disavow authorship of the complaint’. He testified in support of the complaint
before the Tribunal and was cross-examined by Judge Motata’s counsel. As this Court
has previously stated: ‘. . . it would indeed be a sorry day for our constitutional
democracy were serious allegations of judicial misconduct to be swept under the
carpet . . . The public interest demands that the allegations be properly investigated .
. .’12 It follows that I cannot agree with the finding of the majority of the JSC that ‘[t]he
Pretorius complaint cannot stand’ or with the high court’s insistence on a ‘re-lodgement
of the complaint’. This means that the JSC’s cross appeal must fail.
[41] In considering the complaints in a compartmentalised fashion, as it did, the JSC
may well have acted arbitrarily and capriciously. It ought to have considered Judge
Motata’s conduct, which had its genesis in the events of 6 January 2007, holistically
and against the conspectus of all of the evidence. It, moreover, approached the
evidence in a piecemeal fashion. In S v Hadebe,13 this Court, cited with approval from
Moshephi and Others v R, which held:
‘The breaking down of a body of evidence into its component parts is obviously a useful aid to
a proper understanding and evaluation of it. But, in doing so, one must guard against a
11 Freedom Under Law v Acting Chairperson: Judicial Service Commission and Others [2011] ZASCA
59; 2011 (3) SA 549 (SCA) (FUL) para 21.
12 Acting Chairperson: Judicial Service Commission and Others v Premier of the Western Cape
Province [2011] ZASCA 53; [2011] 3 All SA 459 (SCA); 2011 (3) SA 583 (SCA) para 25.
13 S v Hadebe 1998 (1) SACR 422 (SCA) at 426E-H.
tendency to focus too intently upon the separate and individual part of what is, after all, a
mosaic of proof. Doubts about one aspect of the evidence led in a trial may arise when that
aspect is viewed in isolation. Those doubts may be set at rest when it is evaluated again
together with all the other available evidence. That is not to say that a broad and indulgent
approach is appropriate when evaluating evidence. Far from it. There is no substitute for a
detailed and critical examination of each and every component in a body of evidence. But,
once that has been done, it is necessary to step back a pace and consider the mosaic as a
whole. If that is not done, one may fail to see the wood for the trees.’14
[42] The majority decision does not say why the factual findings of the Tribunal in
respect of the Afriforum complaint were rejected, including the findings on the
credibility of the witnesses. It also does not engage with the heart of the complaint that
a judge who conducted himself as Judge Motata did betrays the public’s confidence
in the judicial system. The mosaic as a whole detracts from the foundation upon which
the majority decision came to rest. In particular, two examples that go to the heart of
the majority’s finding and are particularly germane, find little support in the evidence –
namely, that Judge Motata’s ‘responsibility was diminished by his proven intoxication
and provocation in the form of the alleged use of the k-word by the owner of the house’.
[43] Insofar as the provocation is concerned, it was asserted in the answering
affidavit filed on behalf of the JSC:
’43.
As such, the evidence on provocation was clear and irrefutable. The provocation
concerned was not ordinary. It was racist, affecting the dignity of Judge Motata. He himself
described it as “extreme” and there is no reason not to consider it as such.
43.1. The Magistrate found that Judge Motata had been provoked. The provocation had
taken place prior to the commencement of the recording.
43.2. The High Court accepted that Judge Motata had been called “a drunk” by Mr Baird,
which could be a reason for the provocation.
43.3
The JCT also appears to accept provocation, although it finds that the source of that
provocation could not be the use of the “k”-word, but could perhaps be the confiscation of his
keys.
43.4. Judge Motata has throughout asserted provocation, from the very moment of the arrest
when he specifically accused Mr Baird on the scene of insulting him.’
14 Moshephi and Others v R (1980 -1984) LAC at 59F-H.
[44] This assertion (and it remains just that an assertion) is inaccurate on several
fronts. The evidence of provocation was neither clear, nor irrefutable. Not having
testified at the criminal trial, provocation was not squarely raised by Judge Motata. The
trial court did not find as a fact that Judge Motata had been provoked. Nor could it,
given that there was no evidence to that effect before the court. The trial court was
willing however to assume in Judge Motata’s favour that:
‘I must add that there appears certainly to be an element of provocation prior to the recordings.
Mr Motata’s answers speak of a level of anger, the tone of his voice as in the audio, which
does not support a scenario of an unprovoked individual.’
[45] That assumption appears to rest on the following that was put on Judge
Motata’s behalf:
‘It was put to Mr Baird that the accused was allegedly annoyed with the interrupting, interfering
and passing of unnecessary comments by Mr Baird himself. It was also put on behalf of the
accused that Mr Motata denied writing down the particulars on the handwritten note which was
received, Exhibit “E”.’
It goes without saying that what was put on Judge Motata’s behalf, which was not
accepted by the witness, did not constitute evidence. Significantly, it was not put to Mr
Baird that he had used the ‘k-word’. It is hard to imagine that, if employed by Mr Baird,
it would not have been put to him.
[46] It is so that Judge Motata had accused Mr Baird of using the k-word, however,
the Tribunal found that he had ultimately conceded that Mr Baird did not use the k-
word. It stated:
’46. While the trial court found that he was provoked, it did not set out the provocative conduct.
However, the Judge’s evidence that he was provoked into making these utterances by being
insulted is not borne out by the record. And the fact that at no stage in the exchange of
“pleadings” in these judicial conduct proceedings did the Judge mention that he was provoked
by the use of the “k-word”.
47. But even if he had been provoked, that does not justify his conduct of manipulating race
to isolate Mr Baird and to get the police on his side. Further, if he was provoked by Mr Baird
he would have, in all likelihood directed his response to Mr Baird and not to the police officers.
In this sense, his defence that he was responding to provocation does not make sense. Even
if he was provoked, perhaps by the fact that his car keys were taken from him, restraint is an
essential trait in the character of a judicial officer. His reaction far exceeded the provocation.’
[47] That finding was based, in part, on the Chairperson of the Tribunal clarifying
with Judge Motata during his cross-examination that at his criminal trial he had made
and then withdrawn the accusation. When the Chairperson sought further clarity,
Judge Motata’s counsel, Mr Skosana SC, said:
‘. . . what angered him, the first thing he did is he grabbed the key. . . That is the provocation
he spoke about.
. . .
But for the purposes of this Tribunal and our submissions, we rely on provocation based on
the taking of the key. I think we should limit ourselves to that, because the others I do not think
I can really support it much, in view of what has taken place in these proceedings.’
[48] The Tribunal found, not only that Mr Baird did not use the k-word, but that Judge
Motata had embarked on ‘a deliberate racially motivated strategy chosen . . . to get
the police officers on his side and to alienate Mr Baird’. The majority decision does not
acknowledge these findings, let alone explain why it rejected them. The high court, in
turn, finds that the majority was correct that the provocation in question was Mr Baird’s
use of the k-word. Like the JSC, it does not explain why it makes this finding in the
face of the evidence, Judge Motata’s abandonment of the accusation and the findings
of the Tribunal. The high court approached the matter thus:
‘The findings of the JSC are that JM was provoked by utterances of the “k-word” emanating
from Mr Baird, and that proven intoxication diminishes guilt from gross to ordinary misconduct.
Ultimately, at issue for decision by this Court is whether it was irregular / irrational for the JSC
to reach the finding that JM is guilty of misconduct. It was not suggested in this Court that the
extremely provocative “k-word” utterances and the admitted fact that JM was as a fact
intoxicated at the time when he made racial utterances as he did on 17 January 2007 are not
valid defences in law. In argument Mr Maleka SC demonstrated the serious manner in which
the “k-word” is viewed by the members of South African society, and expressed by the courts
as in South African Revenue Service v Commission for Conciliation, Mediation and Arbitration
. . ..’
[49] Importantly, when testifying before the Tribunal about the use by Mr Baird of
the ‘k-word’, the evidence of Judge Motata ran thus:
‘JUDGE MOTATA: I say I was not prejudiced against say the Afrikaners. I was looking at the
man who was disparaging me or undermining me or criticising me without even looking at the
wall. I said but is it necessary for this man to do that to me?
CHAIRPERSON: Well, what precisely did he do or say?
JUDGE MOTATA: He said this drunken kaffir.
CHAIRPERSON: Did he actually use those words?
JUDGE MOTATA: Yes.
CHAIRPERSON: Was that actually put to him at the trial?
JUDGE MOTATA: I cannot recall
CHAIRPERSON: And was any finding made to that effect?
JUDGE MOTATA: It does not appear from the record.
CHAIRPERSON: But that certainly is not on the record. Do you agree?
JUDGE MOTATA: But what can I say, my recollection is even one of the state witnesses
repeated that, that he called me a kaffir, that arrest this kaffir, he must land in jail.
CHAIRPERSON: As far as I can recollect, that was denied and it was then subsequent[ly]
withdrawn. Is that correct?’
[50] The claim that ‘Judge Motata has throughout asserted provocation’ is also
inaccurate. It came to be accepted that the allegation had not been raised by Judge
Motata at any earlier stage in response to the AfriForum complaint. In that regard, the
record reflects:
‘CHAIRPERSON: Because you did not testify, but perhaps you might have said so in the
response to the complaint.
JUDGE MOTATA: Yes.
CHAIRPERSON: And that response you will find at page 105. Now, if we go through it, if you
could show us where you have raised the issue of you being provoked.
JUDGE MOTATA: If I am looking at this is that these were submissions made by my legal
representatives.
CHAIRPERSON: Yes?
JUSTICE DAMBUZA: But there is also your initial response at page 3, which is signed by
yourself.
JUDGE MOTATA: Page 3?
JUSTICE DAMBUZA: Yes, at the beginning, page 3 of that record that you are looking at,
Judge.
JUDGE MOTATA: Yes, okay.
JUSTICE DAMBUZA: That is the first time that you responded to the complaint by AfriForum.
It consists of four pages. It is page 3 to 6, just so that at least we have a complete reference
to your response so that we are not omitting something else that you may have said in this
document.
JUDGE MOTATA: Yes, I see that. Thank you. I do not know . . .
JUSTICE DAMBUZA: Could there be something in there perhaps that points towards your
reference to a provocation of the nature that you alluded to today?
JUDGE MOTATA: This was specifically through the advice I got and we were merely just
responding to what AfriForum said, because when we come to page 5, 5.1, I do say “I dispute
the allegation that I am guilty of any racist conduct and confirm that whenever I am called upon
to perform my duties as a Judge, I do so in the interest of all communities without prejudice or
favour or any racial grouping”.
CHAIRPERSON: Yes, is that your response?
JUDGE MOTATA: Yes.’
[51] One scours the record, but one does so in vain, for any earlier reference to the
use of the ‘k word’. The first allusion to provocation in that form was before the Tribunal
some 11 years after the incident. It had not been raised at any prior stage before the
JSC in response to the complaint. Nor, had it been raised in the course of the criminal
trial. And, once raised, it had almost immediately thereafter been disavowed by Judge
Motata’s counsel, Mr Skosana. This lends support to the finding of the Tribunal that
provocation in the form of the use of the k word was an afterthought. And, yet it formed
an important edifice upon which the majority decision of the JSC came to rest. In that
the JSC was not only far too receptive to Judge Motata’s assertion, but impermissibly
made far more of it than a proper analysis of the evidence permits.
[52] The Tribunal found that Judge Motata was intoxicated at the time of the
incident. It recorded that even if he had believed at the time of the incident that he was
not intoxicated, by the time he went to trial (and subsequently appeared before the
Tribunal), he would have considered the evidence, including the visual and audio
recordings made at the time of the incident, and realised that ‘a denial of intoxication
was against all [the] prevailing evidence [and] could not be true’.
[53] The Tribunal was thus satisfied that Judge Motata had conducted a defence
both at his trial and before the Tribunal that he knew to be untrue and ‘lacked integrity’.
The majority does not engage with Judge Motata’s dishonesty regarding his
intoxication at all. It merely regards his ‘proven intoxication’ as a mitigating factor.
There appear to be deep inconsistencies in the JSC’s approach to the issue of Judge
Motata’s intoxication. The majority uses his ‘proven intoxication’ as a factor that
somehow reduces his moral blameworthiness. In other words, the majority accepted
that despite his denial, he was indeed intoxicated. They ignore that this necessarily
implies that he advanced a dishonest defence in court and lied before the Tribunal.
[54] During the course of the trial, Judge Motata’s then counsel, Mr Dorfling SC, put
to Mr Baird that he ‘will deny being under the influence at the time of driving his motor
car’. In the majority report (upon which the majority decision appears to rest), it is
stated:
’29.
Purely for illustrative purposes and as our own theoretical postulation, we present the
following words for consideration. The variations and meanings of the statement could
theoretically have been:
29.1. “The accused will deny being drunk at the time of driving his car and at the time when
the videos of him were taken”; or
29.2. “The accused will deny being drunk at the time of driving his car . . . but will admit being
drunk at the subsequent stage when the videos were taken”.
30.
If the first meaning is imputed, he should be impeached.’
[55] The majority accepted that the JSC could not revisit the criminal conviction and
that it was bound by the findings of the trial court. In convicting Judge Motata of what
is more colloquially referred to as drunken driving, the trial court found that he was
‘under the influence of intoxicating liquor at the time that [he] drove [the] vehicle when
it crashed into the wall of the property belonging to Richard Baird’. That admits of no
doubt. What is more, such a finding had to have been made to support a conviction
on that charge. So understood, the semantic debate undertaken by the majority simply
does not arise.
[56] In support of the conclusion that Judge Motata was indeed guilty, the trial court
noted:
‘My assessment of the audio recording is, having found them to be admissible and in
evaluating same I am able to state the following, and conclude that there indeed were racial
slurs, derogatory language, the reference to “F you” on at least ten occasions is clear from the
audio recordings. That the speech of the accused was drawn out and laboured and he
stumbled over his words.
The fact that his word construction was inadequate is also set out in the transcript and can be
heard on the audio. There is also proof of drawing out of certain words in a very different
fashion from a normal person. There are occasions where indeed his sentence construction
was inadequate. Some of the answers that he gave, to my mind, do not make sense on the
scene.
There are occasions when the voice tone and the volume of the accused changes to loud
shouting, then toning down. There is confirmation that the accused alighted from his vehicle
as can be seen from the transcript and heard on the audio.
Clearly indeed it is evident from the audio recordings that the tone of certain individuals
speaking around the accused was certainly of trying to get the accused to cooperate. This is
in contrast with the tone, the volume of the manner in which Mr Motata’s voice appears on the
audio recordings that were downloaded from the cellphone to the computer.
If you look at Exhibit “B” photo 3, it is clear, my observation is of a man who appears to be
asleep at the wheel. Head sagging forward, oblivious to his surroundings. Photo 4 is clearly
Mr Motata, not Mr Motata that I have seen in this court no less than 25 times.’
[57] Given the elements of the charge, for any denial advanced on behalf of Judge
Motata to have been meaningful and not illusory, it had to relate to the time when he
crashed into Mr Baird’s wall. The charge had nothing to do with his state of inebriety
after the collision, when the ‘videos were being taken of him’. The distinction sought
to be drawn between the two aforementioned postulations thus appears artificial and
contrived.
[58] The majority report recorded:
‘Crucially, nobody seems to have thought of calling Adv Dorfling to clear up the matter . . . It
would have been the easiest thing for the Johannesburg Bar Council to conduct its own
investigation of the matter and, if necessary to take the necessary action. It would seem that
the basic premise and assumption from which he departed was simply that: Judge Motata was
prima facie guilty and Adv Dorfling was prima facie innocent and even incapable of a bad
formulation of a question. This approach cannot be willy nilly endorsed by the JSC. It is plainly
wrong and irrational. There is no logical basis for counsel to enjoy the presumption of honesty
and/or infallibility and a judge be presumed to be dishonest and/or fallible.
. . .
To add insult to injury, Judge Motata is being crucified, terminally so, for words which were
uttered not by him but by counsel, who was never called to explain his choice of words.’
[59] It is important to point out that it was not open to the evidence leader before the
Tribunal to have called Mr Dorfling to testify. Only Judge Motata could have done so.
What the majority appear to lose from sight is that such evidence would be evidence
of privileged communications between an accused person and his counsel. The
privilege is that of the accused, not that of counsel, and in the normal course would be
inadmissible against an accused. Although the privilege can be waived either
expressly or impliedly by the accused (and there is no suggestion of that having
happened here), it is in general undesirable that counsel should be compelled to give
evidence against his client.15
[60] There is yet a further reason why the approach of the majority is untenable.
Under cross-examination before the Tribunal and after Judge Motata had repeated
that he was not drunk at the time he crashed into Mr Baird’s wall, he admitted that
‘counsel was not exceeding or misrepresenting my instruction to any appreciable or
significant extent’. Yet the majority found that the mistake was that of his advocate and
sought to excuse Judge Motata on this basis.
[61] The majority also took the view that:
‘Moreover, he was entitled, like any other accused person and in terms of section 35 of the
Constitution, not to take the stand. In so doing, both he and the court lost a golden opportunity
to put the matter of his version beyond any doubt and guesswork. This is unfortunate but it
cannot be artificially cured by skewing the meaning of the suggestion posed by counsel
(perhaps inelegantly rather than dishonestly) to suit a particular result.’
[62] Once again, so it seems to me, that is to misconstrue the position. Judge Motata
did not advance a defence to speak of at his criminal trial. Whilst he had a right to
silence, which he sought to exercise at his criminal trial, that may not have been
without its consequence. Somewhat surprisingly he did not testify. When he made that
choice there was a body of evidence that already operated against him, which certainly
called for an answer. In respect of the first charge a prima facie case had been
established by the prosecution. That should have been patent to him when his
application for a discharge on that charge had been refused at the end of the State
15 S v Boesman and Others 1990 (2) SACR 389 (E).
case. Yet he countered it with nothing, preferring instead to shun the witness stand.
His choice to remain silent in the face of the evidence implicating him in criminal
conduct is suggestive of the fact that he had no answer to it. For, if the evidence
implicating him was capable of being neutralised by an honest rebuttal, it surely would
have been.16 If there was an explanation consistent with his innocence it should have
been proferred. For him not to have risen to the challenge and remained silent in the
face of the evidence was nothing short of damning.17
[63] I do not believe that Judge Motata, who had legal advice throughout,
misapprehended any of the issues before the trial court or Tribunal. In the
circumstances, it is passing strange to suggest, as the majority does, that ‘the court
lost a golden opportunity to put the matter beyond any doubt and guesswork’. It was
not for the trial court to ferret out the evidence. There is no suggestion that Judge
Motata’s right to be heard had been infringed. A litigant has a choice to prove a
contested fact. Common sense suggests that a litigant would produce the most
persuasive evidence possible. In this instance that would have been the evidence of
Judge Motata himself. Even though the evidence was peculiarly within his knowledge,
he chose not to place it before the court. That can hardly redound to the discredit of
the court. The trial court was under no misapprehension. It recorded: ‘It was put to Mr
Baird that he will deny being drunk or under the influence at the time of driving his car’.
[64] The majority approached the enquiry thus:
‘The only question to be answered is accordingly whether there is any legally acceptable basis
upon which the explanation tendered by Judge Motata can be outrightly rejected as false or
improbable by the JSC.’
But, by then his version, such as it was, had already been rejected by the trial court.
The majority went on to assess the matter solely from Judge Motata’s perspective. For
example, in regard to its finding of ‘diminished responsibility due to intoxication’, the
majority says that ‘[t]he issue becomes whether [Judge Motata] subjectively believed
himself to be drunk’, not what the public would make of his conduct in driving drunk
and then denying he was drunk. Ironically, diminished responsibility was not even
16 Dos Santos and Another v The State [2010] ZASCA 73; 2010 (2) SACR 382 (SCA); [2010] 4 All SA
132 (SCA) para 35.
17 S v Monyane 2008 (1) SACR 543 (SCA) para 19 and the cases there cited.
raised or relied upon by Judge Motata himself. Quite the contrary, he insisted
throughout that he was not drunk.
[65] Neither the Tribunal, nor the JSC, commenced with a clean slate. Each was
bound by the findings and conclusions reached by the trial court, which, had been
reached employing the higher ‘beyond a reasonable doubt’ yardstick. The trial court
recorded:
‘Mr Baird describes the language of the accused . . . to be very “colourful”. There were racial
slurs and derogatory language, his word construction way in adequate. They were very
illogical arguments. He had a glazed look on his face. He had a look in his eyes that they were
swimming. He smelled of alcohol. He could not stand up without holding onto his car.
He was holding on, uncertain, trying to grab onto steadiness as if a blind person would want
to search in front of him. In my opinion, according to Mr Baird, he was drunk. He just fell over,
caught the car, I do not think his knees touched the ground then. There was a time when he
got out of the car, he was unstable and fell over. He caught himself on the car.’
[66] The trial court thereafter concluded:
‘What is also of importance to me in this matter is the accident, which remains a mystery. It is
a single car accident . . . in the dead of the night. The question remains, why reverse over a
pavement, right through a garden wall when there are driveways on that road into which you
could reverse.
. . .
I am satisfied that Mr Motata’s proven speech impairment, physical impairment, mental
impairment and general conduct shortly after the accident were such coupled with the spelling
mistakes and inaccuracies in the handwritten note, that the only reasonable inference is that
he was indeed under the influence of intoxicating liquor at the time that he drove the vehicle
and collided into the wall.’
[67] Those findings by the trial court admit of no doubt and appear to call the lie to
Judge Motata’s assertion. When his denial that he was drunk is juxtaposed against
the body of evidence relied upon by the trial court, it can hardly survive scrutiny.
Following his conviction, and even after more than sufficient opportunity for reflection,
he persisted in his version, initially before the JCC and thereafter the Tribunal and
JSC, that he had only drunk two glasses of wine. The Tribunal found:
‘Before instructing counsel, the Judge must have considered inter alia, the evidence of not
only Mr Baird but the evidence of both the visual and audio recordings made at the locality at
the time of the incident. No doubt, the Judge together with his legal representatives must have
considered the evidence of witnesses other than Mr Baird as well. All the admissible evidence
which would be placed before the court which the Judge had access to before he pleaded,
must have made it clear that a denial of intoxication was against all prevailing evidence and
could not be true. The response by the Judge that he had no control over questions put by his
counsel to state witnesses cannot be sustained. That being so, the conclusion to be drawn is
that the Judge knowingly conducted a defence which he knew lacked integrity.’
[68] When the findings of the Tribunal are read together with those of the trial court,
there could be no room for the finding that Judge Motata subjectively believed himself
not to be drunk. In any event, the JSC did not pause to consider why the intoxication
was a relevant consideration or seek to demonstrate how Judge Motata’s breach of
the standards of judicial conduct was rendered any less egregious by his intoxication.
[69] There is a further disquieting feature about the conduct of Judge Motata’s
defence in the criminal trial. Mr Baird became the main focus of Judge Motata’s attack.
He was cross-examined over a number of days. In heads of argument filed on behalf
of Judge Motata in the trial court, Mr Baird was described as ‘biased, unreliable,
dishonest and who has concocted evidence has contradicted himself and above all is
a racist’. Those were allegations of a most serious kind. They ought not to have been
made in the absence of a proper factual foundation having been laid for them. The
long and short of it is that Mr Baird was a prosecution witness, with no axe to grind.
[70] As the trial court noted, with reference to Mr Baird, ‘my observation speak[s] to
an individual being called from his house in the dead of the night and finding a vehicle
crashed into . . . property’. To label someone a ‘racist’, absent a true factual foundation
is most unfortunate. To suggest of a witness that he is ‘dishonest’ or ‘concocted
evidence’, is to suggest that such witness has made himself guilty of a deliberate
falsehood. It excludes room for any honest mistake on the part of the witness. Those
are not allegations to be lightly made and certainly not in circumstances where no
evidence has been adduced by the defence to gainsay the testimony of the witness.
[71] The trial court formed a favourable impression of Mr Baird. It said:
‘I hold the view that Mr Baird could have packed up more, could have added more, could have
recorded more and he had the opportunity to do so if he wanted to doctor he could certainly
omit some of the thing[s] [that] seems to favour Mr Motata. But he agreed with Mr Dorfling on
more than occasion with issues that were favourable to Mr Motata’.
[72] Mr Baird testified that Judge Motata had written his particulars on a piece of
paper, which contained incorrect spelling, repetition and was very difficult to read. The
trial court recorded:
‘The note was handed in as Exhibit “E” and contained . . . various spelling and inaccuracies
which are set out hereunder. The contents of the note were as follows: “The honourable mister
mister justice NJ Motata Transvall Provinicial division.” Beneath that “TPD” plus something
that was not clear and telephone numbers: 012 33 illegible digit 75 and something that could
either be 54 or 81. Mr Baird was adamant that the accused wrote his details on the piece of
paper.’
[73] The trial court gave short shrift to the apparent attempt by Judge Motata to
dispute that it was his handwriting on the piece of paper. It dealt with it in these terms:
‘I accept the evidence of Mr Baird together with everything else I have said, including the fact
that the accused has remained silent. I must therefore accept the handwritten note and except
that Mr Baird’s testimony is that Mr Motata wrote on that note in that fashion, where some of
the letters do not spell out words correctly and numbers are written incorrectly. I accept that
Mr Motata wrote on that handwritten note and gave same to Mr Baird. I have also the portions
of the evidence of Mr Madibo and Ms Mashilela which corroborate Mr Baird’s testimony.’
[74] Mr Baird’s evidence and Judge Motata’s denial that he was drunk were mutually
incompatible. Both could not have been true. Once the trial court accepted Mr Baird’s
evidence, it inexorably followed that Judge Motata’s denial was false. In that sense,
the handwritten note was no neutral piece of evidence. It spoke to Judge Motata’s
inebriety at the scene and lent support to Mr Baird’s version. The denial by Judge
Motata that it was his handwriting on the note is telling. It was consistent with his false
denial that he was drunk. The JSC did not consider at all whether the advancing of a
false defence would have a deleterious effect on the public perception of Judge
Motata’s ability to act with honesty and propriety.
[75] To be sure, it is not being postulated that the JSC was obliged to slavishly
endorse the findings of the Tribunal. Far from it. Even on the acceptance that the
Tribunal’s findings are not binding on the JSC, nor is the conclusion that the Tribunal
drew from those findings, it still remained for the JSC, at the very least, to enquire into
whether or not the Tribunal had addressed the issues fully and fairly and directed its
mind to the right questions in reaching the conclusion that Judge Motata should be
removed from office. One finds no evidence of it having done so. The report of the
Tribunal is clear and comprehensive. There is no reason to doubt the fairness of the
procedure adopted. There is no complaint of a lack of balance in the approach of the
Tribunal or suggestion that Judge Motata did not receive a proper hearing before it.
That notwithstanding, the JSC disregarded the factual findings of the Tribunal, without
explaining why it did so. It ignored that the Tribunal was the body that had the
advantage of hearing the evidence and assessing the credibility of the witnesses.
[76] AfriForum complained that ‘[a] judge should be able act in the interest of all
communities without any prejudice. Any judge who makes himself guilty of racist
conduct. . . therefore has no place on the judge’s bench. Such a judge betrays the
public’s confidence in the judicial system’. The Tribunal asked rhetorically’ ‘. . . what
would be the attitude of an ordinary person, let alone a person of Afrikaner descent, if
she/he is to be tried before Judge Motata?’ It said:
‘Our Constitution protects South African citizens against racism and guarantees their right to
dignity. Our judges are custodians of these rights. Post-apartheid, our courts have consistently
decried persistent racist conduct and affirmed the right of all South African citizens to dignity.
Racist conduct on the part of a judge therefore strikes at the heart of judicial integrity and
impartiality, particularly against the background of South Africa’s apartheid history.
Accordingly, racist conduct on the part of a judge constitutes gross misconduct.’
[77] The Tribunal found, inter alia, that:
‘Judge Motata’s conduct at the scene of his motor accident and the remarks he made were
racist and thus impinge on and are prejudicial to the impartiality and dignity of the courts’; ‘the
lack of integrity in the manner which Judge Motata allowed his defence to be conducted at his
trial . . . is incompatible with or unbecoming of the holding of judicial office . . . [T]o permit
Judge Motata to remain a judicial officer would negatively affect the public’s confidence of the
courts’.
[78] The majority report, on the other hand, ignored entirely the impact of the Judge
Motata’s racist comments on the public’s confidence in the judiciary. It recorded: ‘At
the JSC meeting of June 2018, it was overwhelmingly agreed and recorded that the
ground of impeachment based on racial slurs could not be sustained and must fall
away’. Why that was so, is not explained. Nor, as I shall demonstrate, is that approach
supportable. ‘Racial slurs’ and ‘racially loaded utterances’ are the epithets preferred
by the majority. Even on the acceptance of those euphemisms, the majority was still
impelled to the conclusion that the utterances were unbecoming of a Judge. The point
ignored is that the utterances, which evidence an apparent bias, would result in Judge
Motata being substantially disabled from performing his judicial function, because on
any reckoning racist utterances are fundamentally irreconcilable with the standards
expected of a judicial officer.
[79] In arriving at a contrary conclusion to the Tribunal, the JSC largely overlooked
a great many important findings of fact. As I have been at pains to show, the reliance
sought to be placed by the majority decision on the provocation and intoxication is not
supported by the evidence. Once it is accepted that those factors are illusory, rather
than real and, do not tip the scales in Judge Motata’s favour, then the JSC accepts
(as it was put in its answering affidavit) that:
‘106.
Ad paragraph 11
106.1 This allegation is denied. The decision of the JSC of 10 October 2019 clearly applies
the standard for gross misconduct. Moreover, the issue of whether or not racism is serious
misconduct is clear. Racism is a breach of section 9 of the Constitution, which prohibits
discrimination based on race. Racism is also inconsistent with the Judicial Code of Conduct.
Racism of a Judge additionally breaches the principle of judicial independence because it
undermines public confidence in the Judiciary.
106.2 These instruments clearly articulate the standard of gross misconduct as applicable to
racism conduct of a Judge. It is senseless for the JSC, each time it adjudicates a case of
misconduct, to articulate a fresh standard applicable to those facts.
106.3 Nevertheless, as stated above in this particular instance the JSC clearly found Judge
Motata’s conduct to be racially loaded, but it lacked the element of “gross” because of two
mitigatory factors: intoxication and provocation. Absent those factors, it is clear that the racist
utterances by Judge Motata would have been considered to be gross.’
[80] Like the JSC, the high court failed to consider the impact of Judge Motata’s
conduct on the public confidence in the independence, impartiality and integrity of the
judiciary. Both failed to consider the impact on the public of him remaining ‘Judge
Motata’ and continuing to receive the benefits of his pension as a judge, after he was
found to have made racist statements and thereafter conducted a dishonest defence
in his criminal trial and before the Tribunal. That he had retired, as the majority and
the high court seemed willing to emphasise, was thus irrelevant.
[81] The JSC has been charged by the Constitution and the JSC Act to inter alia
protect the integrity of the judicial system. In discharging that function, it had to be
sensitive to the expectations of a reasonably well-informed and dispassionate public
that holders of judicial office would at all times remain worthy of trust, confidence and
respect.18 The court below merely found that the JSC is not bound by the
recommendation of the Tribunal. That goes without saying. However, the JSC is
required by s 20(1) to (3) of the JSC Act to ‘consider’ the Tribunal’s report at a meeting,
and thereafter make a finding whether the judge suffers from an incapacity, is grossly
incompetent or committed gross misconduct. The JSC’s decision was anchored in the
factual findings of Judge Motata’s alleged provocation by the use of the k-word and
his diminished incapacity due to intoxication. It was incumbent on the high court to
determine whether the JSC’s decision in this regard was supported by the facts,
particularly since the JSC did not accept the Tribunal’s factual findings. The high court
should have enquired whether the JSC was entitled to simply disregard the Tribunal’s
factual findings in the manner that it did. It did not do so. Had the high court undertaken
that task, the conclusion would perhaps have been inevitable that no justifiable warrant
existed for the JSC to have rejected the Tribunal’s findings.
[82] It was argued on behalf of the JSC that were we to reach this conclusion, then
the matter should be remitted to the JSC for it to consider afresh the Tribunal’s finding.
It is so that if a court sets aside a decision, it will ordinarily remit the matter to the
decision-maker for reconsideration, with or without a direction. There are instances
though where a court will substitute the decision with its own. This seems to be such
an instance.
18 Moreau-Berube fn 1 above at 291.
[83] FUL had initially sought a remittal. However, this was plainly as an alternative
to the main relief of substitution. It had always been FUL’s case that substitution was
the appropriate remedy. It asserted in its founding affidavit:
‘170.
Justice and equity demand that the Decision should not be remitted to the JSC for
reconsideration. If the matter were referred back to the JSC, then the end-result would be a
foregone conclusion. The facts are common cause. All the materials are before this Court and
they lead to only one conclusion consistent with the constitutional mandate. Judge Motata’s
conduct clearly amounts to gross misconduct and incapacity. This court is in as good a position
to make the decision as the JSC, given that all the material is before it, it is not required to
make findings of fact afresh, the decision involves the application of legal standards which the
Constitutional Court has ruled objective in character, and the subject-matter of these
proceedings is in the heartland of this Court’s remit, given that it involves the constitutional
role of the judiciary and judicial standards of conduct.
171.
The Decision is, at its heart, a disciplinary decision and is thus judicial in nature. In this
respect, therefore, the court is as well qualified as the JSC to make a final determination as to
whether Judge Motata’s conduct constitutes gross misconduct.’
[84] In response, in resisting an order of substitution, Mr Chiloane stated on behalf
of the JSC:
‘189
Ad paragraphs 168 to 173
189.1 These allegations are denied. It is not accurate that if the matter is referred to the JSC
the “end result would be a foregone conclusion”. Nor is it clear that the facts are common
cause. It is denied that it is clear that the conduct of Judge Motata amounts to gross
misconduct.
189.2 One of the key considerations in the remittal would be whether or not the complaint of
Adv Pretorius SC should be taken into account. If taken into account, the question is whether
or not the defence of Judge Motata, namely, that he did not instruct his counsel to ask the
specific question that he did but merely told him that [h]is own subjective belief was that he
was not at the time drunk. It is speculative at this stage to talk of how the JSC would approach
the matter.
189.3 It is not obvious whether or not questions of intoxication and provocation should play
any role in the assessment of the degree of seriousness of the misconduct. These are
questions to be resolved, ultimately by the JSC itself.
. . .
189.6 The complaint that it is taken a long time to resolve the matter is neither here nor there.
One cannot subvert principle for expediency. If the Court directs the JSC to deal with the
matter expeditiously, there is no reason at this stage to believe that such direction will not be
complied with. Therefore, it is submitted that the correct outcome will be the remittal of the
matter to the JSC.’
[85] One may have been entitled to conclude that no proper evidentiary basis had
been laid by the JSC for a remittal. However, on the acceptance once again in the
JSC’s favour that what Mr Chiloane had to say constituted admissible evidence and
did indeed have some evidential weight, this is not quintessentially the kind of matter
where a court need necessarily defer to the original decision-maker. Quite the
contrary. This is very much in the nature of a value judgment to be made in the light
of all of the relevant considerations.19 In any event, none of the considerations
advanced by the JSC in support of a remittal for the purposes of a reconsideration can
still hold water. The facts admit of no doubt. Nor, is the acceptance of the Pretorius
SC complaint still open to discussion. Judge Motata’s defence, his instructions to his
counsel, as well as his intoxication and alleged provocation have been subjected to
careful consideration and scrutiny. His version, in respect of each (to the extent that it
can be said that he had advanced one) has been found to be wanting. It can thus
hardly be open to the JSC to revisit these matters or, more importantly, in doing so, to
simply disregard our findings, by which, I daresay, it would be bound. Remittal, in the
circumstances, would, for all intents and purposes, amount to an insistence of form
above substance.
[86] In Trencon, the Constitutional Court summarised the factors a court should
consider when determining whether an order of substitution is appropriate, namely: (i)
whether the court is as well qualified to decide the issue as was the original
administrator; (ii) whether the end result is a foregone conclusion; (iii) where there has
been a delay in the finalisation of the matter, whether further delay of the matter would
be unjustifiable; and, (iv) whether the original decision-maker has demonstrated bias
or incompetence.20 The Constitutional Court further held that the first two factors
should be considered first and cumulatively, and thereafter the other factors should be
considered. The ultimate consideration is whether substitution is just and equitable.
19 Commissioner for the South African Revenue Service v Nyhonyha [2023] ZASCA 69 paras 16 – 23.
20 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) para 47.
[87] There are instances where ‘a single, highly prejudicial or offensive, comment
might be sufficiently grave to seriously undermine public confidence in a judge to the
extent that removal is the only outcome’.21 Here, there are several demonstrations by
Judge Motata of a serious lack of judgment. His actions and expressions trigger
concerns about the judicial function itself. There appears to be nothing to suggest that
he had even recognised that he had made himself guilty of serious misconduct. Such
lack of awareness, in and of itself, seems to manifest an underlying defect in character.
[88] We have the benefit of the judgment of the trial court, the appeal court, as also,
the record of the proceedings and the report of the Tribunal. The Tribunal conducted
a full enquiry into the complaints. There has been no complaint from anyone about
any aspect of that enquiry. We also have the reports of the majority decision as well
as the majority, minority and concurring opinions. We are accordingly as well placed
as the JSC.
[89] It was of course open to Judge Motata to offer, at any time, an apology for his
conduct. But, he did not. Whether an apology would have been sufficient to restore
public confidence need not detain us, because none was proffered by him. It appears
that he failed even after finalisation of the criminal trial to appreciate that he had
engaged in misconduct of a most serious kind. This reveals both his lack of insight
and his lack of appreciation for his misconduct on the public confidence in the judiciary.
[90] Judge Motata’s conduct was egregious, particularly when one has regard to the
cumulative consequence of both the AfriForum and Pretorius SC complaints. His
behaviour at the scene of the incident was characterised by racism, sexism and
vulgarity. The public watched him conduct a dishonest defence during his trial and on
appeal. They watched him dishonestly accuse Mr Baird of using the k-word, only to
thereafter withdraw the accusation. They watched him lie under oath to the Tribunal
about his level of intoxication, as the video of him slurring his words and stumbling
went viral. His conduct is inimical to his office. For as long as he is entitled to be called
‘Judge Motata’, the judiciary continues to be stained in the eyes of the public.
21 Canadian Judicial Council Inquiry into the conduct of The Honourable Robin Camp. Report to the
Minister of Justice, dated 8 March 2017 para 49.
[91] The incident occurred on 6 January 2007. Sixteen years have since passed. It
has taken nearly thirteen years for the JSC to make a final decision. Undoubtedly,
some of the delays were on account of Judge Motata’s high court challenges and
points in limine before the Tribunal. Should this Court remit the matter to the JSC,
there is every likelihood that any fresh decision by it will be reviewed, and the matter
will again wind its long, slow journey through the courts. Further delay does not serve
the interests of justice.
[92] The majority’s approach disregarded the purpose for which it was exercising its
disciplinary powers. It sought to test whether there was a basis to reject Judge
Motata’s version, which, as I have endeavoured to demonstrate, it could safely have
done. It found, in effect, that it could not conclude that he was lying because he
subjectively believed what he said, notwithstanding the body of cogent and compelling
evidence that operated against him. In so doing, the majority blurred the distinction
between the protection of the institution in the interests of the public at large and the
protection of the personal interests of the judge.
[93] The majority decision also shows no regard whatever for the damning factual
findings of the trial court and the Tribunal. The AfriForum complaint is disposed of on
the basis of the filmiest of reasoning. The refusal to consider the merits of the Pretorius
SC complaint is a striking example of the JSC ‘shirk[ing] its duty’ which ‘can have grave
repercussions for the administration of justice’.22 The JSC thus manifestly ‘blurred the
distinction’ between the ‘protection of the institution in the interests of the public at
large’ and the ‘protection of the personal interests of the judge’.
[94] ‘Public confidence in and respect for the judiciary are essential to an effective
judicial system and, ultimately, to democracy and founded on the rule of law’.23 A fair
minded and dispassionate observer is bound to conclude that Judge Motata cannot
properly discharge his functions. The conduct that I have been at pains to describe is
of such gravity as to warrant a finding that Judge Motata be removed from office. There
is no alternative measure to removal that would be sufficient to restore public
confidence in the judiciary. This means that the conclusion reached by the JSC to
22 FUL fn 11 above para 21.
23 Moreau-Berube fn 1 above at 286.
‘reject the Tribunal’s recommendation’ and that ‘Judge Motata’s conduct did not
constitute gross misconduct’, falls to be rejected. Consequently, the recommendation
by the Tribunal that the ‘provisions of section 177(1)(a) of the Constitution be invoked’,
must stand. Accordingly, the matter will be remitted to the JSC. It is not being remitted,
however, for the JSC to consider the report of the Tribunal in terms of s 20(1) or to
make a finding under s 20(3), but for it to be dealt with in terms of s 20(4) of the JSC
Act.24
[95] In the result:
The appeal is upheld and the cross appeal is dismissed, in each instance with
costs, including those of two counsel.
The order of the court below is set aside and substituted by:
‘1. The application succeeds with costs, including those of two counsel.
2. The matter is remitted to the first respondent for it to be dealt with in terms of
section 20(4) of the Judicial Service Commission Act 9 of 1994.’
________________
VM PONNAN
JUDGE OF APPEAL
Mocumie JA and Masipa AJA (dissenting):
[96] We have read the main judgment penned by Ponnan JA. We agree with his
reasoning, and therefore, accept the summary of the facts, which we will adopt to the
extent that is relevant for the conclusion that we reach hereafter. However, regrettably,
we cannot agree with the order that the majority judgment proposes.
24 Section 20(4) provides:
‘If the Commission finds that the respondent is suffering from an incapacity, is grossly incompetent or
is guilty of gross misconduct, the Commission must submit that finding, together with the reasons
therefor and a copy of the report, including any relevant material, of the Tribunal, to the Speaker of the
National Assembly’.
[97] In the overall, we concur with the majority judgment that the decision of the JSC
should be set aside, for the reasons given. Similarly, the JSC itself, in its Answering
Affidavit, has expressed agreement with this proposition, albeit as an alternative
course of action contingent upon this Court’s determination. FUL too, aligns with this
proposition, as evidenced by the relief sought in the Notice of Motion (para 3), their
Heads of Argument, and their submissions presented before this Court.25 Thus, we
propose to remit the matter to the JSC for a reconsideration of its own decision, guided
by the principles articulated in the whole of this judgment (both the majority and the
minority judgment).
[98] The JSC is the sole authority empowered to make a finding of gross misconduct
against a judge in terms of s 177(1)(a) of the Constitution. The JSC was established
in terms of s 178 of the Constitution and consists of 23 members comprising of diverse
individuals from the legal profession; including judges (most senior in the judiciary),
advocates, attorneys, and law professors. Pursuant to s 178(5) of the Constitution,
only the JSC is entitled to advise the national government on any matters relating to
the judiciary.
[99] The JSC Act was promulgated ‘to regulate matters incidental to the
establishment of the Judicial Service Commission by the Constitution; to establish the
Judicial Conduct Committee to receive and deal with complaints about judges; to
provide for a Code of Judicial Conduct which serves as the prevailing standard of
judicial conduct which judges must adhere to; to provide for the establishment and
maintenance of a register of judges' registrable interests; to provide for procedures for
dealing with complaints about judges; to provide for the establishment of Judicial
Conduct Tribunals to inquire into and report on allegations of incapacity, gross
incompetence or gross misconduct against judges; and to provide for matters
connected therewith’.26
25 Para 3 of the Notice of Motion reads:
‘3 Substituting the Decision with a finding that the second respondent is guilty of gross misconduct
and/or suffers from an incapacity as contemplated in section 177 (1)(a) of the Constitution; alternatively,
remitting the matter to the first respondent to be decided afresh within 20 days of the date of the order;
considering the findings of this Honourable Court;’ (Emphasis added.)
26 Long title of the Judicial Service Commission Act (9 of 1994) after amendment by the Judicial Service
Commission Amendment Act (20 of 2008).
[100] The majority judgment highlights several concerning features, including how
the regional court’s evidence (which the JCT took into account as it ought to) was
treated by the JSC, which have not been adequately addressed at any stage. It also
raised a concern on how ‘the composition of the JSC did not remain constant when
the matter was discussed. [But] despite several changes in its composition as the
matter progressed, the JSC simply picked-up its deliberations whence previously left
off.’ This must have left doubt in the minds of many (including those aggrieved) as to
what drove the JSC to decide as it did. These and other disquieting features
highlighted in the majority judgment are of serious concern not only for this specific
matter, but also for the entire judiciary and the public at large which should be
addressed by the JSC appropriately.
[101] This case represents a test case for the JSC and the judiciary regarding the
impeachment of judge. It focuses on the two complaints lodged by AFRI Forum and
Pretorius SC and inevitably the interpretation of s 20 of the JSC Act. We interpose to
mention that Ms Steinberg, counsel for FUL, is also a Commissioner of the JSC. As
such, it is reasonable to expect that she be aware that the current JSC, with the
advantage of many new members, including her, will fulfil its responsibility as directed
by the JSC Act as this Court will direct. Thus, the necessity to remit the matter to the
JSC to allow it to put its house in order, is not only in the public interest, but it is also
to ensure that that the JSC fulfils its role in continuously monitoring the conduct of
judges under its purview without fear, favour or prejudice. Historically, the judges of
this country have behaved and conducted themselves with fortified behaviour, this
incident being an exception to the norm. It would be unjust for the public and the
society at large to tarnish the entire judiciary based on a single incident.
[102] The high court correctly found that the appeal revolves around the interpretation
of s 20 of the JSC Act. In interpreting this provision, the seminal judgment of Jaga v
Dönges27, remains pivotal in our minds where this Court states:
27 Jaga v Donges and Another NO and Another; Bhana v Donges NO and Another 1950 (4) SA 653
(A).
‘Certainly, no less important than the oft repeated statement that the words and expressions
used in a statute must be interpreted according to their ordinary meaning is the statement that
they must be interpreted in the light of their context. But it may be useful to stress two points
in relation to the application of this principle. The first is that ‘the context’, as here used, is not
limited to the language of the rest of the statute regarded as throwing light of a dictionary kind
on the part to be interpreted. Often of more importance is the matter of the statute, its apparent
cope and purpose, and, within limits, its background.’(Emphasis added.)28
[103] The Constitutional Court states the principle as follows:
‘What this Court said in Cool Ideas in the context of statutory interpretation is
particularly apposite. It said:
“A fundamental tenet of statutory interpretation is that the words in a statute must be
given their ordinary grammatical meaning, unless to do so would result in an absurdity.
There are three important interrelated riders to this general principle, namely:
(a) that 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, that is, where
reasonably possible, legislative provisions ought to be interpreted to preserve their
constitutional validity. This proviso to the general principle is closely related to the
purposive approach referred to in (a).”’ (Footnotes omitted.)
[104] Section 20 provides:
‘(1) The Commission must consider the report of a Tribunal at a meeting [d]etermined
by the Chairperson, and the Commission must inform the respondent and, if
applicable, the complainant, in writing- (a) of the time and place of the meeting; and
(b) that he or she may submit written representations within a specified period for
consideration by the Commission.
(2) At the meeting referred to in subsection (1) the Commission must consider- (a) the
report concerned; and (b) any representations submitted in terms of subsection (1) (b).
28 Ibid para 662G; see also Road Traffic Management Corporation v Waymark (Pty) Limited [2019]
ZACC 12; 2019 (6) BCLR 749 (CC); 2019 (5) SA 29 (CC) para 29 citing Natal Joint Municipal Pension
Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA).
(3) After consideration of a report and any applicable representations in terms of
subsection (2), the Commission must make a finding as to whether the respondent-
(a) is suffering from an incapacity; (b) is grossly incompetent; or (c) is guilty of gross
misconduct.
(4) If the Commission finds that the respondent is suffering from an incapacity, is
grossly incompetent or is guilty of gross misconduct, the Commission must submit that
finding, together with the reasons therefore and a copy of the report, including any
relevant material, of the Tribunal, to the Speaker of the National Assembly.
(5) If the Commission, after consideration of a report and any applicable
representations in terms of subsection (2) finds that the respondent- (a) is not grossly
incompetent, but that there is sufficient cause for the respondent to attend a specific
training or counselling course or be subjected to any other appropriate corrective
measure, the Commission may make a finding that the respondent must attend such
a course or be subjected to such measure; or (b) is guilty of a degree of misconduct
not amounting to gross misconduct, the Commission may, subject to section 17 (9),
impose any one or a combination of the remedial steps referred to in section 17 (8).
(6) The Commission must in writing inform the respondent in respect of whom a finding
referred to in subsection (4) or (5) is made, and, if applicable, the complainant, of that
finding and the reasons therefore.’
[105] The majority judgment holds as follows (on s 20):
‘[75]
Even were it to be accepted that the Tribunal’s findings are not binding on the
JSC, nor is the conclusion that the Tribunal drew from those findings, it still remained
for it, at the very least, to enquire into whether or not the Tribunal had addressed the
issues fully and fairly, and directed its mind to the right questions in reaching the
conclusion that Judge Motata should be removed from office. One finds no evidence
of it having done so. The report of the Tribunal is clear and comprehensive. I see no
reason to doubt the fairness of the procedure that was there adopted. There is no
complaint of a lack of balance in the approach of the Tribunal or suggestion that Judge
Motata did not receive a proper hearing before it. That notwithstanding, the JSC paid
scant regard to the factual findings of the Tribunal, without explaining why it did so. It
ignored that the Tribunal was the body that had the advantage of hearing the evidence
and assessing the credibility of the witnesses.’
[106] The essence of s 20 is that the JSC, upon receipt of the report(s) and
recommendation, must consider the reports and make its own decision whether the
respondent judge is guilty of misconduct simpliciter or gross misconduct and then
under s 177(1)(a), refer the matter to Parliament for its consideration. It is important to
interpret the word ‘consider’. In its plain English meaning ‘consider’ means ‘think
carefully about (something), typically before making a decision.’29 The high court albeit
on different grounds, interpreted s 20 to mean that the Tribunal could only make
recommendation(s), which the JSC, upon reflection, could accept or reject. Thus, the
JSC was not bound to accept the recommendation of the majority of the Tribunal.
[107] From a comprehensive consideration of s 20, read with the relevant provisions
of the JSC Act,30 it is discernible that the legislature intended for the JSC to establish
mechanisms for it to function efficiently through several Committees; considering the
onerous responsibility, which it bears, including the appointment and disciplining of
judges.31 The section is unambiguous and couched in clear language. It says,
unequivocally, once the JCT (the Tribunal) has held its investigations, it must submit
its report to the JSC for consideration before making the decision. When arriving at
this decision, the JSC is to consider not only the reports of the Tribunal but any
applicable representations and in the scheme of enquiries of this nature, any relevant
factors which the Tribunal did not consider.
[108] On these facts, it is common cause that the JCT submitted its report including
the judgments of the regional court and the full bench to the JSC. It is also apparent
from the record that the JSC did not fully interrogate the report of the Tribunal and the
additional material submitted to it. If it did, as it purported to have done, it did not
adequately reflect this with the result that there is doubt that it conducted itself as a
reasonable decision maker would, and should have.
[109] Notably, apart from the material before it, the JSC took cognisance of what it
believed were other relevant factors which the JCT did not consider such as, that
Judge Motata was no longer in active service as he had since retired and the possibility
29 Oxford English Dictionary.
30 Sections 14, 15, 16 and 17 and sections 177 and 178 of the Constitution.
31 For that reason, amongst other ad hoc committees, the JSC functions through the JCC and the JCT.
of him committing this ‘transgression’ was non-existent. This, however, is not the issue
for determination.
[110] The question should be, why did the legislature not couch s 20 in a stronger
language to the effect that ‘the report and recommendation of the Tribunal are final
and binding.’ The wording is not, ‘…upon considering the report and recommendations
of the JCT, the JSC shall accept them as they are.’ It carefully chose the word
‘consider’ in s 20(2) followed by s 20(3) which states ‘after consideration of a report
and any applicable representations in terms of subsection (2), the Commission must
make a finding …’. What mischief was it providing for, in legislation which deals with
disciplining of judges? The most obvious would be, it took into consideration that
impeachment of a judge is a serious matter with vast consequences which cannot and
should not be done arbitrarily. This should not be in the domain of a tribunal, a
subcommittee of the JSC, but should be that of the JSC itself.
[111] Taking a step back to look at the entire mosaic picture; it is apparent that the
JSC did not ‘enquire into whether or not the Tribunal had addressed the issues fully
and fairly’. For that reason, it becomes apparent that the JSC did not adhere to the
language of s 20. Its failure to consider the recommendation, gives s 20 a different
meaning than that intended by the legislature. The fact that the JSC failed to
adequately consider the recommendation of the Tribunal and directed its mind to what
FUL believed to be irrelevant considerations, makes an even stronger case why the
matter should be remitted to the JSC to do exactly that.
[112] There are disquieting features highlighted in the majority judgment that are of
serious concern, not only for this specific matter, but also for the entire judiciary and
the public at large – the JSC should address them appropriately. Questions can be
asked, whether the JSC should have delayed the matter, even if all the concerned
parties seem to have put it under pressure not to delay it any further? Was the JSC so
rushed and or pressurised to decide, to the point where procedural steps (defined in s
20) were ignored?
[113] It is the duty of the courts to ensure that the JSC, like all other similar
independent institutions (resembling Chapter 9 institutions), fulfils its responsibility
diligently when those affected by its decisions seek relief from the courts. Importantly,
in carrying out their responsibility to uphold the law and promote the rule of law, the
courts must not act with vengeance but rather allow room for reflection, on whether
the JSC, when constituted differently, can conduct itself in accordance with the
guidance provided by this Court in this matter. Especially taking into account the
previous judgments referred to in this judgment to; (a) address the highlighted
anomalies identified by the majority judgment and (b) ensure that proper processes
are in place to prevent a recurrence of such incidents in future cases that may come
before it. The approach adopted by the majority judgment would necessitate for the
amendment of s 20 to read that the recommendations of the Tribunal are final and
binding, and that the JSC should slavishly implement them. The unintended results of
an amendment implicit in the order of the majority judgment, is a function of the
legislature, and not that of the courts as prescribed by the principles of the separation
of powers.
[114] Despite all these concerns, the disquieting features, FUL seems to have
accepted the trite principle that this Court, along with the Constitutional Court, has
repeatedly emphasized in numerous judgments32 that, courts should exercise caution,
if not utmost deference, in usurping the decision-making function of a functionary,
simply because they are in a position comparable to that of the functionary to make
the decision, especially if motivated by expediency rather than principle.33 Deferring to
the JSC in this matter represents the more sensible approach and remedy. More so,
considering ‘…the importance of recognising and preserving the distinction between
a fair procedure and the merits of a particular case and the need to avoid being
32 Jacobs and Others v S [2019] ZACC 4; 2019 (5) BCLR 562 (CC) para 84; Airports Company South
Africa v Tswelokgotso Trading Enterprises CC 2019 (1) SA 204 (GJ) para 12; Bato Star Fishing (Pty)
Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC)
para 46-49; Cooper NO v First National Bank of SA Ltd (272/98) [2000] ZASCA 188; [2000] 4 All SA
597 (A) para 39.
33 Minister of Trade and Industry v Sundays River Citrus Company (Pty) Ltd (798/2018) [2019] ZASCA
184; [2020] 1 All SA 635 (SCA) (3 December 2019) para 31; https://www.judgesmatter.co.za/conduct/;
See also Koyabe v Minister for Home Affairs [2009] ZACC 23; 2010 (4) SA 327 (CC) para 36,
“[A]pproaching a court before the higher administrative body is given the opportunity to exhaust its own
existing mechanisms undermines the autonomy of the administrative process. It renders the judicial
process premature, effectively usurping the executive role and function. The scope of administrative
action extends over a wide range of circumstances, and the crafting of specialist administrative
procedures suited to the particular administrative action in question enhances procedural fairness as
enshrined in our Constitution.’
seduced by what may seem to be the inevitable result of a rehearing. The danger of
assuming that a particular result is inevitable has been pointed out frequently.’34
[115] The JSC is best advised to study this judgment (both majority and minority
judgments), reflect on it, establish processes in line with this judgement, and properly
consider the report and recommendation of the JCT. Nonetheless, this Court cannot
be seen as endorsing an ‘eye for an eye’ approach, but rather a path of reconciliation,
based on the values underpinning the Constitution, aspiring toward a united nation
that seeks to rebuild itself as one, irrespective of race, sex, or creed. This case should
not be viewed through the lens of expediency but rather as an opportunity to
strengthen the systems within the JSC that hold judges accountable.
[116] Lastly, we must address two issues: First, that Judge Motata was fined an
amount in excess of R 1 Million to be paid to SAJEI (a body responsible for judicial
education). This was an innovation on the part of the JSC, which was not explained.
Section 20(5) of the JSC Act provides for ‘a respondent judge to attend a specific
training or counselling course or be subjected to any other appropriate corrective
measure; the Commission may make a finding that a respondent judge (in this case
Judge Motata) attends such a course or be subjected to such measure….’ This would
have been the appropriate measure because then Judge Motata would have (through
an intensive programme) come to terms with the magnitude of his transgression. He
would have thereafter taken steps to correct the perception that he has created about
the judiciary, including tendering a public apology and many other measures.
[117] Second, the issue of the Secretary of the Commission deposing to affidavits on
behalf of the JSC, despite not being a member or Commissioner of the JSC, which is
covered thoroughly in the majority judgment. One point to make, it was disconcerting
to witness a respected body like the JSC comprising of judges, and legal practitioners
from both the Bar and side Bar and law professors being found wanting in procedural
matters of their own institution. The JSC should correct this, if it has not done so
already. In any event, if the Secretary (who is a layperson) deposes to an affidavit,
surely, the trite principle is that such must be confirmed in a confirmatory affidavit by
34 Cooper op cit footnote 8.
the responsible person/Chairperson of the Committee concerned, on behalf of the
JSC.35
[118] In conclusion, for the reasons in the preceding paras, and as all parties
believed, the appropriate remedy is to remit the matter to the JSC, to rectify the
deficiencies in its previous proceedings properly. Therefore, we would have granted
the following order:
The appeal is upheld with costs, including the costs of two counsel, where so
employed.
The cross appeal is dismissed with costs, including the costs of two counsel,
where so employed.
The order of the high court is set aside and replaced with the following:
‘(a)
The application is upheld with costs, including the costs of two counsel where
so employed.
(b)
The matter is remitted to the JSC to reconsider the reports and the
recommendation of the JCT, including other available material, afresh ensuring
that every ruling which is made, is supported by reasons. The remittal should
be dealt with within 90 days from the date of this order.’
________________
BC MOCUMIE
JUDGE OF APPEAL
______________________
MBS MASIPA
ACTING JUDGE OF APPEAL
35 See Ganes and another v Telekom Namibia Ltd 2004 (3) SA 615 (SCA).
Appearances
For the appellant:
C Steinberg SC and N Luthuli
Instructed by:
Webber Wentzel Attorneys, Johannesburg
Symington De Kok Inc, Bloemfontein
For the first respondent:
C Georgiades SC and YS Ntloko
Instructed by:
The State Attorney, Johannesburg
The State Attorney, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
22 JUNE 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Freedom Under Law v Judicial Service Commission and Another (Case no 550/2022) [2023]
ZASCA 103 (22 June 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 conduct of Judge Nkola John Motata (Judge Motata) is of
such a kind as to render him incapable of performing the duties of his office.
In the early hours of 6 January 2007, Judge Motata, attempted to execute a U-turn whilst driving his
vehicle along Glen Eagles Road in Hurlingham, Johannesburg, when he reversed into the boundary wall
of a residential property owned by Mr Richard Baird. Having been informed telephonically of the
incident by Mr Lucky Melk, the tenant of the property, Mr Baird arrived at the scene, whereafter he
contacted the police. In the course of those events, Judge Motata became involved in a verbal altercation
with Mr Baird. Mr Baird, who recorded some of the events as they unfolded, formed the view that Judge
Motata was inebriated. In due course Judge Motata was charged – and despite his plea of not guilty –
convicted of drunken driving before the Regional Court (the trial court).
Following upon the events of 6 January 2007, three complaints came to be lodged against Judge Motata
with the first respondent, the Judicial Service Commission (the JSC). Two of the complaints – one
lodged by a senior advocate at the Pretoria Bar (the Pretorius SC complaint) and the other by Afriforum
(the Afriforum complaint) were referred to the Judicial Conduct Tribunal of the JSC (the Tribunal). The
Tribunal found that Judge Motata was intoxicated at the time of the incident, by the time he went to
trial (and subsequently appeared before the Tribunal), he would have considered the evidence, including
the visual and audio recordings made at the time of the incident, and realised that ‘a denial of
intoxication was against all [the] prevailing evidence [and] could not be true’.
AfriForum, with reference to Judge Motata’s conduct and utterances on the night of the incident, had
complained that any judge who makes himself guilty of racist conduct has no place on the Bench. The
Tribunal took the view that racist conduct on the part of a judge constitutes gross misconduct. It
concluded that Judge Motata’s conduct constituted gross misconduct and recommended to the JSC that
the provisions of s 177(1)(a) of the Constitution be invoked.
However, when the recommendation of the Tribunal served before the JSC, the majority of the JSC (the
majority decision) rejected the Tribunal’s recommendation. It found Judge Motata guilty of misconduct
simpliciter and imposed a fine of R1 152 650.40 to be paid to the South African Judicial Education
Institute.
On 21 July 2020, the appellant, Freedom Under Law (FUL), issued an application out of the Gauteng
Division of the High Court, Johannesburg (the high court) to review and set aside the JSC’s decision of
10 October 2019, and to substitute that decision with a finding that Judge Motata is guilty of gross
misconduct as contemplated in s 177(1)(a) of the Constitution, alternatively, for the matter to be
remitted to the JSC to be decided afresh taking into account the findings of the court. FUL contended
that Judge Motata’s conduct constituted gross misconduct, which warranted his removal from office in
terms of s 177 of the Constitution. The high court rejected all of FUL’s grounds of review.
On appeal, the SCA held that the approach followed by the majority decision was untenable for a
number of reasons. To name a few, the SCA found that the majority decision of the JSC did not engage
with Judge Motata’s dishonesty regarding his intoxication at all. It merely regards his ‘proven
intoxication’ as a mitigating factor. It held that the JSC did not pause to consider why the intoxication
was a relevant consideration or seek to demonstrate how Judge Motata’s breach of the standards of
judicial conduct was rendered any less egregious by his intoxication. The JSC disregarded the factual
findings of the Tribunal, without explaining why it did so. It ignored that the Tribunal was the body that
had the advantage of hearing the evidence and assessing the credibility of the witnesses. The SCA held
further that the majority decision ought to have enquired into whether or not the Tribunal had addressed
the issues fully and fairly and directed its mind to the right questions in reaching the conclusion that
Judge Motata should be removed from office. The SCA found no evidence of it having done so. The
SCA emphasised that the majority of the JSC did not start with a clean slate, but was bound, not just by
the findings of the Tribunal, but also the trial court in Judge Motata’s criminal trial. The SCA added
that had the JSC approached the evidence holistically instead of in a compartmentalised fashion, as it
did, then it would not have been as receptive as it was to Judge Motata’s assertions, including the
assertion that he had been provoked by the use of the ‘k-word’, which he ultimately conceded before
the Tribunal had not been employed by Mr Baird.
The SCA held that the high court, like the JSC, had also failed to consider the impact of Judge Motata’s
conduct on the public confidence in the independence, impartiality and integrity of the judiciary and
that on all of the evidence, there was no alternative to removal. In conclusion, the SCA held that the
recommendation by the Tribunal that the ‘provisions of section 177(1)(a) of the Constitution be
invoked’, must stand. The majority of the SCA (Ponnan JA (Schippers JA and Kathree-Setiloane AJA
concurring) remitted the matter to the JSC to be dealt with in terms of s 20(4) of the Judicial Service
Commission Act 9 of 1994, namely that the JSC must submit the finding that Judge Motata is guilty of
gross misconduct to the Speaker of the National Assembly.
The dissenting judgment, penned by Mocumie JA and Masipa AJA (the minority), agree with the
reasoning and findings of the majority of the SCA. The minority proposes, however, that the matter be
remitted to the JSC for reconsideration.
~~~~ends~~~~
|
2534
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 442/13
Reportable
In the matter between:
SOLIDARITY
FIRST APPELLANT
JACOBUS ADRIAAN HENDRIK KOTZE
SECOND APPELLANT
and
THE PUBLIC HEALTH & WELFARE SECTORAL
BARGAINING COUNCIL
FIRST RESPONDENT
COMMISSIONER C L DICKENS N.O.
SECOND RESPONDENT
DEPARTMENT OF HEALTH: FREE STATE
THIRD RESPONDENT
Neutral citation:
Solidarity v The Public Health & Welfare Sectoral Bargaining
Council (442/13) [2014] ZASCA 70 (28 May 2014)
Bench:
Ponnan, Bosielo and Theron JJA and Hancke and Swain AJJA
Heard:
6 MAY 2014
Delivered:
28 MAY 2014
Summary:
Employment – deemed discharge from public service by operation of law
– s 17(5)(a) of the Public Service Act 103 of 1994 – whether employee on
suspension absent from duties without permission.
_____________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Labour Appeal Court, Johannesburg (Tlaletsi JA (Waglay AJP
concurring), Murphy AJA dissenting sitting as court of appeal):
(1)
The appeal is upheld.
(2)
The order of the Labour Appeal Court is set aside and in its stead is substituted
the following order:
‘(a)
The appeal succeeds with costs.
(b)
The order of the Labour Court is set aside and substituted with:
“(i) The arbitration award issued by the second respondent, Commissioner
CL Dickens NO, under case number PSHS453-07/08 on 27 September
2008 is reviewed and set aside;
(ii) The matter is remitted to the first respondent, the Public Health and
Welfare Sectoral Bargaining Council, to arbitrate the dispute referred to it
by the first applicant, Solidarity, on behalf Jacobus Adriaan Hendrik
Kotze.”’
______________________________________________________________________
JUDGMENT
______________________________________________________________________
PONNAN JA (BOSIELO and THERON JJA and HANCKE and SWAIN AJJA
concurring):
[1] On 4 July 2007 the second appellant, Jacobus Adriaan Hendrik Kotze (the
employee), who had been in the employ of the third respondent, the Department of
Health: Free State (the employer), for 17 years was placed on what was described by
the employer as a ‘precautionary suspension’ pending the finalisation of an investigation
into allegations of misconduct levelled against him. With effect from 23 July 2007 and
whilst under suspension, the employee, without having first obtained the permission of
the employer, secured employment in Pretoria with a firm called Compu Africa, which
was owned by one of his relatives.
[2] On 19 October 2007 the employee received a letter from the employer which ran
thus:
‘DISCHARGE FROM SERVICE: YOURSELF: PERSAL NUMBER: 12545015
1.
Kindly take [notice] that you are deemed to be discharged from the Public Service with
effect from 3 July 2007 when you accepted alternative employment whilst you were still in
service of the Department of Health.
2.
Above-mentioned discharge is [imminent] in terms of Section 17(5)(a)(ii) read in
conjunction with Section 30(b) of the Public Service Act, 1994, which stipulates the following: “If
such an officer assumes other employment, he or she shall be deemed to have been
discharged as aforesaid irrespective of whether the said period has expired or not”.
3.
All benefits will be paid to you and all debt you [owe] the Government will be recovered
from your pension.’
[3] When the employee’s attempt to have that decision reviewed internally proved
unsuccessful, he referred a dispute to the third respondent, the Public Health and
Welfare Sectoral Bargaining Council (the council). Conciliation under the auspices of
the council having failed, a certificate of non-resolution issued and the matter proceeded
to arbitration before the second respondent, CL Dickens NO (the commissioner).
[4] The commissioner held:
‘The effect of Section 17(5)(a)(i) & (ii) is that provided the requirements are satisfied the
employment contract terminates by operation of law. As this termination is triggered by the
occurrence of an event and is not based on an Employer’s decision, there is no dismissal as
contemplated by Section 186 of the Labour Relations Act.’
She accordingly concluded:
‘The Bargaining Council does not have the jurisdiction to hear this matter as a deemed
dismissal does not constitute a dismissal for purposes of the Labour Relations Act.’
Aggrieved by that conclusion, the employee, as the second applicant, and duly
represented by the first appellant, his trade union (Solidarity), as the first, approached
the Labour Court (LC) for an order in the following terms:
‘a)
Reviewing and setting aside the Arbitration award issued by the Second Respondent
under case number PSHS453-07/08 on the 27th of September 2008, and received by the
Applicants on the 14th of October 2008;
b)
Refer[ing] the matter back for rehearing before a Commissioner other than the Second
Respondent in terms of Section 145 of the Labour Relations Act 66 of 1995.
c)
Alternatively, remitting the matter back to the First Respondent for [the hearing of the]
matter de novo before a different Commissioner.’
[5] The LC (Molahlehi J) dismissed the application. In so doing, the learned Judge
held:
‘[15]
In the present instance the applicant was suspended on the 4th July 2007, he then
assumed employment with another employer on 23 July 2007 without authorisation from the
respondent. Obtaining work with another employer amounted to absenting himself without
authority. Although the applicant was on suspension, he was still accountable to the respondent
even during the period of suspension. He therefore required authorisation to absent himself to
attend employment with the third party. He also required authorisation to undertake employment
with another employer even during his suspension. In [taking] employment with Compu Africa
the applicant absented himself from his work without authorisation of his employer. Objectively
speaking the applicant could not make himself available if the suspension was to be [uplifted]
and was to be immediately instructed to report for work. Unlike in the case of absconding in the
private sector cases the respondent did not dismiss the applicant but the dismissal occurred by
the operation of the law. The requirement of a fair reason before termination does not apply. In
other words the employer does not have to show what steps it took to locate the whereabouts of
applicant before [invoking] the deeming provisions of the PSA.
[16] It needs to be emphasised the applicant took employment with Compu Africa without
authorization by the respondent. In accepting employment with Compu Africa the employee
absented himself from work without the authorization of the respondent and thereby subjected
his contract to termination by the operation of the law.
[17] It is for the above reasons that I am of the view that the commissioner cannot be faulted
for arriving at the conclusion that the first respondent did not have jurisdiction to entertain the
dispute of the applicant as there was no dismissal. It is also for these reasons that I found that
the case of the applicant [stands] to fail. I however do not [believe] that it would be fair to allow
costs to follow the results.’
[6] With the leave of the LC, the employee and Solidarity appealed to the Labour
Appeal Court (the LAC). The LAC (per Tlaletsi JA (Waglay AJP concurring) with Murphy
AJA dissenting) dismissed the appeal with costs. According to Tlaletsi JA:
‘The issue that was raised before the Commissioner as a point in limine was whether the
Bargaining Council had jurisdiction to entertain the matter. The question that had to be asked in
determining whether the Bargaining Council had jurisdiction is whether the employee had been
dismissed. If there was no dismissal, the Bargaining Council would not have jurisdiction. The
issue of jurisdiction does not depend on a finding of the Commissioner but on whether,
objectively speaking, the facts that would in law clothe the Bargaining Council with jurisdiction
indeed existed. If such facts were not present it would then mean that the Bargaining Council
did not have jurisdiction, notwithstanding any finding by the Commissioner to the contrary . . . .’
That issue, Tlaletsi JA approached thus:
‘[13]
For a deemed discharge provided for in s 17(5)(a)(ii) to take effect, no act or decision on
the part of the employer is required. The discharge takes effect by operation of law as soon as
the jurisdictional requirements are met. The jurisdictional requirements for the deemed
discharge to take place is: it must be an employee who is not excluded; who is absent without
permission; assumes other employment without the permission of the employer. All what the
head of the institution then does is to convey to the employee what has taken effect by
operation of law. The head of the institution does not have the power to stop or suspend what
takes effect by operation of law. It is therefore not within the head of the institution to decide or
make an election on what cause to follow and ignore what has taken effect by operation of law
and follow a procedure that he is in his opinion less draconian.
[14] I have already expressed my views on the HOSPERSA decision in a recent judgment of
this Court in [Grootboom v National Prosecution Authority (2013) 34 ILJ 282 (LAC) para 38] . . .
[16] In this case there is no doubt that the employee did not have the permission of the head
of the department when he assumed other employment. The question that must be considered
is whether the fact that he was on precautionary suspension pending an investigation and a
disciplinary enquiry for misconduct could be deemed to have been discharged when he
assumed new employment. Furthermore, whether when on suspension he could be said to
have been absent without permission.
[17] A situation anomalous to the one at hand arose in Masina v Minister of Justice, Kwazulu
Government. In that case an employee who was on suspension pending an investigation of
misconduct allegations assumed other employment. He was informed that he was deemed
discharged in terms of the applicable legislation. The then AD held, inter alia, that assuming
other employment must be comparable to resignation or incompatible with continued
employment with the department and:
“There is authority that in a case of wrongful dismissal the onus is on the employee to prove the
agreement and his subsequent dismissal; and that the onus thereafter is on the employer to
justify it . . .”
In my view, the above test is applicable in the facts and circumstances of this case in
determining whether the second appellant absents himself from his official duties without the
permission of his head of the institution and assumed other employment.
[18] In my view, the employee’s conduct fell within the circumstances envisaged in s
17(5)(a)(i) and (ii) of the PSA. He is an officer who assumed other employment without the
permission of the executing authority. The employee even though on suspension, remained an
employee of the department and was subject to its authority in terms of the contract of
employment . . . Accepting or assuming other employment amounts to being absent from duty
because the employee is now rendering his services to another employer which conduct is
irreconcilable with his employment with the department while under suspension. He left the Free
State where he was stationed and moved to Pretoria to put his labour at the disposal of the new
employer. In the circumstances, I am of the view that he was deemed to be discharged and
there was no decision to dismiss him. The Bargaining Council therefore, lacked jurisdiction to
entertain his dispute since he was not dismissed.’
[7] The further appeal by the appellants against the judgment of the LAC is with the
special leave of this court. Of the three respondents, only the employer participated in
the proceedings in the LC and the LAC. In this court the employer filed a notice with the
registrar withdrawing its opposition to the appeal and intimating that it would abide the
decision of the court. At the request of this court, Mr Grobler of the Bloemfontein Bar
appeared as amicus curiae, and the court is indebted to him for his assistance in the
matter.
[8] The Labour Relations Act 66 of 1995 (the LRA) provides: if there is a dispute
about the fairness of a dismissal, the dismissed employee may refer the dispute for
conciliation and arbitration to a bargaining council, if the parties to the dispute fall within
the registered scope of that council (s 191); and, in any proceedings concerning any
dismissal, the employee bears the onus of establishing the existence of the dismissal (s
192). In this case the commissioner’s conclusion flowed from his having found that the
employee had not discharged the onus resting upon him of proving that he had been
dismissed. Instead, so he held, the ‘employment contract terminates by operation of
law’. Both the LC and the majority of the LAC agreed with that finding.
[9] The principal thrust of the employee’s argument is that s 17(5)(a) of the Public
Service Act 103 of 1994 (the PSA) did not find application inasmuch as the employer
had failed to prove that he had absented himself from his official duties as contemplated
by that section. To the extent here relevant, s 17(5) provides:
‘(a)(i) An officer . . . who absents himself or herself from his or her official duties without
permission of his or her head of department, office or institution for a period exceeding one
calendar month, shall be deemed to have been discharged from the public service on account
of misconduct with effect from the date immediately succeeding his or her last day of
attendance at his or her place of duty.
(ii)
If such an officer assumes other employment, he or she shall be deemed to have been
discharged as aforesaid irrespective of whether the said period has expired or not.
(b)
If an officer who is deemed to have been so discharged reports for duty at any time after
the expiry of the period referred to in paragraph (a), the relevant executing authority may, on
good cause shown and notwithstanding anything to the contrary contained in any law, approve
the reinstatement of that officer in the public service in his or her former or any other post or
position, and in such a case the period of his or her absence from official duty shall be deemed
to be absence on vacation leave without pay or leave on such other conditions as the said
authority may determine.’
[10] A ‘deemed dismissal’ in terms of s 17(5)(a)(i) of the PSA follows by operation of
law. Accordingly, the notice of 19 October 2007 to the employee purportedly in terms of
that section, was purely a communication of a consequence that, in the employer’s
view, followed by operation of law (Minister van Onderwys en Kultuur v Louw 1995 (4)
SA 383 (A) at 388). Plainly, that section only finds application to an employee who
‘absents himself or herself from his or her official duties without permission’.
Foundational to the judgment of the majority of the LAC was the premise that the
employee was absent from duty without permission when he accepted outside work.
This is obviously incorrect. The employee was indeed absent from duty. But, having
been suspended, he was absent at his employer’s behest. And, not having been
assigned alternative duties, for the duration of his suspension he had no duties.
Logically therefore, he could thus not conceivably ‘absent himself from his official
duties’. In Grootboom v National Prosecuting Authority 2014 (1) BCLR 65 (CC) para 42
the Constitutional Court held:
‘It is so that the applicant was absent from his employment. He was absent because he was
suspended. This means that he was absent with the permission of his employer. Therefore, one
of the essential requirements of s 17(5)(a)(i) has not been met.’
In arriving at that conclusion, the Constitutional Court overruled the LAC, which in its
judgment - the subject of that appeal, namely, Grootboom v National Prosecution
Authority & another (2013) 34 ILJ 282 (LAC) - had held (para 37):
‘The fact that the appellant was on precautionary suspension and was not required to report for
duty is, in my view, not a bar to the application of section 17(5)(a) of the PSA.’
[11] The finding by the majority that the employee had effectively resigned by
assuming alternative employment is equally untenable. There was no evidence that the
employee’s temporary employment with Compu Africa was indeed incompatible with his
obligations to the employer. The employee was under suspension when he commenced
work with Compu Africa. Self-evidently, his suspension relieved him of his obligation to
render his services to the employer. The employee’s only obligation in return for his
salary was to make himself available should his suspension be lifted. His suspension
had not been lifted when he received the notice in terms of s 17(5) of the PSA. It bears
noting that an employee’s entitlement to payment and an employer’s obligation to pay
arises not from the actual rendering by an employee of his services but from his making
those services available to his employer (Johannesburg Municipality v O’Sullivan 1923
AD 201). That principle was endorsed by the Constitutional Court in Equity Aviation
Services (Pty) Ltd v CCMA 2009 (1) SA 390 (CC) para 54 in these terms:
‘As long as an employee makes himself or herself available to perform his or her contractual
obligation in terms of the contract of employment, he or she is entitled to payment despite the
fact that the employer did not use his or her services.’
[12] Moreover, Masinga v Minister of Justice, Kwazulu Government [1995] 2 All SA
350 (A), which the majority of the LAC called in aid, is not authority for the proposition
that assuming alternative employment equates to a resignation. As Murphy AJA
correctly observed in his dissenting judgment, the deeming provision in that case
differed quite significantly from that here under consideration. The relevant provision (s
19(29) of the KwaZulu Public Service Act 18 of 1985), which occupied the attention of
the court in Masinga read:
‘An officer who has been suspended from duty in terms of sub-section (4) or against whom a
charge has been preferred under this section and who resigns from the Public Service or
assumes other employment before such charge has been dealt with to finality . . . shall be
deemed to have been discharged on account of misconduct . . . .’
Of that provision, Nienaber JA stated (Masinga at 351):
‘Before dealing with the evidence, such as it was, it is helpful to consider the purpose of s
19(29). According to Didcott J:
“It is to prevent someone who is facing charges of misconduct from ducking these charges by
resigning and attracting the advantages of a resignation in good standing. It is to ensure that, if
anybody resigns while he is facing charges, he will be in as bad a position as he would have
been if the charges had been found proved and he had been dismissed on account of them. So
what is prevented is, as I say, a resignation in an attempt to avoid the charges and to prevent
the misconduct from being investigated and its presence or otherwise determined.”
The court a quo agreed with this analysis and so do I.’
Nienaber JA added:
‘An officer who resigns while under suspension shall be deemed to be discharged on account of
misconduct. In effect it means that his resignation is deemed to be an admission of misconduct
justifying a discharge from a date specified by the minister. So too, if the officer, without formally
resigning, assumes other employment. The phrase “assumes other employment” is thus used
as an elaboration or extension of the concept of “resignation”. “Assuming other employment”
must therefore be comparable in effect to a resignation; the “other employment”, in a word, must
be incompatible with continued employment with the department. It would be incompatible, on a
par with resignation, if his new conditions of service should prevent him from resuming
employment with the department at will if his suspension is lifted e.g. if he is obliged to give
notice to his new employer to do so. It would likewise be incompatible with his occupation as a
prosecutor if the nature of his new employment would tend to create a conflict of interests, e.g. if
his new employer had an interest in exploiting confidential information at his disposal or is
engaged in criminal pursuits. These are mere examples. They are not applicable in this case.
Here the only real issue is whether his work in the CLP could prevent him from resuming
employment with the department forthwith if his suspension were lifted.’
After alluding to the evidence adduced in that case, the learned Judge of Appeal
concluded (at 354):
‘The evidence of Chaplin was that the appellant was initially employed on a casual basis for
which he was paid by the hour. There is nothing to suggest that the basis of his employment
changed thereafter. On the face of it Chaplin’s further statement:
“He was not appointed on University conditions of service and there was no contract between
him and the University.”
can only mean, judged on the probabilities, that his employment was an ad hoc one, a loose
arrangement, which the appellant could terminate at will. And if that is so the appellant’s
employment with the university was not incompatible with his employment with the department
while he remained under suspension, no more so than if he hawked fruit or sold insurance on
commission or did casual paint work for a building contractor.’
It must therefore follow that reliance on Masinga was misplaced.
[13] In advising the employee of his discharge from service, the employer asserted
that it was invoking ‘Section 17(5)(a)(ii) read in conjunction with Section 30(b) of the
[PSA].’ Somewhat surprisingly, s 17(5)(a)(i) of the PSA was not alluded to in that notice.
That notwithstanding, the commissioner and both courts below approached the matter
as if the employer had indeed placed reliance on s 17(5)(a)(i). The finding of Tlaletsi JA
in favour of the employer appears to be predicated on a reading of s 17(5)(a)(ii) to the
effect that the assumption of outside employment by a suspended employee in and of
itself automatically leads to a deemed discharge. But that is not what that subsection
states. It provides that if ‘such an officer’ assumes other employment, he or she shall be
deemed to have been discharged ‘as aforesaid irrespective of whether the said period
has expired or not’ (my emphasis). Section 17(5)(a)(ii) is not intended to provide for a
deemed discharge by operation of law whenever an employee assumes other
employment. That subsection, which merely provides for the one calendar month
envisaged in subsection (i) to be abridged if certain requirements are met, is not a self-
standing provision. Linguistically, the phrase ‘such an officer’ in subsection (ii) is plainly
a reference to ‘the officer’ contemplated in subsection (i). And, ‘the officer’ contemplated
in subsection (i) is ‘an officer’ ‘who absents himself . . . from his . . . official duties
without permission . . . for a period exceeding one calendar month’. It thus follows that
unless the requirements of subsection (i) are met, subsection (ii) does not find
application. Here, as the employee was not an employee who had absented himself
without permission as envisaged in subsection (i), s 17(5)(a)(ii) did not find application.
[14] That leaves s 30(b) of the PSA, which provides:
‘[N]o officer or employee shall perform or engage himself or herself to perform remunerative
work outside his or her employment in the public service, without permission. . . .’
The employee may well have breached this provision, but in the light of the conclusion
of the commissioner that the council lacked jurisdiction, it did not occupy the attention of
either of the courts below. Nor could it, for whether he had breached that provision fell
to be decided by a duly convened disciplinary enquiry. That did not occur. In any event
had such a tribunal terminated the employee’s employment that would have constituted
a dismissal for misconduct. That is in the nature of a dispute in respect of which the
council would not have suffered a want of jurisdiction. Thus whether s 30(b) does
indeed find application to a suspended employee is a question which neither of the
courts below had to consider. Nor does this court.
[15] It must follow that the commissioner’s conclusion and also the conclusions by the
LC and LAC that the council lacked jurisdiction cannot be sustained. Accordingly, the
appeal must succeed. Counsel for the appellant urged upon us that in that event, given
the time that has elapsed, we should order the employee’s re-instatement. I do not
believe that we can accede to counsel’s request. The effect of the council’s order was to
dismiss the employee’s claim (that he had been unfairly dismissed) for want of
jurisdiction. Having taken the view that it lacked jurisdiction – erroneously as it now
turns out – the council did not enter into the merits. Nor could it. (See Makhanya v
University of Zululand 2010 (1) SA 62 (SCA).) That it must now do. The matter must
thus be remitted to it.
[16] As to costs: The LC, in dismissing the employee’s application, made no order as
to costs. Counsel for the appellant intimated from the Bar in this court that he would
abide that order. In dismissing the appeal, the majority of the LAC ordered each party
‘to pay [its] own costs’. Murphy AJA, who would have upheld the appeal, inclined to the
view that the employer should pay the costs of that appeal. There, undoubtedly, is much
to recommend that approach.
[17] In the result:
(1)
The appeal is upheld.
(2)
The order of the Labour Appeal Court is set aside and in its stead is substituted
the following order:
‘(a)
The appeal succeeds with costs.
(b)
The order of the Labour Court is set aside and substituted with:
“(i) The arbitration award issued by the second respondent, Commissioner
CL Dickens NO, under case number PSHS453-07/08 on 27 September
2008 is reviewed and set aside;
(ii) The matter is remitted to the first respondent, the Public Health and
Welfare Sectoral Bargaining Council, to arbitrate the dispute referred to it
by the first applicant, Solidarity, on behalf Jacobus Adriaan Hendrik
Kotze.”’
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellants:
J Grogan
Instructed by:
Serfontein Viljoen & Swart, Pretoria
Vermaak & Dennis Inc, Bloemfontein
Amicus Curiae:
S Grobler
Instructed by:
Claude Reid Attorneys
Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 May 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
HEPPLE v LAW SOCIETY OF THE NORTHERN PROVINCES (507/2013)
[2014] ZASCA 75 (29 May 2014)
The SCA today dismissed an appeal by two attorneys, Thomas Walter
Rothwell Hepple and Christiaan Hendrik Earle, whose names were removed
from the roll by the North Gauteng High Court (Wright AJ and Makhubele AJ)
for various transgressions and contraventions of the rules of the law society
and the Attorneys Act 53 of 1979, respectively. They were directors in an
incorporated practice in Centurion, Pretoria, under the name, Hepple
Attorneys Inc.
One of the main complaints against them was that they had conducted an
investment practise which did not generate the necessary cash flow to pay the
capital. The trust account was then used irregularly to make interest
payments. Interest to investors was paid out of the trust account. Between 24
July 2009 and 3 June 2010 a total of R268 479.64 was paid to investors out of
the trust account. These practices resulted in trust deficits. The attorneys tried
to conceal these trust deficits by manipulating bank reconciliation statements.
These irregularities persisted from 2005 to 2010, when they were uncovered
by a law society investigation conducted by a Chartered Accountant
appointed by the law society, Mr Vincent Faris. At some point there was a
shortfall of over R600 000 in the attorneys’ trust account.
One of the attorneys, Earle, admitted his wrong-doing but claimed that the
other directors, Hepple and two others Mr Gerhard Barnard and Mr Micheal
Johnson were not aware of what was going on. Hepple’s defence was that a
resolution was taken by the directors confining him to commercial litigation
and that he had little to do with the financial management of the firm did not
avail him.
On appeal the SCA held reiterated that the obligation to keep proper books of
account rested on both. Hepple’s claim that when he discovered what Earle
was doing in 2008, he asked him to stop was not enough. The court held that
such discovery should have caused him to be more vigilant and not to simply
to continue with his unquestioning behaviour.
The appeal was accordingly dismissed and the order of the high court
removing the two attorneys from the roll was confirmed. The SCA further
ordered the two attorneys jointly and severally, to pay costs to be taxed on the
scale as between attorney and client.
|
3156
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number : 392/06
Reportable
In the matter between :
ER24 HOLDINGS
APPELLANT
and
SMITH NO
1ST RESPONDENT
COMPENSATION COMMISSIONER
2ND RESPONDENT
CORAM :
SCOTT, CAMERON, CLOETE, MAYA JJA et THERON AJA
HEARD :
4 MAY 2007
DELIVERED : 18 MAY 2007
Summary: Compensation for Occupational Injuries and Diseases Act, 130 of
1993: remuneration ‘in kind’ as contemplated in the definition of ‘employee’
means the provision of something that has an objectively ascertainable value
which can serve as the basis for the assessment of an employer in terms of s
83 and for the calculation of compensation payable in terms of Chapter VI read
with Schedule 4 of the Act.
Neutral citation: This judgment may be referred to as ER24 Holdings v Smith
NO [2007] SCA 55 (RSA).
_________________________________________________________
JUDGMENT
CLOETE JA/
CLOETE JA
[1] On 10 August 2003 Ms Romy Staracek (‘Romy’) was a passenger in a vehicle
driven by Ms Natasha Swanepoel (‘Natasha’). The vehicle was involved in an
accident caused by the negligence of Natasha and Romy was seriously injured. At
the time of the accident Natasha was acting in the course and scope of her
employment as a shift leader with Emergency Room Company (Pty) Ltd, trading as
ER24, which operates an emergency service. Romy was a volunteer worker
undergoing vocational experience that was essential to enable her to qualify
ultimately as a paramedic, and she and Natasha were on their way to an accident
scene.
[2] Adv Irvin Smith was appointed as curator ad litem to Romy. In that capacity
he sued ER24 for damages in excess of R7 million allegedly suffered by Romy in
consequence of the accident. ER24 delivered two special pleas in answer to the
claim. In the first, ER24 alleged that Romy was an ‘employee’ as defined in the
Compensation for Occupational Injuries and Diseases Act, 130 of 1993 (‘the Act’);
that the damages claimed by her were in respect of an ‘occupational injury’; and that
in terms of s 35 of the Act, no action lay against it for the recovery of the damages
claimed. Section 35(1) of the Act provides:
‘(1)
No action shall lie by an employee . . . for the recovery of damages in respect of any
occupational injury . . . resulting in the disablement . . . of such employee against such employee’s
employer, and no liability for compensation on the part of such employer shall arise save under the
provisions of this Act in respect of such disablement . . .’.
In s 1 of the Act, ‘occupational injury’ is defined as ‘a personal injury sustained as a
result of an accident’ and ‘accident’ is defined as ‘an accident arising out of and in
the course of an employee’s employment and resulting in a personal injury . . . of the
employee’. In the second special plea, ER24 pleaded that it had concluded a
contract with Romy in terms of which its liability for the injuries suffered by Romy was
excluded; and in the alternative, that the contract fell to be rectified so as to exclude
such liability. ER24 also joined the Compensation Commissioner as a third party. In
those proceedings it sought an order declaring that Romy was an ‘employee’ as
defined in the Act and that the claim brought on her behalf accordingly lay against
the Compensation Commissioner in terms of s 35 of the Act. The court a quo
(Bashall AJ) dismissed both special pleas and the relief sought by ER24 against the
Compensation Commissioner, but granted leave to appeal to this court.
[3] The essential question raised by the first special plea and the third party
notice is whether Romy was an ‘employee’ as defined in s 1 of the Act, the relevant
part of which reads as follows:
‘”employee” means a person who has entered into or works under a contract of service or of
apprenticeship or learnership, with an employer, whether the contract is express or implied, oral or in
writing, and whether the remuneration is calculated by time or by work done, or is in cash or in kind
…’.
[4] The court a quo found that Romy had executed a contract with ER24, the first
paragraph of which provided that she
‘will not be regarded as an employee and is not entitled to any statutory protection, remuneration or
fringe benefits.’
If Romy is entitled to benefits under the Act, the exclusion of ‘statutory protection’
cannot apply to such benefits inasmuch as s 33 of the Act provides:
‘Any provision of an agreement existing at the commencement of this Act or concluded thereafter in
terms of which an employee . . . relinquishes or purports to relinquish any right to benefits in terms of
this Act, shall be void.’
[5] Some of the witnesses called to give evidence expressed the opinion that
Romy was not an employee and reference was made to correspondence from the
office of the Compensation Commissioner which was to the same effect. These
opinions are irrelevant. The question whether Romy was an employee as defined in
the Act, is a question for the court.
[6] The definition of ‘employee’ covers remuneration ‘in cash or in kind’. It was
not submitted ─ in my view, correctly ─ that a person who has entered into or works
under any of the three categories contract mentioned in the definition, would qualify
as an employee if that person received no remuneration. The evidence established
that Romy was not paid. It was however submitted on behalf of ER24 that it
remunerated Romy in kind by allowing her to travel in its vehicles, to be exposed to
actual accident scenes and to obtain vocational guidance and experience from its
more experienced personnel, all with the view to enabling her to gain the necessary
experience to qualify as a paramedic. I cannot agree with this argument.
[7] Remuneration ‘in kind’ to my mind means the provision of something that has
an objectively ascertainable value which can serve as the basis for the assessment
of an employer in terms of s 83 and for the calculation of compensation payable in
terms of Chapter VI read with Schedule 4, of the Act. Section 83(1) provides:
‘Subject to the provisions of this section, an employer shall be assessed or provisionally assessed by
the Director-General according to a tariff of assessment calculated on the basis of such percentage of
the annual earnings of his, her or its employees as the Director-General with due regard to the
requirements of the compensation fund for the year of assessment may deem necessary.’
Schedule 4 deals with the manner of calculating compensation and in each case
(save in regard to funeral costs) the benefit is calculated having regard to the
‘monthly earnings’ of the employee. Thus, for example, the compensation for
temporary total disablement payable in terms of s 47(1)(a) of the Act is periodical
payments representing 75 percent of an employee’s monthly earnings at the time of
the accident (subject to a maximum); and the compensation payable in terms of s
49(1) for permanent disablement of 30 percent, is a lump sum being 15 times the
monthly earnings of the employee at the time of the accident (subject to a minimum
and a maximum).
[8] If the argument on behalf of ER24 were correct, some monetary value would
have to be placed on the experience gained by employees for the purpose of
determining the employees’ annual earnings; and such experience would have to be
taken into account in determining the ‘monthly earnings’ of an employee for the
purposes of calculating the compensation payable ─ because there can be no
distinction in principle between a person such as Romy and an employee of ER24
properly so called who is paid a monthly salary. Both tasks are for practical purposes
impossible and neither is in my view required by the Act.
[9] Nor does s 51, referred to in argument, assist ER24. That section provides:
‘(1)
If as a result of an accident an employee sustains permanent disablement and at the time of
the accident ─
(a)
was an apprentice or in the process of being trained in any trade, occupation or profession; or
(b)
was under 26 years of age,
the Director-General shall determine the earnings of such employee in accordance with subsection (2)
for the purpose of the calculation of compensation in terms of section 49.
(2)(a)
In the case of an employee referred to in subsection (1)(a), his earnings shall be calculated
on the basis of the earnings to which a recently qualified person or a person in the same occupation,
trade or profession with five years more experience than the employee would have been entitled at
the time of the accident, whichever calculation is more favourable to the employee.
(b)
In the case of an employee referred to in subsection (1)(b), his earnings shall be calculated
on the basis of the earnings to which a person of 26 years of age would normally have been entitled if
at the time of the accident he had been performing the same work as the employee or a person in the
same occupation, trade or profession with five years more experience than the employee, whichever
calculation is more favourable to the employee.’
The purpose of this section is to benefit a person who is ex hypothesi an employee
(one in training or under 26 years of age) by providing for an increased benefit. This
section does not assist in determining whether a person being trained or under 26
years of age, is an employee.
[10] I therefore conclude that as Romy was not remunerated, whether in cash or in
kind, she was not an employee for the purposes of the Act. It follows that the first
special plea and the relief sought by ER24 against the Compensation Commissioner
were correctly dismissed by the court a quo.
[11] The principal contention by ER24 in its second special plea was that it had
contracted out of liability to Romy. The contention was based on the following clause
in the contract which the court a quo found that Romy had signed:
‘[Romy] indemnifies ER24 of any claim in respect of any loss, damage or injury howsoever caused
which may be sustained during the course of assisting with the operational requirements of the
Company.’
Scott JA in Durban’s Water Wonderland (Pty) Ltd v Botha and Another1 stated the
approach to be followed in construing such an exemption clause as follows:
‘If the language of a disclaimer or exemption clause is such that it exempts the proferens from liability
in express and unambiguous terms, effect must be given to that meaning. If there is ambiguity, the
language must be construed against the proferens. (See Government of the Republic of South Africa
v Fibre Spinners & Weavers (Pty) Ltd 1978 (2) SA 794 (A) at 804C.) But the alternative meaning upon
which reliance is placed to demonstrate the ambiguity must be one to which the language is fairly
susceptible; it must not be “fanciful” or “remote” (cf Canada Steamship Lions Ltd v Regem [1952] 1 All
ER 305 (PC) at 301C-D).’
[12] It was conceded on behalf of ER24 that the clause is ambiguous inasmuch as
it is not clear whether Romy indemnified ER24 for injuries caused to a third party or
to herself. It is only in the latter case that the clause could provide a defence to
ER24. The clause is, however, fairly susceptible to the former interpretation; apart
from anything else, if ER24 wished to exclude liability on its part to Romy, why, it
may be asked, would it limit such exclusion to loss, damage or injury sustained
during the course of her assisting with the operational requirements of the company?
Such a qualification makes far more sense if what is intended to be excluded is loss,
damage or injury caused by Romy to a third party while she was assisting in the
operational requirements of the company. The concession on behalf of ER24 was
accordingly well made. The ambiguity is fatal and the contra proferentem rule must
be applied against ER24.
[13] ER24 pleaded in the alternative in its second special plea that the exclusion
clause should be rectified so as to exclude any liability on its part to Romy. Counsel
representing ER24 did not abandon the point, although he did not press it in
argument either ─ and rightly so. It is trite that a party relying on rectification has to
show that the contract as rectified reflects the common continuing intention of the
parties thereto. Although the author of the contract who was employed by ER24
gave evidence as to what he intended the clause to mean, there was no evidence
1 1999 (1) SA 982 (SCA) at 989G-I; see also Johannesburg Country Club v Stott 2004 (5) SA 511
(SCA).
from which Romy’s intention could legitimately be inferred. It follows that ER24’s
second special plea cannot succeed either.
[14] The appeal is dismissed. ER24 is ordered to pay the costs of the curator ad
litem and the Compensation Commissioner including, in each case, the costs of two
counsel.
______________
T D CLOETE
JUDGE OF APPEAL
Concur: Scott JA
Cameron JA
Maya JA
Theron AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
18 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
ER24 HOLDINGS v I SMITH NO & ANOTHER
1.
The SCA today delivered judgment in a matter affecting part-time
volunteers who receive on-the-job training without remuneration. The
SCA held that in order to qualify for benefits as an employee under the
Compensation for Occupational Injuries and Diseases Act (COIDA), a
person has to be paid in cash or in kind; and payment in kind means the
provision of something that has an objectively ascertainable value. The
issue was determined in a case that arose when an unpaid volunteer,
injured while helping, sued the emergency relief company ER24.
2.
On 10 August 2003 Ms Romy Staracek was a passenger in a
vehicle driven by Ms Natasha Swanepoel. The vehicle was involved in
an accident caused by the negligence of Swanepoel and Staracek was
seriously injured. At the time of the accident Swanepoel was acting in
the course and scope of her employment as a shift leader with
Emergency Room Company (Pty) Ltd, trading as ER24, which operates
an emergency service. Staracek was a volunteer worker undergoing
vocational experience that was essential to enable her to qualify
ultimately as a paramedic, and she and Swanepoel were on their way to
an accident scene. Adv Irvin Smith was appointed as curator ad litem to
Staracek. In that capacity he sued ER24 for damages in excess of R7
million allegedly suffered by Staracek in consequence of the accident.
3.
ER24 argued that Staracek’s claim could not be brought against it,
but lay against the Compensation Commissioner because she was an
employee as defined in COIDA and the damages claimed on her behalf
were in respect of an occupational injury. ER24 argued that although
she received no cash, it remunerated Staracek in kind because it
allowed her to gain experience necessary for her to qualify as a
paramedic. This argument was rejected. The court held that it is
impossible to place a value on experience gained by a volunteer to
determine contributions payable by an employer to the Compensation
Fund or benefits payable to an employee under COIDA. The court held
that because Staracek was not remunerated in cash or in kind, she was
not an employee. COIDA was therefore not a bar to a claim against
ER24 for the negligence of Swanepoel which caused Staracek’s injuries.
The decision of the Johannesburg High Court was upheld, and ER24’s
appeal dismissed.
--ends--
|
3009
|
non-electoral
|
2015
|
`
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 198/2013
In the matter between:
GEORGE MAGWABENI
APPELLANT
and
CHRISTOPHER LIOMBA
RESPONDENT
Neutral citation: Magwabeni v Liomba (198/13) [2015] ZASCA 117 (11
September 2015)
Coram:
Cachalia, Majiedt and Zondi JJA
Heard:
28 August 2015
Delivered:
11 September 2015
Summary:
Delict - Malicious prosecution – requirements restated - whether
plaintiff proved prosecution initiated without reasonable and
probable cause and with malice.
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Local Division, Thohoyandou (Kganyago AJ sitting as
court of first instance):
The appeal is upheld with costs including the wasted costs occasioned by the
postponement of the appeal on 10 March 2014;
The order of the court a quo, as it relates to the defendant, is set aside and
replaced with the following order:
‘The plaintiff’s claim is dismissed with costs.’
JUDGMENT
Zondi JA (Cachalia and Majiedt JJA concurring):
[1] This appeal, with the leave of this Court, is against the judgment of the Limpopo
Local Division, Thohoyandou (Kganyago AJ) finding the appellant (‘the defendant’)
liable for damages for malicious prosecution. It arose from a complaint that he had
lodged against the respondent (‘the plaintiff’) with the South African Police Service,
which was followed by the latter’s arrest and detention. The plaintiff was charged
following the complaint, but the charges were subsequently withdrawn and he was
released after having spent a week in detention.
[2] Following the withdrawal of charges against him the plaintiff instituted two
separate actions in the court a quo, one against defendant and the other against the
Minister of Police (‘the Minister’). The basis of his claim against the defendant was
predicated upon the allegation that the defendant had wrongfully and maliciously set the
law in motion by laying a false charge of ‘theft /fraud/trespassing’ with the
Thohoyandou police. The plaintiff alleged that the defendant had no reasonable or
probable cause for doing so, and that he had maliciously conveyed this false information
to the police. The claim against the Minister was for his ‘unlawful’ arrest and detention.
The two actions were consolidated. The action against the Minister was dismissed. The
plaintiff does not appeal that outcome. This appeal by the defendant therefore concerns
only the adverse finding against him.
[3] The plaintiff’s evidence was that he was an electrical contractor, working for the
defendant, who ran a hotel business in Thohoyandou. He rented premises from the
defendant. A dispute arose between them and on 13 December 2008 the defendant
informed him by letter that he was terminating his services and that he had to vacate the
premises by 15 December 2008. The plaintiff refused to do so because, according to
him, he had not been paid for his work. On the morning of 17 December 2008 a large
contingent of police officers accompanied by the defendant arrived at the premises and
accused him of illegally occupying it. They told him that they were there to assist the
defendant to evict him from the premises. Despite his protestations he was handcuffed,
bundled into a police van and taken to the police station.
[4] There he was charged with malicious injury to property relating to damage to the
defendant’s electrical distribution-box and water-pump. He appeared before a magistrate
the following day, and was remanded in custody. A few days later the defendant
accompanied by a police official, came to the prison and handed him a peace order
dated 18 December. At his next court appearance on 23 December the charges were
withdrawn and he was allowed to leave.
[5] The defendant’s evidence was that on 17 December, he received a report that his
hotel was on fire. He proceeded to the hotel and on arrival detected a smell of smoke.
His employee, Ms Stella Zwitwano Mathoma was standing at the distribution box. It
was open; the wires had been removed and burnt, and the water-pump was damaged. He
suspected that the plaintiff was responsible for the damage because apart from himself,
the plaintiff, with whom he was embroiled in a conflict, was the only person who had
access to the distribution box.
[6] In his statement to the police following upon his complaint, he stated that he
desired ‘further police investigation’ concerning the damage to his property. He also
stated that the plaintiff had fraudulently compiled invoices, stolen items and connected
the DSTV to his room without his permission. When asked whether he had requested
the police to arrest the plaintiff, he insisted that he had not; he only wanted their
assistance to evict him, because he was refusing to leave. He also sought and obtained a
peace order from the magistrates’ court on 18 December which he believed the police
required to effect the eviction.
[7] Captain Tshivhuyahuvhi testified on behalf of the Minister. His evidence was that
while patrolling the area he received a complaint regarding malicious damage to the
defendant’s property. When he, together with nine other police officers, arrived at the
property the defendant was present. He showed them the damage to the wires in the
distribution box and to the water-pump. They then arrested the plaintiff and informed
him that the charge was malicious damage to property. When asked whether his purpose
was to evict the plaintiff, at the defendant’s behest, he denied this.
[8] The question before the court a quo was whether the defendant had initiated the
prosecution of the plaintiff maliciously. In upholding the plaintiff’s claim the court a quo
held, first, that the institution of criminal proceedings against the plaintiff by the
defendant was not based on any reasonable suspicion, but rather on a statement made by
his employee, Ms Mathoma. And since she was not called to testify, what she had said
to the police was inadmissible as evidence. Secondly, it accepted the plaintiff’s evidence
that his arrest had more to do with the defendant’s attempt to evict him rather than the
damage to his property. It reasoned that the defendant was aware that the plaintiff ‘. . .
did not damage his property, but wanted to use the State machinery in order to evict [the
plaintiff].’ It therefore concluded that the defendant had acted maliciously in initiating
the prosecution against the plaintiff. It is against these findings that the appeal is
directed.
[9] Malicious prosecution consists in the wrongful and intentional assault on the
dignity of a person encompassing his good name and privacy.1 To succeed with this
claim, a claimant must allege and prove that:
(i)
the defendant set the law in motion (instigated or instituted the proceedings);
(ii)
the defendant acted without reasonable and probable cause;
(iii)
the defendant acted with malice (or animo injuriandi); and that
(iv)
the prosecution failed.
These requirements were set out by this Court in Minister of Justice and Constitutional
Development & others v Moleko [2008] ZASCA 43; [2008] 3 All SA 47 (SCA) para 8
and later restated in Rudolph & others v Minister of Safety and Security & another
[2009] ZASCA 39; (5) SA 94 (SCA) para 16. See also Moaki v Reckitt and Colman
(Africa) Ltd & another 1968 (3) SA 98 (A).
[10] This Court in Beckenstrater v Rottcher and Theunissen 1955 (1) SA 129 (AD) at
136A-B set out the test for ‘absence of reasonable and probable cause’ as follows:
‘When it is alleged that a defendant had no reasonable cause for prosecuting, I understand this to mean
that he did not have such information as would lead a reasonable man to conclude that the plaintiff had
probably been guilty of the offence charged; if, despite his having such information, the defendant is
shown not to have believed in the plaintiff’s guilt, a subjective element comes into play and disproves
the existence, for the defendant, or reasonable and probable cause.’
[11] The test contains both a subjective and objective element, which means that there
1 Relyant Trading (Pty) Ltd v Shongwe & another [2006] ZASCA 162 [2007] 1 All SA 375 (SCA) para 5.
must be both actual belief on the part of the defendant and also that that belief is
reasonable in the circumstances (J Neethling, J M Potgieter and P J Visser Neethling’s
Law of Personality 2 ed (2005) at 176).
[12] The pleadings in this matter call for comment. The plaintiff’s particulars of claim
allege that the defendant maliciously set the law in motion by laying a false charge of
‘theft/fraud/trespassing . . .’ with the police, which gave rise to his arrest and detention.
There is no allegation of malicious injury to property, even though he was, despite the
defendant’s protestations, permitted to lead such evidence at the trial. However, the
issue was fully ventilated and we will decide the appeal on this basis.
[13] Another difficulty with the plaintiff’s cause of action was that there is no
allegation that the prosecution had failed, which rendered the pleading excipiable.2 But
it was clear from the evidence that the prosecution had terminated and the defendant’s
counsel was prepared to accept this.
[14] I therefore proceed to consider whether the evidence supports the allegation that
the defendant set the law in motion by falsely accusing the plaintiff of trespassing on his
property or of damaging the electrical wires in the distribution box and the water-pump.
Put another way, did he make statements to the police regarding these allegations
without an honest belief founded on reasonable grounds that they were true. This
analysis involves an enquiry into the defendant’s state of mind when he lodged his
complaint against the plaintiff.
[15] The evidence shows that there was a dispute between the parties, which led the
defendant to terminate the plaintiff’s service contract and to give him an eviction notice
to vacate the premises he was renting. The plaintiff refused to leave believing that he
was entitled to stay until the dispute regarding the amount that was owing to him was
settled. At the same time the defendant discovered that the electrical wires and a water-
pump on his property had been damaged. And after Ms Mathoma informed him that she
had seen the plaintiff near the electricity distribution box, he inferred that the plaintiff
was the person responsible for the damage.
[16] He testified that he went to the police because he believed that they would help
him with the eviction and he made a statement to the effect that he desired an
investigation regarding the damage to his property, for which he believed the plaintiff
was responsible. The police, who went to the property, saw the damage, and the
statement they subsequently obtained from Ms Mathoma confirmed this.
[17] The defendant was incorrect in his belief that the police could help him evict the
plaintiff from his property, even though he appeared to believe genuinely that the
plaintiff was unlawfully refusing to move from the property. This was a civil dispute for
which he should have gone to court to obtain an eviction order, rather than solicit the
assistance of the police in this cause. But this does not mean that he had no honest
belief in the truth of the allegations he made against the plaintiff regarding the
trespassing and the damage to his property.
[18] Once he had placed the allegations before the police they ought to have
investigated the case properly before merely arresting the plaintiff as Captain
Tshivhuyahuvhi incorrectly believed was his duty. But the fact that the police acted
hastily and possibly unlawfully in effecting the plaintiff’s arrest does not carry with it the
implication that the defendant instituted the proceedings without honestly believing that
the allegations against the plaintiff were true.
[19] In the circumstances it cannot be said that the defendant had no reasonable and
probable cause for the prosecution of the plaintiff, much less that he was malicious in
2 Thompson & another v Minister of Police & another 1971 (1) SA 371 (E) at 375.
instituting the investigation against him. In his mind he honestly believed that he had a
case for trespassing against the plaintiff when the latter refused to vacate his premises
upon the termination of the lease. And regarding the case of malicious injury to property,
he believed that the plaintiff was responsible because, apart from him, the plaintiff was
the only person who had keys for, and access to, the distribution box. And the
information conveyed to him by Ms Mathoma, whilst only circumstantial, confirmed his
belief. In short, his belief was founded upon an honest, though probably mistaken, belief
that the plaintiff had damaged his property. The court a quo erred therefore in holding
that the plaintiff had proved that his prosecution was malicious.
[20] The next aspect to consider is the order that was made by this court on 10 March
2014 in terms of which the plaintiff’s erstwhile attorneys, Erwee Attorneys, were called
upon to show cause why they should not be ordered to pay de bonis propriis the wasted
costs occasioned by the postponement of the matter caused by their alleged failure to
comply with rule 16(4) of the Uniform Rules of Court. This rule provides that where an
attorney acting in any proceedings for a party ceases so to act, he shall forthwith deliver
notice thereof to such party, the registrar and all other parties. It now appears that the
plaintiff’s erstwhile attorneys served and filed with the registrar of Limpopo High Court,
Thohoyandou a notice of withdrawal as the plaintiff’s attorneys of record on 31 May
2013, presumably before the appeal was placed on roll on 10 March 2014. I am
therefore satisfied that the plaintiff’s erstwhile attorneys complied with Rule 16(4) of the
Uniform Rules of Court. But this finding does not absolve the plaintiff from liability for
the wasted costs for the postponement.
[21] Finally, the court wishes to extend its gratitude to Mr Nel and Mr Mofokeng from
Bloemfontein Justice Centre who appeared on behalf of the plaintiff following the
withdrawal of his erstwhile attorneys.
[22] In the result the following order is made:
The appeal is upheld with costs including the wasted costs occasioned by the
postponement of the appeal on 10 March 2014;
The order of the court a quo, as it relates to the defendant, is set aside and
replaced with the following order:
‘The plaintiff’s claim is dismissed with costs.’
_________________
D H Zondi
Judge of Appeal
Appearances
For the Appellant:
M S Sikhwari
Instructed by:
Mathobo Rambau & Sigogo Inc, Thohoyandou
c/o Matsepes Inc, Bloemfontein
For the Respondent:
P W Nel (with him L M A Mofokeng)
Instructed by:
Legal Aid SA, Bloemfontein Justice Centre
|
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:
11 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.
George Magwabeni v Christopher Liomba (198/2013) [2015] ZASCA 117 (11 September 2015)
The Supreme Court of Appeal (SCA) today delivered a judgment upholding the appeal by the appellant, Mr
George Magwabeni against the judgment of the Limpopo Local Division, Thohoyandou.
The issue before the SCA was whether the appellant acted maliciously when he laid a charge of malicious injury
to property against the respondent with the police.
The respondent’s claim arose in the following circumstances:
The respondent was employed by the appellant to provide certain electrical services at the appellant’s hotel. The
appellant allowed the respondent to stay at his premises in terms of the lease during the duration of the contract.
A dispute arose between the appellant and the respondent as a result of which the appellant terminated the
respondent’s services and the lease. He told the respondent to vacate the premises by 15 December 2008. The
respondent refused to do so because, according to him, he had not been paid for his work. On 17 December
2008 following a report that was made to him, the appellant laid a charge of malicious injury to property against
the respondent with the police. He also asked the police to assist him to evict the respondent from the premises.
The police arrested the respondent and charged him with malicious injury to property. The respondent was kept
in prison for a week after which the charges against him were withdrawn. Thereafter the respondent sued the
appellant for damages for malicious prosecution.
The high court in upholding the respondent’s claim for malicious prosecution held that the institution of
criminal proceedings against the respondent was not based on any reasonable suspicion, and had more to do
with the appellant’s attempt to evict him rather than the damage to his property.
On appeal the SCA set aside the high court’s judgment. The SCA held that the appellant had reasonable and
probable cause for the prosecution of the respondent as in his mind he honestly believed that he had a case for
trespassing against the respondent when the latter refused to vacate his premises upon the termination of the
lease. And in relation to the case of malicious injury to property the SCA held that the appellant believed that
the respondent was responsible for the damage. The SCA accordingly found that the appellant was not malicious
when he instituted criminal charges against the respondent.
|
2770
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 868/2011
Not Reportable
In the matter between
JABULANI KENNY SITHOLE
Appellant
and
THE STATE
Respondent
Neutral citation:
Sithole v S (868/11) [2011] ZASCA 85
(31 May 2012)
Coram:
MTHIYANE DP, KROON and SOUTHWOOD AJJA
Heard:
17 May 2012
Delivered:
31 May 2012
Summary:
In deciding whether to convict or acquit the court must take all the
evidence into account – if accused’s version improbable court cannot convict unless
it can find that it is so improbable that it cannot be reasonably possibly true.
___________________________________________________________________
ORDER
___________________________________________________________________
On Appeal from:
North Gauteng High Court (Pretoria) (Hartzenberg J and
Mabuse AJ sitting as court of appeal) dismissing the appellant’s appeal against
convictions by the Nelspruit Regional Court of assault with intent to do grievous
bodily harm and murder.
Appeal upheld and order of the court below set aside and replaced with
following order:
‘The appeal is upheld and the convictions and sentences are set aside.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SOUTHWOOD AJA (MTHIYANE DP AND KROON AJA concurring)
[1] On 21 September 2005 the appellant was found guilty in the Nelspruit
regional court of assault, assault with intent to do grievous bodily harm and murder
and on 22 September 2005 he was sentenced to 3 months imprisonment for the
assault, 6 months imprisonment for the assault with intent to do grievous bodily harm
and 15 years imprisonment for the murder. The regional court ordered that all the
sentences run concurrently. On 17 August 2009 the appellant’s appeal against the
convictions of assault with intent to do grievous bodily harm and murder was
dismissed by the Pretoria High Court which immediately granted leave to appeal to
this court.
[2] The relevant convictions were based on the evidence of a single witness,
Rose Nkosi, and the medico-legal post-mortem examination report which was
handed in by agreement. The principal finding in the report was that the deceased,
Pinini Lucas Zwane, sustained a single stab wound which penetrated his chest close
to the sternum, between the third and fourth ribs, and caused his death. Only the
appellant testified in his defence.
[3] The incident took place at night at a village in the Mganduzweni Trust where
the appellant’s and the deceased’s girlfriends, respectively Doreen Vilakazi and
Rose Nkosi, resided. It was not in dispute that at about 18:00 on 14 August 2004 the
appellant arrived to visit Doreen and their five year old child and that when he saw
Nico, one of Doreen’s relatives, at the gate of her home the appellant wrongly
assumed that Nico was courting Doreen and flew into a rage and chased him away
from the house. There is no evidence that at that stage the appellant was armed with
a knife. It is also not in dispute that when the appellant returned to the house, angry
words were exchanged between the appellant and Doreen and that he slapped her
more than once and chased her when she ran away. It is also not in dispute that
Doreen ran to Rose Nkosi’s house where she took refuge until she and the appellant
were ordered to leave by Rose’s mother and that they both slept at appellant’s aunt’s
house and that neither was aware of the other’s presence there. The acts involving
Rose Nkosi (resulting in the conviction of assault with intent to do grievous bodily
harm) and the deceased (resulting in the conviction of murder) took place after the
appellant left Rose Nkosi’s house.
[4] Although the appellant admitted that he stabbed the deceased there are two
mutually destructive versions as to how this happened. It is common cause that
Rose Nkosi sustained a stab wound in the forearm when she attempted to separate
the appellant and the deceased while they were wrestling with each other.
[5] Rose Nkosi testified that she and the deceased were sitting in the deceased’s
motor vehicle which was standing in front of her house when the appellant
approached the vehicle in the company of two ‘boys’ whom she did not recognize.
The appellant approached her side of the vehicle and apparently wanted to open the
door but she locked it. The appellant then walked around to the driver’s door and,
according to Rose, the appellant asked the deceased if he, the deceased, wanted to
talk and the deceased got out of the vehicle. Without any discussion or provocation
the appellant produced an Okapi knife and stabbed the deceased. Rose did not see
where the appellant got the knife from and where he stabbed the deceased. All she
saw was the blood on his chest. Rose then got out of the vehicle and tried to
separate the appellant and the deceased. In the process Rose was stabbed on the
left forearm. She could not explain how this happened. She and the deceased then
ran away and hid next to the pump at the river where the deceased collapsed. He
died shortly afterwards.
[6] The appellant testified that after his altercation with Doreen Vilakazi he went
to ask Rose for payment of the purchase price of some perfume which he had sold
her. Rose said to him that he had turned against her because he had failed to catch
the person he was chasing and told him that the perfume was useless. The appellant
replied that if that was so she should return the perfume to him and Rose started
shouting at him. She told him that Pigza (the deceased) is the only person who could
control him. When Rose shouted at him, the appellant left. On his way back to
Doreen’s house a car stopped next to him. The deceased was driving and Rose was
sitting next to him. Rose pointed at the appellant and said ‘this is the man’ and said
something insulting to him. The appellant replied that he would not speak to her as
she is a woman and only the deceased would understand him because he is a man.
The deceased then called him over to the car. When the appellant reached the car,
the deceased, without saying a word punched him and they started to wrestle and
both fell down. They were still wrestling when the appellant managed to get to his
feet. He heard Rose say ‘Pigza catch’ and she tossed a knife to the deceased. The
knife fell between the appellant and the deceased and the appellant grabbed it
before the deceased could and they wrestled with each other for possession of the
knife. While they were wrestling Rose tried to separate them. She came between
them and he heard her cry out. He did not stab her deliberately and he could not say
whether he stabbed her by accident or not. He agreed that he stabbed the deceased
– he could not say how this happened or how many times – but this happened while
they were standing upright, struggling for possession of the knife. He did not see
where he stabbed the deceased. After the incident he dropped the knife and he does
not know what happened to it. The appellant denied that he was the aggressor and
said that he was defending himself. He did not stab the deceased deliberately.
[7] The regional court found that Rose Nkosi was a credible witness and that her
evidence was corroborated by Doreen Vilakazi’s evidence and, accordingly, that her
evidence could be accepted. The regional court also found that Rose’s evidence was
clear, straightforward and logical and that there was not a single improbability in her
evidence. The regional court did not find that the appellant had contradicted himself
or had deviated from his version but found that it could not believe a word of the
appellant’s testimony. This was because of the improbabilities in the appellant’s
evidence: the timing of the appellant’s demand for payment; Rose Nkosi throwing a
knife to the deceased while he was fighting with the appellant; the appellant’s ability
to pick up the knife; the appellant’s inability to remember when he stabbed the
deceased and the appellant’s inability to explain how Rose was stabbed. The
regional court therefore found that the appellant had not acted in self-defence and
had deliberately stabbed Rose Nkosi and the deceased.
[8] The State bears the onus of establishing the guilt of an accused beyond
reasonable doubt and he is entitled to be acquitted if there is a reasonable doubt that
he might be innocent.1The onus has to be discharged upon a consideration of all the
evidence. A court does not look at the evidence implicating the accused in isolation
to determine whether there is proof beyond reasonable doubt nor does it look at the
exculpatory evidence in isolation to determine whether it is reasonably possible that
it might be true. The correct approach is set out in the following passage from
Mosephi and others v R LAC (1980 – 1984) 57 at 59 F-H:
‘The question for determination is whether, in the light of all the evidence adduced at the
trial, the guilt of the appellants was established beyond reasonable doubt. The breaking
down of a body of evidence into its component parts is obviously a useful guide to a proper
understanding and evaluation of it. But, in doing so, one must guard against a tendency to
focus too intently upon the separate and individual part of what is, after all, a mosaic of
proof. Doubts about one aspect of the evidence led in a trial may arise when that aspect is
viewed in isolation. Those doubts may be set at rest when it is evaluated again together with
1 R v Difford 1937 AD 370 at 373, 383; S v Van der Meyden 1999 (1) SACR 447 (W) at 450a; S v Van
Aswegen 2001 (2) SACR 97 (SCA) para 8.
all the other available evidence. That is not to say that a broad and indulgent approach is
appropriate when evaluating evidence. Far from it. There is no substitute for a detailed and
critical examination of each and every component in a body of evidence. But, once that has
been done, it is necessary to step back a pace and consider the mosaic as a whole. If that is
not done, one may fail to see the wood for the trees’.2
In weighing the evidence of a single State witness a court is required to consider its
merits and demerits, decide whether it is trustworthy and whether, despite any
shortcomings in the evidence, it is satisfied that the truth had been told.3 It must state
its reasons for preferring the evidence of the State witness to that of the accused4
so that they can be considered in the light of the record. In applying the onus the
court must also, where the accused’s version is said to be improbable, only convict
where it can pertinently find that the accused’s version is so improbable that it cannot
be reasonably possibly true.5
[9] With regard to the conviction of assault with intent to do grievous bodily harm
it is clear that the regional court erred in finding that the accused deliberately
stabbed Rose ‘to get her away from him so that he can direct his aggression at the
deceased again’. There is no evidence that the appellant deliberately stabbed Rose.
Neither Rose nor the appellant could explain how she was injured and it is common
cause that this happened while the deceased and the appellant were wrestling with
each other and Rose attempted to separate them. The regional court introduced the
finding by saying ‘we believe’ but did not refer to the facts. The evidence does not
support their belief or the finding and the appellant’s appeal against this conviction
must succeed.
[10] As far as the conviction of murder is concerned the regional court’s reasoning
cannot be sustained.
2 Quoted with approval in S v Hadebe & others 1998 (1) SACR 422 (SCA) at 426f – h; S v Mbuli 2003
(1) SACR 97 (SCA) para 57.
3 S v Sauls 1981 (3) SA 172 (A) at 180C–G
4 S v Guess 1976 (4) SA 715 (A) at 718F–719 A.
5 S v Shackell 2001 (2) SACR 185 (SCA) para [30] 194g – i.
(a) It clearly erred in finding that Rose Nkosi’s evidence was corroborated by
that of Doreen Vilakazi. Doreen was not a witness to the events about
which Rose Nkosi testified. She therefore could not corroborate Rose’s
evidence.
(b) It clearly erred in finding that there was not a single improbability in Rose’s
evidence:
(i) It is highly improbable that the appellant, who had a good
friendship with Rose, and, up to this time had shown no hostility to
Rose, would suddenly, without provocation – or any reason at all –
decide to attack her.
(ii) It is highly improbable that the appellant who did not know the
deceased and had not been provoked by the deceased would
suddenly decide to stab him – obviously with the intention of killing
him;
(iii) It is highly improbable that if the appellant had just fatally stabbed
the deceased the appellant and the deceased would have
continued to wrestle with each other;
(iv) It is highly improbable that if Rose had such a restricted view of the
appellant and the deceased she would have been able to identify
the knife used by the appellant as an Okapi;
(v) It is highly improbable that Rose would have been able to identify
the knife as an Okapi if she had not had it in her possession;
(vi) It is highly improbable that if the appellant had decided to kill the
deceased by stabbing him that the appellant would have inflicted
only one stab wound;
(vii) It is highly improbable that the appellant would have stabbed the
windscreen of the deceased’s car.
(c) It erred in finding that Rose’s evidence was clear, logical and
straightforward. Apart from Rose’s ability to identify the knife as an
Okapi, Rose contradicted herself about where the appellant got the
knife. At first she testified unambiguously that she did not know. In cross-
examination she testified, equally unambiguously, that she saw the
appellant drawing the knife from his right hand side before he stabbed
the deceased.
(d) It erred in finding that not one word of the appellant’s evidence was
credible and could be believed. Most of the State’s evidence about the
attack on Doreen Vilakazi was not in dispute. The appellant admitted all
the essential facts: i.e. that he had gone to visit Doreen at about 18:00 on
the night in question; that he had seen Nico at the gate to Doreen’s
house; that he had chased Nico down to the river; that he had returned to
the house and had an altercation with Doreen; that he was angry
(because he had wrongly assumed that Nico was paying court to Doreen)
and had struck Doreen; that he had chased Doreen when she ran to
Rose’s house; that when Doreen got to Rose’s house and closed the door
he had kicked the door; that when Rose’s mother asked him to leave he
had done so without protest; that he had kicked his child when he set off
in pursuit of Rose and that he had slept at his aunt’s house. The court
obviously accepted that the appellant had slapped Doreen and not
punched her repeatedly, as she testified, and found the appellant guilty of
common assault. The court clearly accepted the appellant’s evidence on
this issue and contradicted itself about his credibility.
(e) It erred in finding that the appellant’s aggression runs like a thread through
the evidence. After the events involving Doreen the essential facts are all
disputed, particularly that the appellant was the aggressor.
(f) It erred in first accepting Rose’s evidence and then finding that the
appellant’s evidence could not be believed because of certain
improbabilities, without assessing it in the light of all the evidence as a
whole.
(g) Finally, and most importantly, it erred in failing to find pertinently that
because of the improbabilities in the appellant’s version it was so
improbable that it cannot be reasonably possibly true.6
6 S v Shackell 2001 (2) SARC 185 (SCA) para 30.
[11] Although the appellant’s version was also improbable the following factors are
consistent with the appellant’s version:
(1)
The fact that the two men wrestled with each other is consistent with
them fighting for possession of the knife;
(2)
The fact that neither the appellant nor Rose could explain how Rose
was injured shows that there was great confusion – once again
consistent with the two men fighting for possession of the knife;
(3)
The fact that Rose could identify the knife as an Okapi shows that she
had possession of the knife – consistent with the appellant’s evidence
that she threw the knife to the deceased;
(4)
The fact that there is no evidence to show that it was not possible for
the deceased to have been stabbed in the chest while the two men
were fighting for possession of the knife. This was a crucial factor which
had to be investigated and a pertinent finding made before the
appellant’s evidence could be rejected as not reasonably possibly true.
[12] In view of these factors the court’s rejection of the appellant’s version cannot
be supported and it cannot be found that his version was not reasonably possibly
true. On the appellant’s version he was attempting to keep the deceased from
obtaining possession of the knife and stabbing him and he, the appellant, had no
intention of stabbing the deceased. He was therefore not guilty of murder or any
other offence.
[13] It is significant that the tale appears to have grown in the telling. Rose added
detail as she testified (for example where the appellant got the knife from) and some
of her evidence makes no sense at all. The presence of the two ‘boys’ and the
appellant stabbing the windscreen of the vehicle was never explained. Doreen’s
evidence about the appellant assaulting the child is clearly an embellishment. If she
had witnessed this serious assault on her child she would have told the police and
the appellant would have been prosecuted for that assault as well.
[14] In the premises the appeal is upheld and the order of the court below is set
aside and replaced with the following:
‘The appeal is upheld and the conviction and sentences are set aside.’
________________________
B R SOUTHWOOD
ACTING JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANTS:
V Z Nel
Instructed by:
Justice Centre, Nelspruit;
Justice Centre, Bloemfontein.
FOR RESPONDENTS:
L Pienaar
Instructed by:
Director of Public Prosecutions, Pretoria;
Director of Public Prosecutions, Bloemfontein.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
31 May 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.
JABULANI KENNY SITHOLE v THE STATE
The Supreme Court of Appeal today upheld the appeal of Jabulani Kenny Sithole against his
convictions of assault with intent to do grievous bodily harm and murder in the Nelspruit
regional court on 21 September 2005. The appellant appealed unsuccessfully to the Pretoria
High Court which granted leave to appeal to this court. The Supreme Court of Appeal found
that on a consideration of all the evidence (as a court is obliged to do) the appellant’s version
was reasonably possibly true and that he was not guilty of the offences charged or any other
offence on the facts in question.
|
1327
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
JUDGMENT
Case No: 211/09
In the matter between:
FEDBOND PARTICIPATION MORTGAGE BOND APPELLANT
MANAGERS (PTY) LTD
v
INVESTEC EMPLOYEE BENEFITS LTD FIRST RESPONDENT
CAPITAL ALLIANCE LIFE LTD SECOND RESPONDENT
CHANNEL LIFE LTD THIRD RESPONDENT
Neutral citation:
Fedbond Participation Mortgage Bond Managers v Investec
Employee Benefits (211/2009) [2010] ZASCA 42 (31 March
2010).
Coram:
Harms DP, Mthiyane, Mlambo, Cachalia JJA et Saldulker AJA
Heard:
25 February 2010
Delivered:
31 March 2010
Summary:
Contract – extrinsic evidence inadmissible to contradict written terms – evidence
of terms of alleged common understanding inconsistent with written terms.
Collective Investment Schemes Control Act – withholding of consent by manager
of a collective investment scheme – to be accompanied by reasons – failure to
respond to notice of withdrawal amounts to withholding of consent without reason
– does not relieve manager of obligations arising from agreement – relationship
between participant and manager does not exclude manager’s obligation to
make payment to a participant who has complied with the agreement.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Malan J sitting as
court of first instance).
The following order is made:
The appeal is dismissed with costs including the costs consequent upon the
employment of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
MLAMBO JA
Introduction
[1] This appeal with the leave of this court, is against a judgment and order of
the South Gauteng High Court (Malan J). In terms of that order the appellant,
Fedbond Participation Mortgage Bond Managers (Pty) Limited (Fedbond), was
ordered to pay to the first and second respondents certain amounts of money
which were invested with it in terms of the Collective Investment Schemes
Control Act 45 of 2002 (the CIS Act). The funds were invested in a collective
investment scheme in participation bonds,1 called the Fedbond Participation
1 Section 52(1): ‘[A] scheme of which the portfolio, subject to the provisions of this Act, consists
mainly of assets in the form of participation bonds, and in pursuance of which members of the
Mortgage Scheme (the scheme) administered by Fedbond. The scheme is the
successor in title, in terms of the CIS Act, to the Participation Mortgage Bond
Scheme, previously operated by Fedbond in terms of the Participation Bonds Act
55 of 1981 (the Part Bonds Act) which was repealed by the CIS Act.
[2] The type of investment we are dealing with was aptly described by this
court in the following terms:
‘In broad, the Act is designed, inter alia , to enable financial institutions to offer to
investors, many of whom may wish to invest relatively small amounts of money, an
opportunity of participating with other investors in an investment secured by a registered
mortgage bond over immovable property and yielding a competitive rate of interest.
Each participant who holds such a participation in a participation bond becomes a
creditor of the mortgagor to the extent of the participation. The debt so created is owed
by the mortgagor to the participant and not to the nominee company in whose name the
bond is registered and the rights conferred by the bond are deemed to be held by the
participants (s 6(1)).’2
Background
[3] Before I consider the issues raised in the appeal it is necessary to traverse
the background circumstances of the matter in some detail. In July 1997
Fedbond concluded a written agreement with Fedsure Life Assurance Ltd
(Fedlife). In terms of the agreement Fedlife undertook to pay funds to Fedbond
from time to time and authorised the latter to invest those funds on its behalf
upon the security of a particular participation bond3 or bonds in the scheme. The
salient features of the agreement are briefly that:
public are invited or permitted to acquire a participatory interest in all the participation bonds
included in the scheme.’
2 Syfrets Participation Bond Managers v Commissioner, SARS 2001 (2) SA 359 at 363G-H.
Though the court there was dealing with the Part Bonds Act, this description remains true in
terms of the CIS Act.
3 Section 52(1) ‘Participation Bond’ means – ‘a mortgage bond over immovable property –
3.1
Fedbond was defined as ‘the Manager’4 and Fedlife as the ‘participant’;5
3.2
Fedbond Nominees (Property) Ltd (second respondent in the court a quo)
was formed and registered for the purpose of holding participation bonds,
included in the scheme, in trust as nominee for or representative of
participants in the scheme;
3.3
Fedlife authorised Fedbond to invest on its behalf, upon the security of a
particular participation bond or of any participation bonds, such funds as
Fedlife could pay to or held by Fedbond on its behalf with specific
instructions directing the investment of such funds upon the security of a
participation bond or participation bonds;
3.4
any money received by Fedbond from Fedlife would remain invested for a
period of not less than five years in a participation bond or bonds included
in the scheme.
[4] Pursuant to the conclusion of the agreement and from July 1997 to August
2000 Fedlife made 63 payments, totalling R46 030 000, to Fedbond for
investment in the scheme. Thereafter and during 2001 Fedlife was acquired by
the Investec Group and its name was, on 16 October 2001, changed to Investec
Employee Benefits Limited (IEB), the first respondent in this appeal.
[5] In that year and subsequent to the acquisition of Fedlife, Fedbond sent a
letter to Investec Asset Management (Pty) Ltd (IAM), IEB’s asset manager,
confirming the total amount of the investment (R46 030 000) in the scheme. In
(a) which is described as a participation bond and is registered as such in the name of a
nominee company and is included in a collective investment scheme in participation bonds; and
(b) which is a first mortgage bond or which ranks equally with another first participation bond and
has the same mortgagor.’
4 Section 1: ‘A manager means a person who is authorised in terms of this Act to administer a
collective investment scheme.’
5 Section 52(1): ‘A participant means a person who holds a participatory interest in all the
participation bonds included in a collective investment scheme in participation bonds.’
that letter Fedbond set out details of each investment, making up the total, as
well as the maturity dates thereof. The letter also stated:
‘The investment is for a period of five years and the said proceeds shall not be paid to
the participant before expiry of the five years. The investments will only be scheduled for
repayment on receipt of the required 3 (three) months’ written notice. Interest is paid
monthly in advance to the nominated bank account as per the participant.’
There is also email correspondence from Fedbond to IAM in which it was clarified
that the name change from Fedlife to IEB did not affect the maturity dates of the
investments.
[6] In July 2006 Deneys Reitz Attorneys, acting on the instructions of the
respondents, gave Fedbond three months’ notice of the withdrawal of the total
investment from the scheme. In response, Fedbond questioned the identity of the
respondents as being the correct investors in the scheme, stating that in its
records Fedlife had made the investments. Fedbond further requested the
attorneys to provide a basis on which the respondents claimed ownership of the
investments. This response was said to be necessary in terms of the Financial
Intelligence Centre Act6 (FICA) which was said to make it obligatory on a
manager of a scheme to have correct identities of its investors. The lawyers in
return referred Fedbond to Fedlife’s name change in 2001 and also tendered
delivery of any document required for FICA purposes relevant to IEB. The letter
concluded by stating that the July 2006 letter constituted formal notification to
Fedbond of IEB’s intention to withdraw the total investment.
[7] No further communication was received from Fedbond in this regard until
10 months later, in June 2007, when IEB requested Fedbond, in its capacity as
manager of the scheme, to note in its records that amounts of R 35 430 000 and
R5 245 000, of its investment in the scheme, were transferred to Capital Alliance
6 Act 38 of 2001.
Life Ltd (CAL) and to Channel Life Ltd (Channel), the second and third
respondents herein, in terms of a reinsurance agreement and a sale of business
arrangement, respectively. Fedbond was further requested to confirm within
seven days that it had noted CAL and Channel’s investments as well as
confirmation that all fees and charges were paid in full. Fedbond did not respond
to the notification and in October 2007 Werksmans Attorneys sent a demand to it
for payment of the amounts of R5 355 000, R35 430 000 and R5 245 000 to IEB,
CAL and Channel respectively. That demand was based on the July 2006
withdrawal notice and June 2007 notification of CAL and Channel’s investments.
When the demand evoked no response from Fedbond, proceedings were
initiated in the court a quo resulting in the order referred to at the beginning of
this judgment.
[8] The thrust of Fedbond’s opposition before Malan J, to the relief sought by
the respondents, was premised on a defence disavowing their entitlement to
withdraw the total investment on the basis of an alleged common understanding
amongst members of the Fedsure Group which is said to have included Fedllife.
Fedbond persists with that argument in this appeal amongst others.
The common understanding argument
[9] Primarily Fedbond contended that IEB was not entitled to withdraw the
total investment because from 1990 to 2000 there was a common understanding
by members of the Fedsure Group that Fedlife would continuously invest in
Fedbond and that those investments, would form part of the long term investment
arrangements between members of the group which would never be called up
simultaneously; that in the event of the investments being withdrawn, this would
be gradual and individual notices were required in relation to each investment at
intervals not shorter than those at which those investments had initially been
made. In this regard it was contended on Fedbond’s behalf that these terms were
incorporated, tacitly at least, into each investment made by Fedlife in the
scheme.
[10] In considering this argument the relevant regulatory framework which
governs the agreement concluded by the parties, should also be considered in
addition to the evidence. In this regard s 58 of the CIS Act provides:
‘Minimum investment period
An agreement in terms of which a manager accepts money for investment in a collective
investment scheme in participation bonds must provide that such money is invested in
such scheme for a period of not less than five years.’
[11] Furthermore, the agreement is subject to certain rules published in the
Government Gazette.7 The material provisions thereof are inter alia:
‘20.
Every participation bond must provide that the mortgagor must pay interest on
the principal debt secured by such bond to the manager as agreed upon by the
manager and mortgagor. Such interest, less the manager’s administration fee
and such other fees and charges as imposed and determined by the manager
from time to time must within 30 days after the date on which interest payments
have been received from the mortgagor, be paid by the manager to participants.
22(1) A participant may transfer, cede or encumber part or the whole of his or her
participatory interest without the consent of the mortgagor concerned provided
that –
(a)
the manager is not obliged to note such cession, transfer or
encumberance unless informed in writing thereof and such fees and
charges as may be determined by the manager have been paid by such
participant or his or her successor;
(b)
such cession, transfer or encumberance is only enforceable against the
manager if the manager has confirmed in writing that the cession, transfer
or encumberance has been noted and that the aforementioned fees and
charges have been paid in full; and
7 GN 577 in GG 24984 of 28 February 2003.
(c)
the manager may refuse to note such cession, transfer or encumberance
if such participatory interest is ceded or transferred to, or encumbered in
favour of, more than one person with the result that the extent of any
participatory interest held by any such person is less than the minimum
investment determined by the manager from time to time.
(2)
A participant may, upon the expiry of the 5-year period referred to in section 58 of
the Act, withdraw part or the whole of the funds invested by him or her in a
scheme, if –
(a)
the manager has consented to such withdrawal: Provided that the
manager may withhold such consent subject thereto that the manager
furnishes reasons for withholding such consent;
(b)
the participant has given the manager written notice, the period of which
must be determined by the manager and disclosed in the application
form, of his or her intention to withdraw such investment; and
(c)
the participant has paid such fees and charges as the manager may
impose.’
[12] Lastly the agreement was also subject to Fedbond’s terms and conditions,
contained in a document issued to investors. Some of the material terms are that:
12.1 Fedbond could accept money for investment in the scheme provided that
such money was invested in such scheme for a period of not less than five
years;
12.2 the Registrar had published rules consistent with the CIS Act for the
administration of a collective investment scheme in participation bonds;
12.3 the rules permit transfer, cession or encumberance by a participant of part
or the whole of his participatory interest;
12.4 a participant, by signature to the document agreed that upon the expiry of
the five year period, the participant could withdraw his investment subject
thereto that it had given Fedbond three calendar months’ written notice
and, in terms of rule 22(2) –
12.4.1
Fedbond had consented to such withdrawal;
12.4.2
the participant had given Fedbond three calendar months’ written
notice; and
12.4.3
the participant had paid such fees and charges as Fedbond may
impose.
The document containing the terms was signed as required therein.
[13] Counsel for Fedbond argued that IEB was aware of the common
understanding which, he said, was communicated to IAM, in a letter from
Fedbond dated 2 July 2003. That letter stated inter alia:
‘The investments were not placed as a five year investment but were part of the long
term funding arrangements of Fedsure for Fedbond.’
It is important to state that IAM questioned this statement, stating that it was not
aware that this was so and requested full details of the arrangement referred to.
No such details were forthcoming from Fedbond and when IAM persisted in its
request Fedbond stated that it would not litigate the issue through
correspondence.
[14] Properly viewed Fedbond’s argument in this regard suggests that the
written agreement does not contain all the terms agreed by the parties and seeks
the admission of facts that add to the terms thereof. This is referred to as the
integration rule in terms of which extrinsic evidence of additional terms of a
written agreement not embodied therein is admitted. See Union Government v
Vianini Ferro-Concrete Pipes (Pty) Ltd8 where the following was stated:
8 1941 AD 43 at 47. See also Johnston v Leal 1980 (3) SA 927 (A) at 944B-D: ‘Furthermore, in
my view, an instructive and relevant analogy is provided by cases of what is termed a "partial
integration". Where a written contract is not intended by the parties to be the exclusive memorial
of the whole of their agreement but merely to record portion of the agreed transaction, leaving the
remainder as an oral agreement, then the integration rule merely prevents the admission of
extrinsic evidence to contradict or vary the written portion; it does not preclude proof of the
additional or supplemental oral agreement.’; Capital Building Society v De Jager & others; De
Jager & another v Capital Building Society 1963 (3) SA 381 (T) at 382B-C; Rielly v Seligson and
‘Now this Court has accepted the rule that when a contract has been reduced to writing,
the writing is, in general, regarded as the exclusive memorial of the transaction and in a
suit between the parties no evidence to prove its terms may be given save the document
or secondary evidence of its contents, nor may the contents of such document be
contradicted, altered, added to or varied by parol evidence . . . .’
[15] The terms of the common understanding imply that the investments were
for longer than five years and that there could be no lump sum withdrawal. These
terms clearly impugn the written terms which provide for the maturing of the
investments after five years. I point out further that the CIS Act, the rules and
Fedbond’s terms and conditions, which govern the agreement, all provide for an
investment period of five years after which the investments mature. Clearly the
terms of the alleged common understanding are inconsistent with and contradict
the clear terms of the written agreement. They are for that reason inadmissible
and unenforceable.
[16] Furthermore, the evidence of the parties’ dealings with each other clearly
excludes the possibility of the parties having come to an agreement
encompassing the terms of the common understanding. I point out in this regard,
and this is not in dispute, that when notice was given to Fedbond of the
withdrawal of the total investment, it evoked no response from the latter asserting
the terms of the common understanding. In my view, and purely as a matter of
logic, receipt of the withdrawal notice should have impelled Fedbond to expressly
withhold consent to the withdrawal and to cite the existence of the terms of the
common understanding as a reason. As we all know the details of the common
understanding only came in the answering affidavit despite being requested by
IAM some three years before the onset of litigation.
Clare Ltd 1977 (1) SA 626 (A) at 628D-E; National Board (Pretoria) (Pty) Ltd v Estate Swanepoel
1975 (3) SA 16 (A) at 26A-C.
[17] The July 2003 letter is of no assistance to Fedbond’s argument. Quite
apart from the fact that this letter was not precipitated by a withdrawal notice,
IAM clearly did not accept that the investments were for a period longer than five
years, hence its insistence that details of the alleged long term ‘arrangement’ be
provided. The evidence we have vindicates IAM’s refusal to accept that the
investments were not for five years. Such evidence is in Fedbond’s August 2001
letter to IAM referred to in para 5 above as well as Fedbond’s email confirmation
also referred to above that the five year investment period was not effected by
the name change.
[18] Incidentally the August 2001 letter and its contents was not referred to nor
corrected in the July 2003 letter. Importantly, and as I state above, the latter letter
is inconsistent and contradictory to the clear terms one finds in the agreement,
whilst the earlier letter confirms these. I am not persuaded by the explanation in
the answering affidavit that the author of the August 2001 letter, Alet Horn (Horn),
was a ‘new’ employee who was unaware of the common understanding. If this
was indeed so, one can justifiably wonder why Horn, who must have been in
charge of the investment at the time, as is clear from the email correspondence,
was not aware of such important terms of what was probably a very large
investment.
[19] In my view the existence of the alleged common understanding was
correctly rejected by Malan J. It is clearly an ill-conceived attempt to avoid
honouring the withdrawal of the investment.
Withholding of consent in terms of rule 22(2)(a).
[20] The other basis advanced for disputing the respondents’ entitlement to
withdraw their investments is that Fedbond had not consented thereto within the
contemplation of rule 22(2)(a). As is apparent from the rule, referred to in para 11
above, the manager of a collective investment scheme may not unreasonably
withhold its consent to a withdrawal but it must provide a reason(s) if it does so.
As we know, Fedbond neither gave nor withheld consent when the requisite
notice was given to it. It simply did nothing. It cannot be argued that Fedbond’s
letter questioning the identity of the respondents as being the correct investors,
on receipt of the withdrawal notice, was a reason for withholding consent. Neither
can it be argued that Fedbond withheld consent due to non-compliance with
FICA requirements as the documents relevant in this regard were properly
tendered to it.
[21] Fedbond’s inaction amounts, I surmise, to a withholding of consent without
a reason. For this reason rule 22(2)(a) affords Fedbond no respite. It simply has
no legal basis in terms of that rule to frustrate the respondents’ legitimate
intention to withdraw their investments withholding consent without a reason. Its
inaction cannot, in my view, shield it from its obligations in terms of the
agreement, the rules and its terms and conditions. This conclusion applies
equally to Fedbond’s argument that it did not consent to the cession by IEB of
portions of its investment to CAL and Channel. In that regard too Fedbond simply
failed to respond to the notice requesting it to note the cessions.
Debtor and creditor relationship
[22] Counsel for Fedbond argued finally that the order issued by the court a
quo inclusive of the order for payment of interest was incompetent as it
presupposed a debtor-creditor relationship between Fedbond and IEB.
Reference was made in this regard to s 6(1) of the Part Bonds Act which
provides:
‘Rights of participant – (1) The debt secured by a participation bond shall to the extent of
the participation granted to any participant be a debt owing by the mortgagor to such
participant and not to the nominee company, and the rights conferred by the registration
of any such bond shall, notwithstanding the registration of the bond in the name of the
nominee company, be deemed to be held by the participants.’
Counsel argued that the relationship encapsulated in that provision, which was
not altered by the repeal of the Part Bonds Act, between a manager of a scheme
and a participant was not that of a debtor and creditor. It was further argued,
relying on the judgment of this court in Syfrets Participation Bond Managers Ltd v
Commissioner, South African Revenue Service9 that a participant can only claim
repayment of its investment in a scheme from the mortgagor, and not from the
manager. This argument is also reliant on the provisions of rules 1510 and 1611
which provides for the procedure when a participant seeks to claim its investment
from a mortgagor in a scheme.
[23] I am of the view that the relationship created when an investment is made
in such a scheme is tripartite in nature. Whilst the respondents, as investors, are
in fact creditors vis a vis the mortgagor(s), Fedbond remains in the picture as the
administrator of the investment scheme. Whilst it is further correct conceptually
that Fedbond as manager of the scheme does not become a debtor to a
participant, the agreement between them provides for certain obligations by
either. The agreement encompasses a relationship between Fedbond and the
respondents in terms of which once they have complied with the agreement and
the rules in terms of notice and payment of the relevant fees and charges,
Fedbond as manager must honour the withdrawal notice, unless it contends that
the funds are not available which will kick-start the process envisaged in rule 15
and 16. Those rules essentially provide for the procedure to be followed by a
9 (Supra) at 366A-B.
10 Rights of participants: Recovery of debts – Despite rule 14 a participant may in respect of a
participation bond instruct the manager to take all the necessary steps through and in the name
of the nominee company to recover from the mortgagor such portion of the principal debt as is
necessary to repay in full the participatory interest of such participant in such bond: Provided that
a participant may only so instruct the manager if – (a) the mortgagor has failed to comply with the
conditions of the bond; or (b) subject to the terms and conditions of the bond, the participants in
the scheme (excluding the manager) in which such participation bond is included, who hold a
majority in value of the participatory interests in such scheme, have instructed the manager in
writing to recover from the mortgagor such portion of the principal debt as is necessary to repay
in full the participatory interests of all such participants.
11 Rights of participants: Legal proceedings – A participant may not take any action, legal or
otherwise, in his or her own name to enforce the rights held by such participant in any
participation bond included in a scheme.
participant regarding the enforcements of its injusts against a defaulting
mortgagor.
[24] In this regard when one takes into account the agreement signed between
the parties that investments were placed for five years, it must follow that once a
participant gives notice to the manager to withdraw any portion of its investment
on maturity thereof, the manager must honour the withdrawal notice. It can avoid
honouring the requested withdrawal if for instance it cannot effect the withdrawal
in view of the fact that the funds have not yet been received from the mortgager.
This is not the case asserted here by Fedbond. The simple fact of the matter is
that Fedbond has not asserted that it cannot pay and in terms of the agreement it
must pay. The order of the court a quo was clearly correct including its order for
the payment of interest. Clearly IEB as investor relies on the agreement and the
terms thereof to say that on maturity of its investment it can withdraw it and that
is what it did in this matter. I also point out that my conclusion does not detract
from that in Syfrets, which in the main restated the general principles of the
relationship. In any event the circumstances of our case bear no relation to those
in Syfrets. Lastly, on this point, it is necessary to also point out that this case has
nothing to do with the situation envisaged in rules 15 and 16. Clearly the order
granted by Malan J was competent in all respects.
[25] In the final analysis I conclude that the respondents were perfectly within
their rights to withdraw their investment at the expiry of five years. At that time
the investments had matured in terms of the written agreement. The argument
that individual notices of withdrawal were required is misconceived. Nowhere in
the agreement, the rules and terms and conditions does one find such a
limitation. In the circumstances the appeal must fail.
[26] The following order is granted:
The appeal is dismissed with costs including the costs consequent upon the
employment of two counsel.
_______________
D MLAMBO
JUDGE OF APPEAL
HARMS DP (Mthiyane and Cachalia JJA and Saldulker AJA concurring):
[27] I have read the judgment of Mlambo JA, and while I agree with his
conclusion, I prefer to formulate my reasons somewhat differently.
[28] Malan J, in the high court, granted judgment in favour of the first
respondent, Investec Employee Benefits Ltd (‘Investec’), and the second
respondent, Capital Alliance Life Ltd for, respectively R10 696 122.57 and R35
333 877.43. The reason for the split award is that Investec, which was previously
known as Fedsure Life Assurance Ltd, had ceded part of its claim (which
consisted of a number of discrete claims) to Capital. Much time was wasted in
the court below on the validity of the cession but the issue was not argued in this
court because it would have made no difference to the outcome of the case: the
appellant, Fedbond Participation Mortgage Bond Managers (Pty) Ltd (‘Fedbond’)
is either liable for the whole amount or it is not. I shall, accordingly, not refer to
Capital any further. The third respondent, Channel Life Ltd, played no role in the
appeal and will be ignored.
[29] In addition to the costs order, Malan J ordered payment of interest at the
statutory rate. The correctness of this order relates to the nature of Fedbond’s
alleged liability, something to which I shall return during the course of the
judgment.
[30] Fedbond is a manager of a participation bond scheme. Investec invested
during the period 1 July 1997 and 13 August 2000 the sum of R 46 030 000 with
Fedbond in terms of the Participation Bonds Act 55 of 1981. The investment
consisted of a number of tranches, significantly 13 on 27 May 1998, 12 on 26
September 1999 and 17 on 13 August 2005. As manager of a participation bond
scheme, Fedbond had framed rules that were approved by the registrar and
these rules contained the form of agreement between a participant (Investec)
and the manager.
[31] The written agreement between Investec and Fedbond authorised the
latter to invest on Investec’s behalf, upon the security of a particular participation
bond, the amounts invested by Investec from time to time. It also provided that
the monies would remain invested for a period of not less than five years. This
accorded with the provisions of the Act which provided that money invested upon
the security of a participation bond included in a participation scheme ‘shall
remain invested for a period of not less than five years’ (s 3(3)(d)). The rules
stated that the period of five years would be calculated from the date on which
the funds were invested in a participation in the scheme; and that three months’
notice was required for repayment after the five year period. Based on this,
Investec’s investments matured between 2002 and 2005, and in spite of the
necessary notice, Fedbond refused to repay any amounts.
[32] Fedbond’s first defence is based on the so-called common understanding
between the parties which, according to the argument, overrode the written
agreement and the rules. The gist of the understanding was that the money could
not have been withdrawn after five years on three months’ notice. Malan J found
that this understanding was in conflict with the written memorial and could,
therefore, not be proved. I am prepared to go further and hold on the papers that
the evidence of deponent Field, the managing director of Fedbond, was
contrived. The basis of the understanding (and its main term) was that Investec’s
investment in the participation bond scheme would form part of a long-term
investment arrangement between the members of the Fedsure Group which, at
the time, included Fedbond and Investec (under its old name) to provide long
term funding for the Group. Counsel could not explain the basis of this
‘understanding’ and the consequent tacit agreement or how it could have existed
in the context of a participation bond investment unless Fedbond had
misappropriated the money. Once the foundation of the understanding collapses,
so does the whole structure.
[33] The second defence was based on the ‘rules’ or regulations issued under
the Collective Investment Control Act 45 of 2002.12 This Act repealed the
mentioned 1981 Act. The rules provide that a participant may, upon the expiry of
the 5-year investment period, withdraw part or whole of the funds invested in a
scheme ‘if the manager has consented to such withdrawal: Provided that the
manager may withhold such consent subject thereto that the manager furnishes
reasons for withholding such consent’ (rule 22(2)(a) – the other conditions are of
no moment for present purposes). I have some reservations about whether this
rule can apply to an investment made under the repealed Act. Section 117(2),
which deals with the effect of the repeal on things done under the repealed Act,
does not appear to me to affect existing contractual arrangements.13 In any
event, I do not accept that parties to a scheme may not agree on a fixed or other
regime in relation to the term of the investment, provided the statutory
requirement of a minimum of five years is adhered to. It is not conceivable that if
a participant wishes to invest for a period not exceeding, say, five years and
reaches an agreement with the manager to that effect when the investment is
made that the manager may, after the five years and after all other conditions
have been fulfilled, withhold his consent – even with good reasons – under the
12 Rules for the Administration of a Collective Investment Scheme in Participation Bonds GN 577,
GG 24984, 28 February 2003.
13 Compare Adampol (Pty) Ltd v Administrator Transvaal 1989 (3) SA 800 (A) at 811D-812I.
rule. The object of the rule is to regulate those cases where there is no
agreement about the term of the investment.
[34] Fedbond’s counsel submitted that the ‘understanding’ was the reason why
consent was withheld. Assuming that this ‘reason’ was conveyed when the
consent was withheld (which, on the facts, it was not) the word ‘reason’ in the
rule is not equivalent to ‘excuse’. A bad reason is no reason. A reason under the
rule must be objectively justifiable.
[35] This brings me to the major point on appeal which, according to
respondents’ counsel, was not argued below and did not feature in Malan J’s
careful analysis of the facts and law. The argument was this: because Fedbond
was the manager of the scheme and not Investec’s debtor, judgment for the
capital amount and mora interest at the prescribed rate could not have been
awarded against Fedbond even if it is assumed that Investec was entitled to call
up its investment.
[36] Fedbond relied in this regard on the following quotation from Syfrets
Participation Bond Managers v Commissioner, SARS:14
‘In broad, the Act is designed, inter alia , to enable financial institutions to offer to
investors, many of whom may wish to invest relatively small amounts of money,
an opportunity of participating with other investors in an investment secured by a
registered mortgage bond over immovable property and yielding a competitive
rate of interest. Each participant who holds such a participation in a participation
bond becomes a creditor of the mortgagor to the extent of the participation. The
debt so created is owed by the mortgagor to the participant and not to the
nominee company in whose name the bond is registered and the rights conferred
by the bond are deemed to be held by the participants (s 6(1)).’
14 2001 (2) SA 359 at 363G-H.
[37] The correctness of the quotation is not in doubt. It does not, however, deal
with the full picture. Participation bond schemes work as follows: Collective
investment schemes are managed by managers such as Fedbond. Managers
are appointed by nominee companies who act as nominee for or representative
of a participant (investor) in a participation bond. (The nominee company in this
case was a party in the court below but did not take part in the appeal.) The
nominee company lends money through the agency of a manager, against the
security of mortgages registered over the immovable property of borrowers in
favour of the nominee company.
[38] The manager is responsible for the operation of the scheme. A manager
may offer and grant participation in bonds under the scheme to any person and
accept money for investment on the security of participation bonds. These funds
must be kept on deposit by the manager in the name of the nominee company on
behalf of the investor.
[39] The manager is the person responsible for enforcement of the rights
against the mortgagors and must do so through and in the name of nominee
company (rule 14). A participant may not in his own name take any action to
enforce his rights in a participation bond (rule 16) but may instruct a manager to
do so if, for instance, the mortgagor has failed to comply with the conditions of
the bond (rule 15). The rights of a participant are limited to his pro rata interest in
the particular bond, and he has no other right of recovery against the manager or
the nominee company (rule 18).
[40] The problem in this case is something different and may be illustrated by
way of an example. Assume that the participant and manager had agreed that
the investment would be for ten years only. The manager, contrary to the terms
of the agreement, lends the money on a mortgage bond for a period of twenty
years. After the lapse of the ten years the participant gives due notice of
withdrawal of the investment. The manager is unable to call up the bond because
the mortgagor is not in default and, for the same reason, the participant cannot
instruct the manager to call up the bond. The participant has also no claim
against money held by the nominee company. Is the participant without remedy?
According to Fedbond’s argument the investor has to carry this risk because it
(Fedbond) is not the debtor of the participant. This means that the participant has
no remedy against anyone and that the manager would be entitled to ignore
investment agreements and keep the money of a participant bound up in a bond
for whatever period it pleases the manager.
[41] I believe that it is an over-simplification to say that the manager does not
stand in any debtor-creditor relationship with a participant. The manager
undertakes by necessary implication to manage and structure the portfolio in
such a manner that the bonds in which a particular participant has an interest
may be called up whenever the participant is entitled to call up his investment.
This obligation has nothing to do with the relationship between the manager, the
mortgagor and the participant. It is an obligation of the manager towards the
participant and it follows that there is in this regard a debtor-creditor relationship
between them. The manager is in other words obliged to pay a participant who,
under rule 22, is entitled to payment. If the dedicated funds are not in the account
of the nominee company the manager has to pay the money it has agreed to
pay. And if it fails to do so it is also liable for statutory mora interest which is
something different and distinct from the bond interest.
[42] I do not understand Fedbond’s dilemma and delaying tactics. On its own
version Investec could have called up the investments since July 2002, and that
the last call could have been made in August 2005. All that was required, it said,
was that the aggregate amount could not have been withdrawn on the same date
and that the intervals between withdrawals could not have been shorter than
between investments. Nearly five years later, and nothing has been paid or
offered.
[43] For these reasons I agree with the order proposed by Mlambo JA.
_____________
L T C HARMS
DEPUTY PRESIDENT
APPEARANCES
APPELLANTS:
J J Bret SC (with him E Kromhout)
Instructed by Oosthuizen Du Toit Berg & Boon,
Johannesburg
Van Der Merwe & Sorour, Bloemfontein
RESPONDENTS:
D M Fine SC (with him M M Antonie)
Instructed by Werksmans Inc, Johannesburg
Naudes Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 31 March 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
FEDBOND PARTICIPATION MORTGAGE BOND MANAGERS V INVESTEC
EMPLOYEE BENEFITS
The Supreme Court of Appeal (SCA) today dismissed an appeal brought by
Fedbond Participation Mortgage Bond Managers against an order of the South
Gauteng High Court ordering it to make payment to Investec Employee Benefits
Limited (IEB) of certain monies invested in Fedbond in terms of the Collective
Investment Schemes Control Act 45 of 2002 (the CIS act).
Fedbond had resisted the IEB’s efforts to withdraw its investments upon their
maturity. Fedbond's primary contention was that IEB, who had under its initial name
of Fedsure Life Assurance Limited, made the investments was not entitled to
withdraw the investments because there was a common understanding underlying
the investment agreement that the investments were for longer than the five year
period stated in the agreement.
This argument was rejected by the high court on the basis that the terms of the
disputed common understanding were inconsistent with the written terms of the
written agreement and as extrinsic evidence was inadmissible to contradict terms of
a contract reduced to writing; this argument could not be accepted. The SCA upheld
this conclusion.
Fedbond had also argued that having withheld its consent to the withdrawal this also
forestalled any attempts to the withdrawal. The SCA also rejected this argument
holding that in terms of the CIS Act Fedbond, as the manager of the investment
scheme, could only withhold consent to pay out moneys to the investor if it gives
sufficient reasons for doing so. The SCA held that Fedbond's failure to respond to
the notice of withdrawal amounted to withholding of consent without a reason which
did not shield Fedbond from its obligation to respect the withdrawal notice.
The SCA also rejected Fedbond’s argument that its relationship as manager, to an
investor, arising in terms of the CIS Act was not that of debtor and creditor which
meant that an investor could not approach a court demanding payment of its
investment as was done in this case. The SCA reasoned that upon investments
maturing the manager could not refuse to pay out unless it alleged default by a
mortgagor who had taken out a loan linked to the investment.
---ends---
|
3265
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO: 320/07
In the matter between
NICHOLAS JAMES HAMMOND
APPELLANT
and
THE STATE RESPONDENT
CORAM: MTHIYANE, LEWIS and JAFTA JJA
HEARD: 16 NOVEMBER 2007
DELIVERED: 29 NOVEMBER 2007
SUMMARY: Appeal against conviction and sentence for drug-dealing in
terms of s 5(b) of the Drugs and Drug Trafficking Act 140 of 1992: whether
evidence of a police trap was admissible in terms of the Criminal Procedure
Act 51 of 1977. Appeal against conviction dismissed; sentence reduced
from 12 to five years’ imprisonment, two of which suspended.
Neutral Citation: This judgment may be referred to as Hammond v State 164 [2007] SCA
(RSA)
LEWIS JA
[1] In March 2004 the appellant was convicted in a district magistrate’s court
on a charge of dealing in Methcathinone (Cat) in contravention of s 5(b) of the
Drugs and Drug Trafficking Act 140 of 1992 (the Drugs Act) and sentenced to 12
years’ imprisonment. Cat is categorised as an undesirable dependence-
producing drug, listed in Schedule 2, Part 111, of the Drugs Act. The quantity of
the Cat was established as 3.22kgs. The High Court, Johannesburg, in April
2006, dismissed an appeal against both conviction and sentence. This further
appeal is with the leave of that court. It is regrettable that this court does not have
the judgment of the high court on appeal, since, because of a technical error, it
could not be transcribed.
[2] I turn first to the appeal against conviction. The appellant was
apprehended on 17 October 2003 with another suspect, the second accused, by
two police officers, Sergeant Tickner and Inspector de Jager, who had received
information that men in a particular Mercedes Benz car, to be found at a BP
Service Station opposite Gold Reef City in Johannesburg, were in possession of
drugs: they were instructed to arrest them and duly did so.
[3] The appellant pleaded not guilty to the charge of drug dealing. The second
accused gave a plea explanation in terms of s 115 of the Criminal Procedure Act
51 of 1977, and at the end of the trial was acquitted. The essential submissions
of the appellant before this court are that his trial was unfair as the State did not
lead all the evidence available to it, and the appellant had been trapped into
committing the offence by police, the evidence of the trap being inadmissible in
terms of s 252A of the Criminal Procedure Act.
[4] The background is briefly the following. The police officers made
statements after the arrest that they had been told by an anonymous informer
that a man in possession of Cat was to be found at a BP Service Station opposite
the Gold Reef City Casino in Johannesburg. They proceeded to the car where
they found the second accused in the driver’s seat. The appellant approached
the car with cooldrinks in his hands. The police searched the car, finding a sports
bag on the back seat which contained 7 plastic bags of a white powdery
substance, later identified as Cat. The police handcuffed and arrested the
appellant and the second accused.
[5] Before the trial commenced, both police officers provided the appellant
and the court with supplementary statements. These differed from their original
statements in two material respects, which the appellant argues are significant to
the arguments that the evidence of entrapment by the police should not have
been admitted, and that the conduct of the prosecution and the police was such
that he did not have a fair trial.
[6] First, the police officers’ statements, which were in virtually identical terms,
save that Tickner’s was in English and De Jager’s in Afrikaans, referred to an
anonymous informer who had instructed them to proceed to the BP Service
Station and arrest the appellant and others, whereas in their supplementary
statements they advised that the informer was not anonymous but in fact one
Captain Kukard, who had died before the trial commenced.
[7] Secondly, both officers made no reference in their original statements to
the presence of an Indian man in the car with the second accused and the
appellant. They subsequently, in both their supplementary statements and in
evidence, said that the Indian man, identified only as Yunus (his name is referred
to throughout the record as ‘Eunice’, but I have assumed that ‘Yunus’ is the
correct spelling, although ‘Yunis’ is used in the appellant’s heads of argument)
was in the front passenger seat of the car with the second accused. Yunus, they
said, was removed from the scene by one of the officers, Tickner, on the
instructions of Kukard. Both Tickner and De Jager also stated that Yunus (whom
they did not identify further) was a police agent, and that Kukard had instructed
them to release him when the other men were arrested. Their testimony was also
to this effect.
[8] On the day the trial commenced the appellant requested further particulars
to the charge. It asked:
‘1 Berus die Staat se saak op lokval getuienis?
2 Was die anonieme beriggewer op die toneel deel van die polisie optrede, indien nie,
wat was die doel van sy teenwoordigheid op die toneel?’
The prosecutrix responded:
‘ 1 Ad par 1: Die Staat sal nie beweer dat daar van ’n lokval gebruik gemaak is nie.
Indien die getuienis egter sodanige feit bewys, sal die Staat ook daarop steun.
b) Ad par 2: Dit is onbekend aan die Staat.’
[9] The prosecutrix, in her address to the court before evidence was led,
confirmed that the State would not lead evidence on the use of a police trap, but
that if the defence led such evidence the State would accept it. She added that
the State had no evidence that a trap was used – the docket disclosed none and
the police officers who had made statements would testify that they were not
aware of one.
[10] It transpired during the course of the appellant’s evidence that there had
indeed been a police trap. The appellant argues that the police and the State
must have been aware of this, and thus did not come to court ‘with clean hands’.
Before considering the soundness of this contention, and whether the evidence
of the police trap was admissible in terms of s 252A of the Criminal Procedure
Act, in that it did not go beyond affording an opportunity to commit an offence, or
that if it did, the trial court nonetheless had a discretion to admit it, I shall deal
briefly with the evidence led by the State and that of the appellant.
[11] I have already described the way in which the appellant and his co-
accused were apprehended. Tickner described the arrest, and the discovery of
the Cat, first. She was cross-examined on why she had failed to disclose the
identity of the informant, and the presence of Yunus in the car, in her initial
statement. Her explanation was that the identity of the informer, Kukard, and the
presence of Yunus, were not revealed initially because both were involved in
investigations into drug dealing that might be jeopardized if their identities and
status were revealed. Kukard’s subsequent death enabled the police to reveal
his identity and she had realized that it had been a mistake to fail to disclose
Yunus’s presence on the scene. She had not known, when apprehending Yunus,
that he was a police agent, but De Jager had been phoned by Kukard when at
the scene and told to release Yunus who was a police agent. Tickner had
removed Yunus from the scene.
[12] De Jager confirmed the evidence of Tickner, and elaborated on the
reasons for not disclosing Kukard’s identity: not only would it jeopardize
investigations into drug syndicates but it would also endanger his life. He testified
that he had no knowledge of a police trap or the circumstances leading to his
instruction to apprehend the appellant and the first accused.
[13] As counsel for the appellant argued, the evidence of the police officers
was not entirely satisfactory, and their initial statements, which contained false
statements and failed to disclose the presence of Yunus, are to be deprecated.
However, the appellant himself admitted (despite his plea of not guilty) that he
was involved in a transaction for the sale of Cat, and it is he who testified as to a
police trap.
[14] His evidence is the basis of the conviction. Before dealing with the
appellant’s involvement in drug dealing, and the trap, it should be noted that the
second accused’s plea explanation was confirmed by the appellant. It transpired
that the appellant had hired him simply as a driver on the day of their arrest, and
that he had no knowledge of the presence of drugs in the car – hence his
acquittal.
[15] The appellant testified that in 2003 he shared a house with a friend,
Gareth. Gareth was friendly with a Cat dealer, Tommy Gregory. The appellant
also became a friend of Gregory. Gareth became involved with a woman known
as Roxy, who claimed to be a prostitute. Roxy advised them that she knew a
brothel owner in Durban, known as Judy. Judy was interested in acquiring Cat.
Judy in due course contacted Gareth, and at her instigation Gareth and the
appellant met a man known as Joe. Joe wanted to buy Cat in large quantities.
Nothing came of this encounter.
[16] Judy then arranged for Yunus to contact Gareth and the appellant. Gareth
at that stage was having emotional problems and so Judy preferred to make
arrangements with the appellant. The appellant met Yunus three times near Gold
Reef City, where Yunus was staying. On each occasion the appellant had been
unable to procure Cat to sell to Yunus. On one occasion, Yunus had taken him to
his hotel room, and shown the appellant a vast sum of money to assure him of
his serious intention to buy large quantities of Cat. The appellant’s failure to
produce the drugs disappointed Yunus, and angered Judy who kept badgering
him. On several occasions she was abusive and threatening and the appellant
was afraid that he might be harmed by one of Judy’s associates.
[17] The phone calls ceased, however, and when Judy phoned again and
apologized for her behaviour, the appellant accepted her apology and was ‘quite
happy’. On 17 October 2004 Judy phoned the appellant and said she knew of a
source and that he could collect the drugs from Fourways, in Johannesburg. He
had previously arranged for the second accused to drive him and they went to
the address in Fourways given to him by Judy. There was nobody there. The
appellant called Judy and she instructed him to go to Hyde Park instead. There
he met two men and was given the bag in which the Cat was found.
[18] The appellant was then instructed to proceed to Gold Reef City, and then
subsequently to the BP Service Station. There he met Yunus and his girlfriend
and they tested the drugs. While Yunus’s girlfriend was fetching something from
their hotel room, the appellant went to buy cooldrinks. On his return he was
arrested by Tickner and De Jager.
[19] The appellant testified that he was not himself a drug user, but wanted to
make money out of the transaction. He would have received ten per cent of ‘the
deal’ – some R60 000. In response to a question by the court he frankly said that
he had become willingly involved in dealing with Judy and Yunus: had he been
able to source the Cat from anywhere else, prior to the transaction in issue, he
would have done so. He hoped to make easy money from drug-dealing
transactions. He had learned after his arrest that both Roxy and Judy were police
informers.
[20] The trial court convicted the appellant, finding that the conduct of the
police, as described by the appellant, did not go beyond providing an opportunity
to commit an offence, and that the evidence was admissible under s 252A of the
Criminal Procedure Act. Section 252A(1) provides:
‘Any law enforcement officer, official of the State or any other person authorised thereto
for such purpose (hereinafter referred to in this section as an official or his or her agent)
may make use of a trap or engage in an undercover operation in order to detect,
investigate or uncover the commission of an offence, or to prevent the commission of
any offence, and the evidence so obtained shall be admissible if that conduct does not
go beyond providing an opportunity to commit an offence: Provided that where the
conduct goes beyond providing an opportunity to commit an offence a court may admit
evidence so obtained subject to subsection (3)’ (my emphasis).
[21] Subsection (2) lists various factors that a court should have regard to in
deciding whether conduct does go beyond providing an opportunity to commit an
offence.1
1 The subsection reads:
‘(2) In considering the question whether the conduct goes beyond providing an opportunity to
commit an offence, the court shall have regard to the following factors:
Subsection (3)(a) provides that where a court finds that the conduct in question
has gone beyond providing an opportunity to commit an offence ‘the court may
refuse to allow such evidence to be tendered or may refuse to allow such
evidence already tendered, to stand, if the evidence was obtained in an improper
or unfair manner and that the admission of such evidence would render the trial
unfair or would otherwise be detrimental to the administration of justice’.
Subsection 3(b) requires a court, when considering the admissibility of the
evidence, to weigh up the interest of the public against the ‘personal interest of
(a)
Whether, prior to the setting of a trap or the use of an undercover
operation, approval, if it was required, was obtained from the attorney-general to engage such
investigation methods and the extent to which the instructions or guidelines issued by the
attorney-general were adhered to;
(b)
the nature of the offence under investigation, including-
(i)
whether the security of the State, the safety of the public, the
maintenance of public order or the national economy is seriously threatened thereby;
(ii)
the prevalence of the offence in the area concerned; and
(iii)
the seriousness of such offence;
(c)
the availability of other techniques for the detection, investigation or
uncovering of the commission of the offence or the prevention thereof in the particular
circumstances of the case and in the area concerned;
(d)
whether an average person who was in the position of the accused,
would have been induced into the commission of an offence by the kind of conduct employed by
the official or his or her agent concerned;
(e)
the degree of persistence and number of attempts made by the official or
his or her agent before the accused succumbed and committed the offence;
(f)
the type of inducement used, including the degree of deceit, trickery,
misrepresentation or reward;
(g)
the timing of the conduct, in particular whether the official or his or her
agent instigated the commission of the offence or became involved in an existing unlawful
activity;
(h)
whether the conduct involved an exploitation of human characteristics
such as emotions, sympathy or friendship or an exploitation of the accused's personal,
professional or economic circumstances in order to increase the probability of the commission of
the offence;
(i)
whether the official or his or her agent has exploited a particular
vulnerability of the accused such as a mental handicap or a substance addiction;
(j)
the proportionality between the involvement of the official or his or her
agent as compared to that of the accused, including an assessment of the extent of the harm
caused or risked by the official or his or her agent as compared to that of the accused, and the
commission of any illegal acts by the official or his or her agent;
(k)
any threats, implied or expressed, by the official or his or her agent
against the accused;
(l)
whether, before the trap was set or the undercover operation was used,
there existed any suspicion, entertained upon reasonable grounds, that the accused had
committed an offence similar to that to which the charge relates;
(m)
whether the official or his or her agent acted in good or bad faith; or
(n)
any other factor which in the opinion of the court has a bearing on the
question.
the accused’. The subsection lists numerous factors to be taken into account in
the process of determining these respective interests.2
[22] Section 252A, introduced into the Criminal Procedure Act in 1996, does
not create a special defence of entrapment: it creates an evidentiary rule, and the
court is given a discretion as to whether to admit evidence of conduct that does
go beyond providing an opportunity to commit an offence. The appellant argues
that the conduct of the police did indeed go beyond providing an opportunity to
commit the offence, and the State did not come to court ‘with clean hands’.
[23] In respect of the latter contention the appellant relies on S v Hayes3 where
the court found that the conduct of the police officers involved in the trap, who
had collaborated with one another in making their statements, was irreconcilable
2 The subsection reads:
(i)
The nature and seriousness of the offence, including-
(aa)
whether it is of such a nature and of such an extent that the
security of the State, the safety of the public, the maintenance of public order or the national
economy is seriously threatened thereby;
(bb)
whether, in the absence of the use of a trap or an undercover
operation, it would be difficult to detect, investigate, uncover or prevent its commission;
(cc)
whether it is so frequently committed that special measures are
required to detect, investigate or uncover it or to prevent its commission; or
(dd)
whether it is so indecent or serious that the setting of a trap or
the engaging of an undercover operation was justified;
(ii)
the extent of the effect of the trap or undercover operation upon the
interests of the accused, if regard is had to-
(aa)
the deliberate disregard, if at all, of the accused's rights or any
applicable legal and statutory requirements;
(bb)
the facility, or otherwise, with which such requirements could
have been complied with, having regard to the circumstances in which the offence was
committed; or
(cc)
the prejudice to the accused resulting from any improper or
unfair conduct;
(iii)
the nature and seriousness of any infringement of any fundamental right
contained in the Constitution;
(iv)
whether in the setting of a trap or the engagement of an undercover
operation the means used was proportional to the seriousness of the offence; and
(v)
any other factor which in the opinion of the court ought to be taken into
account.
3 1998 (1) SACR 625 (O). See also S v Nortjé 1997 (1) SA 90 (C) at102B-C, decided before s
252A was introduced, but where the court considered that the police procedures were
fundamentally unfair.
with a fair trial and amounted to defeating the ends of justice. One of the
considerations to be taken into account in balancing the interests of an accused
with the public interest under s 252A(3)(iii) is the infringement of any fundamental
right, including, of course, the right to a fair trial under s 35(3) of the Constitution.
[24] The appellant contends that the conduct of Tickner and De Jager, in
making false statements, and of the prosecution in failing to adduce the evidence
of the police agents or informers who set up the trap, rendered the trial unfair.
But in Hayes the court held that the true enquiry was whether the conduct of the
police had been so fundamentally unfair that the accused’s right to a fair trial had
been frustrated. In my view, the dishonest conduct of Tickner and De Jager in the
making of their initial statements is to be condemned. But it related only to the
arrest of the appellant, the identity of the informant and the presence of Yunus at
the scene of the arrest. They had nothing to do with the trap, and before the trial
commenced they placed the facts known to them on record. The failure of the
State to adduce the evidence of the police who were involved in the trap does not
in itself render the trial unfair: there was nothing in the evidence or in argument to
suggest, contrary to the appellant’s submission, that the State suppressed vital or
even relevant evidence. I do not consider that there is any merit in the appellant’s
contention that the trial was unfair.
[25] That leaves the questions whether the police conduct went beyond
providing an opportunity to source and sell the Cat, and whether the trial court
had a discretion to admit that evidence if it did. The appellant submits that once it
became clear to Judy and to Yunus that the appellant could not obtain Cat
himself, and after Judy had threatened him, her conduct and that of Yunus fell
foul of several of the provisions of s 252A(2): they had provided the drug to the
appellant, they had induced him with a large reward (R60 000), and Judy’s
threats had made him fear for his safety. The trial court had not considered all of
the 13 factors listed in s 252A(2)4 nor determined whether they played any role in
the commission of the offence by the appellant.
[26] The submission in this regard has no merit. The factors are listed simply
as those to be considered in determining whether the entrapper has gone further
than providing an opportunity. There is no requirement that each be considered.
Moreover, in this matter the contention that any of these factors played a role is
not consonant with the appellant’s evidence. As indicated previously, he testified
that he had willingly become involved with his friends in attempting to obtain and
sell Cat. Had he been able to obtain it he would have done so before Judy and
Yunus provided him with information about a source. Although testifying that he
had become afraid after Judy had threatened him, once she had apologized he
felt comfortable and willingly participated in the transaction. He was aware of the
risks involved.
[27] As I have said, it is the appellant’s evidence that led to his conviction, and
I cannot see any reason why it should have been treated as inadmissible by the
magistrate. The evidence showed that the police conduct did not go beyond
providing an opportunity to commit an offence. Accordingly it is unnecessary to
consider whether the trial court correctly exercised its discretion in admitting the
evidence under s 252A(3).
[28] This court raised with counsel the question whether s 252A renders
inadmissible evidence of a trap tendered by an accused rather than the State.
But the matter was not fully argued before us and it is not necessary to decide
the issue since I find that the evidence was in any event admissible. The appeal
against conviction must therefore fail.
[29] That brings me to the appeal against the sentence. The trial court imposed
a sentence of 12 years’ imprisonment, and this was confirmed by the court
4 Footnote 1 above.
below. It induces in me a sense of shock and this court must interfere. The
appellant was seduced by police agents to participate in one transaction where
they provided the drugs. While he was a willing party and entered into the
transaction because of the financial reward it would bring, this does not warrant
such a heavy sentence. There are, moreover, mitigating factors. Apart from the
fact of entrapment, the appellant was frank with the court. He did not evade
responsibility for the offence. Moreover, he has spent 20 months in prison
awaiting trial, a factor that the trial court said it had taken into account.
[30] However, the offence committed by the appellant is a very serious one.
The consequences for society of dealing in drugs are severe: vast quantities of
dependence-producing drugs on the market almost invariably have a detrimental
and irreversible impact on those who do become dependent. And the appellant
admitted freely to having tried to deal, before he was trapped, in order to make
money. His offence warrants direct imprisonment.
[31] The appeal against conviction is thus dismissed. The appeal against
sentence is upheld. The sentence imposed by the trial court is replaced with the
following:
‘The accused is sentenced to five years’ imprisonment two of which are wholly
suspended for a period of five years on condition that the accused is not again
convicted of any offence under the Drugs and Drug Trafficking Act 140 of 1992.’
_____________
C H Lewis
Judge of Appeal
Concur:
Mthiyane JA
Jafta JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
29 November 2007
STATUS: Immediate
Hammond v The State [2007] SCA 164 (RSA)
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
Mr Nicholas Hammond was convicted in a magistrate’s court of dealing in
drugs (Methcathinone – ‘Cat’) and sentenced to 12 years’ imprisonment. His
appeal to a full bench of the High Court, Johannesburg, failed. Today the
Supreme Court of Appeal dismissed his further appeal against conviction, but
reduced his sentence to five years’ imprisonment, two of which are
suspended.
In testifying in his own defence, Hammond said that he had become involved
with friends who were drug-dealing, and he had willingly participated in trying
to find drugs to sell them. He had been asked by a brothel owner in Durban,
Judy, to find Cat for her and when he could not she became angry and
abusive. After a while she phoned to apologize to him, and advised him about
a source. She arranged for him to collect the drugs and to deliver them to a
man known as Yunus, who would be waiting at a BP Service Station near
Gold Reef City, Johannesburg. Hammond had met Yunus previously.
Hammond admitted that he would earn about R60 000 for his role in selling
the drugs and that he had participated purely for financial gain.
When at the service station Hammond and his driver were arrested by two
police officers, who had been instructed to apprehend them. The police found
over 3kgs of Cat in a tog bag in the car. The driver was also charged, but was
acquitted by the trial court since Hammond testified that he had hired the
driver for the day, and that the driver knew nothing about the drugs found in
his car. It transpired that Yunus was a police agent, and that Judy was as
well.
Before his trial commenced, Hammond asked whether the State was relying
on evidence of a police trap. The prosecutor replied that she was not, but that
should evidence be led during the course of the trial as to the existence of a
trap, the State would rely on it. The defence was that Hammond had been
trapped and that his evidence should be inadmissible in terms of s 252A of
the Criminal Procedure Act 51 of 1977 since the police had gone further than
merely providing an opportunity to commit the offence. It was contended also
that the evidence of the State was contaminated, since the two police officers
who arrested Hammond and the driver had made misleading statements prior
to the trial. They had, however, before the trial started, made supplementary
statements revealing the identity of their informant and referring to Yunus,
whose presence on the scene of the arrest they had not initially disclosed.
On appeal Hammond argued that his trial had been unfair: the State had not
come to court with ‘clean hands’. It had not led all the available evidence and
had concealed evidence of the trap. The Supreme Court of Appeal today
dismissed the appeal against conviction. It held that the evidence of
Hammond as to the police trap was admissible, since the police had not done
anything more than providing an opportunity to deal in Cat. It also held that
there was nothing on record to show that the State had concealed, or failed to
lead, evidence available to it: the trial was not unfair. It upheld the appeal
against sentence, however, finding that the sentence of 12 years’
imprisonment induced a sense of shock. Although the offence was very
serious, Hammond had been entrapped; he had been frank with the trial
court, and had not tried to evade responsibility for what he had done. The
Supreme Court of Appeal held that a sentence of five years’ imprisonment
should be imposed, but that two years should be suspended.
The judgment can be found on www.supremecourtofappeal.gov.za
-----------
|
1301
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 275/09
In the matter between:
NORTHVIEW SHOPPING CENTRE (PTY) LTD
Appellant
and
REVELAS PROPERTIES JOHANNESBURG CC
First Respondent
NICK CHRISTELIS
Second Respondent
Neutral citation:
Northview Shopping Centre v Revelas Properties
(275/09) [2010] ZASCA 16 (18 March 2010)
Coram:
LEWIS, HEHER, MLAMBO and MALAN JJA and THERON AJA
Heard:
22 February 2010
Delivered
18 March 2010
Summary: Where an agent of a close corporation, who is not a member,
concludes on its behalf a contract for the sale of land, authorization must be in
writing in order to comply with s 2(1) of the Alienation of Land Act 68 of 1981.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Brett AJ sitting
as court of first instance):
The appeal is dismissed with costs.
JUDGMENT
LEWIS JA (HEHER, MLAMBO and MALAN JJA and THERON AJA
concurring)
[1] The appellant, Northview Shopping Centre (Pty) Ltd (Northview),
claimed specific performance of a contract for the sale of immovable property
that it alleges it purchased from the first respondent, Revelas Properties
Johannesburg CC (Revelas). The second respondent, Mr Christelis, is the
husband of the sole member of Northview, a close corporation. He signed the
contract on behalf of Revelas. The issue before us is whether he was
authorized to sign the contract, as required by s 2(1) of the Alienation of Land
Act 68 of 1981. Revelas contends that he was not, as he had no written
authority from it, and that the sale is thus invalid for want of formalities.
Northview contends, on the other hand, that written authority is not required
when a close corporation is the principal.
[2] Northview, in its particulars of claim, alleged that Christelis was duly
authorized to sign the contract, which is enforceable against Revelas. It
excepted to the claim on two bases (and raised several other exceptions,
none of which was adjudicated by the high court and that are not before us).
First it asserted that the claim was vague and embarrassing since it did not
expressly aver that Christelis was authorized in writing (the pleading
exception); and second, in the alternative, Revelas asserted that the claim
lacked averments necessary to sustain an action (the substantive exception).
[3] Brett AJ in the high court upheld the substantive exception, saying that
he agreed that ‘if a person other than the member acted on its [the close
corporation’s] behalf that person would constitute an agent properly so called
within the meaning of the Act [s 2(1) of the Alienation of Land Act]. Moreover,
in concluding the agreement relied upon by the plaintiff [Northview] the
second defendant [Christelis] purported to “act on behalf of the close
corporation ie as an agent and not as its functionary.”’ The high court also
upheld the pleading exception on the basis that there was no allegation that
Christelis was authorized in writing, and that the written authority should have
been annexed to the particulars of claim together with the contract of sale.
The appeal to this court is with Brett AJ’s leave.
The requirement of written authority under s 2(1) of the Alienation of Land Act
[4] I shall deal first with the finding on the substantive exception. Section
2(1) of the Alienation of Land Act provides:
‘No alienation of land after the commencement of this section shall . . . be of any
force or effect unless it is contained in a deed of alienation signed by the parties
thereto or by their agents acting on their written authority.’
The provision is not new. It was first included in s 30 of the Transvaal Transfer
Duty Proclamation 8 of 1902; was carried into s 1(1) of the General Law
Amendment Act 68 of 1957; repeated in s 1(1) of the Formalities in Respect of
Contracts of Sale of Land Act 71 of 1969 and repeated again in the Alienation
of Land Act. Cases dealing with the provision span more than a century. Of
particular importance in this matter are the decisions dealing with the
application of the provision where a party to the sale is a juristic person, which
date back at least to 1913 with the landmark judgments in Potchefstroom
Dairies and Industries Co Ltd v Standard Fresh Milk Supply Co.1
1 1913 TPD 506.
The Potchefstroom Dairies principle
[5] The question before the court in this case was whether a contract for
the sale of land signed by a partner, on behalf of a partnership, was subject to
the requirement of s 30 of the Proclamation. De Villiers JP held that the
requirement of written authority did not apply where a partner signed for a
partnership because a partner is not an agent of the partnership within the
meaning of s 30 of the Proclamation. Partners, he said, were more than
agents: a partner ‘sustains the double character of agent and principal in one
and the same transaction’.2
[6] Bristowe J agreed with this conclusion, but elaborated also on the
application of the written authority requirement in respect of other juristic
entities, such as companies. It is his judgment that has been the foundation of
the principle that corporate entities, being unable to act other than through
natural persons, cannot give written authority to their representatives, and that
therefore the written authority requirement does not apply when a functionary
of a company signs a contract for the sale of land. It is largely on the
interpretation of the following passage that this appeal turns.
[7] Bristowe J said:3
‘Under that section [s 30 of the Proclamation of 1902] a contract of sale, if not
signed by the principal, must be signed by his agent “duly authorised in writing”. That
must, I think, mean “authorised in writing by the principal”. The principal must
therefore be capable of giving the agent the power which he is appointed to exercise.
And for this purpose he must be capable of exercising those powers himself.
Moreover the use of the word “authorised” points I think to an express authorisation
as distinct from one arising by implication of law. So that it seems to me that the
agency contemplated by the section is one expressly created by a person who could
himself have exercised the delegated power had he chosen to do so.
In this view tutors, curators, corporations and partnerships are all excluded.
Tutors and curators are excluded because the acts which they are appointed to
perform are ex hypothesi acts which their wards cannot perform. Corporations are
excluded because having neither minds nor hands of their own they cannot
2 At 511.
3 At 512-513.
themselves do what their agents do for them. And partnerships are excluded
because the agency of a partner for his co-partner is not expressly created but arises
by implication of law as soon as the partnership relation is constituted. Not only is this
in my opinion the effect of the section properly construed, but it seems to me to be a
reasonable interpretation and one which accords with the true facts of the case.
Tutors and curators are really not agents at all. They are principals, though with
limited powers. And if they enter into a contract of sale they do so by virtue of a
faculty incidental to their office and not of any power derived from the ward. So
although the seal of a corporation is affixed by an agent, the seal once affixed is the
signature of the corporation. And quite apart from the special provisions of the
Companies Act it would not be true to say that a document properly sealed with the
corporation’s seal is executed by an agent. Similarly in the case of a partnership. By
the partnership contract a relation is established between the parties which persists
during the continuance of the partnership and for all partnership purposes by virtue of
which each partner becomes prima facie capable of signing the firm’s name. The
name so signed is really the signature of the firm, though written by one partner; just
as the seal of a company is the signature of the company though affixed by an
agent.’
[8] The principle expressed in this passage has been applied consistently
since then to companies, partnerships and co-operative societies. And as
counsel for Northview points out, it has been viewed against all the different
provisions enacted from time to time that require an agent to have written
authorization in order to bind a principal to a contract for the sale of land.
[9] In Suid Afrikaanse Sentrale Koöperatiewe Graanmaatskappy Bpk v
Thanasaris4 Murray J, having set out the reasoning of De Villiers JP in
Potchefstroom Dairies said:
‘The concurring judgment of Bristowe J is to the same effect, and goes further by
expressing the view that the reasoning for the exclusion of partners from the
operation of the section is equally applicable to exclude corporations as well: the
agency contemplated by the section is one expressly created by a person who could
himself if so minded have exercised the power which he has elected to delegate.
4 1953 (2) SA 314 (W) at 317B-E. See also the judgments of this court in Muller v Pienaar
1968 (3) SA 195 (A) at 200H-201D andTrever v Friedhelm Investments 1982 (1) SA 7 (A) at
18G-H. There are a number of decisions of the high courts too. They need not be
enumerated.
Tutors, curators, corporations and partners are excluded from the section; tutors and
curators because the acts they are appointed to perform are acts which ex hypothesi
their wards cannot perform; partnerships because the agency of a partner for his co-
partner is not expressly created but arises by implication of the law on the
constitution of the partnership relation. “Corporations are excluded because having
neither minds nor hands of their own they cannot do what their agents do for them.”’
[10] Trusts are treated differently, however. In Thorpe v Trittenwein5 this
court held that a trustee who did not have the written authority of co-trustees
to sign a contract for the sale of land did not bind the trust. Scott JA said that
the position was different from that of a partnership. Trustees, unlike partners,
are required to act jointly. He said:6
‘As previously indicated the very object of s 2(1) of the Act [the Alienation of Land
Act] is on grounds of public policy to facilitate that proof by requiring the authority to
be in writing and so avoid needless litigation. Whether one regards Thorpe [the
trustee who had signed the contract for the trust] as having acted as a functionary of
the trust and in that sense a principal or as both a principal (as co-trustee) and agent
of the other co-trustees, the result in my view must be the same. Given the object of
the section, it must be construed, I think, as being applicable on either basis. In other
words, the reference in the section to “agents” must be understood as including a
trustee who may in a sense be said to sign as a principal (ie as the trust), but whose
power to bind the trust is nonetheless dependent upon the authority of the co-
trustees. To do otherwise would be to thwart the clear object of the section. It follows
that in my view the agreement of sale (as supplemented by the addenda) is void ab
initio and of no force and effect.’
[11] There is nothing to suggest that the Potchefstroom Dairies principle is
incorrect in so far as juristic persons generally are concerned. And, as already
pointed out, it has been applied for nearly a century. The only question is
whether it applies to an agent of a close corporation who is not a member.
Before dealing with the differences between provisions governing companies
and those governing close corporations, I should make it clear that there is in
my view no difference in principle between a person authorized by virtue of
5 2007 (2) SA 172 (SCA).
6 Para 15.
his or her position within a company, on the one hand, and one who is a
member of a close corporation on the other, to sign a contract for the sale of
land. A member of a close corporation, authorized as such to sign, is in the
same position as a functionary of a company authorized to sign (both without
requiring written authority). For the sake of convenience I refer to a person
authorized by law (or the internal rules of a juristic entity) as a ‘functionary’, so
as to distinguish his or her position from that of an agent authorized by
expression of will (sometimes referred to as an ‘outside agent’). Thus at issue
in this appeal is whether an agent, as opposed to a functionary, can bind a
close corporation to a contract for the sale of immovable property where there
is no written authority to do so.
Section 69 of the Companies Act
[12] The question of written authority in so far as companies is concerned is
regulated by the provisions of the Companies Act 61 of 1973. Section 69
reads:
‘Contracts by companies. – (1) Contracts on behalf of a company may be made as
follows:
(a) Any contract which if made between individual persons would by law be
required to be in writing signed by the parties to be charged therewith may be
made on behalf of the company in writing signed by any person acting under
its authority, expressed or implied, and may in the same manner be varied or
discharged;
(b) any contract which if made between individual persons would by law be valid
though made orally only and not reduced to writing, may be made orally on
behalf of the company by any person acting under its authority, expressed or
implied, and may in the same manner be varied or discharged.
(2) All contracts made in accordance with this section shall be effectual in law and
shall bind the company and its successors and all other parties thereto.’
[13] Section 69 was preceded by s 72(1)(a) of the Companies Act 46 of
1926, which itself replaced s 74(1) of the Companies Act 31 of 1909. Thus for
a long period any agent of a company, whether or not a functionary of the
company, has, it is argued, been able to bind the company to a contract for
the sale of land without written authority by virtue of the provisions of s 69 and
without reference to the Potchefstroom Dairies principle.
[14] Northview’s argument is thus that had Christelis been representing a
company, he would have been able to bind it on his signature. I have some
doubt about whether s 69 was ever intended to apply to a person who is not a
functionary of a company and who does not have authority by virtue of his or
her position within the company, in terms of the company’s articles of
association or in terms of a resolution of the company. It is so, however, that
the decisions based on Potchefstroom Dairies do not deal with that situation:
all deal with functionaries of a juristic person such as company secretaries,
and partners. See, for example, Trever Investments (Pty) Ltd v Friedhelm
Investments (Pty) Ltd 7 where Trollip JA, referring to Potchefstroom Dairies
and cases applying it, said that parol evidence was admissible to prove that
the signatory to a contract for the sale of land had ‘the necessary implied
authority’ (my emphasis). He continued: ‘After all, in most cases that is the
only way in which “implied authority”, permitted by [s 69] of the Companies
Act, could be established.’ The signatory was a director of the company
concerned.
[15] However, the meaning of s 69 and its ambit were not debated before
us: it was assumed that any agent for a company, whether authorized by law
or by mandate, does not require written authority to bind a company to a
contract for the sale of land.8 No finding in this regard is made.
Contracts concluded on behalf of close corporations
[16] There is no provision equivalent to s 69 in the Close Corporations Act
69 of 1984. Is there any reason to treat close corporations differently? The
7 1982 (1) SA 7 (A) at 18F-19C.
8 But see P Wulfsohn Formalities in Respect of Contracts of Sale of Land Act pp 150-153. He
points to the anomaly that arises if s 69 is interpreted to mean that an outside agent – not
authorized by law – can bind a company without written authority. He argues that this is not
what is intended. The argument was referred to by Davis J in Myflor Investments (Pty) Ltd v
Everett NO & others 2001 (2) SA 1083 (C) at 1093H-1094E but rejected. The different views
on this issue are also set out in De Villiers and Macintosh The Law of Agency in South Africa
3 ed by J Silke (1981) pp102-103. See also P M Meskin Henochsberg on the Companies Act
127-128.
Close Corporations Act confers on members the power to bind the close
corporation. Section 54 provides:9
‘(1) Subject to the provisions of this section, any member of a corporation shall in
relation to a person who is not a member and is dealing with the corporation, be an
agent of the corporation.
(2) Any act of a member shall bind a corporation whether or not such act is
performed for the carrying on of the business of the corporation unless the member
so acting has in fact no power to act for the corporation in the particular matter and
the person with whom the member deals has, or ought reasonably to have,
knowledge of the fact that the member has no such power.’
[17] Section 54(2) does no more than express the usual rules relating to
ostensible authority. And s 54(1) simply confers on a member authority to act
for a close corporation, as the common law confers on a partner the power to
bind the partnership. The section does not regulate the question of written
authority for the purpose of s 2(1) of the Alienation of Land Act, as it is
assumed s 69 of the Companies Act does. It is clear, however, that on the
reasoning in Potchefstroom Dairies a member, who by law can represent a
close corporation, need not have written authority. But why should that be true
of an agent of the close corporation who is not a member, as is the case with
Christelis?
[18] Assuming that Christelis did not have written authority to sign the deed
of sale, did he bind Revelas? Counsel for Revelas argues that only Mrs
Christelis, the member, had the power to bind the corporation. The basis of
the argument is that Potchefstroom Dairies deals with situations where the
juristic person can act only through a natural person, who has authority by
virtue of his or her position to bind the entity – that is where the principal
cannot itself act, as in the case of companies that have no ‘minds nor hands
of their own’. So too, tutors and curators act for persons who have no, or
limited, legal capacity. In this case, Revelas could act through Mrs Christelis.
9 The section was amended in 1997 to simplify it and to provide greater protection for third
parties: see H S Cilliers, M L Benade, J J Henning, J J du Plessis and P A Delport Close
Corporations Law 3 ed (1998) p 64.
And she could have given Christelis written authority to sign the agreement of
sale. The Potchefstroom Dairies principle does not, therefore, apply.
[19] The argument is thus that where there is no implication of authority by
law (as with a company director or secretary, or a close corporation member –
who would all fall in the class of functionaries of the juristic entity) written
authority, as required for an agent under s 2(1) of the Alienation of Land Act is
necessary. In the first class there is a primary attribution of authority – by
statute or other instrument. In the second class there is a secondary rule of
attribution – authority conferred by the expression of will. In the latter class
there must be written authority to comply with s 2(1).
The rules of attribution
[20] Counsel for Revelas cites in this regard a decision of the Privy Council:
Meridian Global Funds Management Asia Ltd v Securities Commission.10
Lord Hoffman, delivering the judgment of the Council, explained that a
company exists as a legal fiction because of certain rules. And a company
runs in accordance with rules which tell one which acts are those of the
company. He said:11
‘It is therefore a necessary part of corporate personality that there should be rules by
which acts are attributed to the company. These may be called the “rules of
attribution”.’
Lord Hoffman continued:12
‘The company’s primary rules of attribution will generally be found in its constitution,
typically the articles of association, and will say things such as “for the purpose of
appointing members of the board, a majority vote of the shareholders shall be a
decision of the company” or “the decisions of the board in managing the company’s
business shall be the decisions of the company” There are also primary rules of
attribution which are not expressly stated in the articles but implied by company law,
such as
“the unanimous decision of all the shareholders in a solvent company about anything
which the company under its memorandum of association has power to do shall be
10 [1995] 2 AC 500 (PC).
11 At 506B-D.
12 At 506C-507F.
the decision of the company”: see Multinational Gas and Petrochemical Co. v
Multinational Gas and Petrochemical Services Ltd [1983] Ch 258.
These primary rules of attribution are obviously not enough to enable a
company to go out into the world and do business. Not every act on behalf of the
company could be expected to be the subject of a resolution of the board or a
unanimous decision of the shareholders. The company therefore builds upon the
primary rules of attribution by using general rules of attribution which are equally
available to natural person, namely, the principles of agency. It will appoint servants
and agents whose acts, by a combination of the general principles of agency and the
company’s primary rules of attribution, count as the acts of the company. And having
done so, it will also make itself subject to the general rules by which liability for the
acts of others can be attributed to natural persons, such as estoppel or ostensible
authority in contract and vicarious liability in tort.
It is worth pausing at this stage to make what may seem an obvious point.
Any statement about what a company has or has not done, or can or cannot do, is
necessarily a reference to the rules of attribution (primary and general) as they apply
to that company. Judges sometimes say that a company ‘as such’ cannot do
anything; it must act by servants or agents. This may seem an unexceptionable, even
banal remark. And of course the meaning is usually perfectly clear. But a reference to
a company “as such” might suggest that there is something out there called the
company of which one can meaningfully say that it can or cannot do something.
There is in fact no such thing as the company as such, no ding an sich, only the
applicable rules. To say that a company cannot do something means only that there
is no one whose doing of that act would, under the applicable rules of attribution
count as an act of the company.
The company’s primary rules of attribution together with the general principles
of agency, vicarious liability and so forth are usually sufficient to enable one to
determine its rights and obligations. In exceptional cases, however, they will not
provide an answer. This will be the case when a rule of law, either expressly or by
implication, excludes attribution on the basis of the general principles of agency or
vicarious liability. For example, a rule may be stated in language primarily applicable
to a natural person and require some act or state of mind on the part of that person
“himself”, as opposed to his servants or agents. This is generally true of rules of the
criminal law, which ordinarily impose liability only for the actus reus and mens rea of
the defendant himself. How is such a rule to be applied to a company?
One possibility is that the court may come to the conclusion that the rule was
not intended to apply to companies at all; for example, a law which created an
offence for which the only penalty was community service. Another possibility is that
the court might interpret the law as meaning that it could apply to a company only on
the basis of its primary rules of attribution, ie if the act giving rise to liability was
specifically authorised by a resolution of the board or an unanimous agreement of the
shareholders. But there will be many cases in which neither of these solutions is
satisfactory; in which the court considers that the law was intended to apply to
companies and that, although it excludes ordinary vicarious liability, insistence on the
primary rules of attribution would in practice defeat that intention. In such a case, the
court must fashion a special rule of attribution for the particular substantive rule. This
is always a matter of interpretation: given that it was intended to apply to a company,
how was it intended to apply? Whose act (or knowledge, or state of mind) was for
this purpose intended to count as the act etc of the company? One finds the answer
to this question by applying the usual canons of interpretation, taking into account the
language of the rule (if it is a statute) and its content and policy.’
[21] Counsel for Northview argues that the rules of attribution expressed in
Meridian are not part of South African law. It seems to me, however, that they
are simply rules of logic. And in any event, I consider that they are expressed
(although more concisely) by Bristowe J in Potchefstroom Dairies where he
said:
‘Moreover the use of the word “authorised” points I think to an express authorisation
as distinct from one arising by implication of law. So that it seems to me that the
agency contemplated by the section is one expressly created by a person who could
himself have exercised the delegated power had he chosen to do so’ (my emphasis).
[22] Authority arising by implication of law in this context is that conferred by
statute, by the rules of the juristic entity (in articles of association, for
example) or by the common law in relation to partners. An express
authorization is one given to an agent by a principal who can act for him or
herself. In the case of a close corporation the logical principle should in my
view prevail: a member who is given authority by statute to bind it needs no
written authority.13 But if a member authorizes an agent to enter into a
13 See contra Lombaard v Dropprop CC 2009 (6) SA 150 (N) para 55. The court held that
even a member required written authority, which cannot be correct.
contract for the sale of land on behalf of the close corporation he or she must
do so in writing.
[23] The logic of the principle is made clear by an example dealing with a
partnership. Assume a partnership of doctors. It owns immovable property
from which the doctors practise. They decide to sell the property. Any one of
the partners, by virtue of his or her position as a partner, may sign the deed of
sale without any written authority from the others. But if they instruct their
bookkeeper, or receptionist, to sign the deed that instruction must surely be in
writing in order for the partnership to be bound. A close corporation must
likewise, through a member, give its attorney or other agent written authority
to sign the deed.
Anomalies arising from treating companies and close corporations differently
[24] Northview argues that such a conclusion is anomalous. Why should the
position be different as between companies and close corporations? I
consider that there is no anomaly. There may be a difference but there is no
deviation from the norm. The argument begs the question as to whether there
is a norm. The first reason for the difference lies in the very fact that the Close
Corporations Act does not include the equivalent of s 69 (whatever its ambit
is). We must assume that the omission of an equivalent provision is
deliberate. And secondly, even if there is an anomalous difference, the
anomaly is no more significant than that which arises if one treats people
differently from close corporations. If A, a human being, authorizes B, an
agent, to sign a contract for the sale of land, the authorization must be in
writing. It would be extraordinary if A, the sole member of a close corporation,
could orally (or perhaps even by conduct) authorize B, an agent, to sign such
a contract.
[25] Moreover, a close corporation is intended to be a simple entity, akin to
a partnership, but with limited liability.14 The structure of a close corporation is
designed for individual entrepeneurs or for a limited number of people (10) to
14 Cilliers et al above p15.
conduct business. There is no board of directors and each member has the
power to bind the close corporation, as discussed above. The complex
requirements of company law are not intended to apply to them.15 The fallacy
in Northview’s argument arises through comparing close corporations with
companies rather than with partnerships or individuals. It is partnership
principles rather than company law principles that govern the relationship
between members.16 It follows that a member, like a partner, need not have
written authority to enter into a contract for the sale of land. But where a
partner or a member authorizes a third person (an agent in the true sense) to
enter into such a contract the authorization must be in writing.
Achieving the object of s 2(1) of the Alienation of Land Act
[26] The object of s 2(1) of the Alienation of Land Act is to ensure certainty
in respect of contracts for the sale of land. That object is not defeated if a
functionary of a company or a close corporation or any other juristic entity
signs such a contract. There is no uncertainty about the functionary’s
authority. It derives from law. In Bristowe J’s words,17 the authority ‘arises by
implication of law’. But where the authority arises from the expression of will
(an ‘express authorization’) it must be in writing. If it were not, the uncertainty
as to the authority would defeat the object of the section.
[27] I conclude, thus, that in the absence of written authority given to
Christelis by the member of Revelas, the contract for the sale of the property
was invalid. The substantive exception was thus correctly upheld by the high
court.
The pleading exception
[28] In so far as the pleading exception is concerned – that the written
authority was not attached to the particulars of claim, and that the claim was
thus vague and embarrassing – my view is that it was sufficient for Northview
15 Lawsa 1st reissue, Vol 4, Part 3, para 414 and Cilliers et al above p 13.
16 Cilliers et al above p 15 and J J Henning ’Die aanspreeklikheid van ‘n beslote korporasie vir
die handelinge van ‘n lid en enkele ander aspekte van eksterne verhoudings’ (1984) Tydskrif
vir Regwetenskap p 155 esp pp 166ff.
17 Potchefstroom Dairies at 513.
to plead that Christelis was ‘duly authorized’. Such an allegation implies
proper compliance with the requirement of written authority and Revelas could
have denied that in its plea. There is ample authority for the proposition that
the denial of an agent’s authority is a special defence and must be specifically
pleaded.18 The finding that that exception was correctly taken was thus not
correct, and in any event would not be appealable given that it was not final in
effect.
[29] The appeal is dismissed with costs.
______________
C H Lewis
Judge of Appeal
18 Charugo Development Co (Pty) Ltd v Maree NO 1973 (3) SA 759 (A) at 763F-764A.
APPEARANCES
APPELLANT:
W Trengove SC
M Chaskalson SC
Instructed by Derek Mazaham Attorneys
Johannesburg
Lovius Block Attorneys
Bloemfontein.
RESPONDENTS:
J Peter
Instructed by Cuzen Randeree Attorneys
Johannesburg
McIntyre & van der Post
Bloemfontein.
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
18 March 2010
STATUS: Immediate
Northview Shopping Centre v Revelas Properties (275/09) [2010] ZASCA
16 ( 18 March 2010)
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
A close corporation, like a company, is a legal fiction. It can enter into legal
transactions only through natural persons. The question for decision in this
appeal was whether an agent of a close corporation, who was not a member,
was required to have written authority from a member to enter into a contract
for the sale of land.
Section 2(1) of the Alienation of Land Act provides:
‘No alienation of land after the commencement of this section shall . . . be of any
force or effect unless it is contained in a deed of alienation signed by the parties
thereto or by their agents acting on their written authority.’
Northview Properties had offered to purchase property, at a considerable
price, from Revelas Properties, a close corporation. The contract was signed
on behalf of Revelas by the husband of the sole member of the close
corporation. Northview instituted action claiming performance of the contract.
Revelas excepted (raised a legal defence that there was no cause of action)
on the basis that there was no allegation that he had written authority to bind
the close corporation.
The South Gauteng High Court (Johannesburg) upheld the exception finding
that the contract would not be binding in the absence of written authority. This
court today dismissed the appeal against that order. It held that while a
member of a close corporation does not require written authority to bind it to a
contract for the sale of land, in the same way as a partner would not need
such written authority, being able to bind a partnership without more, an
outside agent must have written authority from a member to enter into a valid
contract for the sale of land.
|
1325
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 403/09
Bruce-Lee Lutchman Naidoo
Appellant
and
The State Respondent
Neutral citation:
Bruce-Lee Naidoo v The State (403/09) [2010] ZASCA 40
(30 March 2010)
Coram:
HEHER, MALAN JJA and SERITI AJA
Heard:
25 February 2010
Delivered:
30 March 2010
Summary:
Criminal law – self –defence – whether appellant acted in
self defence – whether appellant erroneously believed his
life was in danger – putative self defence – sentence of
years’
imprisonment
reduced
to
years’
imprisonment.
______________________________________________________________
ORDER
On appeal from:
North Gauteng High Court Pretoria (Murphy, Molopa
JJ sitting as court of appeal)
(a)
The appeal against conviction is dismissed.
(b)
The appeal against sentence succeeds. The sentence imposed by the
trial court is set aside and for it is substituted a sentence of
12 (twelve) years imprisonment.
JUDGMENT
Seriti AJA (HEHER AND MALAN JJA concurring):
[1] The appellant appeared before the regional court, facing one count of
murder. After evidence was led he was convicted as charged and sentenced
to fifteen years’ imprisonment. His appeal to the North Gauteng High Court
against both conviction and sentence was unsuccessful. He was granted
leave to appeal to this court by Murphy J.
[2] The appeal revolves around two issues, namely whether the appellant
acted in self defence when he shot and caused the death of the deceased, Mr
Robert Miller, and whether, when imposing the sentence, the trial court was
correct when it found that there were no substantial and compelling
circumstances which justified the imposition of a sentence lesser than the
sentence prescribed by section 51(2) of the Criminal Law Amendment Act 105
of 1997.
[3] It is common cause that on the day in question the deceased and
Messers Vernon Watson (‘Watson’), Marcus Ruiters (‘Ruiters’) and Barend
Barnard (‘Barnard’) drank alcohol at a certain place. In the evening, the
deceased drove them in a Toyota Corolla, to a barbershop and parked their
motor vehicle in a parking bay parallel with the pavement. In front of the motor
vehicle there was a bakkie belonging to the appellant parked with its nose
facing the nose of the Corolla.
[4] The deceased and his friends (but as the trial court correctly found, not
Watson who was left in the car) went to the pool tables adjoining the
barbershop where they encountered the appellant and other people. An
argument ensued between the appellant and the deceased leading to a fight.
The friends of the deceased joined in and assisted the deceased. The
appellant’s friends also took part in helping him. In the process the appellant
was assaulted and he sustained bodily injuries.
[5] The owner of the business premises, Mr Abdul Rocker came on the
scene and chased the deceased and his friends out. They went to their motor
vehicle. The deceased sat on the driver’s seat and Mr. Barnard on the
passenger’s front seat together with two young children and Watson on the
left back seat and Ruiters on the right.
.
[6] The appellant was also chased from the premises. He went to his
bakkie and, whilst standing in front of it, fired five bullets at the motor vehicle
in which the deceased and his friends were sitting. At that stage the appellant
was about three metres away from the deceased’s motor vehicle. The gun
shots hit that vehicle on the bonnet, front windscreen and radiator. The
deceased was struck by one of the bullets and later died.
[7] The state witnesses Watson, Ruiters and Barnard testified that when
the appellant fired their vehicle was stationary, idling and not in gear. Rocker
said that when he went out of the barbershop, just after the shooting, he found
the deceased’s Corolla idling.
[8] The appellant testified that when he left the barbershop the deceased
and his friends were standing on the sidewalk. They swore at him and
threatened to run him over. His mother and young brother came on the scene,
and his brother ran to him and held him by his leg. At that time, the four men
were inside their motor vehicle. The driver of motor vehicle was revving it and
it was jerking forward. He drew his firearm which was in a holster at his side.
He fired a shot at the motor vehicle’s engine. The motor vehicle continued
coming towards him and he fired a second shot. There was no positive
response from the driver. The Corolla continued coming towards him. He then
fired three more shots one after the other and the motor vehicle stopped.
[9] The trial court accepted the evidence of the state witnesses on how the
shooting occurred and rejected the version of the appellant. It accepted that
there was no attempt to run over the appellant with a motor vehicle. The trial
court further found that when the appellant fired he had the intention to kill the
driver.
[10] The full court which heard the appeal, after analysing the facts of the
case, agreed with the trial court that the evidence of Messers Watson, Ruiters
and Barnard was by and large credible and reliable and that the probabilities
supported their version. The trial court was aware of their intoxication and
approached their testimony with caution. It noted contradictions in the version
of the state witnesses but found them not to be material. It rejected the
appellant’s version and his defence on the grounds that it was highly
improbable.
[11] The appellant’s counsel submitted that the trial court should not have
accepted the evidence of Messers Watson, Ruiters and Barnard when they
said that their motor vehicle was stationary when shot at. The submission was
that the state witnesses had a motive to tender false evidence against the
appellant as their friends was killed and they assaulted the appellant. There is
no merits in this. In S v Morgan and others1; S v Tshoko2 en ‘n ander; R v
Dhlumayo3 the court reiterated the principle that an appeal court is generally
reluctant to upset a trial court’s findings of fact and its assessment of the
credibility of witnesses. I am unable to find any reason why the trial court
should not have accepted the state witnesses’ evidence. There was no
1 1993 (2) SACR 134 (A) at p153 a-c.
2 1988 (1) SA 139 (AA) at 142I-143A.
3 1948 (2) SA 677 (AD) at 689.
objective evidence to suggest that they had a motive to give false evidence
against the appellant.
[12] The appellant’s counsel further submitted that the deceased could
(involuntarily) have put the gears of the motor vehicle into neutral after being
shot at. This submission is not based on reliable evidence and amounts to
speculation.
[13] The appellant testified that when the motor vehicle jerked towards him
he could not take evasive action because the pavement next to him was full of
people and the road to his left was busy with traffic. Later he changed his
evidence and stated that he did not think about taking any evasive action to
avoid being knocked down by the motor vehicle. His evidence was correctly
rejected by the trial court.
[14] Appellant’s counsel further submitted that if it is found, objectively
viewed, that the appellant’s life was not under threat, the appellant
erroneously believed that it was in danger and that he therefore acted in
putative self defence. The submission was further made that the erroneous
belief of the appellant excluded dolus and he should have been convicted of
culpable homicide only.
[15] The submission by the appellant’s counsel is without merits. The trial
court found, and I agree, that the deceased's motor vehicle was stationary
when the appellant fired at it. The appellant could not have reasonably
believed that his life was in danger – See S v Joshua4 and S v De Oliveira5.
The appellant fired directly at the front windscreen knowing that there was a
driver behind the steering wheel. His life was not threatened. It follows that the
appeal against his conviction should be dismissed.
[16] As far as sentence is concerned section 51(2) of the Act read in
conjunction with Part II of Schedule 2 provides that if an accused is convicted
4 2003 (1) SACR 1(SCA) at para 29.
51993 (2) SACR 59 (A) at 63i-64a.
of murder, the court shall impose a minimum sentence of 15 years.
Subsection (3) stipulates that the court may depart from the prescribed
sentence and impose a sentence less than the prescribed sentence if there
are substantial and compelling circumstances justifying the imposition of such
a sentence.
[17] When considering sentence, the trial court took into account the
personal circumstances of the appellant and the fact that the appellant was a
first offender. It also took into account nature and seriousness of the offence
and the interests of society. The trial court further said that although the
appellant was clearly a victim of assault, it could not find sufficient factors
justifying the imposition of a lesser sentence.
[18] As a general rule, a court of appeal will not interfere with the sentence
imposed by the trial court unless the trial court has failed to exercise its
discretion properly. This will be the case if there was a misdirection on the
part of the trial court – see S v Shapiro 6; S v Sadler 7and S v Michele. 8
[19] In passing sentence the magistrate accepted that the appellant had
been assaulted by the deceased and his friends. He, however, did not
consider that to be a substantial and compelling circumstance justifying the
imposition of a lesser sentence. He said that, despite the assault on him, the
appellant had the choice of withdrawing but instead went ahead and stood in
front of the Corolla in order to provoke a further confrontation. The full court
associated itself with this view. To my mind, however, it is precisely
circumstances such as the assault, the injuries he sustained and the anger
which possessed him that palliate the horror of the appellant’s crime and his
moral culpability. Neither court apparently attached weight to the combined
effect of these factors. That was, as I see it, a material misdirection which
entitles us to consider the sentence afresh.
6 1994 (1) SACR112 (A) at 124d-e.
7 2000 (1) SACR 331 (SCA) at 334d-g.
8 2010 (1) SACR 131 (SCA) at para H.
[20] The personal circumstances of the appellant, the fact that he was
assaulted prior to he shooting and sustained physical injuries and that he was
angry at the time of the shooting cumulatively justifies the imposition of a
sentence less than the prescribed sentence. In my view, after taking into
account all the relevant factors into account, a sentence of twelve years’
imprisonment is appropriate.
[21] (a)
The appeal against conviction is dismissed.
(b)
The appeal against sentence succeeds. The sentence is set
aside and for it is substituted a sentence of 12 years’ imprisonment.
W L SERITI
Acting Judge of Appeal
APPEARANCES:
FOR APPELLANT:
M van Wyngaard
Instructed by
Matwadia Attorneys, Springs
Mpobole & Ismail Attorneys, Bloemfontein
FOR RESPONDENT:
J J Kotzé
Instructed by
The Director of Public Prosecutions, Pretoria
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
The appellant Mr. Bruce – Lee Lutchman Naidoo a resident of Mackenzieville,
Nigel was convicted by the regional court Nigel of Murder of the deceased Mr.
Robert Muller. He was sentenced to Fifteen (15) years imprisonment.
He challenged his conviction and sentence.
According to the Supreme Court of Appeal Mr. Naidoo’s conviction was in order as
he did not act in self defence when he shot the deceased. The court felt that in the
circumstances of this case a sentence of fifteen (15) years imprisonment was
severe and it reduced the sentence to twelve (12) years imprisonment.
|
3502
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 663/2019
In the matter between:
ESKOM HOLDINGS SOC LIMITED
APPELLANT
and
RESILIENT PROPERTIES (PTY) LTD
FIRST RESPONDENT
CHANGING TIDES 91 (PTY) LTD
SECOND RESPONDENT
RETRACTION PROPS 7 (PTY) LTD
THIRD RESPONDENT
MOGWELE TRADING 278 (PTY) LTD FOURTH RESPONDENT
EMALAHLENI MUNICIPALITY
FIFTH RESPONDENT
MEC: COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS
MPUMALANGA
SIXTH RESPONDENT
MINISTER OF ENERGY
SEVENTH RESPONDENT
NATIONAL ENERGY REGULATOR
OF SOUTH AFRICA
EIGHTH RESPONDENT
and
SAKELIGA NPC
AMICUS CURIAE
Case no: 664/2019
In the matter between:
ESKOM HOLDINGS SOC LIMITED
APPELLANT
and
SABIE CHAMBER OF COMMERCE
AND TOURISM
FIRST RESPONDENT
LYDENBURG CHAMBER OF
COMMERCE AND TOURISM
SECOND RESPONDENT
GRASKOP CHAMBER OF
COMMERCE AND TOURISM
THIRD RESPONDENT
THABA CHWEU LOCAL
MUNICIPALITY
FOURTH RESPONDENT
MUNICIPAL MANAGER: THABA
CHWEU LOCAL MUNICIPALITY
FIFTH RESPONDENT
EXECUTIVE MAYOR: THABA
CHWEU LOCAL MUNICIPALITY
SIXTH RESPONDENT
CHIEF FINANCIAL OFFICER: THABA
CHWEU LOCAL MUNICIPALITY
SEVENTH RESPONDENT
NATIONAL ENERGY REGULATOR
OF SOUTH AFRICA
EIGHTH RESPONDENT
MINISTER OF ENERGY
NINTH RESPONDENT
MEC: COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS
TENTH RESPONDENT
MINISTER OF COOPERATIVE
GOVERNANCE AND TRADITIONAL
AFFAIRS
ELEVENTH RESPONDENT
and
SAKELIGA NPC
AMICUS CURIAE
Case no: 583/2019
In the matter between:
THABA CHWEU LOCAL MUNICIPALITY
FIRST APPELLANT
MUNICIPAL MANAGER: THABA
CHWEU LOCAL MUNICIPALITY
SECOND APPELLANT
EXECUTIVE MAYOR: THABA
CHWEU LOCAL MUNICIPALITY
THIRD APPELLANT
CHIEF FINANCIAL OFFICER: THABA
CHWEU LOCAL MUNICIPALITY
FOURTH APPELLANT
and
SABIE CHAMBER OF COMMERCE
AND TOURISM
FIRST RESPONDENT
LYDENBURG CHAMBER OF
COMMERCE AND TOURISM
SECOND RESPONDENT
GRASKOP CHAMBER OF
COMMERCE AND TOURISM
THIRD RESPONDENT
ESKOM HOLDINGS SOC LIMITED
FOURTH RESPONDENT
NATIONAL ENERGY REGULATOR
OF SOUTH AFRICA
FIFTH RESPONDENT
MINISTER OF ENERGY
SIXTH RESPONDENT
MINISTER: COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS
SEVENTH RESPONDENT
MEC: COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS
EIGHTH RESPONDENT
Neutral citation: Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd
and Others (Case no 663/19); Eskom Holdings SOC Ltd v
Sabie Chamber of Commerce and Tourism, and Others
(Case no 664/19); Thaba Chweu Local Municipality and
Others v Sabie Chamber of Commerce and Tourism, and
Others
(Case
no
583/19)
[2020] ZASCA
(29 December 2020)
Coram:
PETSE DP, CACHALIA, VAN DER MERWE and
MOCUMIE JJA and LEDWABA AJA
Heard:
27 – 28 August 2020
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives via e-mail, publication on the
Supreme Court of Appeal website and released to SAFLII. The
date and time for hand-down is deemed to be 09H45 on
29 December 2020.
Summary: Constitutional law – section 41 of the Constitution of the Republic
of South Africa, 1996 – principles of cooperative government and
intergovernmental relations – all spheres of government and all organs of state
obliged to make reasonable effort in good faith to settle intergovernmental
disputes – Intergovernmental Relations Framework Act 13 of 2005, ss 40 and
41.
Electricity – Electricity Regulation Act 4 of 2006, s 21(5) – interruption of
electricity supply by Eskom to municipalities in financial crises and unable to
pay for electricity supply – municipalities constitutionally and statutorily
obliged
to
provide
basic
services,
inclusive
of
electricity,
to
communities – whether Eskom entitled to interrupt electricity supply due to
non-payment.
Local Government – Local Government: Municipal Structures Act 117 of
1998 – Local Government: Municipal Systems Act 32 of 2000 – Local
Government: Municipal Finance Management Act 56 of 2003.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Hughes J
sitting as court of first instance): judgment reported sub nom Sabie Chamber
of Commerce and Tourism and Others v Thaba Chweu Local Municipality
and Others; Resilient Properties (Pty) Ltd and Others v Eskom Holdings SOC
Ltd and Others [2019] ZAGPPHC 112
Case no 663/2019: Eskom Holdings SOC Limited v Resilient Properties (Pty)
Ltd and Others:
The appeal is dismissed with costs, including the costs of two counsel where
so employed.
Case no 664/2019: Eskom Holdings SOC Limited v Sabie Chamber of
Commerce and Tourism and Others:
The appeal is dismissed with costs, including the costs of two counsel where
so employed.
Case no 583/2019: Thaba Chweu Local Municipality and Others v Sabie
Chamber of Commerce and Tourism and Others:
The appeal against paragraph 2 of the order of the high court is upheld.
The first, second and third respondents shall pay the costs of the appeal
jointly and severally, the one paying the others to be absolved.
Paragraph 2 of the order of the high court is set aside and in its place is
substituted the following:
‘The costs of this application shall be borne by Eskom Holdings SOC
Limited, with the rest of the respondents being absolved.’
JUDGMENT
Petse DP (Cachalia, Van der Merwe and Mocumie JJA and
Ledwaba AJA concurring):
Introduction
[1] These proceedings encompass a trilogy of appeals, two of which
primarily concern the issue of whether the decisions taken by Eskom Holdings
SOC Limited (Eskom) to interrupt the bulk supply of electricity to two
municipalities at scheduled times are defensible on both constitutional and
statutory grounds. They arise from two applications brought in the Gauteng
Division of the High Court, Pretoria, sitting in Mpumalanga. Although these
applications were not formally consolidated, they were nonetheless heard
together over several days. The high court (Hughes J) granted an order
reviewing and setting aside Eskom’s decisions, together with other ancillary
relief. 1 Whether the high court rightly reviewed and set aside Eskom’s
decisions is the primary question confronting us in this appeal. The third
appeal is confined to the issue of whether the high court exercised its
discretion judicially in awarding costs against Thaba Chweu Local
Municipality, and three of its senior executives. The appeals come before us
with the leave of the high court.
1 Sabie Chamber of Commerce and Tourism and Others v Thaba Chweu Local Municipality and Others;
Resilient Properties Proprietary Limited and Others v Eskom Holdings SOC Ltd and Others [2019]
ZAGPPHC 112. The review applications were heard together from 13-18 August 2018, with the order
following on 7 March 2019.
[2] The facts of these appeals graphically illustrate the distressing state of
municipal governance in this country, which depict a picture of the
dysfunctional state of affairs bedevilling local government. The Emalahleni
Local Municipality (ELM) and the Thaba Chweu Local Municipality
(TCLM), the municipalities occupying centre-stage in these proceedings,
have been aptly referred to by counsel as financial delinquents, dysfunctional
municipalities, and municipalities plagued by poor governance and financial
mismanagement.
[3] Eskom is a state-owned public company having a share capital,
incorporated in accordance with the company laws of the Republic of South
Africa.2 It is the appellant in two of the three appeals. Where it is necessary to
distinguish between the two appeals, I shall, for convenience, refer to the
appeal under case no 663/19 as Eskom I, and the appeal under case no 664/19
as Eskom II.
[4] The first to fourth appellants in the third appeal under case no 583/10
are the Thaba Chweu Local Municipality; the Municipal Manager: Thaba
Chweu Local Municipality; the Executive Mayor: Thaba Chweu Local
Municipality; and the Chief Financial Officer: Thaba Chweu Local
Municipality, respectively. For convenience, these appellants shall be referred
to collectively as the Thaba Chweu Municipal appellants.
[5] The respondents in Eskom I are, respectively, Resilient Properties (Pty)
Ltd; Changing Tides 91 (Pty) Ltd; Retraction Props 7 (Pty) Ltd; Mogwele
2 See the long title of the Eskom Conversion Act 13 of 2001.
Trading 278 (Pty) Ltd; the Emalahleni Municipality; the MEC: Cooperative
Governance and Traditional Affairs, Mpumalanga; the Minister of Energy;
and the National Energy Regulator of South Africa (NERSA).3 For
convenience, the first to fourth respondents shall collectively be referred to as
Resilient. The fifth to eighth respondents shall be referred to, respectively, as
Emalahleni, the MEC, the Minister, and the NERSA.
[6] The first to third respondents in Eskom II are, respectively, the Sabie
Chamber of Commerce and Tourism; the Lydenburg Chamber of Commerce
and Tourism; and the Graskop Chamber of Commerce and Tourism. For
brevity, they will collectively be referred to as the Chambers. The fourth to
eleventh respondents are, respectively, the Thaba Chweu Local Municipality;
the Municipal Manager: Thaba Chweu Local Municipality; the Executive
Mayor: Thaba Chweu Local Municipality; the Chief Financial Officer: Thaba
Chweu Local Municipality; the NERSA; the Minister of Energy; the MEC:
Cooperative Governance and Traditional Affairs; and the Minister:
Cooperative Governance and Traditional Affairs. The fourth to seventh
respondents shall collectively be referred to as the municipal respondents. For
convenience, the eighth to the eleventh respondents shall respectively be
referred to as the NERSA, the MEC, and the Ministers. Where it is necessary
to distinguish between the two Ministers, the ninth respondent will be referred
to as the Minister of Energy and the eleventh respondent simply as the
Minister of Cooperative Governance.
3 The National Energy Regulator of South Africa (NERSA) is a regulatory authority, established as a
juristic person, in terms of s 3 of the National Energy Regulator Act 40 of 2004.
[7] Resilient are all private companies who own the Highveld Mall, a
68 000m2 retail shopping centre located within the jurisdiction of the ELM.
The mall has 185 retail tenants. These companies together employ some 2 000
employees and more than 100 support staff. The mall consumes a large
amount of electricity supplied by the ELM, which is a licensed distributor of
electricity it bulk-purchases from Eskom for use by its residents. Resilient
have dutifully paid the ELM for their consumption. The Chambers share a
common interest with Resilient in these proceedings. They represent various
businesses that are affiliated to them. Despite Resilient and the Chambers
having fulfilled their payment obligations to the ELM and TCLM, the two
municipalities have repeatedly defaulted in making their payments to Eskom.
This has resulted in Eskom deciding to interrupt electricity supply to them.
For Resilient and the Chambers, these electricity interruptions have had a
devastating effect as they ‘threaten the very fabric of society’, with hospitals,
schools, households and businesses severely disrupted.
[8] Mr Gwilym Rees, who deposed to the founding affidavit of the
Chambers, elaborated on the effects of electricity interruptions as follows:
‘Firstly, when the power supply is cut, all sewage works immediately come to a standstill.
This means that sewage is not pumped to the sewage processing plants but instead, will
simply sit (and will eventually spill into the streets) for the duration of the cut-off, with the
associated, serious risks to the health of the community.
Secondly, the minute the power is shut off, the water purification and processing plants as
well as those pumping water to the community to ensure adequate water pressure come to
an immediate standstill. This means that taps run dry, households run out of water, and
critical water based facilities will cease functioning. Even worse, when the supply is
reconnected, it will take some time for an adequate reserve to be generated to enable the
community and business to recommence.
Thirdly … any process (industrial, commercial or domestic) that is dependent on electricity
will immediately cease.’
[9] Along similar lines, the deponent to the founding affidavit of Resilient
alleged:
‘50.2
The proposed interruptions will lead to the rapid collapse of the entire Emalahleni
water network within 48 hours and it is likely that a human and environmental
disaster will follow;
50.3
Interruptions to the electrical supply to the water purification system will lead to
raw, unpurified water flowing into reservoirs and creating a serious health risk to
the community;
50.4
There is a real risk that Eskom’s planned interruptions will lead to a total collapse
of the entire sewer system;
50.5
Interruptions to the electrical supply to the sewage works will result in a situation
where raw sewage flows into the natural waterways and ultimately finds its way
into the Olifants River catchment system, creating an environmental hazard way
beyond the boundaries of Emalahleni.’4
[10] Sakeliga NPC (Sakeliga), a business interest organisation boasting a
countrywide membership of some 12 000 members, is a non-profit company
incorporated in terms of the Companies Act 71 of 2008. It was admitted as an
amicus curiae in both Eskom I and Eskom II. In the high court, Sakeliga was
admitted as an amicus curiae in Eskom I but not in Eskom II. I interpose to
observe that counsel for Eskom, in Eskom II, made some play of the fact that
Sakeliga was not admitted as an amicus in relation to the challenge of the
Chambers, contending that its submissions should not have been taken into
account by the high court. In my view this complaint has no substance. In this
court, Sakeliga was, pursuant to its unopposed application, admitted as amicus
4 These allegations were confirmed in a supporting affidavit deposed to by Resilient’s expert.
and repeated the submissions it advanced before the high court. Eskom must
have been aware for several months before the hearing of the appeal, when
Sakeliga’s application for admission as amicus was served on all interested
parties, what its argument would entail. Thus, it was well-prepared to contest,
as it in fact did, those submissions in this Court. Indeed, before us counsel was
not able to point to any prejudice that Eskom had suffered as a result of
Sakeliga having been allowed to present oral argument before the high court.
[11] The government is Eskom’s sole shareholder. Eskom is also an organ
of state as contemplated in s 239 of the Constitution of the Republic of South
Africa, 1996 (the Constitution).5 In terms of its constituent Act, the Eskom
Conversion Act 13 of 2001, Eskom plays a developmental role and is charged
with promoting ‘universal access to, and the provision of, affordable
electricity, taking into account the cost of electricity, financial sustainability
and the competitiveness of Eskom’.6 The litigation in the high court was
precipitated by decisions7 taken by Eskom to interrupt the bulk supply of
electricity to the ELM and the TCLM. Eskom asserts that it had to resort to
what it accepts is a drastic measure because not only had the ELM and the
TCLM persistently failed over several years to pay for the bulk electricity
supplied by Eskom, in breach of their contractual obligations, they had also
failed to honour their payment obligations undertaken in terms of the
acknowledgment of debt arrangements that they had each respectively signed.
5 See para (b)(ii) of the definition of ‘organ of state’ which includes:
‘(b)
any other functionary or institution—
(i)
…
(ii)
exercising a public power or performing a public function in terms of any legislation, but
does not include a court or a judicial officer…’
6 See s 6(5)(a) and (b) of the Eskom Conversion Act.
7 Eskom’s decisions to interrupt the bulk supply of electricity to the TCLM and the ELM were taken on 15
September and 29 November 2017, respectively.
In addition, Eskom asserted that its principal objective in resorting to the
drastic measure of interrupting the bulk supply of electricity to the ELM and
the TCLM was to contain the spiralling of the electricity debt which, over the
years, had increased exponentially. Eskom further alleged that failure to take
the drastic measures it had adopted would ultimately impact negatively on its
overall capacity to generate electricity. And that if it were pushed to a point
where it could no longer generate electricity, so the argument continued, the
whole country would be plunged into darkness, with disastrous consequences
on many fronts.
[12] Eskom is licenced by the NERSA to generate, transmit and distribute
electricity countrywide.8 Currently, it is the only entity licenced to supply
electricity to municipalities in the country. The municipalities are in turn
licenced to sell electricity to their communities and other customers or end-
users within their areas. Eskom supplies bulk electricity to the municipal grid
which is then distributed by municipalities through their electricity supply
networks to the end-users. It is common cause between the parties that the
municipal electricity supply networks are designed in such a way that it is not
technically possible for Eskom to isolate supply to selected end-users within
municipal areas, the municipal water purification system and the like.
[13] In Joseph and Others v City of Johannesburg and Others9 the
Constitutional Court said, with reference to Mkontwana,10 that: ‘[E]lectricity
8 See, generally, Chapter III of the ERA.
9 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (4) SA 55 (CC) para 34.
(Citations omitted.)
10 Mkontwana v Nelson Mandela Metropolitan Municipality and Another; Bissett and Others v Buffalo City
Municipality and Others; Transfer Rights Action Campaign and Others v MEC, Local Government and
Housing, Gauteng, and Others (KwaZulu-Natal Law Society and Msunduzi Municipality as Amici Curiae)
2005 (1) SA 530 (CC) para 38.
is one of the most common and important basic municipal services and has
become virtually indispensable, particularly in urban society.’ This statement
by the Constitutional Court resonates with the facts of this case. In Mkontwana
the Constitutional Court held that ‘[m]unicipalities are obliged to provide
water and electricity to the residents in their area as a matter of public duty.’11
That electricity is a component of the basic services that municipalities are
constitutionally and statutorily obliged to provide to their residents is
therefore beyond question.
Factual background
[14] It is now opportune to set out a detailed background to this litigation.
As the two applications were brought on essentially similar grounds, and
resisted by Eskom on virtually the same basis, it is convenient to recount the
facts in a consolidated narrative.
[15] The generation, transmission and distribution of electricity in this
country is regulated in terms of the Electricity Regulation Act 4 of 2006 (the
ERA). The NERSA, established in terms of the National Energy Regulator
Act 40 of 2004,12 has, in terms of s 3 of the ERA, been designated as the
custodian and enforcer of the regulatory framework of the ERA. As Regulator
it is empowered, amongst other things, to consider applications for licences
and issue licences for the generation, transmission or distribution of
electricity.13 Eskom is licenced by the NERSA to generate, transmit and
11 Ibid. (Citations omitted.)
12 The National Energy Regulator Act established, under s 3, the National Energy Regulator of South Africa
as a juristic person to undertake, amongst other things, the functions set out in s 4 of the ERA.
13 The powers and duties of the NERSA are set out in s 4 of the ERA:
‘The Regulator—
(a)
must—
(i)
consider applications for licenses and may issues licenses for—
distribute electricity. The ELM and the TCLM are, for their part, licenced by
the NERSA to reticulate14 electricity supplied to them in bulk by Eskom. The
ELM and the TCLM in turn on-sell or supply electricity to the customers or
end-users within their respective municipal areas at a marked-up tariff in order
to raise revenue for themselves. The contractual relationship between Eskom
on the one hand and the ELM and the TCLM on the other is, apart from the
ERA, also regulated in terms of written electricity supply agreements (ESAs)
concluded between the parties. Clauses 9.1 and 9.2 of the ESAs provide:
‘Electricity accounts for all charges payable under this Agreement shall be sent to the
DISTRIBUTOR15 as soon as possible after the end of each month (i.e. meter-reading
month, as per the definition of “month” in the Eskom Schedule of Standard Prices), and
each account shall be due and payable on the date the account is received by the
DISTRIBUTOR, which date, for purposes of this Agreement, shall be as set out in
subclause 25.2.
Should payment not be received within a period of 10 (ten) days from the date the account
is deemed to have become due and payable in terms of subclause 9.1, ESKOM may
discontinue the bulk supply to the DISTRUTOR and/or terminate the electricity supply
agreement after having given the DISTRIBUTOR 14 (fourteen) days written notice. The
(aa) the operation of generation, transmission or distribution facilities;
(bb) the import and export of electricity;
(cc) trading;
(ii)
regulate prices and tariffs;
(iii)
register persons who are required to register with the Regulator where they are not required
to hold a licence;
(iv)
issue rules designed to implement the national government's electricity policy framework, the
integrated resource plan and this Act;
(v)
establish and manage monitoring and information systems and a national information system,
and co-ordinate the integration thereof with other relevant information systems;
(vi)
enforce performance and compliance, and take appropriate steps in the case of non-
performance;
(b)
may—
(i)
mediate disputes between generators, transmitters, distributors, customers or end users;
(ii)
undertake investigations and inquiries into the activities of licensees;
(iii)
perform any other act incidental to its functions.’
14 For purposes of the ERA ‘reticulation’ is defined in s 1 to mean ‘trading or distribution of electricity and
includes services associated therewith’. Properly construed, reticulation appears to refer to the infrastructure
necessary to connect individual end-users to a single supply point for which municipalities are responsible.
15 ‘Distributor’ is a reference to the ELM and the TCLM.
amount outstanding shall bear interest compounded monthly from the due date to date of
payment, at a rate per annum equal to the prevailing prime overdraft rate charged by Firs
National Bank of Southern Africa Limited plus 5% (five per centum).’
[16] Clause 22.3 of the ESAs, in turn, provides:
‘Should the DISTRIBUTOR fail to pay any electricity account in accordance with the
provisions of Clause 9, ESKOM may discontinue the bulk supply to the DISTRIBUTOR
and/or terminate this Agreement, without prejudice to any claim ESKOM may have for
electricity supplied or for damages suffered by the default on the part of the
DISTRIBUTOR, subject to the proviso that ESKOM shall give the DISTRIBUTOR prior
notice thereof by facsimile or some other electronic medium. ESKOM shall afford the
DISTRIBUTOR a period of 48 (forty-eight) hours within which to rectify the said default.
The bulk supply shall be restored as soon as practicable after the DISTRIBUTOR has
remedied the default and paid the requisite reconnection fee.’
[17] Eskom asserted that in breach of their respective contractual
obligations, the ELM and the TCLM failed to pay for the electricity that they
had purchased for distribution to their customers, the end-users. As a result,
their accounts with Eskom fell into arrears. By June 2017 the collective debt
owed to Eskom by various municipalities in the country had reached alarming
proportions.16 The ELM and the TCLM have been two of the notable serial
defaulters17 of their payment obligations for electricity supplied by Eskom.
When the debt owed by the ELM and the TCLM had reached intolerable
levels, Eskom threatened to cut off its electricity supply to the ELM and the
TCLM to induce them to pay. In order to stave off Eskom’s threatened action,
the ELM and the TCLM signed acknowledgements of debt in favour of Eskom
16 As at April 2020 the combined municipal debt for electricity in the country stood at approximately
R 30 billion.
17 When litigation commenced some two and a half years ago, the ELM owed Eskom over R1.2 billion and
the TCLM owed approximately half a billion Rand.
in terms of which they undertook to pay off the accumulated debt in agreed
monthly instalments. At the same time, they also undertook to pay for future
monthly electricity consumption in full upon Eskom rendering its monthly
invoices. These undertakings came to naught for both the ELM and the TCLM
defaulted on their payment plans agreed with Eskom to settle the debt. In
consequence, the arrears continued to mount as the ELM and the TCLM, apart
from the sporadic payments that they made, failed to pay for their ongoing
current consumption, the historical debt and interest accruing thereon.
[18] When Eskom’s tactic of adopting ‘a carrot and stick approach’ to
extract payment from the defaulting municipalities failed to yield the desired
outcome, it published notices declaring its intention to interrupt the bulk
electricity supply at scheduled times, to wit: from 06h00 to 08h00 and again
from 17h00 to 19h30 during the week; and from 08h30 to 11h00 and again
from 15h00 to 17h30 on weekends. These times were to be extended,
incrementally, until the point of a total termination of electricity supply unless
the ELM and the TCLM made substantial payments to Eskom to reduce their
indebtedness. In the notices, Eskom invited members of the public and
interested parties to make representations on why it should not proceed with
the proposed electricity supply interruptions. Resilient made representations
to Eskom to dissuade it from proceeding with the threatened action. No
representations were received from the Chambers or from residents within the
municipal area of the TCLM.
[19] Eskom was not moved by the representations made by Resilient. It gave
notice that it would implement its decision to interrupt the bulk electricity
supply to both the ELM and the TCLM as they had repeatedly failed to honour
their payment arrangements. In justifying its stance, Eskom stated that
Resilient, the Chambers and any other similarly situated parties were not
without a remedy. It was open to them, asserted Eskom, to apply to a court
and seek a mandamus against the ELM and the TCLM directing them to pay
their debts which would then obviate the need for Eskom to implement its
decision to interrupt the supply of electricity. I observe in passing, that it is
cold comfort to suggest that end-users of electricity could seek a mandamus
directing a delinquent municipality to pay its debts in circumstances where it
is known that it is unable to do so.
[20] The stance adopted by Eskom precipitated the litigation that ensued in
the high court. Both Resilient and the Chambers brought separate applications
on an urgent basis in which they sought interim and final relief. With respect
to the interim relief, they sought orders, in essence, directing Eskom to restore
the full supply of electricity pending the final determination of the relief
sought in part B of their notices of motion. With respect to final relief, they,
so far as is relevant for present purposes, sought orders in the following terms:
(a)
declaring that the interruption decision is unconstitutional and invalid;
(b)
reviewing and setting aside the interruption decision;
(c)
declaring that s 21(5) of the ERA is inconsistent with the Constitution
and invalid; and
(d)
interdicting Eskom from disconnecting the electricity supply for the
purpose of compelling the municipalities to pay their arrear debts to Eskom.
[21] The case of Resilient and the Chambers is that it is unconstitutional and
unlawful for Eskom to enforce its debt against the ELM and the TCLM by
interrupting the electricity supply in circumstances where they, as end-users,
have met their payment obligations to the municipalities. They assert that: (a)
they have dutifully paid for their electricity but cannot compel the ELM and
the TCLM to pay Eskom; (b) Eskom has been dilatory in failing to recover
the escalating debt from the municipalities and allowed it to escalate to
unsustainable levels, and (c) the interruption of electricity created a public
health and environmental emergency because it threatened the functioning of
the municipal water reticulation and sewage systems.
[22] Accordingly, the case of Resilient and the Chambers was based on the
following grounds: First, Eskom was obliged to supply electricity to all end-
users in terms of clauses 3.1 and 3.2 of its distribution licence. Therefore, its
decision to interrupt the supply of electricity to the entire municipality was
not consonant with its licence conditions. Second, Eskom’s decision was
tantamount to an impermissible exercise of self-help and thus inconsistent
with the rule of law under s 1(c) of the Constitution and the right of access to
courts under s 34. Third, the decision was in breach of s 6(2)(e)(iii) of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) because in taking
it, Eskom failed to have regard to all the relevant considerations, particularly
the potential damage to the environment as a result of sources of water being
contaminated due to damage to the municipal water and sewage systems. It
thereby put the health of the local residents at risk Fourth, Eskom had not
exhausted the mechanism provided for in s 41 of the Constitution and s 40 of
the Intergovernmental Relations Framework Act 13 of 2005 (IRFA) to resolve
its disputes with the ELM and the TCLM before taking its interruption
decision.
[23] For its part, Eskom contended that: first, there was no contractual nexus
between it on the one hand and Resilient and the Chambers on the other and,
therefore, that it bore no constitutional obligation to supply them with
electricity. Secondly, it was entitled to rely on clause 9.2 of the ESAs, which
accorded it the contractual right to interrupt or even terminate altogether the
supply of electricity to the ELM and the TCLM. Thirdly, its contractual right
to interrupt or terminate the supply of electricity was buttressed by s 21(5)(c)
of the ERA, which authorises it to reduce or terminate the supply of electricity
to the affected municipalities, when they have contravened the payment
conditions of its distribution licence. Fourthly, s 41 of the Constitution and ss
40 and 41 of the IRFA were not implicated because there existed no dispute
between it on the one hand and the ELM and the TCLM on the other. On this
score, Eskom asserted that the two municipalities had unequivocally admitted
liability to it, undertook to settle the existing debt over an agreed period, pay
for their current consumption of electricity when billed therefor by Eskom,
but failed to honour their undertaking. As a further justification for its
decision, Eskom asserted that it was statutorily obliged to take the action it
did because s 51(1)(b)(i)18 of the Public Finance Management Act 1 of 1999
(PFMA) obliges it to recover revenue owed to it.
[24] Although Eskom had consented to the grant of interim relief (albeit at
different times) in terms of which it was directed to restore full supply of
electricity to the ELM and the TCLM, it nevertheless made clear that it would
resist the grant of final relief.
18 Section 51(1)(b)(i) reads:
‘An accounting authority for a public entity—
…
(b)
must take effective and appropriate steps to—
(i)
collect all revenue due to the public entity concerned…’
[25] In its answering affidavit in Eskom II, Eskom emphasised that the
failure of the municipalities to settle their debts threatened its financial
viability. It stated:
‘Between the periods March 2016 to November 2016, total municipal debt owed to Eskom
had increased to R10.2 billion. As at the June 2017, the overall municipal debts for various
municipalities had risen exponentially to R 11.45 billion of which R 2.536 billion was owed
by various municipalities within Mpumalanga Province where the [TCLM] is located.
Eskom requires the income it earns from the supply of electricity to service its debts and
meet is operational expenditure. The debt owed to it adversely impact upon Eskom’s
financial viability and its ability to deliver services to supply electricity in the country.
In the circumstances, it [became] unsustainable for Eskom to continue to supply bulk
electricity to municipalities that do not pay for it. It also [became] necessary for Eskom to
take measures to reduce and manage the rate of escalation of the debts in cases where no
payment is received.
Eskom needs to collect the outstanding debt to ensure its financial stability. It has become
urgent to collect revenue from all offending municipalities in order to ensure that: (i) its
cost of debt for capital expansion does not become unmanageable; (ii) it is not compelled
to raise funds on the capital markets to meet operating expenses; and (iii) it can maintain
and expand electricity generation to meet the needs of all South Africans. This has become
more important in light of recent credit ratings downgrades in relation to Eskom’s debt.
…
Further, if Eskom’s customers such as the municipality herein, do not pay for the bulk
electricity having been supplied with, that will put Eskom in a situation where it may not
be able to deliver on its mandate to generate electricity. That will lead to the demise of
Eskom. Should that happen, the entire economy of the country will collapse. No industry
or institution will operate. There will simply be no economic activities that will take place
in the country. Therefore, the action taken by Eskom is necessary in the circumstances.
Eskom is, moreover, statutorily obliged to collect all revenue owed to it in terms of s
51(1)(b)(i) of the PFMA and municipalities have a concomitant obligation to Eskom to pay
for the electricity they distribute to end-users.’
[26] Eskom then asserted that all of its engagements with the defaulting
municipalities to recover the debt and secure compliance with their
obligations have been unsuccessful. Significantly, with respect to the
acknowledgment of debt by the TCLM the amount of some R400 million
owing was for the period from 30 September 2002 to 7 June 2016. Yet, no
concerted effort was made to contain the debt before it spiralled to an
unmanageable level over a 16 year period.
[27] As already mentioned, in the high court the application for final relief
came before Hughes J who granted an order reviewing and setting aside
Eskom’s decisions to embark on scheduled interruptions of electricity to the
ELM and the TCLM, together with ancillary relief.
[28] It concluded that Eskom had the power under s 21(5) of the ERA to
interrupt the supply of electricity. But it nevertheless held further that Eskom
had failed to comply with the requirements of cooperative governance, as
prescribed in s 41 of the Constitution and read with ss 40 and 41 of the IFRA,
before taking the impugned decision. It reasoned as follows:
‘It is apparent that there is a dispute with regards to payments due to Eskom by the two
municipalities concerned. It is common cause that both parties have constitutional duties
and obligations towards the public at large. Both parties in my view, have failed the public
at large; on the one hand we have the delinquent municipalities and on the [other] hand we
have Eskom having not been paid by the municipalities opting to deprive the public of
basic services in terms of the Constitution and the Bill of Rights. In conclusion it is evident
to me that Eskom and the municipalities failed to adopt the dispute mechanism at their
disposal in terms of the IRFA.
In terms of s 6(2)(e)(iii) of the PAJA, the failure on the part of Eskom and the municipalities
to exhaust alternative remedies and procedures before embarking on the procedure of
supply interruptions by Eskom, warrants the grant of the review sought. This section makes
provision for a court to review an administrative action if relevant considerations were not
considered. I agree with the amici that in this instance, the failure to pursue the process and
mechanism, as is found in IFRA, would constitute a ground for review.’19
Constitutional and statutory framework
[29] Following upon the detailed factual background canvassed above, it is
now necessary to make reference to the constitutional and statutory
obligations that municipalities in the local sphere of government bear. First, s
151(1) of the Constitution establishes the local sphere of government, which
consists of municipalities throughout the territory of the Republic. Subsection
(2) vests the executive and legislative authority of municipalities in their
Municipal Councils. Each municipality has ‘the right to govern, on its own
initiative, the local government affairs of its community, subject to national
and provincial legislation, as provided for in the Constitution.’20
[30] Section 152, in turn, deals in broad terms with the objects of local
government. It provides:
‘(1) The objects of local government are—
(a)
to provide democratic and accountable government for local communities;
(b)
to ensure the provision of services to communities in a sustainable manner;
(c)
to promote social and economic development;
(d)
to promote a safe and healthy environment; and
(e)
to encourage the involvement of communities and community organisations in the
matters of local government.
19 Sabie Chamber of Commerce and Tourism (above fn 1) paras 53-54.
20 Section 151(3) of the Constitution.
(2) A municipality must strive, within its financial and administrative capacity, to achieve
the objects set out in subsection (1).’
[31] In order to fulfil its constitutional mandate as envisioned in s 152, a
municipality is required, in terms of s 153(a), to ‘structure and manage its
administration and budgeting and planning processes to give priority to the
basic needs of the community, and to promote the social and economic
development of the community’. It is also necessary to make reference to s
154 of the Constitution. The provision is headed ‘Municipalities in
cooperative government’ and provides as follows in subsection (1):
‘The national government and provincial governments, by legislative and other measures,
must support and strengthen the capacity of municipalities to manage their own affairs, to
exercise their powers and to perform their functions.’
[32] Pursuant to the constitutional mandate conferred and the constitutional
duty imposed, national government enacted various legislative measures in
order to give effect to the dictates of the Constitution. Relevant for present
purposes are: the Housing Act 107 of 1997 (the Housing Act), the Local
Government: Municipal Systems Act 32 of 2000 (the Municipal Systems
Act), and the Local Government: Municipal Finance Management Act 56 of
2003 (MFMA), the latter applying to all municipalities, municipal entities,
and to national and provincial organs of state to the extent of their financial
dealings with municipalities.21
[33] Section 4 of the Municipal Systems Act, dealing with the rights and
duties of municipal councils, provides, amongst others in subsection (2) that:
21 Section 3(1) of the MFMA. Subsection (2) goes on to state that:
‘In the event of any inconsistency between a provision of this Act and any other legislation in force when
this Act takes effect and which regulates any aspect of the fiscal and financial affairs of municipalities or
municipal entities, the provision of this Act prevails.’
‘The council of a municipality, within the municipality’s financial and administrative
capacity and having regard to practical considerations, has the duty to-
…
(f)
give members of the local community equitable access to the municipal services to
which they are entitled…’
Moreover, s 73 states that:
‘(1) A municipality must give effect to the provisions of the Constitution and—
(a)
give priority to the basic needs of the local community;
(b)
promote the development of the local community; and
(c)
ensure that all members of the local community have access to at least the minimum
level of basic municipal services.
(2) Municipal services must—
(a)
be equitable and accessible;
(b)
be provided in a manner that is conducive to—
(i)
the prudent, economic, efficient and effective use of available resources;
and
(ii)
the improvement of standards of quality over time;
(c)
be financially sustainable;
(d)
be environmentally sustainable; and
(e)
be regularly reviewed with a view to upgrading, extension and improvement.’
[34] Section 9 of the Housing Act, in respect of the functions of
municipalities, reads as follows in subsection (1)(a)(iii):
‘Every municipality must, as part of the municipality's process of integrated development
planning, take all reasonable and necessary steps within the framework of national and
provincial housing legislation and policy to—
(a)
ensure that—
…
(iii) services in respect of water, sanitation, electricity, roads, stormwater drainage
and transport are provided in a manner which is economically efficient;’
[35] The object of the MFMA is ‘to secure sound and sustainable
management of the fiscal and financial affairs of municipalities’.22 It seeks to
do so by establishing norms and standards and other requirements for,
amongst other things, ‘the handling of financial problems in municipalities’.23
Section 139, which is headed ‘[m]andatory provincial interventions arising
from financial crises’, provides in subsection (1) that:
‘If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent
material breach of its obligations to provide basic services or to meet its financial
commitments, or admits that it is unable to meet its obligations or financial commitments,
the provincial executive must promptly—
(a)
request the Municipal Financial Recovery Service—
(i)
to determine the reasons for the crisis in its financial affairs;
(ii)
to assess the municipality's financial state;
(iii) to prepare an appropriate recovery plan for the municipality;
(iv) to recommend appropriate changes to the municipality's budget and
revenue-raising measures that will give effect to the recovery plan;
(v)
to submit to the MEC for finance in the province—
(aa) the determination and assessment referred to in subparagraphs (i) and (ii)
as a matter of urgency; and
(bb) the recovery plan and recommendations referred to in subparagraphs (iii)
and (iv) within a period, not to exceed 90 days, determined by the MEC
for finance; and
(b)
consult the mayor of the municipality to obtain the municipality's co-operation in
implementing the recovery plan, including the approval of a budget and legislative
measures giving effect to the recovery plan.
(2) The MEC for finance in the province must submit a copy of any request in terms of
subsection (l)(a) and of any determination and assessment received in terms of subsection
(l)(a)(v)(aa) to—
22 Section 2 of the MFMA.
23 Ibid para (f). Chapter 13 of the Act (ss 135-162) deals with the resolution of financial problems. Provincial
interventions make up part 2 of this chapter and are provided for in ss 136-150.
(a)
the municipality;
(b)
the Cabinet member responsible for local government: and
(c)
the Minister.
(3) An intervention referred to in subsection (1) supersedes any discretionary provincial
intervention referred to in section 137, provided that any financial recovery plan prepared
for the discretionary intervention must continue until replaced by a recovery plan for the
mandatory intervention.’
[36] Section 139(5) of the Constitution provides:
‘If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent
material breach of its obligations to provide basic services or to meet its financial
commitments, or admits that it is unable to meet its obligations or financial commitments,
the relevant provincial executive must—
(a)
impose a recovery plan aimed at securing the municipality's ability to meet its
obligations to provide basic services or its financial commitments…’24
If a provincial executive cannot, or does not, or does not adequately exercise
the powers or perform the functions referred to in subsections (4) and (5), the
national executive must intervene in the stead of the relevant provincial
executive.25
[37] Finally, s 1 of the Constitution decrees that the Republic of South Africa
is a single, sovereign and democratic state founded on certain values ‘to
ensure accountability, responsiveness and openness’.26
The issues
24 There are two requirements for this, as listed in s 139(5)(a)(i) and (ii) of the Constitution. The provincial
executive must impose a recovery plan which:
‘(i)
is to be prepared in accordance with national legislation; and
(ii)
binds the municipality in the exercise of its legislative and executive authority, but only to the extent
necessary to solve the crisis in its financial affairs.’
25 See s 139(7) of the Constitution.
26 See s 1(d) of the Constitution.
[38] The principal issues for adjudication in Eskom I and Eskom II are:
(a)
whether the contractual and constitutional disputes relating to the
moneys owed to Eskom and, in particular, the manner in which Eskom sought
to recover them constituted intergovernmental disputes as contemplated in s
41 of the Constitution and s 40 of the IRFA;
(b)
whether Eskom was in law entitled to invoke s 21(5) of the ERA
without a court order authorising it to do so.
The subsidiary issues are whether:
(i)
Eskom’s decision to interrupt the bulk supply of electricity to the ELM
and the TCLM was susceptible to review, and if so, whether such decision
was irrational and unconstitutional; and
(ii)
if s 41 of the Constitution and s 40 of the IRFA are found to apply,
whether Eskom failed first to exhaust the alternative avenues contemplated in
s 41 and s 40 respectively.
[39] With respect to the appeal of the Thaba Chweu municipal appellants,
the sole issue is whether they should have been ordered to bear the costs of
the Chambers in Eskom II.
Discussion
[40] The relevant provisions of the MFMA must now be considered in
detail. The overarching purpose of this Act is apparent from its preamble. It
is to ‘secure sound and sustainable management of the financial affairs of
municipalities and other institutions in the local sphere of government.
Section 44(1) provides that whenever a dispute of a financial nature arises
between organs of state (one of which is a municipality) the parties concerned
must promptly take all reasonable steps to resolve the dispute out of court.
Furthermore, subsection (2) provides that if the National Treasury is not a
party to the dispute, the parties must report the matter to National Treasury
and may request the latter to mediate or designate a person to mediate between
them.
[41] In terms of s 135(1), the primary responsibility to identify and resolve
financial problems in a municipality rests with the municipality. Section
135(2) imposes a duty on a municipality to meet its financial commitments.
If a municipality encounters a serious financial problem, it must in terms of s
135(3)(b) ‘notify the MEC for local government and the MEC for finance in
the province.’ Section 138 sets out criteria for determining serious financial
problems. It goes further to provide a list of factors which either individually
or cumulatively may indicate a serious financial problem. Two of those
factors bear mentioning in the context of this case. They are: (i) failure by a
municipality to make payments as and when due; and (ii) where a municipality
has defaulted on financial obligations for financial reasons.
[42] Section 136 imposes an obligation on the MEC for local government in
a province if he or she becomes aware that a municipality is experiencing a
serious financial problem. In that event, the MEC is obliged to promptly: (a)
consult the mayor to determine the facts; (b) assess the seriousness of the
situation and the municipality’s response to that situation; and most
importantly (c) determine whether the situation justifies or requires an
intervention in terms of s 139 of the Constitution. Moreover, in terms of
s 136(2) the MEC must, if the financial situation has been caused by or
resulted in a failure by the municipality to comply with an executive
obligation in terms of legislation or the Constitution, and the conditions for
intervention in terms of s 139 of the Constitution are met, promptly decide
whether or not to intervene in the municipality.
[43] Section 150 provides for the intervention of the national executive
where the provincial executive ‘cannot or does not or does not adequately
exercise the powers or perform the functions’ referred to in s 139(4) or (5) of
the Constitution. It reads:
‘(1) If the conditions for a provincial intervention in a municipality in terms of section
139(4) or (5) of the Constitution are met and the provincial executive cannot or does not
or does not adequately exercise the powers or perform the functions referred to in that
section, the national executive must—
(a)
consult the relevant provincial executive; and
(b)
act or intervene in terms of that section in the stead of the provincial executive.
(2) If the national executive intervenes in a municipality in terms of subsection (1)—
(a)
the national executive assumes for the purposes of the intervention the functions and
powers of a provincial executive in terms of this Chapter;
(b)
the Minister assumes for the purposes of the intervention the functions and powers
of an MEC for finance in terms of this Chapter; and
(c)
a reference in this Chapter—
(i)
to a provincial executive must be read as a reference to the national executive;
(ii)
to an MEC for finance must be read as a reference to the Minister; and
(iii) to a provincial intervention must be read as a reference to a national
intervention.’
[44] I revert briefly to the ERA. Section 2 thereof sets out its objects which,
in relevant part, are to:
‘(a) achieve the efficient, effective, sustainable and orderly development and operation
of electricity supply infrastructure in South Africa;
(b)
ensure that the interests and needs of present and future electricity customers and end
users are safeguarded and met…
(d)
facilitate universal access to electricity;
…
(g)
facilitate a fair balance between the interests of customers and end users, licensees,
investors in the electricity supply industry and the public.’
[45] Section 27 then deals with the duties of municipalities with respect to
electricity reticulation. It reads:
‘Each municipality must exercise its executive authority and perform its duty by—
(a)
complying with all the technical and operational requirements for electricity
networks determined by the Regulator;
(b)
integrating its reticulation services with its integrated development plans;
(c)
preparing, implementing and requiring relevant plans and budgets;
(d)
progressively ensuring access to at least basic reticulation services through
appropriate investments in its electricity infrastructure;
(e)
providing basic reticulation services free of charge or at a minimum cost to certain
classes of end users within its available resources;
(f)
ensuring sustainable reticulation services through effective and efficient
management and adherence to the national norms and standards contemplated in
section 35;
(g)
regularly reporting and providing information to the Department of Provincial and
Local Government, the National Treasury, the Regulator and customers;
(h)
executing its reticulation function in accordance with relevant national energy
policies; and
(i)
keeping separate financial statements, including a balance sheet of the reticulation
business.’
[46] As can be seen from the provisions of s 27 quoted in the preceding
paragraph, it imposes certain obligations on municipalities. Notably amongst
those obligations, in the context of the facts of these appeals, is the duty to
regularly report and provide information on electricity reticulation to the
Department of Provincial and Local Government, the Regulator and
customers. And, significantly, to ‘keep separate financial statements,
including a balance sheet of the reticulation business’.
Section 21(5) of the ERA
[47] I now proceed to consider the argument advanced in relation to s 21(5)
of the ERA. From the perspective of Resilient, the Chambers and Sakeliga,
this issue raises the question whether Eskom in effect resorted to ‘self-help’
when it invoked s 21(5). In Chief Lesapo v North West Agricultural Bank and
Another27 the Constitutional Court held:
‘No one is entitled to take the law into her or his own hands. Self help, in this sense, is
inimical to a society in which the rule of law prevails, as envisioned by section 1(c) of our
Constitution, which provides:
“The Republic of South Africa is one, sovereign, democratic State founded on the
following values:
…
(c)
Supremacy of the constitution and the rule of law.”
Taking the law into one’s own hands is thus inconsistent with the fundamental principles
of our law.’28
[48] Section 21 of the ERA which is headed ‘Power and duties of licensee’
provides in relevant part of subsection (5) thereof that:
‘(5) A licensee may not reduce or terminate the supply of electricity to a customer, unless—
(a)
the customer is insolvent;
(b)
the customer has failed to honour, or refuses to enter into, an agreement for the
supply of electricity; or
27 Chief Lesapo v North West Agricultural Bank and Another 2000 (1) SA 409 (CC) para 11. (Citations
omitted.)
28 See also: Public Servants Association obo Ubogu v Head, Department of Health, Gauteng and Others
[2017] ZACC 45; 2018 (2) SA 365 (CC) paras 66-67; Gundwana v Steko Development CC and Others [2011]
ZACC 14; 2011 (3) SA 608 (CC) para 45.
(c)
the customer has contravened the payment conditions of that licensee.’
[49] In the high court, Eskom argued that it was empowered in terms of s 21(5) to
interrupt or even terminate electricity supply, where a customer fails to honour the terms
of the agreement for the supply of electricity or has contravened the payment conditions of
the licensee. On this score Eskom strongly relied on the judgments of the Constitutional
Court and this Court in Rademan. In Rademan v Moqhaka Municipality and Others29 the
question that confronted this Court was whether the respondent municipality was
empowered to interrupt the supply of electricity without having to approach a court first to
seek a court order authorising it to discontinue the supply of services. In answering this
question in the affirmative, this Court said:
‘Such a proposition is both unrealistic and untenable. Given the rate of the protests and
demonstrations for delivery across the country concomitant with the refusal by ratepayers
to pay their rates and taxes and fees for municipal services, I am of the view that it would
not be practical for municipalities to pursue these matters in court. It cannot be gainsaid
that such a step would result in the municipalities being mired in such cases, losing precious
time in the process and incurring high legal bills unnecessarily.
I have no doubt these powers were given to municipalities to enable them to collect all
moneys that are due and payable to them in the most cost-effective manner. Commenting
on the power of a municipality to discontinue municipal service as a means of getting the
ratepayers to pay their accounts, Yacoob J remarked as follows in Mkontwana v Nelson
Mandela Metropolitan Municipality, Bisset and Others v Buffalo City Municipality and
Others; Transfer Rights Action Campaign and Others v MEC, Local Government and
Housing, Gauteng and Others (Kwazulu-Natal Law Society and Msunduzi Municipality as
Amici Curiae) 2005 (1) SA 530 (CC) para 52:
“It is emphasised that municipalities are obliged to provide water and electricity and that it
is therefore important for unpaid municipal debt to be reduced by all legitimate means. It
bears repeating that the purpose is laudable, has the potential to encourage regular
payments of consumption charges, contributes to the effective discharge by municipalities
29 Rademan v Moqhaka Municipality and Others [2011] ZASCA 244; 2012 (2) SA 387 (SCA).
of their obligations and encourages owners of property to fulfil their civic
responsibility.”’30
[50] A further appeal against this judgment to the Constitutional Court was
unsuccessful.31 Dealing with s 21(5)(b), the Constitutional Court said that the
provision contemplates two scenarios. The first is where there is an agreement
between a resident and the municipality to supply electricity by the
municipality to the customer, and the customer refuses to honour the
agreement. The other is where there is no agreement for the supply of
electricity and the customer refuses to enter into an agreement. The Court
concluded that ‘[i]n either case the municipality would be entitled to cut off
the supply of electricity to the resident or customer if it were already supplying
electricity to the customer’.32
[51] Eskom submitted that here there was no dispute between it on the one
hand and the ELM and the TCLM on the other. This was because the two
municipalities admitted that they owed money to Eskom and signed
acknowledgments of debt in terms of which they undertook to settle the debt
in agreed monthly instalments. When they failed to comply with the
agreement Eskom was left with no other option but to implement its decision
to interrupt bulk electricity supply. In this regard Eskom, as previously stated,
relied both on s 21(5) of the ERA and clauses 9.1, 9.2 and 22.4 of the ESAs.
[52] In their heads of argument Resilient, the Chambers and Sakeliga
respectively contended that it was not open to Eskom to invoke s 21(5)
30 Ibid paras 16-17.
31 See Rademan v Moqhaka Local Municipality [2013] ZACC 11; 2013 (4) SA 225 (CC).
32 Ibid para 36.
without recourse to litigation. They argued that to construe s 21(5) to mean
that Eskom could interrupt or terminate the electricity supply to an entire
municipality without judicial supervision would be a violation of ss 1(c) and
3433 of the Constitution. However, when it soon became clear that this
contention was running into headwinds, counsel for Resilient found himself
unable to press the argument. But counsel for the Chambers and Sakeliga
persisted. They argued that in the context of the ERA a municipality which is
a licensee in its own right, and licenced by the NERSA to reticulate or on-sell
electricity distributed to it by Eskom to end-users cannot be regarded as a
customer.
[53] Relying on Jaftha v Schoeman and Others, Van Rooyen v Stoltz and
Others34 and certain other decisions of the Constitutional Court,35 counsel for
the Chambers submitted that because of the egregious nature of the rights
likely to be violated by the termination of electricity to a municipality, s 21(5)
should be interpreted so as to require prior judicial authorisation of any
decision by Eskom to interrupt or terminate the supply of electricity to a
municipality. In Jaftha the Constitutional Court had occasion to say the
following:
‘Judicial oversight permits a magistrate to consider all the relevant circumstances of a case
to determine whether there is good cause to order execution. The crucial difference
between the provision of judicial oversight as a remedy and the possibility of reliance on
33 Section 34 reads:
‘Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair
public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.’
34 Jaftha v Schoeman and Others, Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC).
35 Chief Lesapo v North West Agricultural Bank and Another 2000 (1) SA 409 (CC); Gundwana v Steko
Development CC and Others 2011 (3) SA 608 (CC); University of Stellenbosch Legal Aid Clinic and Others
v Minister of Justice and Correctional Services and Others; Association of Debt Recovery Agents NPC v
University of Stellenbosch Legal Aid Clinic and Others; Mavava Trading 279 (Pty) Ltd and Others v
University of Stellenbosch Legal Aid Clinic and Others [2016] ZACC 32; 2016 (6) SA 596 (CC) para 59.
ss 62 and 73 of the Act is that the former takes place invariably without prompting by the
debtor. Even if the process of execution results from a default judgment the court will need
to oversee execution against immovables. This has the effect of preventing the potentially
unjustifiable sale in execution of the homes of people who, because of their lack of
knowledge of the legal process, are ill-equipped to avail themselves of the remedies
currently provided in the Act.’36
There, the applicants in the two cases had their homes sold in execution for
paltry amounts after they had fallen into arrears with their payments. They
applied to the high court for orders setting aside the sales in execution, and
interdicting the registration of transfer of their homes to the persons who had
purchased them by challenging the constitutionality of s 66(1)(a) of Act 32 of
1944 to the extent that it permitted the sale of a debtor’s home without
affording the debtor adequate protection. The applicants failed in the high
court but were successful before the Constitutional Court.
[54] Counsel for the Chambers, therefore, contended that Eskom’s reliance
on the Constitutional Court’s judgment in Rademan was misplaced. In
developing this argument, it was submitted that Rademan is authority only for
the proposition that ‘the supply of electricity may be terminated or interrupted
on the basis of s 21(5) of the ERA by a municipality, for non-payment of any
type of municipal service, without the sanction of a court order. And, further,
for confirmation that the constitutional rights of residents to receive electricity
from a municipality are in fact limited by the provisions of s 21(5) of the
ERA’. It certainly, argued counsel, is no authority for the proposition that
Eskom may interrupt or terminate the electricity supply to an entire
municipality upon default of payment by the municipality and, as a result,
36 Jaftha (above fn 32) para 55.
adversely affect even electricity consumers who are up to date with their
payments. This must be so, proceeded the argument, because Eskom’s power
‘is subject to the implied requirement of prior judicial oversight’ given its far-
reaching implications. Counsel accepted that in order to sustain this argument
it would be necessary to read in words to the effect that Eskom is required to
apply to court on notice to all interested parties for an order authorising it to
exercise its power under s 21(5).
[55] There is no merit in this contention. It cannot be sustained unless the
plain meaning of the language used in s 21(5), read contextually and
purposively, is supplemented by reading in the words suggested by counsel
for the Chambers. Indeed, counsel readily and fairly accepted this to be the
case. As the constitutional validity of s 21(5) is not in issue, it is not open to
this Court to adopt the construction that counsel attributes to the section.37
However, that is not to say that, in interpreting s 21(5), this Court must not
promote the spirit, purport and objects of the Bill of Rights as required by s
39(2) of the Constitution.38 It is therefore correct, as counsel for Eskom
argued, that s 21(5) of the ERA empowers Eskom to reduce or terminate the
supply of electricity to its customers in the circumstances spelt out in the
section. And that it may exercise that power without prior authorisation by a
court. All of the decisions upon which counsel for the Chambers heavily relied
turned on their peculiar facts which are materially distinguishable from the
facts of the Eskom appeals. To conclude, there can be no doubt that s 21(5)
was adopted with the manifest purpose of obviating obstacles that distributors
37 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000
(2) SA 1 (CC) paras 23-34.
38 Section 39(2) of the Constitution reads:
‘(2) When interpreting any legislation, and when developing the common law or customary law, every court,
tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.’
of electricity would encounter if, in the circumstances spelt out in the section
itself, they were required to seek prior judicial authorization before
interrupting or terminating the supply of electricity to a customer who refuses
or is unable to pay for it.
[56] However, this is not the end of the matter. It necessarily raises the
question whether, in the context of the ERA, a municipality to which Eskom
supplies electricity as a distributor and licensee is, vis-a-vis Eskom, a
‘customer’. This is because Sakeliga argues that a municipality is a licensee
and not a ‘customer’ as envisaged in s 21(5). Section 1 of the ERA provides
that, unless the context indicates otherwise, ‘customer’ means ‘a person who
purchases electricity or a service relating to the supply of electricity’. It further
defines ‘person’ to ‘include any organ of state as defined in s 139 of the
Constitution’. A ‘distributor’ is defined as ‘a person who distributes
electricity’ and ‘licensee’ in turn means ‘the holder of a licence granted or
deemed to have been granted by the Regulator’ under the ERA. There can be
no doubt that for purposes of the ERA both the ELM and the TCLM are
licensees and distributors of the electricity supplied to them by Eskom, which
they in turn supply to their customers or end-users.39
[57] Sakeliga’s contention does not bear scrutiny. To uphold it would result
in Eskom being precluded from invoking s 21(5) not only against
municipalities which are distributors in their own right but, crucially, also
against any other entity that distributes bulk electricity supplied by Eskom.
39 The word ‘supply’ is defined in the ERA to mean ‘trading and the generation, transmission or
distribution of electricity’.
Thus, on a contextual and purposeful construction of s 21(5) the contention
for which Sakeliga contends is untenable.
[58] But when it comes to municipalities as distributors of electricity, further
considerations would come into play. Terminating the supply of electricity to
an entire municipality in the circumstances provided for in s 21(5) would be
a radical step. Such reduction or termination of the supply of electricity would
adversely affect every consumer within the affected municipality. Indeed, it
would have the effect of collapsing the entire municipality, rendering it unable
to fulfil its constitutional and statutory mandate to provide basic services. The
objects of local government spelt out in s 152 of the Constitution would be
subverted. And a municipality whose electricity supply is terminated by
Eskom would not be able to ‘give members of the local community equitable
access to the municipal services to which they are entitled’ as required by s
4(2)(f) of the Municipal Systems Act. Nor would such a municipality be able
to provide services in respect of water, sanitation and electricity in terms of s
9(1)(a)(ii) of the Housing Act as these services rely on electricity for their
functionality.
[59] There can be no doubt about the developmental role of legislative
measures like the Municipal Structures Act which, in its preamble, recognises,
amongst other things, the fundamental importance of local government to
democracy. The Municipal Structures Act also seeks to ensure sustainable,
effective and efficient municipal services, and to promote social and economic
development in a safe and healthy environment. Without the supply of
electricity to a municipality, all of these developmental and transformative
goals would be nothing more than a dream deferred with deleterious effects
to local communities. Thus, it is manifest that these legislative measures seek
to foster an integrated co-ordinated approach to the provision of municipal
services to local communities.
[60] It is as well to remember that s 1 of the Constitution constitutes the
Republic of South Africa as ‘one, sovereign, democratic state’ founded on
certain fundamental values. In addition, s 154 of the Constitution decrees that
the ‘national government and provincial governments, by legislative and other
measures, must support and strengthen the capacity of municipalities to
manage their affairs, to exercise their power and to perform their duties’.
There is also s 4(2) of the Municipal Systems Act that imposes a duty on
municipalities together with other organs of state, like Eskom, to contribute
to the progressive realisation of the fundamental rights contained in ss 24, 25,
26, 26, 27 and 29 of the Constitution. Accordingly, before Eskom decides to
invoke its power under s 21(5) to interrupt the supply of electricity to an entire
municipality, it must, as an organ of state, be mindful of its constitutional
obligations.
Intergovernmental disputes
[61] Was Eskom required to comply with s 41(3) of the IRFA before taking
the decision to interrupt electricity supply to the municipalities herein
concerned because of their failure to pay for the electricity supplied? The short
answer to this question is: Yes. I elaborate on this below. Section 41 of the
Constitution deals with principles of cooperative government and
intergovernmental relations. It provides in relevant part that:
‘(1) All spheres of government and all organs of state within each sphere must—
(a)
preserve the peace, national unity and the indivisibility of the Republic;
(b)
secure the well-being of the people of the Republic;
(c)
provide effective, transparent, accountable and coherent government for the Republic
as a whole;
…
(h)
cooperate with one another in mutual trust and good faith by—
…
(ii)
assisting and supporting one another;
(iii) informing one another of, and consulting one another on, matters of common
interest;
(iv) coordinating their actions and legislation with one another;
(v)
adhering to agreed procedures; and
(vi) avoiding legal proceedings against one another.’
[62] Section 41 goes on to state as follows:
‘An organ of state involved in an intergovernmental dispute must make every reasonable
effort to settle the dispute by means of mechanisms and procedures provided for that
purpose, and must exhaust all other remedies before it approaches a court to resolve the
dispute.’40
The importance of this mandate is then bolstered by subsection (4), which
empowers courts to decline entertaining disputes that have not first
legitimately travelled through the extra-curial mechanisms designed and
available for that purpose.
[63] The IRFA is the legislative measure contemplated in s 41(2) of the
Constitution. In its preamble, the broad object of s 41 is taken further by
stating, amongst other things, that ‘all spheres of government must provide
effective, efficient, transparent, accountable and coherent government for the
Republic to secure the well-being of the people and the progressive realisation
40 Section 41(3) of the Constitution.
of their constitutional rights’. It goes on to state that the pervasive need for
government to redress the legacies of apartheid and discrimination are ‘best
addressed through a concerted effort by government in all spheres to work
together and to integrate as far as possible their actions in the provision of
services, the alleviation of poverty and the development of our people and our
country’. Whilst recognising that piecemeal legislation exists to regulate this
area in particular parts of the government, it deemed it necessary ‘to establish
a general legislative framework applicable to all spheres and in all sectors of
government to ensure the conduct of intergovernmental relations in the spirit
of the Constitution’.
[64] The long title of the IRFA states that the object of the Act is ‘to establish
a framework … to promote and facilitate intergovernmental relations; to
provide for mechanisms and procedures to facilitate the settlement of
intergovernmental disputes’. In particular, s 4 of the IRFA states that its object
is:
‘[T]o provide within the principle of co-operative government … a framework for the
national government, provincial governments and local governments, and all organs of
state … to facilitate coordination in the implementation of policy and legislation
including—
…
(b)
effective provision of services;
…
(d)
realisation of national priorities’.
Accordingly, there can be no doubt that there are important consequences
flowing from this particular relationship, meaning that disputes arising
between different spheres of government and other state organs are subject to
the strictures of the IRFA.
[65] Section 40 of the IRFA, which is headed ‘Duty to avoid
intergovernmental disputes’ provides:
‘(1) All organs of state must make every reasonable effort—
(a)
to avoid intergovernmental disputes when exercising their statutory powers or
performing their statutory functions; and
(b)
to settle intergovernmental disputes without resorting to judicial proceedings.
(2) Any formal agreement between two or more organs of state in different governments
regulating the exercise of statutory powers or performance of statutory functions, including
any implementation protocol or agency agreement, must include dispute-settlement
mechanisms or procedures that are appropriate to the nature of the agreement and the
matters that are likely to become the subject of a dispute.’
[66] Section 41 of the same Act, on the declaration of ‘formal
intergovernmental disputes’, reads:
‘(1) An organ of state that is a party to an intergovernmental dispute with another
government or organ of state may declare the dispute a formal intergovernmental dispute
by notifying the other party of such declaration in writing.
(2) Before declaring a formal intergovernmental dispute the organ of state in question must,
in good faith, make every reasonable effort to settle the dispute, including the initiation of
direct negotiations with the other party or negotiations through an intermediary.’
It is important to note that the s 41(2) obligation, to ‘make every reasonable
effort to settle the dispute’, is already relevant before a dispute is declared a
‘formal intergovernmental dispute’. Thus, in effect, organs of state are obliged
at two (separate) stages of the process to resolve their disputes with each other,
by means of whatever mechanism or procedure available to them in the
circumstances, outside of the courts.
[67] Both s 40 and s 41 make plain that an organ of state, as Eskom is, has a
constitutional and statutory duty to avoid judicial proceedings before a
genuine attempt has been made to settle the dispute. To that end, state organs
must make every reasonable effort, in good faith, to settle the dispute without
recourse to litigation. Moreover, where a dispute is of a financial nature, as in
these proceedings, Eskom and the ELM and the TCLM were required to
promptly take all reasonable steps necessary to resolve the dispute. To this
end, organs of state have a statutory duty to report the matter to the National
Treasury for the latter to mediate the dispute.41
Contentions of the parties
[68] The contentions of counsel for Eskom (in both appeals) were essentially
threefold. First, it was submitted that the IRFA found no application in this
litigation because the proceedings in the high court were instituted by private
entities and not by one organ of state against another. Furthermore, and in any
event, continued the submission, even accepting that the IRFA applied, this
would not avail Resilient and the Chambers because the three organs of state,
that is Eskom and the two municipalities, had, as amongst themselves, reached
agreement in relation to the amounts owed by the two municipalities to Eskom
and how they were to be paid off.
[69] In addition, counsel in Eskom II argued that, in any event, s 41 of the
IRFA was not raised in the papers and therefore not dealt with by Eskom either
in its opposing papers or in argument in the high court. Thus, counsel
41 See para 40 above.
contended that it was not open to the Chambers and Sakeliga to raise it on
appeal. Counsel emphasised that the issue of whether or not s 41 of the IRFA
had been complied with was a fact-based enquiry that could not be raised at
the eleventh hour on appeal. But even if it had timeously been raised, s 41 of
the IRFA, being a law of general application, would still not apply when s 30
of the ERA which is the specific legislation dealing with disputes between
licensees under the ERA was of direct application. Of course, the latter
contention accords with the principle that where a statutory provision in a
general legislative instrument regulates the same subject dealt with in a
specific legislative instrument, the latter takes precedence over the former.42
[70] For its part, Sakeliga submitted in its heads of argument that Eskom and
the municipalities concerned did ‘not fully exhaust other interventions and
dispute resolution mechanisms first in order to address’ the failures by the
ELM and the TCLM to meet their payment obligations to Eskom before the
latter resorted to its decision to interrupt the electricity supply ‘with
potentially disastrous consequences to the local communities and the local
economies’, thereby adversely affecting paying customers.
[71] In opposing Eskom’s appeals, counsel for Resilient, the Chambers and
the ELM made common cause. Broadly stated, their contentions, so far as they
are relevant to this aspect of the appeals, were:
(a)
Eskom failed to comply with the constitutional requirements of
cooperative governance as given effect to by the IRFA particularly having
regard to the fact that: (i) the interruption decision would have ‘catastrophic
implications for [other] organs of state’ (ie the ELM and the TCLM); (ii)
42 See: Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2008 (2) SA 24 (CC) para 103.
Eskom had for several years remained supine whilst the electricity debt soared
to unsustainable levels for the two local municipalities involved;
(b)
that the dispute amongst the parties related to both the quantum of the
debt and the manner in which it could be liquidated;
(c)
Eskom’s decisions amounted to self-help which is inconsistent with the
Constitution when there was no statutory power authorising Eskom to
disconnect electricity to an entire municipality;
(d)
that the decisions were not rationally related to the purpose for which
they were taken; and
(e)
the interruption decisions were unconstitutional to the extent that their
implementation would render the ability of the municipalities concerned to
comply with their constitutional obligations to provide basic services
unattainable.
[72] Before considering the contentions of the parties, it is necessary to
determine the antecedent issue of what constitutes a dispute.43 This is
necessary because Eskom argues that there was no dispute between organs of
state. An analogous point to the one under consideration here was considered
over seven decades ago in Williams v Benoni Town Council44 in which the
registered owner of an agricultural holding contested the assessment rate
levied by a municipal council in respect of his property. The council argued
43 Section 1 of the IRFA defines ‘intergovernmental disputes’ as:
‘a dispute between different governments or between organs of state from different governments concerning
a matter—
(a)
arising from—
(i)
a statutory power or function assigned to any of the parties; or
(ii)
an agreement between the parties regarding the implementation of a statutory power or
function; and
(b)
which is justiciable in a court of law, and includes any dispute between the parties regarding a related
matter…’
44 Williams v Benoni Town Council 1949 (1) SA 501 (W).
that there was no dispute because the parties were still engaged in discussions
to resolve the impasse. In rejecting this argument, Roper J who gave the
judgment in the case, said:
‘I am unable to agree … that there is no “dispute” until the parties are at arm’s length. A
dispute exists when one party maintains one point of view and the other party the contrary
or a different one. When that position has arisen the fact that one of the disputants, while
disagreeing with his opponent, intimates that he is prepared to listen to further argument,
does not make it any the less a dispute.’45
[73] Most recently, the Constitutional Court was called upon in Competition
Commission of South Africa v Hosken Consolidated Investments Ltd and
Another46 to determine whether there was a ‘live dispute’ or merely ‘a
difference of opinion’ between the parties in that matter. The Court had the
following to say (para 85):
‘The mere fact that parties had a difference of opinion regarding an important jurisdictional
issue suggests that there was a live dispute. This is particularly so where the difference of
opinion existed between an important statutory entity such as the Commission and parties
who are involved in a proposed transaction that may trigger the far reaching investigative
powers of the Commission.’47
[74] As to the question whether there is a dispute between Eskom on the one
hand and the ELM and the TCLM on the other, the following bears emphasis.
It is true that there is no real dispute as to the existence of the debts owed to
Eskom by both the ELM and the TCLM. Nor is there a dispute as to the
inability of these municipalities to make any meaningful payments themselves
45 Ibid at 507.
46 Competition Commission of South Africa v Hosken Consolidated Investments Ltd and Another [2019]
ZACC 2; 2019 (3) SA 1 (CC) para 23.
47 Ibid para 85. See also Frank R Thorold (Pty) Ltd v Estate Late Beit 1996 (4) SA 705 (A) at 708J-709A, in
which this court held that for a dispute to arise there must exist two or more parties, who are in controversy
with one another, in the sense that they are advancing irreconcilable contentions.
due to their parlous financial state. The real disputes concerned the manner in
which these two municipalities could be enabled or empowered to pay their
debts to Eskom and thus whether it was appropriate in the circumstances to
interrupt the supply of electricity to exact payment from them. It was in
relation to these disputes that Eskom and the affected municipalities, in
collaboration with the other state role players, were constitutionally obliged
to make ‘every reasonable effort’ to avoid or settle, but failed to do so.
[75] I am therefore persuaded that there was a live dispute between Eskom
on the one hand and the ELM and the TCLM on the other, in relation to the
manner as to how the debt would be liquidated and the remedies available to
Eskom in the event of default. That the two municipalities involved signed
acknowledgments of debt detailing how the debt was to be liquidated cannot
assist Eskom. This must be so because the acknowledgments of debt
themselves under the heading ‘Default’ provided in terms that ‘Eskom may
with due regard to all the relevant legislation … take whatever legal remedies
available to it including disconnection of supply of electricity …’ (my
emphasis). In the context of the facts of these proceedings the ‘relevant
legislation’ is the IRFA, s 139 of the MFMA and PAJA
[76] Moreover, in signing the acknowledgments of debt the municipalities
did not thereby consent to the interruption of electricity. On the contrary, all
indications point to the fact that there were always sharp disagreements
between the parties as to whether it was open to Eskom to interrupt electricity
supply as a measure to coerce the ELM and the TCLM to pay. This is borne
out by the fact that the ELM and the TCLM applied for and were granted
interim relief directing Eskom to restore the electricity supply following on
the disastrous consequences of the enforced interruption a few days earlier.
There can be little doubt that in signing the acknowledgments of debt, the
municipalities sought to stave off the interruptions of bulk electricity supply
that Eskom had all along threatened. And it was unrealistic of Eskom to expect
the ELM and the TCLM to pay off a debt that had accumulated over 15 years
within 12 months when it was known that they were in financial crisis.
[77] In support of the contention that there was no dispute of the kind
contemplated in ss 40 and 41 of the IRFA and s 44 of the MFMA, Eskom
heavily relied on an unreported judgment of the Free State Division of the
high court delivered on 28 May 2015.48 There, the court held that where a
municipality: (a) admits its liability to Eskom in the amount claimed; (b)
admits that it is in arrears; and (c) does not dispute that ‘it is obliged to pay
such arrears and any current liabilities’ no dispute exists and ss 40 and 41 of
the IRFA therefore find no application. In my view this judgment is not
directly on point as it was decided on its peculiar facts. On a careful reading
of the judgment it can hardly be understood to mean that where a dispute does
indeed exist Eskom is free from the strictures of ss 40 and 41 of the IRFA and
s 44 of the MFMA. In these proceedings, Eskom was, at all times, aware that
the financial situation within the ELM and the TCLM was dire. This is clear
from what Eskom itself alleged in its answering affidavit that: ‘there is a
constitutional obligation on the part of the National Department of
Cooperative Governance and Traditional Affairs to intervene in the affairs of
the municipality where the latter is unable to fulfil its constitutional
obligations to provide services’.
48 Ngwathe Local Municipality v Eskom Holdings SOC Limited and Others FB 28-05-2015 case no
4428/2014.
[78] I elaborate on why I earlier held that Eskom was required to comply
with s 41(3) of the IRFA before embarking on the course it had chosen in
order to extract payment from the ELM and the TCLM. Municipalities bear
certain obligations to provide their communities with basic services, including
electricity. The source of these obligations is the Constitution itself, buttressed
by a number of statutory provisions.49 If anyone of these obligations is
breached by a municipality, the Constitution provides the necessary remedies
to resolve the breach.
[79] As an organ of state, Eskom bears certain constitutional duties. The
relationship between Eskom on the one hand and the ELM and the TCLM on
the other is more than merely a contractual one regulated purely in terms of
the ESAs that the parties concluded. Eskom supplies bulk electricity to the
municipalities which, in turn, have a concomitant duty to supply it to the end-
users. The unique feature of this relationship is that Eskom, as an organ of
state, supplies electricity to local spheres of government to secure the
economic and social well-being of the people. This then brings the
relationship within the purview of the IRFA.
[80] It must therefore perforce follow that Eskom is under a constitutional
duty to ensure that municipalities, which are solely dependent on it for
electricity supply, are enabled to discharge their obligations under the
Constitution. Thus, it goes without saying that Eskom cannot act in a way that
would undermine the ability of municipalities to fulfil their constitutional and
statutory obligations to the citizenry. For as Froneman J said, in Allpay
49 The Housing Act, the Municipal Systems Act, the Structures Act and the MFMA.
Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive
Officer, South African Social Security Agency and Others:50
‘Organs of state have obligations that extend beyond the merely contractual. In terms of
s 8 of the Constitution, the Bill of Rights binds all organs of state. Organs of state, even if
not state departments or part of the administration of the national, provincial or local
spheres of government, must thus “respect, protect, promote and fulfil the rights in the Bill
of Rights”.’
Accordingly, Eskom’s decision to interrupt or terminate bulk electricity
supply to the entire municipality without prior compliance with ss 40 and 41
of the IRFA, is inimical to the constitutional obligations that it bears.
[81] In paragraph 77 above, mention is made that Eskom itself realised that
the parlous state in which the ELM and the TCLM are warranted intervention
by the provincial government and, if need be, the national government. But
this avenue was not explored because Eskom was not prepared to wait for that
process to unfold. The irony about Eskom’s obdurate stance was that (it had
indulged the ELM and the TCLM for far too long) Eskom had inexplicably
failed to make any serious attempt for more than ten years to act in terms of
legislative prescripts like s 51(1) of the PFMA. As already indicated, s 41(3)
requires organs of state to exhaust all other remedies to resolve disputes before
they approach a court. True, in this instance, Eskom never approached a court.
Instead, it took the impugned decisions to interrupt electricity supply to the
municipalities, hoping that doing so would coerce the municipalities to pay
for the electricity supplied over several years. This, Eskom asserts, had the
desired effect in the Sabie matter that was settled between the parties. In taking
this route, Eskom in effect circumvented the consequences that flow from the
prohibition contained in ss 40 and 41 of the IRFA against instituting
50 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African
Social Security Agency and Others [2014] ZACC 12; 2014 (4) SA 179 (CC) para 49. (Citations omitted.)
proceedings in a court to settle intergovernmental disputes if the dispute has
not been declared a formal intergovernmental dispute, and all efforts to
resolve that dispute have not been exhausted in terms of chapter 4 of the IRFA
and proved unsuccessful. Nothing less than a ‘reasonable effort, in good faith’
to resolve the dispute will suffice.
[82] There was some suggestion that Eskom had complied with its statutory
duty under the IRFA in that it held meetings with the ELM together with the
Premier of Mpumalanga, the provincial MEC and at one stage including the
Minister of Cooperative Governance to seek a solution to the ELM’s inability
to pay. At these meetings the representatives of the ELM once more undertook
to settle their debt to Eskom in monthly instalments which the municipality
still failed to honour. I shall not burden this judgment with the details of those
meetings ostensibly held to find a lasting solution to the financial crisis facing
several municipalities within Mpumalanga. Suffice it to say that these
attempts came to naught and were insufficient for compliance with the
precepts of s 41 of the Constitution and ss 40 and 41 of the IRFA. Importantly,
no attempt was made to engage the National Treasury as required by s 44 of
the MFMA.
[83] Counsel for Eskom had another string in their bow. They argued that
even if it were found that there was a dispute between the parties, ss 40 and
41 of the IRFA would not be implicated. Counsel submitted that s 39 of the
IRFA provides that chapter 451 of the Act does not apply ‘to the settlement of
specific intergovernmental disputes in respect of which other national
legislation provides resolution mechanisms or procedures’. They contended
51 Chapter 4 regulates resolution of intergovernmental disputes.
that as the dispute in these proceedings arose out of the supply of electricity
under the ERA, it was s 3052 of the ERA that would find application.
[84] These contentions cannot be upheld. Section 30 deals with disputes
arising out of the ERA, and even then only if the dispute is between licensees,
and the Regulator has been requested ‘by both parties to the dispute’ to act as
a mediator. It therefore cannot apply to a dispute where Eskom seeks to
interrupt bulk electricity supply to a municipality which, although willing to
settle its indebtedness, is unable to do so because it is not only facing financial
crisis but also contests Eskom’s right to interrupt electricity. Such a dispute
would trigger the application of ss 40 and 41 of the IRFA. And absent every
reasonable effort to settle the dispute, including negotiations through an
intermediary, it was not open to Eskom to implement its interruption decision
without first exhausting the avenues prescribed under ss 40 and 41. In
addition, there is s 41 of the MFMA which prescribes the process that must
be followed whenever a dispute of a financial nature arises between organs of
state one of which is a municipality. This section too requires the organs
concerned to take all reasonable steps necessary to resolve the dispute out of
court.
Irrationality challenge
[85] The two decisions taken by Eskom in issue in these proceedings were
also impugned on the basis that they were irrational. When a decision is sought
to be reviewed on the basis of irrationality, the test of rationality is concerned
with the evaluation of the relationship between the means employed and the
52 Section 30 which is titled ‘Resolution of disputes by Regulator’ provides:
‘(1) The Regulator must, in relation to any dispute arising out of this Act—
(a)
if it is a dispute between licensees, act as a mediator if so requested by both parties to the dispute.’
ends to be achieved. The evaluation of the relationship seeks to determine, not
whether there are means that can achieve the same purpose better than those
chosen, but whether the means employed are rationally related to the purpose
for which the power was conferred.53
[86] A rationality review also determines whether the process leading up to
the decision and the decision itself are rational. The Constitutional Court
cautioned that it should not be lost from sight that where there is an overlap
between the reasonableness and rationality evaluations one is nevertheless
dealing with discrete concepts. In Albutt v Centre for the Study of Violence
and Reconciliation and Others the following was stated:54
‘The executive has a wide discretion in selecting the means to achieve its constitutionally
permissible objectives. Courts may not interfere with the means selected simply because
they do not like them, or because there are other more appropriate means that could have
been selected. But, where the decision is challenged on the grounds of rationality, courts
are obliged to examine the means selected to determine whether they are rationally related
to the objective sought to be achieved. What must be stressed is that the purpose of the
enquiry is to determine not whether there are other means that could have been used, but
whether the means selected are rationally related to the objective sought to be achieved.
And if, objectively speaking, they are not, they fall short of the standard demanded by the
Constitution.’
[87] Eskom’s avowed purpose for the interruptions of the supply of
electricity was stated in its heads of argument as ‘two pronged’. Eskom
asserted that ‘First, it was to collect [the outstanding] debt; second … to
reduce and manage the rate of escalation of the debt’. Eskom contested its
53 See Democratic Alliance v President of the Republic of South Africa and Others 2012 [ZACC] 24; 2013
(1) SA 248 (CC) para 32.
54 Albutt v Centre for the Study of Violence and Reconciliation, and Others [2010] ZACC 4; 2010 (3) SA
293 (CC) para 51.
adversaries’ assertions that there were less drastic means available to it to
address the failure of the ELM and the TCLM to honour their financial
obligations, describing these as misplaced. The less drastic means suggested
by Eskom’s adversaries were: (i) withdrawal of the distribution licences
issued by NERSA to the ELM and the TCLM; (ii) recommending to the
minister to appoint alternative licensees in their stead; (iii) Eskom itself taking
over the distribution functions. But Eskom argued that the measures suggested
by its adversaries fail to take account of the historical debt currently overdue
and how it would be paid.
[88] There is one crucial fact that is uncontentious in relation to Eskom’s
appeals. It is that Eskom’s decision to interrupt bulk electricity supply to the
ELM and the TCLM was used as a leverage to extract payment. This drastic
measure, with its catastrophic consequences as detailed above, was decided
upon at a time when Eskom knew full well that it would not result in the
financially strapped municipalities settling their debt, at least within the short
space of time allowed by Eskom when they had all along struggled to do so
for several years, and since 2002 in the case of the TCLM. And these measures
were adopted by Eskom against the backdrop that Eskom itself had come to
realise that without the intervention of both the national government and the
provincial government it was beyond the power of the ELM and the TCLM
to turn their fortunes around on their own. Eskom sought to justify its
decisions by contending that the other reason why it embarked on is chosen
course was to contain the spiralling of the debt. I have already explained above
that Eskom, as an organ of state, cannot act in a manner that renders another
organ of state unable to discharge its constitutional and statutory obligations.
It must therefore follow that Eskom’s impugned decisions were irrational.
[89] Finally, I deal briefly with the other basis upon which the high court
found that Eskom's impugned decisions fell to be reviewed and set aside under
s 6(2)(1)(iii)of PAJA. In this regard the high court said the following (para
54):
‘In terms of section 6(e)(iii) of PAJA, the failure on the part of Eskom and the
municipalities to exhaust alternative remedies and procedures before embarking on the
procedure of supply interruptions by Eskom, warrants the grant of the review sought. This
sections makes provision for a court to review an administrative action if relevant
considerations were not considered.’
[90] There can be no doubt that Eskom’s decisions constitute administrative
action as contemplated in s 1 of PAJA. In Minister of Defence and Military
Veterans v Motau and Others (2014) ZACC 18; 2014 (5) SA 69 (CC) para 33
the Constitutional Court held that administrative action, in essence, comprises
the following elements: (a) a decision of an administrative nature; (b) by an
organ of state or a natural or juristic person; (c) exercising a public power or
performing a public function; (d) in terms of legislation or empowering
provision; (e) that adversely affects rights; (f) has direct and external legal
effect; (g) that does not involve the excluded categories.55
[91] It will be recalled that Eskom took its impugned decisions for two
reasons. The first was to force the ELM and the TCLM to pay the arrear debt.
This was despite the fact that Eskom well knew that this purpose could not be
achieved as the two municipalities were unable to pay the arrears within the
55Section 1 defines administrative action to mean ‘any decision taken or any failure to take a decision, by–
(a)
an organ of state, when-
(i)
. . .
(ii)
exercising a public power or performing a public function in terms of any legislation;’.
And see further: Mazibuko and Others v City of Johannesburg and Others 2010 (4) SA 1(CC) para 130.
time stipulated. In addition, the planned interruptions of bulk electricity
supply also failed to address the underlying reasons for the inability to pay
both the arrear and current debt. Thus, the decisions precipitately taken by
Eskom failed to take into account relevant considerations that should have
informed those decisions. Accordingly, the high court cannot be faulted for
concluding that Eskom’s impugned decisions fell to be set aside on this basis
too.
Costs
[92] For the aforegoing reasons it must follow that Eskom’s appeals fall to
be dismissed. The dismissal of Eskom’s appeals must necessarily carry with
it a costs order against Eskom. But such costs order will be restricted only to
Eskom’s adversaries with the exclusion of the amicus curiae. This must be so
for as the Constitutional Court pertinently remarked ‘it is unusual and indeed
it will rarely be appropriate for costs to be awarded in favour of an amicus
curiae’.56
Conclusion
[93] There is one final issue to address in relation to the Eskom appeals.
Earlier, I mentioned that although the NERSA, the Minister of Cooperative
Governance and the MEC were cited as necessary parties in the high court
proceedings, none of them participated in the litigation. They all elected to
remain supine. But the record discloses that the Minister of Cooperative
Governance and the MEC were cited for good reason. This litigation brought
56 See: President of the Republic of South Africa and Another v Modderklip Boerdery (Pty) Ltd [2005] ZACC
5; 2005 (5) SA 3 (CC) para 67.
to the fore the question whether the ELM and the TCLM had the requisite
capacity to effectively manage their affairs. All concerned knew for a
considerable time that they were facing a colossal crisis. To this end, s 155(6)
and (7) of the Constitution provide that:
‘(6) Each provincial government must establish municipalities in its province in a manner
consistent with the legislation enacted in terms of subsections (2) and (3) and, by legislative
or other measures, must—
(a)
provide for the monitoring and support of local government in the province; and
(b)
promote the development of local government capacity to enable municipalities
to perform their functions and manage their own affairs.
(7) The national government, subject to s 44, and the provincial governments have the
legislative and executive authority to see to the effective performance by municipalities of
their functions in respect of matters listed in Schedules 4 and 5, by regulating the exercise
by municipalities of their executive authority referred to in s 156 (1).’
[94] The overwhelming evidence that emerges from the record demonstrates
that the ELM and the TCLM have been in financial crisis for nearly two
decades. During 2016 and 2017 appeals were made to the Minister of
Cooperative Governance, the Premier of Mpumalanga, and the MEC, by
Eskom and the municipalities in an attempt to rescue the ELM and the TCLM
from their financial quagmire. But the endeavours fell short of what is
required by ss 41(1)(h) and 41(3) of the Constitution and ss 40 and 41 of the
IRFA. When agreement was reached between Eskom and the municipalities
on how their substantial debt would be liquidated, there does not appear to
have been any monitoring, by the national government and provincial
executive, of the implementation of the payment plan. The two municipalities,
hopelessly languishing in financial distress, were still left to their own devices
at a time when it must have been obvious that they lacked the capacity to turn
their fortunes around on their own. And given their parlous financial state, it
is hardly surprising that they defaulted on their payment arrangements with
Eskom.
[95] As already indicated above, Eskom is a business enterprise, albeit with
a developmental objective. As its constituent Act decrees, it is required, in
playing its developmental role, to take into account its financial sustainability
and competitiveness. It is estimated that Eskom is currently owed some R 31
billion by municipalities countrywide. The question then arises: can Eskom
on its own resolve the widespread failure by some of the municipalities to pay
for electricity? It remains to be seen. But what emerges from the record in
these proceedings is that without the constitutionally57 and statutorily58
mandated intervention by both the national and provincial governments, the
prospect of Eskom recovering its debt seems bleak. This is an untenable
situation, which is precisely what s 41 of the Constitution was designed to
avert.
[96] A situation where Eskom, as an organ of state, is driven to resorting to
all manner of ways to coerce municipalities which are a critical sphere of
government in the constitutional scheme, to pay when they are unable to do
so is plainly undesirable. This dire situation obliges the national and
provincial governments to intervene, consonant with the letter and spirit of
the constitutional59 and statutory prescripts to which reference has been made
in this judgment.
57 See s 139 of the Constitution.
58 See ss 139 and 150 of the MFMA.
59 See also s 154(1) of the Constitution, which commands the National Government and provincial
government to support and strengthen the capacity of municipalities to manage their own affairs, to
exercise their powers and to perform their functions.
[97] On this score, what the Gauteng Division of the High Court said in
Cape Gate (Pty) Ltd and Others v Eskom Holdings (SOC) Ltd and Others,60
with reference to s 139(7) of the Constitution, bears repeating. It said:
‘[T]here are only two sources of funds on which Eskom can rely for payment in respect of
on-going supply of electricity to Emfuleni. The one is Emfuleni’s paying consumers, and
the other is, ultimately, national treasury. And since in this country civilized society cannot
exist and the economy cannot function without Eskom remaining economically viable,
national treasury and ultimately National Government must inevitably step in when and
where local authorities fail; that is what the Constitution expressly envisages.’61
What this means is that without the national and provincial governments’
intervention in the financial crises experienced by the ELM and the TCLM –
and many other similarly-situated municipalities – all are doomed. It is indeed
a distressing feature of this litigation that those who are charged with certain
responsibilities in terms of the Constitution and other statutory prescripts
appear to be failing the people they are required to serve.
Case no 583/2019: Thaba Chweu Local Municipality and Others v Sabie
Chamber of Commerce and Tourism and others
[98] As already indicated, the appeal of the TCLM appellants is just about
the costs order made against them by the high court and nothing else. It is trite
that an award of costs is a matter which is pre-eminently in the discretion of
the court considering the issue of costs. It enjoys a wide discretion, to be
exercised judicially on a proper consideration of all the relevant
circumstances.
60 Cape Gate (Pty) Ltd and Others v Eskom Holdings (SOC) Ltd and Others [2018] ZAGPPHC 599; 2019
(4) SA 14 (GJ).
61 Ibid at 148E-G. (Citations omitted.)
[99] Cognisant of the fact that the high court – which sat as a court of first
instance – was vested with a discretion in the strict sense to determine the
question of costs in the light of the peculiar circumstances of the case, this
Court, sitting as a court of appeal, will require cogent reasons before it can
interfere with the exercise of the high court’s discretion. Thus, in Giddey NO
v J C Barnard and Partners62 the Constitutional Court, in a comparable
situation, reiterated the general rule that the approach of an appellate court to
an appeal against the exercise of a discretion in the strict sense will largely
depend on the nature of the discretion concerned.
[100] Accordingly, where the discretion entails that the court of first instance
may have regard to a wide range of considerations, an appellate court will not
readily interfere with the exercise of that discretion on appeal. In Giddey,
O’Regan J explained it thus:
‘The ordinary approach on appeal to the exercise of a discretion in the strict sense is that
the appellate court will not consider whether the decision reached by the court at first
instance was correct, but will only interfere in limited circumstances; for example, if it is
shown that the discretion has not been exercised judicially or has been exercised based on
a wrong appreciation of the facts or wrong principles of law. Even where the discretion is
not a discretion in the strict sense, there may still be considerations which would result in
an appellate court only interfering in the exercise of such a discretion in the limited
circumstances mentioned above.’63
[101] The Constitutional Court went on to say that the court of first instance
is best placed to make the assessment, noting that:
‘it would not be appropriate for an appellate court to interfere with that decision as long as
it is judicially made, on the basis of the correct facts and legal principles. If the court takes
62 Giddey NO v J C Barnard and Partners [2006] ZACC 13; 2007 (5) 525 (CC).
63 Ibid para 19. (Citations omitted.)
into account irrelevant considerations, or bases the exercise of its discretion on wrong legal
principles, its judgment may be overturned on appeal. Beyond that, however, the decision
of the court of first instance will be unassailable.’64
[102] More than a century ago, in Fripp v Gibson and Company 1913 AD
354, Lord De Villiers CJ said (at 357-358):
‘In appeals upon questions of costs two general principles should be observed. The first is that the
Court of the first instance has a judicial discretion as to costs, and the second is that the successful
party should, as a general rule, have his costs. The discretion of such Court, therefore, is not
unlimited, and there are numerous cases in which courts of appeal have set aside judgments as to
costs where such judgments have contravened the general principle that to the successful party
should be awarded his costs.’
[103] In order to succeed in their appeal, the TCLM appellants must, having
regard to the principles set out above, demonstrate that the high court failed
to exercise its discretion judicially. This necessarily entails that there must be
grounds underpinning the exercise of the discretion because a discretion
exercised on no grounds at all or that was based on a misapprehension of the
correct facts cannot be judicial. Where the court of first instance has exercised
its discretion capriciously or upon a wrong principle, or has not brought an
unbiased judgment to bear on the question or has not acted for substantial
reasons, the appellate court would be justified to interfere.65
[104] The costs order of the high court, so far as it relates to the TCLM
appellants, was assailed on several grounds. These were that the high court
failed to have proper regard to the fact that: (i) the municipality was in a
64 Ibid para 22. See also Erf One Six Seven Orchards CC v Greater Johannesburg Metropolitan Council
(Johannesburg Administration) and Another 1999 (1) SA 104 (SCA) at 109A-B.
65 See, in this regard, Techmed (Pty) Ltd v Eastern Cape Provincial Tender Board and Others 2001 (3) SA
735 (SCA) 741E-F.
parlous financial state; (ii) its financial capacity was severely constrained; (iii)
the applicants before it had abandoned the relief sought against them including
the prayer for costs. It was therefore contended that having regard to these
factors the high court ‘failed to properly consider the question of costs’
thereby rendering its costs award vulnerable to interference by this Court.
[105] Against the backdrop set out above, the high court’s reasons for
lumping the TCLM appellants with, for example, Eskom whose action had
precipitated the litigation in its costs award is dealt with in a few laconic
lines66 as follows:
‘I see no need to deprive the victorious party of its costs. I am also not convinced that either
Eskom or the municipalities should not be liable to pay costs. The matter is before court
due to their actions or non-actions… Therefore, costs are to follow the result…’
The high court made no attempt to explain why the TCLM appellants, in
particular, should still be mulcted in costs despite the fact that they had not
opposed the application and, most importantly, no relief was in the end sought
against them. The fact that the principal target of the relief sought was Eskom,
whose decision to interrupt bulk supply of electricity to the TCLM was at the
core of the dispute, was overlooked by the high court. Moreover, that the
Chambers as applicants had, during the hearing, unequivocally abandoned the
prayer for costs against the TCLM appellants does not appear to have received
the attention that it merited from the high court.
[106] In the absence of any evidence that the TCLM appellants had directly
brought about the litigation or had done something wrong connected with the
conduct of the litigation, I can see no justification for mulcting them in costs.
66 Sabie Chamber of Commerce and Tourism (above fn 1) para 56.
This conclusion ineluctably drives me to find that the high court did not
exercise the wide discretion it enjoyed judicially.
[107] It remains to deal with the issue of costs in relation to this appeal. The
TCLM appellants were represented by two counsel at the hearing. And
leading counsel asked for costs of two counsel. As indicated earlier, two
counsel were employed for the limited purpose of preparing heads of
argument on costs and appearance in this Court to argue the appeal. In
response to a question from a member of the Bench, counsel readily accepted
that the employment of two counsel for this limited purpose was not
reasonably necessary. Thus, costs of one counsel will be allowed.
[108] In all the circumstances, therefore, the appeals in Eskom I and Eskom
II must fail and the appeal of the TCLM appellants must succeed.
[109] The following orders are made:
Case no 663/2019: Eskom Holdings SOC Limited v Resilient Properties (Pty)
Ltd and Others:
The appeal is dismissed with costs, including the costs of two counsel where
so employed.
Case no 664/2019: Eskom Holdings SOC Limited v Sabie Chamber of
Commerce and Tourism and Others:
The appeal is dismissed with costs, including the costs of two counsel where
so employed.
Case no 583/2019: Thaba Chweu Local Municipality and Others v Sabie
Chamber of Commerce and Tourism and Others:
The appeal against paragraph 2 of the order of the high court is upheld.
The first, second and third respondents shall pay the costs of the appeal
jointly and severally, the one paying the others to be absolved.
Paragraph 2 of the order of the high court is set aside and in its place is
substituted the following:
‘The costs of this application shall be borne by Eskom Holdings SOC
Limited, with the rest of the respondents being absolved.’
________________________
X M PETSE
DEPUTY PRESIDENT
SUPREME COURT OF APPEAL
Appearances
For Appellant in
case no 663/2019:
L T Sibeko SC (with him N H Moloto)
Instructed by:
Ngeno & Mteto Inc., Pretoria
Kramer Weihman & Joubert Attorneys,
Bloemfontein
For First, Second,
Third and Fourth
Respondents:
M Chaskalson SC (with him C van der Spuy)
Instructed by:
Kokinis Inc., Pretoria
McIntyre van der Post Attorneys, Bloemfontein.
For Fifth Respondent:
L B van Wyk SC (with him N C Hartman)
Instructed by:
Neuhof Khoza Attorneys, Witbank
Hill, McHardy & Herbst Inc., Bloemfontein
For amicus curiae:
A T Lamey
Instructed by:
Kriek Wassenaar & Venter Inc., Pretoria
Rosendorff Reitz Barry, Bloemfontein
For Appellant in
case no 664/2019:
V S Notshe SC (with him M Gwala SC)
Instructed by:
Ngeno & Mteto Inc., Pretoria
Kramer Weihman & Joubert Attorneys,
Bloemfontein
For First, Second and
Third Respondents:
A Katz SC (with him S Pudifin-Jones)
Instructed by:
Van der Merwe & Ass Inc., Pretoria
Honey Attorneys, Bloemfontein.
For amicus curiae:
A T Lamey
Instructed by:
Kriek Wassenaar & Venter Inc., Pretoria
Rosendorff Reitz Barry, Bloemfontein
For Appellant in
case no 583/2019:
W Mokhare SC (with him Z Gumede)
Instructed by:
Matsane Attorneys Inc., Nelspruit
Matsepes Attorneys Inc., Bloemfontein
For First, Second and
Third Respondents:
A Katz SC (with him S Pudifin-Jones)
Instructed by:
Van der Merwe & Ass Inc., Pretoria
Honey Attorneys, Bloemfontein.
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
29 December 2020
Status:
Immediate
Eskom Holdings SOC Ltd & others v Resilient Properties (Pty) Ltd and Others
(Case no 663/19); Eskom Holdings SOC Ltd v Sabie Chamber of Commerce and
Tourism, and Others (Case no 664/19); Thaba Chweu Local Municipality and
Others v Sabie Chamber of Commerce and Tourism, and Others (Case no
583/19) [2020] ZASCA 185 (29 December 2020)
Please note that the media summary is for the benefit of the media and does not form part of the
judgment of the Supreme Court of Appeal.
The Supreme Court of Appeal (SCA) today dismissed two appeals by Eskom Holdings SOC Limited
Eskom) and at the same time upheld an appeal by the Thaba Chewu Local Municipality (the TCLM), its
Municipal Manager, Executive Mayor and Chief Financial Officer, all of which were against the judgment
of the Gauteng Division of the High Court, Pretoria (the high court). For convenience, the three appeals
were heard together even though they were lodged separately by the appellants in the three appeals.
Prior to litigation in the high court, disputes had arisen between Eskom on the one hand and Emalahleni
Local Municipality (the ELM) and the TCLM on the other in relation to electricity supplied in bulk by
Eskom to the two municipalities which had not been paid for over several years. At that stage, the ELM
owed Eskom some R1,2 billion whilst the TCLM owed approximately R407 million. Because the
amounts owed by the ELM and the TCLM had escalated to unmanageable levels, as the two
municipalities had only been making sporadic payments, Eskom threatened to interrupt the supply of
electricity to the affected municipalities unless they settled their respective arrear debt over a period of
12 months. Ostensibly, to demonstrate their intention to settle the arrear debt, that had been outstanding
for several years, both the ELM and TCLM signed acknowledgments of debt in favour of Eskom
undertaking to reduce the amount in arrears over a period of 12 months whilst at the same time paying
for their ongoing electricity consumption. Despite concluding these agreements, the ELM and TCLM
still failed to pay the arrears and for their monthly consumption, save for the erratic payments that they,
from time to time, made. As a result, the debt continued to mount.
Faced with this predicament, Eskom published notices in terms of which it invited interested parties
within the affected municipalities to make representations as to why it should not implement its decision
to interrupt the bulk supply of electricity to the ELM and the TCLM for four and a half hours a day.
Although Resilient Properties (Pty) Ltd and its associated companies, which own a 68,000 m² shopping
mall in Emalahleni with 185 retail shops, had made representations to Eskom to dissuade the latter
from implementing its threatened decision, Eskom still went ahead to implement it. When the bulk
electricity supply was interrupted, the very fabric of society was threatened because hospitals, schools,
households and businesses were severely disrupted, after being without water for several days. The
municipal water sewage works were also brought to a standstill. Thus sewage, for example, could not
be pumped into sewage processing plants but would instead spill over into the streets and municipal
water catchment areas, posing a serious health and environmental risk. As a result of the total
interruption of bulk electricity supply, the two municipalities were left without electricity which meant that
they would, in turn, not be able to supply electricity to their customers.
Resilient and its associated companies in the ELM, and the Sabie Chambers of Commerce in the TCLM,
brought separate applications in the high court against Eskom and the ELM and TCLM in which they
sought declaratory orders that Eskom’s decision to interrupt the bulk supply of electricity was both
unconstitutional and unlawful, and therefore liable to be reviewed and set aside.
Eskom opposed the applications. It contended that it was empowered to interrupt or terminate the
supply of electricity to its customers, the ELM and TCLM, in terms of s 21(5) of the Electricity Regulation
Act 4 of 2006 (the ERA). Eskom also relied on clauses 9.1, 9.2 and 22.3 of the Electricity Supply
Agreements (the ESAs) that it had separately concluded with the ELM and TCLM which accorded it a
contractual right to discontinue or terminate the bulk supply of electricity to a municipality that is in
arrears with its accounts.
The ELM and TCLM countered Eskom’s contentions and argued that Eskom was precluded from
invoking s 21(5) of the ERA or asserting its contractual rights under clauses 9.1, 9.2 and 22.3 until it
has complied with its statutory obligations in terms of ss 40 and 41 of the Intergovernmental Relations
Framework Act 13 of 2005 (the IRFA) which oblige organs of state to make every reasonable effort to
settle intergovernmental disputes amongst themselves before resorting to litigation. Resilient and the
Chambers further contended that if Eskom sought to invoke s 21(5) of the ERA, it was required first to
approach a court and obtain prior judicial sanction to do so. As Eskom had not done so, its conduct in
interrupting the supply of electricity to the ELM and TCLM amounted to self-help which is inimical to the
rule of law.
The high court held that Eskom had every right in terms of s 21(5) of the ERA to reduce or terminate
the supply of electricity to a customer if such customer fails to honour an agreement for the supply of
electricity, or contravened the payment conditions of a Distributor’s licence. And that Eskom can do so
without prior judicial sanction like any other Distributor of electricity. The high court, however, upheld
the principal argument advanced by Resilient and the Chambers that Eskom failed to comply with its
constitutional and statutory obligations to make every reasonable effort to settle the dispute that had
arisen between it on the one hand and the ELM and TCLM on the other in relation to the implementation
of its decision to interrupt the supply of bulk electricity. Consequently, Eskom’s decision to interrupt the
bulk supply of electricity to the two municipalities was reviewed and set aside on the grounds that it was
both unconstitutional and unlawful. Eskom, the ELM and TCLM were ordered to pay the costs of
Resilient and the Chambers. Subsequently, Eskom was granted leave to appeal against the order of
the high court. The TCLM was also granted leave to appeal against the costs order insofar as it related
to it.
Before the SCA, Eskom argued that ss 40 and 41 of the IRFA were not implicated because it was not
the party that instituted proceedings in the high court. It further argued that Resilient and the Chambers
were in fact the parties that took Eskom and the ELM and TCLM to court. Eskom also contended that
in any event there was no dispute between it on the one hand and the ELM and TCLM on the other
because the two municipalities had admitted that they were lawfully indebted to it. The SCA rejected
this argument, and held that Eskom has mischaracterised the nature of the dispute in thinking that the
dispute is confined to the payment of a debt. The SCA stated that the dispute in issue concerned the
lawfulness of the decision to implement Eskom’s decision to interrupt the bulk supply of electricity. The
SCA therefore concluded that a dispute of that kind fell within the purview of ss 40 and 41 of the IRFA.
For this reason, Eskom was obliged first to make every reasonable effort to resolve such dispute before
it could resort to the drastic action of interrupting electricity supply. But the SCA held that the conclusion
reached by the high court in relation to s 21(5) of the ERA was correct.
Insofar as the appeal of the TCLM is concerned, the SCA held that the high court erred in awarding
costs against the TCLM. As a consequence, the appeal of the TCLM was upheld. This was because
Resilient and the Chambers had, during the hearing, unequivocally abandoned their prayer for
substantive relief and attendant costs against the TCLM. Thus, the high court did not exercise its
discretion judicially in relation to the issue of costs as against the TCLM.
The SCA also lamented the fact that although the ELM and TCLM were facing financial crisis and clearly
unable to pay their debts the National Government and the Member of the Executive Council:
Cooperative Governance and Traditional Affairs for Mpumalanga still failed to intervene in the affairs of
these municipalities in terms of s 139 of the Constitution and ss 139 and 150 of the Municipal Finance
Management Act 56 of 2003 when they were obliged, in light of the prevailing circumstances, to do so.
In the circumstances, Eskom’s two appeals were dismissed with costs, including the costs of two
counsel. The appeal of the TCLM was upheld with costs, and paragraph 2 of the order of the high court
was altered to one awarding costs against Eskom only, including the costs of two counsel.
|
1344
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH
AFRICA
JUDGMENT
In the matter between:
Case No:222/09
KGOSI LERUO MOLOTLEGI
First Appellant
ROYAL BAFOKENG ADMINISTRATION
Second Appellant
and
MOSOKO MOKWALASE
Respondent
Neutral citation:
Molotlegi v Mokwalase (222/09) [2010] ZASCA 59 (1 April
2010)
Coram:
Mthiyane, Heher, Bosielo et Shongwe JJA et Seriti AJA
Heard:
8 March 2010
Delivered:
1 April 2010
Summary:
Defamation – action for damages for defamation based on
an innuendo – separation of issues in terms of rule 33(4) –
trial court decided that the words are defamatory per se
without reference to the innuendo – misdirection justifying
the setting aside of its order – matter referred back to the
court below for trial.
ORDER
On appeal from: North West High Court, Mafikeng (Mogoeng JP sitting as
court of first instance):
1.
The appeal is allowed to this extent:
(a)
The order of the court below is set aside.
(b)
The appellants are ordered to pay the costs of the hearing of the issues
which were separated in terms of rule 33(4), jointly and severally.
2.
The matter is referred back to the court below for trial.
3.
The appellants are ordered to pay the costs of appeal jointly and severally.
JUDGMENT
BOSIELO JA (Mthiyane et Shongwe JJA et Seriti AJA concurring)
[1] The first appellant is Kgosi Molotlegi of the Royal Bafokeng Nation, which
is situated in the Northwest Province. The second appellant is a legal persona
responsible for the administration of the Royal Bafokeng Nation. The respondent
was employed as a team leader of the VIP Protection Team of the Royal
Bafokeng Nation.
[2] A protocol and security meeting of the second appellant was held on 13
October 2006 where both first appellant and the respondent were present. At the
meeting and in the presence of members of the protocol and security, first
appellant uttered the following words or words to the same effect to the
respondent:
'Mokwalase, you are fired. I don't want to see you again on my premises. You can
excuse yourself'.
Acting thereupon, the respondent left the meeting.
[3] Aggrieved by the first appellant's utterances, the respondent issued
summons against the two appellants alleging that the words uttered, given the
context of the meeting, the respondent's position at the meeting and the first
appellant's behaviour towards the respondent, are wrongful and defamatory.
[4] The appellants applied by notice of motion to the court below for a
separation of issues in terms of rule 33(4) of the Uniform Rules in the following
terms:
'1.
that the meaning of alleged defamatory words set out in paragraph 7 of the
Respondent's (Plaintiff's) particulars of claim be determined separately;
2.
that in the event that the Honourable Court determines that the words bear a
defamatory meaning, whether such meaning accords with the meanings pleaded by the
Respondent in paragraph 9 of his particulars;
3.
That the other issues in dispute between the parties be postponed sine die and
the determination thereof be stayed pending the finalisation of the separated issues; and
4.
that the respondent in the event that he opposes the relief set out in paragraph 1
and 2 above be ordered to pay the costs of this application.'
[5] The respondent neither opposed the application nor appeared at court
when it was heard. As a result the application was granted by the court below
(per Matlapeng AJ) on 25 September 2008. The part of the court order which is
relevant is the one to the effect that the meaning of the alleged defamatory words
as set out in paragraph 7 of the Respondent's (Plaintiff's) particulars of claim be
determined separately.
[6] On 28 November 2008, the court below (per Mogoeng JP), without any
evidence having been led about the context in which the alleged words were
uttered, found that they were defamatory in nature. The learned judge proceeded
further and found that the publication of the words (which was admitted) was
wrongful and was published with the requisite animus iniuriandi, ie 'with intent to
defame and the knowledge of wrongfulness and it caused the plaintiff to suffer
damages. A case of defamation, has therefore been proved'.
The appellants are appealing against this finding with the leave of the court
below.
[7] The appellants have launched a three-pronged attack against the
judgment of the court below. This appears clearly from the appellant's Notice of
Appeal where the three grounds of appeal are set out as follows:
'1.
The Learned Judge, with respect, erred in finding that the statement was
wrongful, published with animus iniuriandi, and caused the Plaintiff damages and that a
case of defamation had been proved, in that the only issue before the Learned Judge,
separated in terms of Rule 33(4), was to determine whether or not the words used by the
First Defendant were defamatory of the Plaintiff.
2.
The Learned Judge, with respect, erred further in finding that the words used by
the First Defendant of and concerning the Plaintiff were defamatory of the Plaintiff in
that–
2.1
It was common cause that the words used by the First Defendant were:
"Mokwalase, you are fired. I don't want to see you again on my premises. You can
excuse yourself."
2.2
The Plaintiff limited the meaning of these words to three stings, namely that the
words meant that he was:
"unable to perform his duties in a professional manner; and
although being a member of the ROYAL BAFOKENG NATION, was deemed an
undesired person on the premises of the ROYAL BAFOKENG NATION; and\
not even worthy of proper disciplinary action and/or the rules of natural justice."
2.3
And the learned Judge ought, with respect, to have found that the words uttered
by the First Defendant were not defamatory of the Plaintiff in the senses pleaded and
relied upon by the Plaintiff.'
[8] Before us counsel for the appellants confined his submissions to the first
ground which he argued was dispositive of the whole appeal. The contention was
that the court below erred in finding that the words uttered were defamatory
without having heard evidence of the special circumstances surrounding the
utterances. He submitted further that the court below erred in going beyond the
terms of the court order of 25 September 2008, by, in addition to finding the
words uttered to be defamatory per se, continuing to find that 'it is wrongful and
was published with animus iniuriandi, ie with the intent to defame and the
knowledge of the wrongfulness and it caused the plaintiff to suffer damages. A
case of defamation has, therefore, been proved.'
[9] The respondent had raised the issue of the appealability of the finding by
the court below in his heads of argument. The contention is that as the parties
still had to return to court to lead evidence on other issues which had been
deferred for later determination, it could not be said that the order by the court
below had the effect of finally disposing of the issues between the parties.
However, counsel for the respondent conceded that the learned Judge President
erred in deciding that the words uttered were defamatory without any evidence of
the special circumstances under which the words were uttered. He argued further
that, given the fact that the respondent relied on the secondary as opposed to the
primary meaning of the words uttered, the court below erred in granting
separation of the issues in the manner it did as this failed to take account of the
averments regarding the special circumstances and the innuendo pleaded by the
respondent in para 9 of the particulars of claim.
[10] Notwithstanding the fact that the issue of appealability was not vigorously
argued before us, I deem it appropriate to deal with it upfront as it might be
dispositive of this appeal. It is clear from the judgment of the court below that it
had pronounced itself unequivocally and definitely on the issues of the
defamatory nature of the utterances as well as whether the utterances were
wrongful and made with the requisite animus iniuriandi. It follows that once the
court below had so pronounced itself on these issues, it would not be possible for
it to correct, alter or set aside its own order. It is only a court of appeal which
would be competent to correct, alter or set aside such an order. Self-evidently the
order made by the court below finally disposed of a substantial portion of the
relief sought by the plaintiff in the main action. Dealing with a similar situation in
Marsay v Dilley 1992 (3) SA 944 (AD) Corbett CJ stated the following at 962C-D:
'The law relating to the appealability of decisions of a Court of a Provincial or Local
Division was re-examined relatively recently by this Court in the case of Van Streepen &
Germs (Pty) Ltd v Transvaal Provincial Administration 1987 (4) SA 569 (A). As this
judgment shows, this Court has over the years adopted an increasingly flexible approach
to the question of appealability. The general principle which, I think, may be extracted
from the judgment is the following: where a trial Court has under some competent
procedure (such as an application under Rule 33(4)) made an order which has the effect
of being a final decision (ie one which cannot be corrected or altered or set aside by the
trial Judge at a later stage of the trial) and the decision is definitive of the rights of the
parties and has the effect of disposing of a substantial portion of the relief claimed by the
plaintiff in the main action, then this order is a judgment (as understood in s 20(1) of the
Supreme Court Act 59 of 1959) and is appealable, despite the fact that the main action
has not been concluded.'
Based on the above exposition, I am satisfied that the decision of the court below
is appealable. I proceed to deal with the merits of the appeal.
[11] In order to resolve this conundrum, I deem it necessary to quote the
relevant parts of the pleadings which reads:
7.
'During the said meeting, the FIRST DEFENDANT, in the presence of members of the
said protocol and security meeting, uttered the following and/or words with the same
effect and meaning, to PLAINTIFF:
"Mokwalase, you are fired. I don't want to see you again on my premises. You can
excuse yourself".'
8.
As a result of the above, PLAINTIFF had to withdraw from the said meeting with
immediate effect.
9.
The said words,
-
in the context of the meeting; and
-
in the context of PLAINTIFF'S position in the meeting; and
-
in the context of FIRST DEFENDANT'S behaviour towards PLAINTIFF,
are wrongful and defamatory of PLAINTIFF,
in that they were intended and were understood by PLAINTIFF and members of the said
meeting, to mean that PLAINTIFF was:
-
unable to perform his duties in a professional manner; and
-
although being a member of the ROYAL BAFOKENG NATION, was deemed an
undesired person on the premises of the ROYAL BAFOKENG NATION; and
-
not even worthy of proper disciplinary action and/or the rules of natural justice.'
[12] In responding to these allegations, the appellants pleaded as follows:
'Save to admit that the First Defendant uttered the following words to the plaintiff:
"Mokwalase you are fired. I don't want to see you again on my premises. You can
excuse yourself." These allegations are denied.'
[13] It is common cause that this matter proceeded to trial on the issue as
separated in terms of rule 33(4). No evidence was led at the trial.
Notwithstanding the fact that no evidence regarding the context and the special
circumstances surrounding the utterance of these words was led, the court below
found the alleged words to be defamatory of the respondent. Furthermore, the
court below found the words to be wrongful and to have been uttered with
animus iniuriandi.
[14] It is necessary to recall that the respondent did not rely on the alleged
words as being defamatory per se. The respondent averred in paragraph 9 of the
particulars of claim that these words were defamatory because of the context of
the meeting, his position at the meeting and the manner in which they were
uttered. In other words the respondent pleaded special circumstances giving rise
to an innuendo. Based on this context, the respondent averred that the alleged
words were intended to mean and were understood by him and the members at
that meeting to mean that he was:
unable to perform his duties in a professional manner; and
although a member of the Royal Bafokeng Nation, was deemed an
undesired person on the premises of the Royal Bafokeng Nation; and
not even worthy of proper disciplinary action and/or the rules of natural
justice.
[15] It should be clear from the court order dated 25 September 2008 that the
issues for separation in terms of rule 33(4) were restricted to paragraph 7 of the
particulars of claim. The appellants' first prayer unduly limited the issue to be
separated to the words as set out in paragraph 7 of the particulars of claim. No
reference is made to paragraph 9 which sets out the context under which the
words were uttered and the innuendo which the respondent attributes to the
words uttered. It is clear to me that this was a mischaracterisation of the issues
pleaded by the respondent. Given the issues as pleaded by the respondent, it is
not possible to determine if the alleged words uttered about the respondent are
capable of bearing the meaning attributed to them in the innuendo without any
evidence of the background facts being led. This accords with the dictum by
Colman J in Hassen v Post Newspaper (Pty) Ltd & others 1965 (3) SA 562 at
566G-H where he stated:
'When a secondary meaning is relied upon, evidence is necessary because the plaintiff
must prove the special circumstances by reason whereof the published matter would, to
those aware of the special circumstances, bear the secondary meaning relied upon. The
plaintiff must prove, further, upon a balance of probabilities, that there were persons,
among those to whom the publication was made, who were aware of the special
circumstances, and to whom, it can therefore be inferred, the publication is likely to have
conveyed the imputation relied upon.'
[16] The logical conclusion is that the court below erred in attempting to
determine the meaning of the words used without any evidence of the special
circumstances being led. It follows that the order of the court below has to be set
aside so that the respondent can be afforded the opportunity to lead the
necessary evidence regarding the special circumstances and context under
which the alleged words were uttered in order to determine whether the meaning
attributed to them in the innuendo by the respondent is defamatory or not.
[17] Based on the wording of the order of separation dated 25 September
2008, both counsel are ad idem that the learned Judge President went beyond
what he was required to decide. Evidently he was not required to determine the
issues of wrongfulness and animus iniuriandi at that stage. He was only required
to determine if the words uttered were defamatory per se or not. I agree that the
learned Judge President erred in deciding issues which were not before him.
[18] What remains for consideration is the issue of costs. The general rule is
that ordinarily costs will follow the result unless there are exceptional
circumstances dictating otherwise. However, this rule is not inflexible. It is equally
trite that costs are discretionary. Considerations of fairness and justice might, in
appropriate circumstances, dictate otherwise.
[19] Given the peculiar circumstances of this case, I am of the view that it
would be unfair and unjust to award the appellants costs in this matter. It is
common cause that it is the appellants who sought and obtained an order for
separation of issues. It is the appellants who settled the terms of that order. The
respondent played no role in that application. I have already found that the
respondent's case was mischaracterised in the application for separation of
issues. This led to the appellants obtaining a wrong order which did not take
proper account of the respondent's pleaded case. It is this order which led the
court below to decide the matter on the narrow and incorrect basis chosen by the
appellants. I do not think that the mere fact that the respondent did not oppose
that application is sufficient reason for him to be mulcted with the costs. It is
important not to loose sight of the fact that in the application for separation of
issues, the appellant had warned the respondent that in the event that he might
oppose the application, they would ask for an order of costs against him. Why
should the respondent who exercised his option not to oppose the application,
probably to avoid attracting a cost order, be made to pay the costs he tried to
avoid incurring. Aggrieved by the decision of the court below, the appellants took
the matter on appeal to this court. It is clear to me that it is the appellants who
determined the course which this matter took culminating in the appeal before us.
To my mind justice and fairness demand that the appellants be ordered to pay all
the costs including the costs of appeal.
[20] A court hearing an application for a separation of issues in terms of rule
33(4) has a duty to satisfy itself that the issues to be tried are clearly
circumscribed to avoid any confusion. It follows that a court seized with such an
application has a duty to carefully consider the application to determine whether
it will facilitate the proper, convenient and expeditious disposal of litigation. The
notion of convenience is much broader than mere facility or ease or expedience.
Such a court should also take due cognisance of whether separation is
appropriate and fair to all the parties. In addition the court considering an
application for separation is also obliged, in the interests of fairness, to consider
the advantages and disadvantages which might flow from such separation.
Where there is a likelihood that such separation might cause the other party
some prejudice, the court may, in the exercise of its discretion, refuse to order
separation. Crucially in deciding whether to grant the order or not the court has a
discretion which must be exercised judiciously. The court cannot simply grant
such an application because it is unopposed. I regret to say that the court below
failed in this respect. See Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA)
para 3.
[21] Based on the conclusions made above, I make the following order:
1.
The appeal is allowed to this extent:
(a)
The order of the court below is set aside.
(b)
The appellants are ordered to pay the costs of the hearing of the issues
which were separated in terms of rule 33(4), jointly and severally.
2.
The matter is referred back to the court below for trial.
3.
The appellants are ordered to pay the costs of appeal jointly and severally.
___________________
L O BOSIELO
JUDGE OF APPEAL
HEHER JA:
[22] In Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 536A-C
this Court held that, generally speaking, a non-appealable decision (ruling) is
a decision which is not final (because the court of first instance is entitled to
alter it), nor definitive of the rights of the parties nor has the effect of disposing
off at least a substantial portion of the relief claimed in the main proceedings.
[23] Because I am of the view that, at least, the second and third legs of
that dictum apply to the present matter, it follows that I would strike the appeal
from the roll with costs. My reasons are, in brief, as follows.
[24] The application under rule 33(4) should neither have been made nor
granted. The separation of the issues as formulated was a hypothetical
exercise. The plaintiff’s case was not dependent on the meaning of the
alleged defamatory words construed in isolation. His case was that the words,
in the context in which they were spoken and heard, were intended and
understood as defamatory of him. That was a perfectly acceptable way of
pleading.1 The defendant took no exception to it.2 The proof of the plaintiff’s
allegation depended on the evidence which he adduced of the ‘context’, which
he identified in his particulars of claim as relating to ‘the meeting’, the
‘plaintiff’s position in the meeting’ and ‘the first defendant’s behaviour towards
the plaintiff’. Within those limits the plaintiff was free to prove facts which
conduced to a defamatory intention and understanding in the words he
attributed to the first defendant, the final decision being that of the court.3
[25] But the rule 33(4) application attempted to have the case decided
without evidence, not as an exception taken at the beginning of the trial, but
simply as a preliminary question to be answered. Because of the manner of
pleading of the plaintiff’s case the answer to
1 Because the plaintiff, having pleaded ambiguous language, was, in effect relying on a
context which lifted his words out of the non-defamatory sense and tinged them with the
colour of defamation; and cf Hassen v Post Newspapers (Pty) Ltd 1965 (3) SA 562 (W) at
566F-H.
2 Indeed he would have been hard-pressed to argue such an exception in the light of the
authorities referred to by this Court in Coulson v Rapport Uitgewers (Edms) Bpk 1979 (3) SA
286 (A) at 294B-295H.
3 Sutter v Brown 1926 AD 155 at 166 in fine – 167.
the question was an irrelevance that carried the trial nowhere. The defendant
was wholly responsible for the application and his counsel’s submission to us
that the plaintiff should have opposed the application does not mitigate his
culpability.
[26] The fact that the learned judge erred in arriving at his conclusion by
assuming that the context had been proved and was such as to imbue the
words with a defamatory meaning, does not mean that his final word has been
expressed on the pleaded issues. Once such evidence as the parties may
wish to place before the court has been considered and the context, if any,
established, a proper appraisal can be undertaken of the real issues.
______________
J A Heher
Judge Of Appeal
APPEARANCES:
For appellant:
J W G Campbell SC
Q R Mashabane
Instructed by:
Bell Dewar Inc
c/o Kgomo, Mokhetle & Tlou, Mafikeng
Webbers, Bloemfontein
For respondent:
B P Geach
Instructed by:
Moloto Weiss Inc
c/o Smit Stanton Inc, Mafikeng
Lovius-Block Inc, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME
COURT OF APPEAL
FROM:
The Registrar, Supreme Court of Appeal
DATE:
1 April 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.
MOLOTLEGI v MOKWALASE(222/09) [2010] ZASCA (1 April 2010)
The Supreme Court of Appeal upheld the appeal by the appellants Kgosi Leruo
Molotlegi of the Royal Bafokeng Nation and the Royal Bafokeng Administration
from a judgment of the Mmabatho High Court (Mogoeng JP), which had granted
judgment in favour of the respondent, Mr Mosoko Mokwalase. Mr Mokwalase, was a
team leader of the VIP Protection Team of the Royal Bafokeng Nation. At a protocol
and security meeting attended, inter alia, by Kgosi Molotlegi, Mr Mokwalase and
members of the protocol and security, Kgosi Molotlegi said to Mr Mokwalase:
'Mokwalase, you are fired. I don't want to see you again on my premises. You can
excuse yourself.'
Mr Mokwalase issued summons against Kgosi Molotlegi and the Royal Bafokeng
Administration alleging that he was defamed by the utterances. The court below
ordered separation of issues in terms of rule 33(4). When the trial resumed before
Mogoeng JP, the learned Judge President found that the words uttered were
defamatory per se without any evidence of the special circumstances surrounding the
utterances referred to above to prove the innuendo relied upon by Mr Mokwalase
being led.
The Supreme Court of Appeal found that the learned Judge President erred in finding
that the words per se, without any evidence of the special circumstances, were
defamatory. The SCA set aside the judgment of the court below and referred the
matter back to the court below for trial. Given the peculiar circumstances of this
matter and the role played by the appellants in having the wrong issue decided by the
court below, there, being no blame to attribute to Mr Mokwalase, the SCA found that
it would be unfair and unjust to mult him with any costs.
Accordingly the appeal was granted but the appellants were ordered to pay the costs.
|
2254
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 324/2008
In the matter between
MUNICIPAL MANAGER: QAUKENI
LOCAL MUNICIPALITY
First Appellant
QAUKENI LOCAL MUNICIPALITY
Second Appellant
and
F V GENERAL TRADING CC
Respondent
Neutral citation: QAUKENI LOCAL MUNICIPALITY and F V GENERAL TRADING
(324/08) [2009] ZASCA 66 (29 May 2009)
Coram:
MPATI P, BRAND, CLOETE, MAYA JJA and LEACH AJA
Heard:
14 May 2009
Delivered:
29 May 2009
Updated:
Summary: Contract – municipal contract concluded in breach of prescribed processes
relating to procurement of municipal services – no difference in procument
processes required for basic municipal services - contract invalid –
unnecessary for appellants in present proceedings to have sought a formal
review of the award of the contract – declaration of invalidity issued.
______________________________________________________________________
ORDER
On appeal from: High Court, Mthatha (Greenland AJ sitting as court of first instance).
1. The appeal succeeds with costs. Such costs are to include the costs of two counsel
but shall exclude one half of the appellants’ costs of preparing, perusing and
lodging the appeal record.
2. The order in the court a quo is set aside and replaced with the following:
‘(a) The application is dismissed with costs.
(b) The counter-application is granted with costs and the contract ‘ZEV 2’ concluded
on 25 June 2006 is declared to be null and void.
(c) The costs shall include the costs of two counsel in each case.’
JUDGMENT
_____________________________________________________________________
LEACH AJA (MPATI P, BRAND, CLOETE and MAYA JJA concurring):
[1] This appeal concerns the validity of a services procurement contract concluded by the
second appellant, the Qaukeni Local Municipality, without due compliance with various
statutorily prescribed procedures relating to municipal procurements. The second
appellant is situated in that portion of the province of the Eastern Cape formerly known as
Transkei. Its principal towns are Lusikisiki and Flagstaff. In the circumstances more fully
described below, it purported to appoint the respondent as the refuse collector for its
municipal area. The first appellant, the municipal manager Mr Fihlani, later sought to
terminate the contract with effect from 30 June 2007. This gave rise to the respondent
instituting urgent proceedings in the High Court, Mthatha seeking an order declaring the
termination to be unlawful and directing the second appellant to ‘. . . continue with the
contract and to pay the (respondent) for the work done in terms thereof until the contract is
lawfully terminated’. In their absence, the court issued a rule nisi calling upon the
appellants to show cause on the return day why such an order should not be granted. The
appellants subsequently opposed the confirmation of the rule, contending that the contract
relied on by the respondent was invalid and of no force and effect; and in a counter
application, they sought a declaratory order to that effect.
[2] In due course the matter came before Greenland AJ who held the contract to be valid.
He further held that the appellants had not discharged the onus of showing that they had
justifiably terminated the contract and, consequently, he granted the respondent’s
application and dismissed the counter-application. A subsequent application for leave to
appeal was also dismissed but, with leave granted by this court, the appellants now appeal
against the judgment in respect of both the main and counter-applications.
[3] The material facts relevant to the issues in the appeal are not in dispute. During
November 2005, the respondent submitted a tender for a contract offered by the second
appellant to collect refuse in both Lusikisiki and Flagstaff. Its tender was accepted and
gave rise to the conclusion of an oral agreement under which the respondent provided the
required service during the period November 2005 to 30 June 2006. The validity of this
agreement has not been challenged and I mention it merely as historical background to the
events that followed.
[4] When the oral agreement was nearing its end, the municipal manager at the time, Mr
Cezula, contacted the respondent and invited it to submit a copy of its budget for the
twelve month period from July 2006 to June 2007. This the respondent did, but the
‘budget’ it presented in fact appears to have been no more than an itemised quotation to
continue to provide its services at a monthly charge of R351 350. Without inviting any
other persons to tender for such a contract, the municipal council resolved to reappoint the
respondent as the second appellant’s refuse collector against payment of the monthly sum
quoted in its ‘budget’ and tasked Cezula to draw up a written agreement for the respondent
to sign. He did so, and presented it to the respondent for its approval. The respondent
accepted the terms offered, and the contract was duly signed by both parties at Flagstaff
on 25 June 2006 (a copy thereof is included in the papers as annexure ‘ZEV 2’).
[5] In terms of this contract the appellant was appointed the sole refuse collector for the
second appellant for which it would be paid R351,350.00 per month, subject to a 20%
annual escalation. Clause 2 further provided:
‘. . . to ensure uninterrupted delivery of the service in the best interest of the local community, it is
agreed that this contract is for the initial period of one (1) year starting from 01 July 2006 to 30
June 2007. However for the contract to end on 30th June 2007 the notice that the contract will
terminate on 30th June 2007 must be given to the service provider six (6) months prior to the date
of termination otherwise the contract is automatically renewed on the 30th of June 2007 for another
period of one (1) year at the 20% escalation on the fees charged for the service. In any case for
the contract to lapse a notice of termination must be given six (6) months before the end of the
contract otherwise it will be automatically renewed at a 20% escalation on the fees charged for the
service. . . . .’
[6] The respondent duly proceeded to render the service it had undertaken and was paid
the agreed monthly fee for doing so. As no notice of termination was given six months
before 30 June 2007, the contract appeared set to continue beyond that date by reason of
the automatic renewal provision in clause 2. However, in correspondence which passed
between the parties commencing on 4 June 2007 the first appellant, Cezula’s successor
as municipal manager, informed the respondent that the municipal council had resolved
that its services were not required beyond 30 June 2007 and that, although it would be at
liberty to tender afresh when the second appellant called for tenders, the necessary
statutory procedures would be strictly adhered to in the future.
[7] The letter of 4 June 2007 which conveyed this to the respondent was printed on a
letterhead bearing the name ‘Ingquza Hill Local Municipality’. This led to the respondent
rushing to court to launch legal proceedings which terminated in chaos. In an application
issued out of the Mthatha High Court under case number 891/2007, it sought an urgent
order declaring ‘the intervention of the Ingquza Hill Local Municipality [to be] wrongful and
unlawful in terminating [the contract ‘ZEV 2’] without giving the required notice’. In a brief
affidavit to oppose the grant of interim relief, the appellants’ attorney drew attention to the
fact that the Ingquza Hill Local Municipality had been established on 2 December 2000 by
Provincial Notice No. 107 of 2000 which, in turn, had been amended on 28 January 2002
by Provincial Notice No 5 of 2002 by the substitution of the name ‘Ingquza Hill’ with
‘Qaukeni’.
[8] In the light of this amendment, the appellant’s attorney averred that the Ingquza Hill
Local Municipality neither continued to exist nor was a legal entity capable of suing or
being sued. Of course that was nonsensical as the municipality’s name had merely been
changed and the second appellant, which had previously been known as the Ingquza Hill
Local Municipality, was thereafter known by its current name. But the respondent was so
confused by all of this that it withdrew its application on 5 July 2007. It stated in the present
proceedings that it had done so as the second appellant (viz. the Qaukeni Local
Municipality) had had nothing to do with the letter of 4 June 2007 which had come from the
Ingquza Hill Local Municipality, that the latter had no legal right to interfere with the
contractual obligations between it and the second appellant, and that there had therefore
been no reason to pursue the application in case 891/2007 as the second appellant had
not sought to terminate the contract. As the second appellant and the Ingquza Hill Local
Municipality were the same entity, all of this is farcical.
[9] In any event, the day after the withdrawal of the application in case 891/2007, the
appellants wrote to the respondent (this time on a Qaukeni Municipality letterhead)
referring to the letter of 4 June 2007 and re-iterating that such letter ‘. . . terminating or
cancelling the contract still stands’ and that the use of an incorrect letterhead had nothing
to do with the identity of the parties to the contract. The appellants therefore stated that
they persisted in the contents of the letter of 4 June 2007. As a result, on 10 July 2007 the
respondent rushed back to the High Court and instituted the urgent proceedings which
eventually culminated in the decision in the court a quo which the appellants now seek to
have overturned.
[10] The respondent contended, both in this court and in the court below, that the written
contract ‘ZEV 2’ had indeed been valid and of full force and effect and, that being so and
as no notice of termination had been given six months before the end of June 2007, it had
been automatically renewed for a further year and Fihlani’s notice of termination was of no
force and effect. On the other hand, the appellants argued that as the agreement had
been concluded in breach of various prescribed statutory requirements it had been void ab
initio and was thus incapable of being validly extended. The cardinal point in this appeal
is therefore the validity of the agreement. I turn to consider that issue.
[11] In considering the validity or otherwise of the written contract ‘ZEV 2’, it is necessary
to recall that s 217(1) of the Constitution, couched in peremptory terms, provides inter alia
that an organ of state in the local sphere (such as a municipality) which contracts for
goods and services ‘must do so in accordance with a system which is fair, equitable,
competitive and cost-effective’ (my emphasis). This constitutional imperative is echoed in
both the Systems Act and the Municipal Finance Management Act 56 of 2003 (‘the
Financial Management Act’) as will become apparent from what is set out below.
[12] The provisions of these two Acts, both of which relate to the procurement of
‘municipal services’ by municipalities are interrelated and somewhat convoluted. For
present purposes it suffices to summarise the applicable provisions relating to the
procurement of such services from a non-municipal entity such as the respondent (defined
in s 1 of the Systems Act as an ‘external service provider’) as follows:
A municipality is to have and implement a supply chain management policy1 which is
‘fair, equitable, transparent, competitive and cost-effective’ and which complies with a
regulatory framework designed to have that effect which, inter alia, covers
‘competitive bidding processes’, procedures for ‘the evaluation of bids to ensure the
best value for money’ and measures to combat ‘fraud, corruption, favouritism and
unfair and irregular practices in municipal supply chain management’.2
A municipality may provide a municipal service by way of an ‘external mechanism’ by
concluding a service delivery agreement with an external service provider.3
In the event of a municipality deciding to do so it must select the external service
provider by a process which complies with its supply chain management policy,
including a competitive bidding process which allows all prospective service providers
to have equal access to information relevant to the bidding process and which
minimises the possibility of fraud and corruption.4
The process by which an external service provider is selected must be ‘fair, equitable,
transparent cost-effective and competitive’.5
The regulatory framework governing a municipal supply chain management policy6
requires the policy to provide for the procurement of goods and services above a
1 Section 111 of the Finance Management Act.
2 Section 112(1)(f),(h)(ii) and(m)(i).
3 Section 76(b)(v) of the Systems Act.
4 Section 80(1)(a) as read with s 83 of the Systems Act.
5 Section 83(3) of the Systems Act.
6 Promulgated in Government Notice R868 of 30 May 2005.
transaction sum of R200 000 by way of ‘a competitive bidding process’.7 As the
value
of the present contract exceeds R4 million per annum, this regulation was obviously
intended to apply to such a contract.
Before appointing the external service provider, the municipality must establish ‘a
programme for community consultation and information dissemination’ regarding the
appointment and the contract to be concluded with the service provider.8
[13] These statutory precepts therefore oblige a municipality concluding a service delivery
agreement with an external supplier at a contract amount in excess of R200 000 to act
openly and in accordance with a fair, equitable, competitive and cost-effective system, and
in terms of a supply chain management policy designed to have that effect. Unfortunately
for the members of the local community who live and work within its municipal area, the
second appellant appears to have ignored its obligation to have and implement a supply
chain management policy and both in this court and the court below the matter was argued
on the basis that no such policy was in place. But the respondent’s failure to implement a
supply chain management policy cannot relieve it of its statutory obligation to act in a
manner as summarised above, and it would be untenable to suggest that the respondent
was therefore not obliged to act openly, transparently and without following a fair,
equitable, competitive and cost-effective process when contracting with an external service
supplier to render a municipal service.
[14] It was suggested by the respondent both in the court below and in the heads of
argument filed in this court that a failure to comply with these statutory precepts did not
automatically visit a contract with an external service supplier with nullity, and that the
court had a discretion to enforce such a contract if the supplier would otherwise be
prejudiced. However counsel who appeared for the respondent in the appeal (who I
should hasten to add had been briefed for the first time in the matter at the eleventh hour
and had not been responsible for the respondent’s heads of argument) was unable to
advance this argument with any enthusiasm. His diffidence is understandable. It is not a
question of a court being entitled to exercise a discretion having regard to issues of
7 Regulation 12(1)(d)(i).
fairness and prejudice. Rather, the question is one of legality.
[15] Consequently, in a number of decisions this court has held contracts concluded in
similar circumstances without complying with prescribed competitive processes are invalid.
In Premier, Free State and Others v Firechem Free State (Pty) Ltd 2000 (4) SA 413 (SCA)
this court set aside a contract concluded in secret in breach of provincial procurement
procedures, holding that such a contract was ‘entirely subversive of a credible tender
procedure’ and that it would ‘deprive the public of the benefit of an open competitive
process’.9 Similarly in Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd
2001 (4) SA 142 (SCA), which concerned the validity of two leases of immovable property
concluded between the respondent and a provincial department without the provincial
tender board having arranged the hiring of the premises as was required by statute, this
court concluded that the leases were invalid. In giving the unanimous judgment of this
court, Marais JA, after outlining the applicable statutory tender requirements, said the
following:10
‘ As to the mischief which the Act seeks to prevent, that too seems plain enough. It is to eliminate
patronage or worse in the awarding of contracts, to provide members of the public with
opportunities to tender to fulfil provincial needs, and to ensure the fair, impartial, and independent
exercise of the power to award provincial contracts. If contracts were permitted to be concluded
without any reference to the tender board without any resultant sanction of invalidity, the very
mischief which the Act seeks to combat could be perpetuated.
As to the consequences of visiting such a transaction with invalidity, they will not always be harsh
and the potential countervailing harshness of holding the province to a contract which burdens the
taxpayer to an extent which could have been avoided if the tender board had not been ignored,
cannot be disregarded. In short, the consequences of visiting invalidity upon non-compliance are
not so uniformly and one-sidedly harsh that the legislature cannot be supposed to have intended
invalidity to be the consequence. What is certain is that the consequence cannot vary from case to
case. Such transactions are either all invalid or all valid. Their validity cannot depend upon whether
or not harshness is discernible in the particular case.’
[16] I therefore have no difficulty in concluding that a procurement contract for municipal
8 Section 80(2) of the Systems Act.
9 At [30].
10 At [8] and [9].
services concluded in breach of the provisions dealt with above which are designed to
ensure a transparent, cost effective and competitive tendering process in the public
interest, is invalid and will not be enforced.
[17] Faced with this reality, counsel for the respondent argued, that while the removal of
refuse is a service rendered by a municipality, it had not been shown that the service
which the respondent provided was a ‘municipal service’ as envisaged by the procurement
provisions in the Systems and Financial Management Acts.
[18] The respondent’s argument in this regard was based on the fact that both Acts
contain identical definitions of ‘basic municipal services’ and ‘municipal services’. The
former is defined as a ‘municipal service that is necessary to ensure an acceptable and
reasonable quality of life and, if not provided, would endanger public health or safety or the
environment’ while the latter is defined as ‘a service that a municipality in terms of its
powers and functions provides or may provide to or for the benefit of the local community’
irrespective of whether it does so by way of an internal or external mechanism or whether
or not fees, charges or tariffs are levied in respect of such service. The respondent’s
argument is that as the statutory procurement processes I have dealt with spoke only of
‘municipal services’ and not of ‘basic municipal services’, a municipality was not bound to
apply such processes in the procurement of the latter – and as the refuse removal service
the respondent had agreed to perform may well be such a basic service, it had not been
shown that the appellants had been obliged to follow those processes in awarding the
contract to the respondent.
[19] This argument was raised for the first time when the appeal was called in this court.
As it is an issue of both fact and law, it should properly have been raised by the
respondent in its papers in the court below and for that reason alone the respondent
should not be entitled to raise it now: see Minister of Land Affairs and Agriculture and
Others v D & F Wevell Trust and Others 2008 (2) SA 184 (SCA) para 43. But in any event,
as a matter of law it is ill-founded. Not only does s 217 of the Constitution not draw any
difference between “municipal services” and “basic municipal services” in obliging a
municipality contracting for goods and service to do so in a fair, equitable, competitive and
cost effective system, but there is no reason to think that the legislature intended basic
municipal services to be procured in any other manner to the detriment of the public and
the public purse. After all, the resources of many municipalities will be used in supplying
only basic services as defined. In addition, while s 73(1) of the Systems Act obliges a
municipality to give effect to the provisions of the Constitution, to give priority to the basic
needs of the local community and to ensure access to at least the minimum level of basic
municipal services, s 73(2) provides for municipal services to be equitable and accessible,
provided in a manner that is conducive to a prudent, economic, efficient and effective use
of available resources, be financially sustainable and be regularly reviewed. No distinction
is drawn in sub-section (2) between “basic municipal services” and “municipal services”
and, clearly, “basic municipal services” are nothing more than “municipal services” which
are provided to ensure an acceptable and reasonable quality of life – as explained in the
definition.
[20] Accordingly the legislature clearly did not intend to draw any distinction between the
processes required for the provision of municipal services and those for municipal services
which could be regarded as “basic”. The distinction drawn in the definition is only to
ensure that a municipality provides at least basic municipal services. Consequently, even
if the contract presently in dispute amounted to the provision of basic municipal services, it
was therefore still necessary for the prescribed procurement procedures to be followed.
[21] The refuse collection service the respondent undertook to provide was clearly a
municipal service as envisaged by the Systems Act and the Financial Management Act,
and the second appellant was therefore obliged to follow the procurement processes they
prescribed. It did not do so in awarding the contract to the respondent. Instead the
appellants decided on the terms of the contract, including payment of the amount the
respondent had quoted to provide the required services, and then made an offer to the
respondent to contract with it on those terms. All this was done without any transparent,
competitive, cost-effective or bidding process taking place and without any programme
involving community consultation or information dissemination being followed. Clearly as
this infringed the prescribed procedures I have mentioned, the contract was invalid: with
the concomitant result that it could not be validly extended and the second appellant was
not bound thereby beyond the end of June 2007.
[22] Despite this, the respondent raised, both in the court a quo and in the heads of
argument, what effectively amounts to an objection in limine based on the contention that it
was an innocent party who had done nothing wrong but had merely accepted the
appellants’ offer whereas the appellants had failed to follow the municipal procedures that
bound them. The respondent therefore argued that the appellants were not entitled to bring
proceedings that would result in them gaining an advantage from their own unlawful
conduct to the prejudice of the respondent.
[23] This argument cannot be upheld. This court has on several occasions stated that,
depending on the legislation involved and the nature and functions of the body concerned,
a public body may not only be entitled but also duty bound to approach a court to set aside
its own irregular administrative act: see Pepcor Retirement Fund v Financial Services
Board 2003 (6) SA 38 (SCA) para 10. Consequently, in Rajah & Rajah (Pty) Ltd and
Others v Ventersdorp Municipality and Others 1961 (A) SA 402 (A) at 407D-E it held that
the interest a municipality had to act on behalf of the public entitled it to approach a court
to have its own act in granting a certificate to obtain a trading licence declared a nullity.
Similarly, in Transair (Pty) Ltd v National Transport Commission and Another 1977 (3) SA
784 (A) at 792H-793G this court held that an administrative body which held wide powers
of supervision over air services to be exercised in the public interest, had the necessary
locus standi to ask a court to set aside a licence it had irregularly issued. Finally, in
Premier, Free State and Others v Firechem Free State (Pty) Ltd, supra, Schutz JA, in
giving the unanimous judgment of this court, concluded that ‘the province [the appellant]
was under a duty not to submit itself to an unlawful contract and [was] entitled, indeed
obliged, to ignore the delivery contract and to resist [ the respondent’s] attempts at
enforcement’.11
[24] In the present case, the contract in issue was concluded by a body created to serve
the citizens of the country who live and work within its municipal area, and which under s
73 of the Systems Act is obliged to see to the needs of the local community and to provide
municipal services in a manner ‘conducive to . . . the prudent, economic, efficient and
effective use of available resources’. The contract in question was concluded in order to
11 Supra at [36].
provide a service to the second appellant’s local community and, of course, payments
due thereunder were to be met by the use of public funds. In these circumstances, I have
no hesitation in concluding that the appellants were entitled to raise the alleged invalidity of
the contract and to seek to have it set aside.
[25] This brings me to another issue raised by the respondent for the first time during the
appeal. The thrust of the argument of respondent’s counsel was this: the award of a
municipal contract of the nature of that in the present case constituted ‘administrative
action’ as envisaged by the Promotion of Administrative Justice Act 3 of 2000 (commonly
known as ‘PAJA’); the appellants should have brought review proceedings under PAJA to
set aside such action; the appellants failed to do so and their counter-application could not
be regarded as such, not only as it was never intended to be a review but as certain facts
relevant to a review had not been canvassed; thus not only had the appellants
misconceived their defence to the main application but as the award of the contract to the
respondent could not be reviewed on the present papers, the contract had to be regarded
as binding; consequently the appellants had no defence to the relief that had been sought
against them and their counter-application had also to be dismissed.
[26] While I accept that the award of a municipal service amounts to administrative action
that may be reviewed by an interested third party under PAJA, it may not be necessary to
proceed by review when a municipality seeks to avoid a contract it has concluded in
respect of which no other party has an interest. But it is unnecessary to reach any final
conclusion in that regard. If the second respondent’s procurement of municipal services
through its contract with the respondent was unlawful, it is invalid and this is a case in
which the appellants were duty bound not to submit to an unlawful contract but to oppose
the respondent’s attempt to enforce it.12 This it did by way of its opposition to the main
application and by seeking a declaration of unlawfulness in the counter-application. In
doing so it raised the question of the legality of the contract fairly and squarely, just as it
would have done in a formal review. In these circumstances, substance must triumph over
form. And while my observations should not be construed as a finding that a review of the
award of the contract to the respondent could not have been brought by an interested
12 Compare Premier, Free State and Others v Firechem Free State (Pty) Ltd supra, at [36].
party, the appellants’ failure to bring formal review proceedings under PAJA is no reason
to deny them relief.
[27] In the light of what I have set out above, the respondent’s application in the court
below should have been dismissed and the appellants’ counter-application upheld. The
appeal must accordingly succeed.
[28] That brings me to the question of costs. Counsel for the respondent drew attention
to the appellants’ failure at the outset of the dispute to draw the respondent’s attention to
the precise statutory provisions which had been breached. In the light of this failure, and
the allegation that the respondent was the innocent victim of the appellants’ failure to
comply with the prescribed procedures, he submitted it would be equitable for each party
to pay its own costs of all stages, including the costs of the appeal. In the alternative, he
submitted that the respondent should only bear costs with effect from the stage the
appellants had pointed out the precise respects in which the contact breached the
prescribed statutory procedures.
[29] However, as appears from the letter of 4 June 2007 the respondent was alerted at
the outset that the contract had not been concluded in compliance with the necessary
statutory requirements and while the appellants did not spell out in chapter and verse the
provisions upon which they relied for their contention that the contract was invalid, I do not
think it was incumbent upon them to do so. Rather it was for the respondent, alerted to the
suggestion that statutory procedures had not been complied with, to fully investigate the
validity of the contract before rushing into court to enforce it. In any event, even when the
appellants did explain why they maintained that the contract was invalid, the respondent
persisted in contending otherwise, up to and including the appeal, and there is therefore
no reason to think its attitude would have been any different had the appellants fully
explained their case before proceedings commenced. There therefore seems to me to be
no reason why the costs, both in the court below and in this court, should not follow the
event.
[30] There is, however, another issue relating to costs that needs to be considered. The
record in this appeal is replete with unnecessary documents, and contains both the heads
of argument filed during previous proceedings as well as a transcription of the lengthy
argument of counsel in the court below. None of this ought to have been included in the
record and the fact that it has, has resulted in at least half of the record being wholly
unnecessary. This not only inflates the high costs of litigation but also leads to a complete
waste of valuable judicial time and inconvenience to members of this court.
[31] This court has previously expressed its displeasure at records that include
unnecessary documents of this kind13 and has, where appropriate, ordered costs to be
paid by attorneys de bonis propriis14 or disallowed the appellant’s attorney’s costs of
perusing the record15. In the present matter, the exigencies of the case will be met by
allowing the appellants only one half of their costs of preparing, lodging and perusing the
record.
[32] In the result, the following order is made:
1. The appeal succeeds with costs. Such costs are to include the costs of two counsel
but shall exclude one half of the appellants’ costs of preparing, perusing and
lodging the appeal record.
2. The order in the court a quo is set aside and replaced with the following:
‘(a) The application is dismissed with costs.
(b) The counter-application is granted with costs and the contract ‘ZEV 2’ concluded
on 25 June 2006 is declared to be null and void.
(c) The costs shall include the costs of two counsel in each case’.
________________________
L E LEACH
ACTING JUDGE OF APPEAL
13 Eg Neon And Cold Cathode Illuminations (Pty) Ltd v Ephron 1978 (1) SA 463 (A) at 469D-G.
14 Eg Absa Bank v Davidson 2000 (1) SA 1117 (SCA) at [28].
15 Eg Venter v Bophuthatswana Transport Holding (Edms) Bpk 1997 (3) SA 374 (SCA) at 390G-391B.
APPEARANCES:
FOR APPELLANTS:
M R MADLANGA SC and R M DILIZO
INSTRUCTED BY:
B.B. LINYANA ATTORNEYS,
c/o V.V. MSINDO & ASSOCIATES, MTHATHA
PONOANE ATTORNEYS, BLOEMFONTEIN
FOR RESPONDENT:
M H WESSELS SC
INSTRUCTED BY:
MDUMA MJOBO ATTORNEYS,
c/o FIKILE NTAYIYA & ASSOCIATES, MTHATHA
JOE SCHOEMAN ATTORNEYS, BLOEMFONTEIN
|
Supreme Court of Appeal of South Africa
MEDIA STATEMENT
From:
The Registrar, Supreme Court of Appeal
Date:
Friday 29 May 2009
Status:
Immediate
The respondent was awarded a contract by the appellants to provide a municipal
refuse removal service. The contract had been concluded without due compliance with
statutory procurement procedures.
Although a high court had found the contract to be valid and enforceable, the
appellants contended otherwise.
The Supreme Court of Appeal today ruled that the contract was invalid and could not
be extended. The appellants appeal was upheld with costs.
--ends--
|
3482
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1087/2019
In the matter between:
THE MEC FOR HEALTH, WESTERN CAPE
APPELLANT
and
MPUMELELO SIDWELL COBOZA RESPONDENT
Neutral citation:
MEC for Health, Western Cape v Coboza (1087/2019) [2020]
ZASCA 165 (10 December 2020)
Coram:
VAN DER MERWE, MOLEMELA and DLODLO JJA and SUTHERLAND
and UNTERHALTER AJJA
Heard: 23 November 2020
Delivered:
This judgment was handed down electronically by circulation to the parties’
legal representatives by email. It has been published on the Supreme Court
of Appeal website and released to SAFLII. The date and time for hand-down
is deemed to be 10h00 on 10 December 2020.
Summary:
Extinctive prescription – s 12(3) of Prescription Act 68 of 1969 – involves
two enquiries in respect of facts from which the debt arises (primary facts) – first:
determination of primary facts – second: ascertainment of when primary facts were known
or should reasonably have been known.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Baartman J sitting
as court of first instance):
The appeal is dismissed with costs.
JUDGMENT
Van der Merwe JA (Molemela and Dlodlo JJA and Sutherland and Unterhalter AJJA
concurring)
[1] On 8 July 2016, the respondent, Mr Mpumelelo Sidwell Coboza, instituted an action
in the Western Cape High Court, Cape Town against the appellant, the Member of the
Executive Council for Health, Western Cape. The respondent alleged that he had suffered
damages in the amount of R4 750 000 as a result of the negligence of the medical staff
employed by the appellant at specified provincial hospitals. In a special plea, the appellant
contended that the respondent’s claim had prescribed and that he had failed timeously to
comply with the provisions of s 3 of the Institution of Legal Proceedings Against Certain
Organs of State Act 40 of 2002. By agreement, Baartman J determined the special plea
separately. She dismissed it with costs, but granted leave to the appellant to appeal to this
court.
[2] The following common cause facts provide the background for the adjudication of
the appeal. During May or June 1998, the respondent underwent a surgical procedure at
Somerset Hospital to drain a rectal abscess. For this purpose, a spinal anaesthetic was
administered. Subsequent to this procedure, the respondent experienced pain in the area
where the spinal anaesthetic had been administered and found it difficult to walk. During
1998 and 1999 he attended Tygerberg Hospital on various occasions for treatment of these
symptoms. On 15 July 1999, the respondent underwent further surgery at Tygerberg
Hospital, where a T7/T8 laminectomy was performed. Following this, he was treated at Karl
Bremer Hospital for a period of three months. However, his neurological condition
continued to deteriorate. Despite the performance of a further surgical procedure at
Tygerberg Hospital on 27 September 2005, when a cysto-peritoneal shunt was introduced,
the respondent’s condition worsened further. By November 2005 he tragically was in an
irreversible paraplegic condition.
[3] In the light of the conclusion that I have reached, it is not necessary to consider the
alleged non-compliance with the Institution of Legal Proceedings Against Certain Organs
of State Act. The plea of prescription focused on the epidural anaesthesia that had been
performed during May/June 1998. The appellant pleaded that by September 2005 at the
latest, the respondent had been ‘in possession of sufficient facts to cause him, on
reasonable grounds, to think that the cause of his walking difficulties could possibly be
attributed to the fault of the medical staff who drained his abscess’. This was the foundation
of the appellant’s averment that prescription had commenced to run during 1998 or 1999
or, at the latest, during September 2005. Therefore, so the plea of prescription concluded,
the respondent’s claim had prescribed well before the summons was issued.
[4] At the hearing of the special plea, the parties placed a statement of agreed facts
before the court. The appellant correctly accepted the onus to prove prescription but led no
evidence. Only the respondent testified. The gist of his evidence was that until January
2016 he had been unaware that he might have a claim based on substandard medical
treatment. He did concede, however, that he had been informed during 1998 that ‘the
problem lay with the spinal anaesthetic and that there was water on his spinal cord that
needed to be drained’.
[5] In the light of the allegations in the special plea, the appellant regarded this
concession as decisive of the matter. The court a quo was not persuaded. It said:
‘This is not the equivalent of knowing that the negligent application of the anaesthetic had caused
the water on his spine.
. . .
There is no basis to suggest that the plaintiff knew or had reasonable grounds to suspect that the
negligent application of the spinal anaesthetic had caused the water on his spine.’
[6] Prescription begins to run when the debt in question is due, that is, when it is owing
and payable. Section 12(3) of the Prescription Act 68 of 1969 provides:
‘A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor
and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising reasonable care.’
[7] In the present matter only the requirement of knowledge of ‘the facts from which the
debt arises’ needs to be considered. These are the minimum essential facts that the plaintiff
must prove in order to succeed with the claim. See Truter and Another v Deysel [2006]
ZASCA 16; 2006 (4) SA 168 (SCA) paras 16, 18, 19 and 22; Minister of Finance and Others
v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA) para 17
and the footnotes thereto; Mtokonya v Minister of Police [2017] ZACC 33; 2017 (11) BCLR
1443 (CC); 2018 (5) SA 22 (CC) para 48. Legal conclusions, such as the invalidity of a
contract or that the delictual elements of negligence or wrongfulness have been
established, are not facts. Neither is the evidence necessary to prove the essential facts.
See Truter v Deysel paras 17 and 20 and Mtokonya paras 44-45 and 50-51.
[8] Once the facts from which a debt arose (primary facts) have been determined, the
enquiry turns to the plaintiff’s knowledge of the primary facts. Section 12(3) therefore brings
into play a further set of facts. They inform the determination of when the plaintiff had actual
knowledge of the primary facts or objectively should reasonably have had knowledge
thereof. Although there may be some overlapping of facts, it is important to bear in mind
that these are distinct enquiries.
[9] The facts in Links v Department of Health, Northern Province [2016] ZACC 10; 2016
(5) BCLR 656 (CC); 2016 (4) SA 414 (CC) provide an illustration of this. There the plaintiff
permanently lost the use of his left hand and forearm subsequent to medical treatment. The
Constitutional Court had to determine whether the plaintiff’s medical negligence claim had
prescribed. In para 46 of the judgment reference was made to an essential primary fact,
namely the factual cause of the plaintiff’s condition. It was not alleged that the plaintiff had
actual knowledge thereof at the relevant time. Paragraph 47, therefore, dealt with when the
plaintiff ought reasonably to have had knowledge of this primary fact. The question was
whether the plaintiff had for more than three years prior to the service of the summons been
in possession of sufficient facts to cause him on reasonable grounds to think that his injuries
were due to the fault of the medical staff and to seek advice. In Links this question was
answered in the negative. The same question, I venture to say, was answered in the
affirmative in Loni v MEC for Health, Eastern Cape (Bhisho) [2018] ZACC 2; 2018 (6) BCLR
659 (CC); 2018 (3) SA 335 (CC). It is not my understanding that the Constitutional Court in
either Links or Loni considered that the legal conclusion as to negligence constitutes one
of the primary facts from which the debt arises.
[10] It follows that the court a quo erred in requiring knowledge of negligence as a
prerequisite for the running of prescription to commence. Importantly, however, regard had
to be had to the alleged factual causes of the respondent’s paralysis. These were
indispensable primary facts. They had to be gleaned from the respondent’s particulars of
claim. What had to be decided was whether the debt relied upon in the particulars of claim,
had prescribed.
[11] The particulars of claim related the medical procedures and treatment that I have
alluded to in para 2 above. After alleging that the appellant’s servants ‘had an obligation to
provide plaintiff with professional medical advice, service and treatment with the skill,
diligence and care reasonably required of doctors in their respective fields of specialisation
and of hospital employees’, the particulars of claim proceeded as follows:
‘In breach of the duty of care owed by defendant and/or his servants to plaintiff, defendant and/or
his servants were negligent in failing to timeously administer the appropriate treatment reasonably
required by plaintiff when he attended the said hospitals subsequent to the surgery of May/June
1998, in circumstances where timeous intervention would have salvaged his neurological condition.
As a consequence of these delays and defendant’s breach of the duty of care owed to plaintiff,
plaintiff suffered neurological damage and was rendered a motor and sensory incomplete
paraplegic.’
[12] It is quite clear that the respondent alleged that the failure to timeously administer
the appropriate treatment subsequent to the surgery of May/June 1998, had caused his
condition. Even if the particulars of claim could be read generously to include the May/June
1998 spinal anaesthetic as a cause of his paraplegic condition, they clearly alleged much
more. However, the particulars of claim did not specify the ‘appropriate treatment’ nor when
it should timeously have been administered.
[13] The appellant could have acquired this particularity under various provisions of the
Uniform Rules of Court, but did not. The consequence was that prescription had been
raised in the air, without reference to the relevant primary facts upon which the respondent’s
claim was founded. Because these facts were not pleaded, it could obviously not be
determined when the respondent knew the primary facts or should reasonably have known
them. In the result the determination of the plea of prescription was an exercise in futility.
The court a quo should have dismissed the special plea on this ground and it is on this
basis that the appeal must fail.
[14] The appeal is dismissed with costs.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances:
For appellant:
B Joseph SC, with him N Kahn
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein
For respondent:
C Webster SC
Instructed by:
Jonathan Cohen & Associates, 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
10 December 2020
STATUS
Immediate
MEC for Health, Western Cape v Coboza (Case no 1087/2019) [2020] ZASCA 165
(10 December 2020)
Please note that the media summary is intended for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant, the Member of
the Executive Council for Health, Western Cape, against the decision of the Western Cape Division of
the High Court, Cape Town (the high court).
During May or June 1998, the respondent, Mr Mpumelelo Sidwell Coboza, underwent a surgical
procedure at Somerset Hospital where a spinal anaesthetic was administered. Subsequent to this
procedure, the respondent experienced pain in the area where the spinal anaesthetic had been
administered and found it difficult to walk. On various occasions thereafter the respondent underwent
treatment and procedures at provincial hospitals in the Western Cape in respect of these symptoms,
however, his condition continued to deteriorate until November 2005 when he was in an irreversible
paraplegic condition. In July 2016 the respondent instituted an action in the high court against the
appellant for damages based on the negligence of the medical staff employed by the appellant at
specified provincial hospitals. In a special plea, the appellant contended that the respondent’s claim
had prescribed. The special plea was determined separately; it was dismissed, but the high court
granted leave to appeal to this court.
The SCA held that prescription begins to run when the debt in question is due. Section 12(3) of the
Prescription Act 68 of 1969 provides that ‘[a] debt shall not be deemed to be due until the creditor has
knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a
creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable
care.’ In the present matter, the SCA held that only the requirement of knowledge of ‘the facts from
which the debt arises’ needed to be considered. It noted that legal conclusions, such as the invalidity
of a contract or that the delictual elements of negligence or wrongfulness had been established, were
not facts. Neither was the evidence necessary to prove the essential facts. It held that once the facts
from which a debt arose (primary facts) have been determined, the enquiry turns to the plaintiff’s
knowledge of the primary facts.
The SCA held that in order to determine the issue, regard ought to be had to the alleged factual causes
of the respondent’s paralysis, which were indispensable primary facts that had to be gleaned from the
respondent’s particulars of claim. The SCA held that it was quite clear that the respondent alleged in
his particulars of claim that the failure to timeously administer the appropriate treatment subsequent to
the surgery of May/June 1998, had caused his condition. Even if the particulars of claim could be read
generously to include the May/June 1998 spinal anaesthetic as a cause of his paraplegic condition,
they clearly alleged much more. However, the particulars of claim did not specify the ‘appropriate
treatment’ nor when it should timeously have been administered. The appellant could have acquired
this particularity under various provisions of the Uniform Rules of Court, but did not. The consequence
was that prescription had been raised in the air, without reference to the relevant primary facts upon
which the respondent’s claim was founded. Because these facts were not pleaded, it could obviously
not be determined when the respondent knew the primary facts or should reasonably have known them.
In the result the determination of the plea of prescription was an exercise in futility. In the circumstances,
the appeal was dismissed with costs.
|
2216
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No 523/07
In the matter between:
BONGANI DUBE
First appellant
LODRICK ALLEN MKHIZE
Second appellant
NTOBEKO NDHLOVU
Third appellant
and
THE STATE
Respondent
Neutral citation: Dube v The State (523/07) [2009] ZASCA 28 (30
March 2009)
Coram:
Mthiyane, Lewis, Cachalia, Snyders et Mhlantla JJA
Heard:
13 March 2009
Delivered: 30 March 2009
Summary: Special entry ─ recusal on grounds of appearance of bias.
Test for bias ─ judicial officer's failure to recuse himself
tainted the appeal process ─ order set aside ─ appeal remitted
for rehearing.
ORDER
____________________________________________________________
On appeal from: Bophuthatswana High Court (Mogoeng JP and Gura J
sitting as a court of appeal).
(a)
The appeal succeeds to the extent that the special entry is upheld;
(b)
The order of the court a quo is set aside and replaced with the
following:
'The appeal is remitted to the High Court for re-hearing before a
differently constituted Full Bench.'
JUDGMENT
___________________________________________________________
MHLANTLA JA (Mthiyane, Lewis, Cachalia and Snyders JJA
concurring)
[1] On 26 March 2002 at approximately 09h15 the First National Bank
in Koster was robbed of R119 000 by four armed men. The appellants
were subsequently arrested as suspects and charged in the Regional
Court, Rustenburg with one count each of robbery with aggravating
circumstances. They were convicted and sentenced to 16 years'
imprisonment each. Their appeal to the Bophuthatswana High Court,
before Mogoeng JP and Gura J against both conviction and sentence was
based on several grounds, including alleged irregularities in the
proceedings, and whether the identity of the appellants had been proved.
The appeal was dismissed on all bases. Mr Dube, the first appellant has
since died. The appeal to this court is with the leave of the court a quo.
[2] This appeal is based on a special entry relating to an alleged
irregularity in the court a quo, in terms of s 317 of the Criminal Procedure
Act 51 of 1977, as well as on the merits. Only the issue relating to the
special entry was argued before us.
[3] Accordingly this judgment deals only with that issue ─ whether the
Judge President should have recused himself mero motu because his wife,
a state advocate, represented the State in the appeal before the court; and
if so, whether his failure to recuse himself constituted an irregularity
which vitiated the appeal proceedings. In answering these questions it is
necessary to sketch briefly the background events leading to the
application for a special entry.
[4] According to counsel for the appellants, he and the correspondent
attorney learnt on the day of the appeal hearing that the Judge President
would be one of the judges presiding over the appeal. At that stage,
counsel was aware that Mrs Mogoeng, the Judge President's wife, was
arguing the appeal on behalf of the State. The appellants were not in court
during the hearing. Their counsel did not foresee any problems and never
considered the possibility of asking the Judge President to recuse himself
on the basis that his wife was representing the State. He did not, at the
time of arguing, believe that it was necessary to request a recusal because
he had been involved previously in a full bench appeal presided over by
Judge President Mogoeng and at which Mrs Mogoeng represented the
State – S v Baletseng 2005 (2) SACR 28 (B). That appeal was decided in
favour of the appellants.
[5] After the appeal was dismissed in the present matter counsel met
the appellants in prison to discuss the judgment and outcome with them.
It was at that stage that the appellants enquired about the similarity of the
surnames between that of the Judge President and the state advocate.
Counsel thereupon informed them that the two were in fact husband and
wife. The appellants were not comfortable with this revelation. This
eventually led to the application for a special entry on the basis that the
appellants had a perception of bias on the part of the Judge President. The
application for a special entry was granted by the full bench.
[6] The test applicable to determine whether a judicial officer is
disqualified from hearing a case by reason of a reasonable apprehension
of bias was enunciated in President of the Republic of South Africa and
others v South African Rugby Football Union and others.1 In that case the
Constitutional Court said:
'It follows from the foregoing that the correct approach to this application for the
recusal of members of this court is objective and the onus of establishing it rests upon
the applicant. The question is whether a reasonable, objective and informed person
would on the correct facts reasonably apprehend that the judge has not or will not
bring an impartial mind to bear on the adjudication of the case, that is a mind open to
persuasion by the evidence and the submissions of counsel. The reasonableness of the
apprehension must be assessed in the light of the oath of office taken by the judges to
administer justice without fear or favour; and their ability to carry out that oath by
reason of their training and experience. It must be assumed that they can disabuse
their minds of any irrelevant personal beliefs or predispositions. They must take into
account the fact that they have a duty to sit in any case in which they are not obliged
to recuse themselves. At the same time, it must never be forgotten that an impartial
judge is a fundamental prerequisite for a fair trial and a judicial officer should not
hesitate to recuse herself or himself if there are reasonable grounds on the part of a
1 1999 (4) SA 147 (CC) para 48. This test was considered with approval in SACCAWU v Irvin &
Johnson Ltd (Seafoods Division Fish Processing) 2000 (3) SA 705 (CC), and in Locabail (UK) Ltd v
Bayfield Properties Ltd and another [2000] 1 All ER 65 (CA) at 76F to 77A.
litigant for apprehending that the judicial officer, for whatever reasons, was not or
will not be impartial.'
[7] Where the claimed disqualification is based on a reasonable
apprehension, the court has to make a normative evaluation of the facts to
determine whether a reasonable person faced with the same facts would
entertain the apprehension. The enquiry involves a value judgement of
the court applying prevailing morality and common sense.2 A cornerstone
of our legal system is the impartial adjudication of disputes which come
before our courts and tribunals. What the law requires is not only that a
judicial officer must conduct the trial open-mindedly, impartially and
fairly but that such conduct must be manifest to all those who are
concerned in the trial and its outcome, especially the accused.3
[8] It is settled law that not only actual bias but also the reasonable
perception of bias disqualifies a judicial officer from presiding (or
continuing to preside) over judicial proceedings. Once this is established
the disqualification is so complete that continuing to preside after recusal
should have occurred renders the further proceedings a nullity.4 This dual
aspect is captured in the oft repeated words that justice must not only be
done, but must manifestly be seen to be done.5
[9] The Bangalore Principles of Judicial Conduct6 are a comprehensive
statement of ethical principles. The second value identified by these
principles is that of 'impartiality'. The principle is articulated as follows:
2 S v Basson 2004 (6) BCLR 620 (CC) para 53.
3 S v Roberts 1999 (4) SA 915 (SCA) para 25.
4 Take and Save Trading CC and others v Standard Bank of SA Ltd 2004 (4) SA 1 (SCA) at para 5.
5 R v Sussex Justices, ex parte McCarthy [1924] 1 KB 256 at 259, per Lord Hewart CJ.
6 The Bangalore Principles were adopted by the Judicial Group on Strengthening Judicial Integrity, at a
meeting of Chief Justices held in The Hague, Netherlands on 25-27 November 2002. The principles are
intended to establish standards for ethical conduct of judges and are designed to afford the judiciary a
framework for regulating judicial conduct.
'Impartiality is essential to the proper discharge of the judicial office. It
applies not only to the decision itself but also to the process by which the
decision is made'.
[10] 'Impartiality is the fundamental quality required of a judge and the core
attribute of the judiciary. It must exist both as a matter of fact and as a matter of
reasonable perception. If partiality is reasonably perceived, that perception is likely to
leave a sense of unease, grievance and of injustice having been done, thereby
destroying confidence in the judicial system. The perception of impartiality is
measured by the standard of a reasonable observer. The perception that a judge is not
impartial may arise in a number of ways, for instance, by a perceived conflict of
interest; by the judge's behaviour on the bench, or by the judge's out-of-court
associations and activities. A judge must therefore avoid all activity that suggests that
the judge's decision may be influenced by external factors such as the judge's personal
relationship with a party or interest in the outcome.'7
[11] It is helpful to refer to other jurisdictions to ascertain how the rule
is applied. In some states of the United States of America, the rule is
mandatory when a judge's spouse or relative to the third degree is a party.
The Code of Judicial Conduct in Arkansas for example provides that a
judge should disqualify himself or herself in a proceeding in which his or
her impartiality might reasonably be questioned, including but not limited
to instances where: he or she has a personal bias or prejudice concerning
a party or personal knowledge of disputed evidentiary facts concerning
the proceeding, where he or she or his or her spouse, or a person within
the third degree or relationship to either of them, or the spouse of such
person is acting as a lawyer in the proceeding. A judge disqualified in
terms of the Code, may, instead of withdrawing, disclose on the record
the basis of his disqualification. If based on such disclosure and if the
7 Section 52 of the Commentary on the Bangalore Principles.
parties and lawyers independently of the judge's participation all agree in
writing that the judge's relationship is immaterial or that his financial
interest is not substantial, the judge may participate in the proceeding.
The agreement has to be incorporated in the record of the proceedings.
[12] In this country a judicial officer was held to be disqualified in a
case where his wife was called as a witness. In S v Sharp8 the
complainant was the magistrate's wife. He presided in a trial where his
wife testified. The court on review held that the magistrate had a direct
personal interest in the outcome of the proceedings and that it was
difficult to conceive of a more obvious example necessitating recusal.
[13] The rule is clear: generally speaking a judicial officer must not sit
in a case where he or she is aware of the existence of a factor which
might reasonably give rise to an apprehension of bias. The rationale for
the rule is that one cannot be a judge in one's own cause. Any doubt must
be resolved in favour of recusal. It is imperative that judicial officers be
sensitive at all times. They must of their own accord consider if there is
anything that could influence them in executing their duties or that could
be perceived as bias on their part. It is not possible to define or list factors
that may give rise to apprehension of bias – the question of what is proper
will depend on the circumstances of each case.
[14] In situations where the judge has a relationship with a party or a
legal representative appearing before him or her, it is always appropriate
for the judge to consider the degree of intimacy between him or herself
and the person concerned. The more intimate the relationship, the greater
the need for recusal. In the case such as the present, where there is a close
8 2002 (1) SACR 360 (Ck) para 21.
relationship between the presiding officer and one of the legal
representatives, it appears to be undesirable if not improper for such
judicial officer to sit in the matter. No general rule as to the kinds of
relationship that should require recusal need be laid down, however,
given the clarity of the test in SARFU.
[15] There may, of course, be instances where it is difficult to avoid
closely connected people working in a matter. The preferred route would
then be to bring in other judicial officers or legal representatives from
different jurisdictions. If it is not feasible then the relationship must be
brought to the attention of the parties and their consent canvassed before
the commencement of the hearing. If such consent is given it must be
entered into the record.
[16] I turn now to consider the circumstances relating to the special
entry in this appeal. Counsel for the respondent submitted that the
perception of bias could not be established because counsel for the
appellants had been aware of the relationship between the Judge President
and the state advocate. This argument in my view is without merit. The
test set out in SARFU does not relate to counsel but to the litigant. It is the
litigant who must entertain a reasonable apprehension of bias for the
disqualification to be sustained. Although counsel was aware of the
relationship concerned before the hearing, it is common cause that he had
not discussed the issue with the appellants. The appellants learnt for the
first time about the relationship when the judgment on appeal was shown
to them. Consequently the fact that their counsel, on the basis of what had
occurred in Baletseng, did not object to the sitting of the Judge President,
is irrelevant to the present enquiry. In that case the relationship of the
Judge President and his wife was not raised. It is not clear what would
have happened if it had been.
[17] In making the special entry, the learned Judge President was alive
to this issue: He said:
'Be that as it may, we are inclined to allow the special entry irrespective of whether it
is the applicants or Mr Shapiro or both who have the perception that the Presiding
Judge or both judges are biased against the applicants. We do so because we believe
that a perception by a layperson that a husband and wife may, in the secrecy of their
bedroom, inadvertently or deliberately find themselves talking about the case in which
they are involved cannot be said to be frivolous or ridiculous. An application for the
recusal of a presiding officer in the position of the Presiding Judge in this matter
cannot be said to be absurd or an abuse of process and an average right-thinking
person would, in all likelihood, sympathise with a person in the position of the
applicants in this matter.'
[18] Counsel for respondent contended that the appellants' submissions
would be persuasive if the Judge President had been sitting alone. I do not
agree with this submission. In R v Bow Street Stipendiary Magistrate, Ex
parte Pinochet Ugarte (no 2)9 a majority of the court, including Lord
Hoffman, had issued an order against Senator Pinochet. He subsequently
brought a petition to set aside the order on the basis that Amnesty
International (AI) was a party to the appeal; that AI was joined in order to
argue a particular result and that Lord Hoffman, a member of the
Appellate Committee that had heard the appeal, was a director of a
charity closely allied to AI. Lord Nolan held that in any case where the
impartiality of a judge was in question, the appearance of the matter was
just as important as the reality. The House of Lords held that Lord
Hoffman's links were such as to give the appearance that he might have
been biased against the applicant; that he had an interest in the outcome
9 [1999] 1 All ER 577; [1999] 2 WLR 272.
of the proceedings and was accordingly disqualified from sitting as a
judge in those proceedings. The previous order of the House of Lords was
set aside. Similarly in this case, the proceedings are tainted regardless of
the fact that the Judge President heard the matter with another judge and
irrespective of the fact that the Judge President did not conduct himself at
the hearing in a manner that gave rise to a reasonable suspicion of bias.
[19] It seems to me that a reasonable litigant would have been justified
in entertaining a reasonable perception of bias on the part of the Judge
President given that he is married to counsel for the State. This does not
of course mean that bias on the part of the Judge President was
established. Nor does this judgment seek to lay down a rule that in every
case in which a judge is related to a legal representative he or she will be
disqualified from presiding or sitting. It is as I have said, a question that
will have to be evaluated from case to case with due regard to the
principles laid down in SARFU and other pertinent cases.
[20] For the above reasons the failure of the Judge President to recuse
himself when his wife presented argument for the State in the court below
constituted an irregularity which vitiated the appeal proceedings. In the
result the appeal succeeds to the extent that the special entry must be
upheld. The order of the court a quo must be set aside and the appeal
referred back for re-hearing before a differently constituted bench.
[21] In the result the following order is made:
(a)
The appeal succeeds to the extent that the special entry is upheld.
(b)
The order of the court a quo is set aside and replaced with the
following:
'The appeal is remitted to the High Court for re-hearing before a
differently constituted Full Bench.'
_______________
N Z MHLANTLA
JUDGE OF APPEAL
Appearances:
For Appellant:
P I Shapiro
Instructed by:
Ms Ester Resnik, Observatory, Johannesburg
Giorgi & Gerber Attorneys, Bloemfontein
For Respondent:
G S Maema
Deputy Director of Public Prosecutions, Mafikeng
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
30 March 2009
STATUS: Immediate
B DUBE AND OTHERS & THE STATE CASE NO 523/07
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The SCA granted an application in favour of the appellants for a special entry
which related to the question whether the Judge President of the
Bophuthatswana High Court who presided over an appeal against the appellants
should have recused himself. The Judge President had sat with another judge in
an appeal in which the advocate who represented the State was his wife.
The complaint was that because of the close relationship between the Judge
President and his wife, he would not have brought an impartial mind to bear on
the adjudication of the case before him.
The SCA accepted that it was not only the actual bias that would disqualify a
judicial officer from sitting in a case but also a reasonable perception of bias.
The court however accepted that in the present case no actual bias had been
proved against the Judge President but considered that the reasonable
perception entertained by the appellants was sufficient.
The court accordingly granted the application and made an order remitting the
matter to the Bophuthatswana High Court for a re-hearing of the appeal before a
re-constituted Full Bench.
- - ends --
|
2478
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 497/2013
In the matter between:
MAPOSA FRANS MADIBA
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Madiba v The State (497/2013) [2014] ZASCA 13 (20
March 2014)
Coram:
Ponnan JA and Swain and Mathopo AJJA
Heard:
5 March 2014
Delivered:
20 March 2014
Summary:
Appeal against conviction on charges of attempted rape
and rape dismissed – material misdirection by trial court in passing sentence –
appeal court at large to impose sentences on all counts – appeal against
sentence partially upheld.
ORDER
On appeal from Limpopo High Court, Thohoyandou (Hetisani J sitting as court
of first instance):
1 The appeals against the convictions of attempted rape and rape are
dismissed.
2 The appeal against the sentences imposed on all counts are upheld, the
sentences imposed are set aside and the appellant is sentenced to the following
terms of imprisonment:
Count 1 – attempted rape: 5 years’ imprisonment
Count 2 – kidnapping: 6 years’ imprisonment
Count 3 – rape: life imprisonment
Count 4 – murder: 35 years’ imprisonment
3 It is ordered that the sentences are to run from the date when sentence was
originally imposed being 4 May 2009.
JUDGMENT
_______________________________________________________________
Swain AJA (Ponnan JA and Mathopo AJA concurring):
[1] The appellant Mr Maposa Madiba was convicted of the crimes of
attempted rape, kidnapping, rape and murder by the Limpopo High Court
(Hetisani J) and sentenced to terms of imprisonment of 10 years, 15 years, life
and 35 years respectively in respect of each conviction. The sentences were
ordered to run concurrently. Hetisani J wrongly added that the appellant had
effectively been sentenced to 70 years’ imprisonment.
[2] The appellant was subsequently granted leave by Makhafola J to
appeal to this court against his convictions for attempted rape and rape, as well
as the sentences imposed on all counts.
[3] The salient facts forming the basis for the conviction of the appellant on
all of the counts, was that he had broken into the home of Livhuwani Mbetzi
where she was sleeping with her nine year old son Rudzani and her three year
old daughter Ratani. The appellant stated ‘Rudzani’s mother, it is long that I
wanted to have sex with you’, at which stage Rudzani ran out of their home.
The appellant then held Livhuwani and attempted to trip her but she in turn
managed to trip the appellant causing him to fall down. She then ran out of her
home chased by the appellant, leaving Ratani behind lying on the bed. The
appellant managed to grab Livhuwani outside her home and again tried to trip
her but she again succeeded in tripping the appellant, causing him to fall. This
enabled her to make good her escape. She then saw the appellant re-enter her
home but did not see him leave. A short while later in the company of other
persons she returned to her home only to find that Ratani was missing. A
search was then conducted, the police were called and the appellant was found
hiding in the bush. The appellant then pointed out the body of Ratani to the
police.
[4] The challenge advanced by counsel for the appellant against the
conviction of attempted rape of Livhuwani was that on the evidence the action
of the appellant had not reached a point where it could be said beyond
reasonable doubt that the appellant wanted to rape Livhuwani. Counsel referred
to the evidence that the appellant and Livhuwani were fully dressed, the
appellant did not touch Livhuwani’s private parts and Livhuwani had managed
to trip the appellant causing him to fall.
[5] In R v B 1958 (1) SA 199 (A) at 204 C-D Schreiner JA stated:
‘I apprehend that if a man assaults a woman in order to have intercourse with her
against her will he attempts to rape her. In my view, which I believe accords with the
general practice, the stage of attempt is reached as soon as the assault takes place
and before any direct effort is made to effect penetration.’
It is quite clear on the evidence, namely the attempt by the appellant to subdue
the complaint coupled with his utterance, that this stage had been reached and
there is accordingly no basis to interfere with the conviction of attempted rape.
When faced with this authority counsel for the appellant fairly and properly
conceded that this charge had been proved against the appellant.
[6] As regards the conviction of the rape of Ratani, counsel for the
appellant submitted that there was no direct or circumstantial evidence that the
victim’s vagina was penetrated, alternatively penetrated by a penis. It was
submitted that all that was relied upon was the post mortem report conducted
on the body of Ratani as well as the photo album containing photos of Ratani’s
body at the scene.
[7] However, several witnesses including Martha Tshirana, inspector
Tshikudo and inspector Tshisudzungwane all stated that they had seen the
body of Ratani and that blood was flowing from her vagina or ‘private parts’.
This evidence appears on the photos taken of Ratani’s body contained in the
photo album. The post mortem report which was handed in by consent and
which in terms of s 212(4) of the Criminal Procedure Act 51 of 1977 (the Act)
constituted proof of its contents, states ‘large amount of blood in vulva’ and that
one of the causes of death was ‘sexual homicide’.
[8] If the State had taken the trouble to call the doctor who had performed
the post mortem to explain the contents of the report, this issue would probably
have been clarified. There appears to be a disturbing tendency on the part of
the representatives of the State not to call the doctor who conducted the post
mortem or performed an examination and completed the report, to testify.
However, there are many cases where this evidence is essential to the just
determination of a case and in many cases is of great value in assessing guilt.
[9] When regard is had to the totality of the evidence – that the appellant
wanted to rape Ratani’s mother and violently attempted to do so, but when this
failed immediately kidnapped Ratani, who was thereafter found dead, bleeding
from her vagina – taken together with the appellant’s mendacity as a witness,
and the medical evidence the only reasonable inference to be drawn is that the
appellant raped Ratani. There is accordingly no basis to interfere with the
conviction of rape. Counsel for the appellant, again, when faced with these
facts, fairly and properly conceded the charge of rape had been proved against
the appellant.
[10] Turning to the issue of the sentences imposed. This court can only
interfere with the sentence imposed by the trial court where it is vitiated by a
material misdirection or where the disparity between the sentence of the trial
court and the sentence that the appellate court would have imposed, had it
been the trial court, is so marked that it can be described as ‘shocking’,
‘startling’, or ‘disturbingly inappropriate’ (see S v Malgas 2001 (1) SACR 469
SCA at 478 E-H).
[11] It is quite clear that Hetisani J misdirected himself when he stated that
the cumulative effect of the sentence imposed was that the appellant was
sentenced to 70 years’ imprisonment. Regard being had to the fact that one of
these sentences imposed was life imprisonment, it is incomprehensible how
Hetisani J came to this conclusion.
[12] This court is accordingly at large to reconsider the sentences imposed.
As regards the sentences imposed for the convictions for attempted rape and
kidnapping of 10 years’ and 15 years’ imprisonment respectively, counsel for
the appellant and the State were agreed that these sentences should be
reduced to five and six years’ imprisonment respectively. I agree that these are
appropriate sentences in all of the circumstances.
[13] As regards the sentence of life imprisonment for the rape of Ratani,
counsel for the appellant sought to persuade us that substantial and compelling
circumstances were present, which circumstances justified the imposition of a
lesser sentence. He referred to the fact that the appellant had been assaulted
by the community at the time the appellant had pointed out the body of the
deceased and had spent one year and five months in detention awaiting trial.
He also sought to rely upon a statement made by Hetisani J when passing
sentence that the appellant was under the influence of liquor when he
perpetrated the crimes. No evidence, however, was led in this regard to justify
this conclusion. In any event, all of these factors pale into insignificance when
the brutality of the rape perpetrated by the appellant on Ratani, a three year old
girl, is considered. I am accordingly satisfied that no substantial and compelling
circumstances are present to justify the imposition of a sentence less than the
prescribed minimum sentence of life imprisonment.
[14] I turn to the sentence of 35 years imprisonment imposed by Hetisani J
for the murder of the three year old girl, Ratani. Hetisani J furnished no reasons
for imposing a lesser sentence for the murder of Ratani than he imposed for her
rape. Her murder was undoubtedly deserving of a sentence of life
imprisonment. The State, however, did not seek leave to appeal against this
sentence and in fact asked for the sentence to be confirmed. This court is
accordingly not entitled to increase the sentence (see Frank Nabolisa v The
State 2013 (2) SACR 221 (CC)).
[15] The following order is made:
1 The appeals against the convictions of attempted rape and rape are
dismissed.
2 The appeal against the sentences imposed on all counts are upheld, the
sentences imposed are set aside and the appellant is sentenced to the following
terms of imprisonment:
Count 1 – attempted rape: 5 years’ imprisonment
Count 2 – kidnapping: 6 years’ imprisonment
Count 3 – rape: life imprisonment
Count 4 – murder: 35 years’ imprisonment
3 It is ordered that the sentences are to run from the date when sentence was
originally imposed being 4 May 2009.
K G B SWAIN
ACTING JUDGE OF APPEAL
Appearances:
For the Appellant:
M Madima
Instructed by:
Thohoyandou Justice Centre
Bloemfontein Justice Centre
For the Respondent:
N R Nekhambele
Instructed by:
The Director of Public Prosecutions,
Thohoyandou
The Director of Public Prosecutions,
Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
20 March 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Madiba v The State (497/2013) [2014] ZASCA 13 (20 March 2014)
Media Statement
The appellant appealed against his conviction for the rape of a three year old child
and the attempted rape of her mother. He also appealed against the sentences
imposed for the kidnapping and murder of the child. The SCA dismissed the appeal
against the convictions, but reduced the sentences imposed in respect of the
convictions for attempted rape and kidnapping. The sentence of life imprisonment
imposed for the rape of the child was confirmed. The SCA expressed the view that a
sentence of life imprisonment and not one of 35 years’ imprisonment should have
been imposed for the murder of the child. However, in the absence of an appeal by
the State against this sentence, it was powerless to intervene. The SCA also
expressed concern at the disturbing tendency on the part of the State not to call a
doctor who performed a post mortem report or performed an examination, to give
evidence. This evidence could play a vital role in the just determination of a case.
--- Ends ---
|
2481
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 434/2013
In the matter between:
ANDRÉ FRANCOIS PAULSEN
First Appellant
MARGARETHA ELIZABETH PAULSEN
Second Appellant
and
SLIP KNOT INVESTMENTS 777 (PTY) LIMITED Respondent
Neutral citation: Paulsen v Slip Knot Investments (434/13) [2014]
ZASCA 16 (25 March 2014)
Coram:
MPATI P, SHONGWE, WALLIS and WILLIS JJA and
MATHOPO AJA
Heard:
4 March 2014
Delivered:
25 March 2014
SUMMARY:
Credit agreement to which the National Credit Act 34
of 2005 does not apply – not invalid because credit provider not
registered in terms of s 40 (1) of Act – mezzanine financing – application
of in duplum rule.
ORDER
On appeal from: Western Cape High Court, Cape Town (Louw, Ndita JJ
and Dolamo AJ sitting as court of appeal):
1 The appeal is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
2 The cross-appeal succeeds with costs, such costs to include those
consequent upon the employment of two counsel.
3 Paragraph 2 of the order of the court below is amended to read as
follows:
The orders made by the court a quo are set aside and the
following substituted orders are made:
‘1 The Eighth and Ninth Respondents are ordered to pay, jointly
and severally, the following amounts:
(a) The sum of R 12 million.
(b) Interest on the sum of R 12 million up until 10 February
2010 in the amount of R 12 million.
(c) Further interest on the capital sum of R 12 million at a rate
of 3% per month from 10 February 2010 to 24 February
2012.
(d) Interest on the total of the amounts set out in paras (a), (b)
and (c) above at a rate of 3% per month from 25 February
2012 to date of payment thereof, such interest to be limited
to the total of the said amounts.
(e) Costs of suit on the party and party scale, such costs to
include the costs of two counsel.’
JUDGMENT
Wallis JA (Mpati P, Shongwe JA and Mathopo AJA concurring)
[1] In 2006, a company, optimistically named Winskor 139 (Pty) Ltd
(Winskor), had the opportunity to purchase a portfolio of properties in
Pretoria and resell them at what it anticipated would be a substantial
profit. It had obtained a loan for the bulk of the purchase price, but there
was a shortfall of R12 million. In order to obtain this amount it
approached Slip Knot Investments 777 (Pty) Ltd (Slip Knot), which
conducts business as a provider of what is termed mezzanine finance, an
expression meaning nothing more than short term bridging finance. Such
finance is high risk and those who provide it demand commensurately
high returns. How high, will be seen when I come to examine the
provisions of the agreement in relation to the return that Slip Knot
required on this loan. Needless to say, Winskor’s dreams of a speedy and
substantial profit dissipated during the course of the world economic
downturn that commenced in 2007 and the result is the present litigation.
In it Slip Knot seeks to recover what it lent, together with interest, from
Mr and Mrs Paulsen (the Paulsens), who bound themselves as sureties for
and co-principal debtors with Winskor for the repayment of the loan.
[2] The litigation commenced in the Western Cape High Court before
Blignault J. He upheld all of Slip Knot’s claims. The Paulsens sought and
obtained leave to appeal to the full court of that division. There they
enjoyed substantial success in that their liability for the payment of
interest was held to be limited by virtue of the operation of the in duplum
rule. In addition Slip Knot’s claims for the payment of interest over and
above a fixed amount were dismissed. The judgment was delivered by
Louw J, and concurred in by Ndita J and Dolamo AJ. However, that did
not entirely satisfy the Paulsens, who believed that they had grounds, in
terms of the provisions of s 40(4)(a), read with s 89(2)(d), of the National
Credit Act 34 of 2005 (the NCA), for defeating the claim in its entirety.
They accordingly sought and obtained the special leave of this Court to
appeal against the full court’s judgment. Slip Knot likewise was
dissatisfied and sought and obtained special leave to appeal in regard to
the dismissal of its claims for interest. It is that appeal and the cross-
appeal that are before us.
[3] My colleague Willis JA has prepared a judgment that I have had
the opportunity of reading. I agree with it in part and disagree with it in
part. On the parts where we agree on the result my reasoning is different
from his. I accordingly express my views separately. For convenience I
have adopted his nomenclature to refer to the parties.
[4] The Paulsens bound themselves as sureties for and co-principal
debtors with Winskor for the latter’s liabilities arising from the loan
agreement concluded with Slip Knot. The latter agreement was a large
agreement as described in s 9(4) of the NCA and Winskor was a juristic
person the asset value or annual turnover of which exceeded the
prescribed threshold. Accordingly, in terms of s 4(1)(b) of the NCA it
was one of the credit agreements to which the Act does not apply and to
which I will refer as ‘excluded agreements’. In their appeal the Paulsens
contend that it was nonetheless invalid in terms of the provisions of
s 89(2)(d) of the NCA, because Slip Knot was not registered as a credit
provider in terms of s 40 (1) of the NCA.
[5] The argument and my colleague’s analysis focus on the obligation
to register in terms of s 40 (1) of the NCA. With respect I believe that is
the wrong starting place. If the loan agreement between Slip Kot and
Winskor is invalid that is because of the provisions of s 89(2)(d) of the
NCA. That much is apparent from s 40(4) of the NCA, which provides
that a credit agreement entered into by a credit provider who is obliged to
register in terms of the NCA is ‘an unlawful agreement and void to the
extent provided for in section 89’. Accordingly it is to s 89 that we must
turn to ascertain whether this agreement is void and, if so, to what extent.
[6] Section 89 is the opening section in Chapter 5 of the NCA dealing
with ‘Consumer Credit Agreements’. That heading immediately alerts the
reader to the question whether the chapter applies generally to all credit
agreements, or only to those to which the NCA applies. In my view it is
clear that it applies only to those credit agreements in respect of which it
is elsewhere provided that the NCA shall apply. For that reason s 89(2)(d)
does not apply to the loan agreement between Slip Knot and Winskor and
does not serve to invalidate it. My reasons for reaching that conclusion
are the following.
[7] The starting point is s 4 of the NCA, which deals with the scope of
application of the NCA and provides that, subject to the limitations
spelled out in ss 5 and 6, the NCA ‘applies to every credit agreement
between parties dealing at arm’s length and made within, or having an
effect within, the Republic’. That broad statement is then qualified by the
word ‘except’ and there follows a list of exceptions, of which a large
agreement entered into by a juristic person whose turnover or assets
exceed stipulated limits is one. These exceptions are the excluded
agreements. They are all credit agreements, but they are excluded from
the application of the NCA. The plain meaning of that exclusion is that
the provisions of the NCA that would otherwise apply to them because
they are credit agreements do not apply to them.
[8] The next step is to determine the scope of this exclusion and to
identify the provisions of the NCA to which it relates. Counsel correctly
pointed out that the NCA deals with many matters. Chapter 1 defines the
different types of credit agreements and delimits the scope of application
of the NCA in relation to those agreements. Chapter 2 deals with
consumer credit organisations and Chapter 3 with regulation of the
industry. It is here that the provisions governing registration of credit
providers are to be found. Chapter 4 deals with policy in regard to
consumer credit. If one pauses at this point it is not immediately clear
why the fact that certain agreements are excluded from the application of
the NCA should necessarily mean that persons who seek credit in relation
to such agreements should not be protected against discrimination under
s 61, or disentitled to reasons for the refusal of credit in terms of s 62,
both of which fall in Chapter 4. Nor is it clear that the regulation of the
consumer credit industry should not encompass all credit providers and
not merely some.
[9] In order for the exclusion in s 4 to have operative effect the
portions of the NCA that are not intended to apply to excluded
agreements must be identified. That brings me to Chapter 5, which is the
chapter that deals expressly with consumer credit agreements. Its
provisions, and those of Chapter 6 dealing with collection, repayment,
surrender and debt enforcement, are the provisions of the NCA that apply
generally to credit agreements. Accordingly when s 4 says that the
provisions of the NCA do not apply to excluded agreements, it is to these
provisions that we must look. These chapters are the obvious place in
which to find the provisions that do not apply in respect of excluded
agreements. And s 89(2)(d), on which the Paulsens depend for their
contentions, falls squarely within the opening section of Chapter 5.
[10] Does Chapter 5 or any of its provisions apply to credit agreements
in respect of which the application of the NCA has been specifically
excluded? The answer lies in a closer consideration of the provisions of
the chapter. It consists of ss 89 to 123 of the NCA. It is manifest from
reading most of these provisions that they cannot apply to agreements
that are otherwise excluded from the application of the NCA. To apply
them to such agreements would render their exclusion from the
application of the NCA pointless. Thus Part F of Chapter 5 (ss 121 to
123) affords consumers rights to terminate agreements that would
otherwise be legally binding upon them. Conversely it constrains the
ability of the credit provider to terminate the agreement where the
consumer is in default of their obligations. Part E (ss 116 to 120) permits
consumers unilaterally to alter the terms of the credit agreements to
which they are party; precludes alterations to agreements unless they
reduce the consumer’s liabilities under the agreement and limits the
alterations that the credit provider can effect. Part D (ss 107 to 115) deals
with the content and form of statements. Significantly it is careful to
exclude (in s 107) certain types of credit agreement that are clearly
subject to the provisions of the NCA. That shows that those responsible
for drafting the NCA were alive to the need to exclude certain agreements
from its area of operation.
[11] Part C of Chapter 5 (ss 100 to 106) deals with prohibited charges,
the cost of credit, fees and charges and interest and makes provision for
these to be capped by way of regulations. It also governs the basis upon
which interest, fees and charges may be adjusted. If these provisions
apply to excluded agreements they would render their exclusion from the
application of the NCA pointless. Part B (ss 92 to 99) deals with pre-
agreement disclosure, the form of agreements, notices and other related
matters. Although it distinguishes between small agreements on the one
hand, and intermediate and large agreements on the other, with special
provision for pawn brokers in s 99, there is no indication that it is
intended to apply to excluded agreements.
[12] That brings me to Part A, in which we find s 89(2)(d). Part A
identifies in s 89 those credit agreements that are unlawful and in s 90 the
provisions of credit agreements that are unlawful. These latter include
provisions that are commonplace and would be expected to appear in
agreements covering most large commercial transactions such as ‘no
misrepresentation’ or ‘whole agreement’ clauses; waivers of common law
rights such as, in the case of a surety, the right to demand that the
principal debtor be excussed before resort is had to the surety; limitation
of liability or exemption clauses; and provisions requiring the conclusion
of supplementary agreements, such as deeds of suretyship or contracts of
insurance. The notion that the NCA intended such provisions to be
invalidated in all commercial transactions falling within the broad notion
of a credit agreement (see s 8 of the NCA read with various definitions in
s 1) is obviously incorrect. That would fly in the face of the entire
purpose of the NCA, which is to regulate the provision of credit to natural
persons and small businesses and even then only at the lower end of the
credit market.
[13] Against that background I am unable to see on what basis
s 89(2)(d), of all the provisions in Chapter 5, should apply to excluded
agreements, when none of the other provisions in the chapter do so. That
being so, it is unnecessary for me to consider whether Slip Knot was
required to register as a credit provider under the regulatory provisions of
the NCA. Conceivably those provisions may serve some purpose in
relation to a credit provider that only enters into excluded agreements. I
appreciate that in the definition of ‘credit provider’ in s 1 the term is only
defined in relation to ‘a credit agreement to which this Act applies’ and
that is a strong indication that the credit providers that are obliged to
register do not include those that confine their activities to the conclusion
of excluded agreements,1 but prefer not to express a final view on this
when it is unnecessary to do so.
[14] For those reasons I agree with my colleague that the Paulsens’
appeal falls to be dismissed with costs, such costs to include those
consequent upon the employment of two counsel. I turn then to deal with
Slip Knot’s cross-appeal.
[15] The cross appeal relates to Slip Knot’s claims in terms of clause 6
of the loan agreement. The clause reads as follows:
‘6. Interest
SLIP KNOT shall be entitled to payment from the Borrower of interest accrued on the
loan amount, such interest which shall be calculated at 25% (twenty five percent) of
1 This is the view expressed in JW Scholtz, JM Otto, E van Zyl, CM van Heerden and N Campbell
Guide to the National Credit Act (looseleaf) Vol 2, at 5-3 (Issue 5), fn 12, where they describe it as
‘logical’.
the nett profit in the development, the Borrower having however guaranteed a
minimum interest repayment of R17 000 000.00 (Seventeen million rand). For
example, should 25% of the nett profit in the development be R16 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17 000 000.00 (seventeen million
rand). Should 25% of the nett profit in the development be R18 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
The full court held that this clause embodied arrangements for the
payment of interest and that it fell foul of the provisions of the in duplum
rule that restricts the amount of interest that a creditor may recover on a
debt to the capital amount of that debt. It accordingly held that Slip
Knot’s recovery was to be limited to the capital sum of R12 million and
interest on that sum of R12 million.
[16] Slip Knot contended that this was a profit sharing arrangement and,
notwithstanding the terminology of the clause, that it did not provide for
the payment of interest at all. Accordingly it said that the in duplum rule
found no application. Like my colleague, I disagree, and believe that the
contention that this is a profit sharing arrangement is easily disposed of.
A claim to rectify the agreement to remove the description of this amount
as interest and to describe it instead as a profit share was not pursued. The
matter is therefore one of interpretation. Apart from the fact that the R17
million is described repeatedly as interest, it is payable even if no profit
accrues from the venture in which Winskor was engaged and for which
the loan was advanced. That excludes the notion that this was a profit
share. In its ordinary connotation ‘interest’ describes the reward or return
that a lender expects the borrower to pay in return for the loan. That is
what the R17 million is. The fact that further interest was payable in
terms of clause 7 of the agreement if the capital was not repaid within six
months merely reinforces that conclusion.
[17] Once interest is payable on a debt the in duplum rule potentially
comes into play. The effect of that rule is clear. Where a debt is owed and
bears interest, the amount of such interest may not exceed the capital
amount.2 It was argued that this restriction only applied to arrear interest,3
but as the cases show that expression merely means accumulated interest
on the amount in arrears.4 It excludes amounts already paid by way of
interest and relates only to interest that has accrued but is unpaid.5 Then it
was argued that this court in African Dawn Property Finance 2 (Pty) Ltd
v Dreams Travel and Tours CC and Others,6 sanctioned the charging of
interest exceeding the amount of the capital. That is a misreading of that
judgment, which dealt with usury and not the operation of the in duplum
rule. All that it held was that there is no rate of interest that is
automatically usurious and therefore contrary to public policy. It did not
sanction breaches of the in duplum rule.
[18] It follows that the stipulation for the payment of interest in clause 6
contravened the in duplum rule. That is readily illustrated by the
following example. Had Slip Knot stipulated that it be paid interest at a
2 Union Government v Jordaan’s Executors 1916 TPD 411 at 413 per, de Villiers JP: ‘No interest runs
after the amount is equivalent to the amount of the capital.’ Wessels and Curlewis JJ concurred in the
decisions which was accordingly rendered by a court of which all three members went on to become
Chief Justice. The rule in this form was held by this court still to be the law in LTA Construction Bpk v
Administrateur, Transvaal 1992 (1) SA 473 (A) at 482B-H.
3 Sanlam Life Insurance Ltd v South African Breweries Ltd 2000 (2) SA 647 (W) at 655D-E. Neither
that judgment, which dealt with the determination of the price payable for immovable property by way
of the application of an interest factor, nor Ethekwini Municipality v Verulam MediCentre [2006] 3 All
SA 325 (SCA), which dealt with the calculation of restitution in respect of a failed property transaction
making use of an interest factor, has any bearing on the facts of this case, which involves a
straightforward money loan.
4 That is clear from the Afrikaans expression ‘opgehoopte rente’.
5 Van Coppenhagen v Van Coppenhagen 1947 (1) SA 576 (T) at 581-582.
6 African Dawn Property Finance 2 (Pty) Ltd v Dreams Travel and Tours CC and Others 2011 (3) SA
511 (SCA) para 19.
rate of 23.5 per cent per month on the capital it lent to Winskor, on
condition that the interest was repayable with the capital after six months,
the effect would have been that Winskor was obliged to repay the
R12 million in capital together with an amount only fractionally less than
R17 million by way of interest. It could not be disputed that after the end
of the fourth month the in duplum rule would have operated to prevent
the accumulation of further interest. The position cannot be any different
where the interest is payable in a lump sum.
[19] I accordingly agree with my colleague that clause 6 stipulated for
the payment of interest and that the interest for which it stipulated
exceeded the duplum. The full court was accordingly correct to hold that
up until the date of commencement of the proceedings at first instance,
which was the 10 January 2010, the interest recoverable was limited to
R12 million. It is at this point and in regard to the recovery of further
interest that I diverge from my colleague in regard to the fate of the cross-
appeal.
[20] The operation of the in duplum rule after the commencement of
legal proceedings was the subject of the decision in this court in
Oneanate. 7 At the end of a discussion of the relevant authorities
Zulman JA rejected the views of Huber that, where the duplum had been
reached prior to the institution of action, interest did not run during the
pendency of the litigation, but only began to run after judgment, and
concluded8 that the true position is that:
‘(i) the in duplum rule is suspended pendente lite, where the lis is said to begin upon
service of the initiating process, and (ii) once judgment has been granted, interest may
7 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (In Liquidation) 1998 (1) SA
811 (SCA).
8 At 834H-I.
run until it reaches the double of the capital amount outstanding in terms of the
judgment.’
[21] Some confusion may arise from Zulman JA’s use of the expression
pendente lite in this passage, as its ordinary meaning is ‘pending the
suit’,9 and he was dealing with the situation during the pendency of the
suit, that is, after the litigation was underway. In this passage it means
during the litigation and not before the litigation. Once that is understood
its effect is clear. If the duplum has been reached prior to litigation
commencing, interest will accumulate afresh on the capital debt from the
date of service of the summons or application papers. Once judgment is
pronounced, in this case on 24 February 2012, the capital and interest
accumulated up to that date are consolidated and interest begins to run
again on the consolidated debt until it reaches the duplum. The in duplum
rule will accordingly operate to limit the interest recoverable on a debt at
two points in time. Prior to litigation it will prevent interest accumulating
beyond the full amount of the debt. If that point has been reached prior to
litigation interest will start to run again and will accumulate until
judgment is pronounced. At the stage of judgment the whole judgment
debt, that is, capital plus all accumulated interest to date of judgment, will
bear interest until it again reaches the duplum.
[22] The full court held that these principles do not apply in this case
because Slip Knot did not sue Winskor. The reasoning on which this was
based is the following. Before the commencement of litigation Slip Knot
could only recover the capital of R12 million plus interest of a further
R12 million from Winskor. As it did not sue Winskor that is at present
the limit of Winskor’s liability to it. The Paulsens are sued as sureties and
9 V G Hiemstra and H L Gonin Trilingual Legal Dictionary 2 ed, 253 sv ‘pendente lite’
their liability is accessory to that of Winskor. They cannot therefore be
held liable to pay further interest on the amount of their existing liability
because Slip Knot would then recover more from them than it could
recover from Winskor.
[23] I do not agree. This approach conflates what are different matters,
namely the accessory liability of the surety and the obligation on a debtor
to pay interest on the debt. The liability of Winskor as at the date of
commencement of these proceedings was limited to the total amount of
R24 million by virtue of the operation of the in duplum rule, and so was
that of the Paulsens. However, once they were sued, there is no reason
why interest on what they owed Slip Knot as co-principal debtors, should
not run again. That is not to impose upon them a liability different from
that of Winskor, because Winskor would similarly have been liable had it
been sued. The surety is generally entitled to raise any defence that the
principal debtor could raise. Accordingly the Paulsens were entitled to
raise the operation of the in duplum rule in order to limit their liability
before the institution of proceedings to a total of R24 million. However,
Winskor had no defence to a claim for the payment of further interest if
litigation was commenced against it. There is accordingly no reason why
the Paulsens should have one.
[24] By permitting a claim for further interest after the commencement
of proceedings a liability to pay interest is imposed on the Paulsens in
respect of a debt that they owed to Slip Knot. They were the only ones
who could limit that liability by paying what they owed. If they did not
do so there is no reason why they should be able to shelter behind the fact
that proceedings were not taken against an entity in respect of which
liquidation proceedings were pending.
[25] The contention that interest does not run against the sureties unless
the principal debtor is sued, where prior to litigation the duplum has been
reached, has extraordinary consequences. It could compel a claimant to
sue a manifestly insolvent principal debtor in order to ensure that interest
ran against the sureties. That would be pointless and would result in costs
being incurred for which the sureties would very likely be liable on the
ordinary form of commercial suretyship. What is to happen if the
principal debtor has already gone into liquidation and the liquidator is
prepared to recognise the claim by the creditor in the winding up? Does
that mean that interest will not run against the sureties when they do not
do what they have undertaken to do and pay the debt? Can the sureties
defeat any further claims against them for payment of interest on the debt
beyond the duplum by causing the principal debtor to be liquidated and
rendering it worthless as a target for the creditor? If the principal debtor
was excussed and, only after that process was complete, it transpired that
it could not pay the judgment debt, the sureties would be entitled to say
that interest above the duplum would only be recoverable from them once
they were sued. Why should they be able to avoid paying interest when
they are sued but the principal debtor is not? If the benefit of excussion
has not been waived the claim against the surety will arise at a later date
than the claim against the principal debtor, so that they cannot be sued
simultaneously. What happens if both are sued, but in different
proceedings that proceed at a different pace, for example, because the
proceedings take place in different divisions of the high court for
jurisdictional reasons? If the approach of the full court were correct, there
is no answer to these and other problems, the existence of which can
easily be imagined.
[26] Where I think the problem lies with the full court’s reasoning is in
its failure to recognise that the accessory nature of the surety’s
obligations in relation to the principal debtor relates only to the existence
and extent of the principal debt itself.10 That is why our courts have held
that an interruption in the running of prescription against the principal
debtor also interrupts the running of prescription against the surety. 11
Whilst the surety’s liability may be less than the amount of the principal
debt it cannot be more.12 That does not, however, mean that, once the
surety is sued for the debt and accumulated interest, the principles
governing the recovery of interest laid down in Oneanate and set out in
para 20 above cease to be applicable. It is clear that the inability to pursue
a claim against the principal debtor, for example because it is a company
and has been deregistered, does not bar a claim against the surety.13 There
is no reason why it should bar the continued running of interest on the
claim and no authority was cited for this proposition, nor have I been able
to find any. The fact that the interest reached the duplum before the surety
was sued is no reason for not permitting it to commence running again
once litigation commences in accordance with the ordinary application of
the rule. Nor is the fact that, if it transpired that the liquidated company
had hitherto undisclosed assets, the claim against those assets would be
limited to the capital and interest up to the duplum. Once the creditor
turns to the surety for payment of that debt, the surety’s obligation is to
discharge that debt and if they fail to do so the surety is in breach of their
own obligations and therefore liable to pay interest on the outstanding
indebtedness.
10 Kilroe-Daley v Barclays National Bank Ltd 1984 (4) SA 609 (A) at 622H-623H.
11 Jans v Nedcor Bank Ltd 2003 (6) SA 646 (SCA).
12 Pfeiffer v First National Bank of SA Ltd 1998 (3) SA 1018 (SCA)
13 Traub v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd 1983 (3) SA 619 (A) at
634A and Norex Industrial Properties (Pty) Ltd v Monarch SA Insurance Co Ltd 1987 (1) SA 827 (A)
at 840F-H.
[27] My colleague accepts this, but nonetheless upholds the conclusion
of the full court. He does so in paras 53 and 54 of his judgment on the
basis that the in duplum rule is founded on the public interest and that to
apply it in the present case in the manner set out in Oneanate would
enfeeble the rule in its entirety. He concludes (para 54) that ‘a residual
discretion must remain for a court, in appropriate circumstances, to apply
the in duplum rule in the traditional manner’. In reaching this conclusion
he is much concerned at the effect of applying the judgment in Oneanate
in accordance with its terms and expresses the view that mezzanine
finance lenders must be incentivised to commence proceedings quickly in
order to recover debts owed to them so as to avoid prejudice to their
debtors.
[28] I respectfully disagree. My colleague points to no authority that
supports what is in effect an equitable approach that invokes the in
duplum rule in some circumstances, such as mezzanine financing, and not
in others. He suggests that the approach in Oneanate is not to be used to
enfeeble the in duplum rule. But that is precisely what it does not do. It
explains how the rule operates and is to be applied once litigation is
commenced. He contends for a residual discretion to apply the rule in
what he describes as ‘the traditional way’. But that is what Oneanate
does. None of this is supported by any authoritative statement of the
scope of the rule and it is an entirely novel approach to the in duplum
rule. In the absence of argument that we should depart from existing
authority or adapt the rule in some way I am not persuaded that it is either
permissible or desirable to follow the route he suggests.
[29] The concern appears to be the large sums of interest that the
Paulsens may be called upon to pay. I agree that they are large,14 but that
is because the loan was large and the Paulsens were engaged on a
transaction that they confidently thought would generate a profit of
R68 million within the short space of six months. The accumulation of
interest beyond the sum of R12 million to which it was initially limited is
not, as my colleague appears to believe, due to any dilatoriness on the
part of Slip Knot. Their entitlement was capped at R24 million from the
outset. What has caused additional interest to accrue has been the
Paulsens’ dogged resistance to Slip Knot’s claims before three courts.
Had they tendered to pay R24 million at the outset they would not have
been liable for any further amount. Instead they offered to pay
R12 million and the present litigation ensued.
[30] The amounts involved are to any ordinary person substantial, but
that flows from the size of the loan. A loan of R1 000 bearing interest at
the maximum permissible rate for unsecured credit transactions of a little
over 32 per cent per annum15 would pass the duplum after a little more
than 2 years and would double again to R4 000 two years after judgment
was obtained if that was sought and obtained immediately the two years
had passed. At the maximum rate of five per cent per month applicable to
short term credit transactions the duplum is reached within 15 months. A
person needing a loan in that amount is probably more deserving of
concern than those borrowing large sums in the hope of making even
larger profits. Yet my colleague’s approach does not suggest that the rule
14 The maximum they may be called upon to pay is about R72 million. That is calculated as R24
million prior to the commencement of litigation, plus approximately R12 million of interest between
that date and judgment and further interest on the judgment debt, which would total approximately
R36 million, up to the duplum. That gives R72 million.
15 The maximum prescribed rate for unsecure credit transactions is (Repo Rate x 2.2) + 20% per year,
which at the current SA Reserve Bank Repurchase Rate (the Repo Rate) of 5.5% is a little over 32%.
Regulation 42 in GN 713 of 1 June 2006.
as expounded in Oneanate should not apply to such transactions or
should be subject to a residual discretion vested in the court to relax its
effect.
[31] In the circumstances I would uphold the cross-appeal to the extent
of permitting Slip Knot to recover interest from 10 January 2010 to 24
February 2012 on the sum of R12 million at the agreed default rate of
three per cent per month capitalised monthly in arrears. I would also
permit them to recover further interest on the judgment debt of R24
million, plus the interest accumulated between 10 January 2010 and 24
February 2012, at the same rate from 24 February 2012 to date of
payment, subject to the amount of that interest not exceeding the amount
of the judgment debt. That success on the cross-appeal should carry with
it an order for costs of the appeal including the costs of two counsel. In
the court below, however, the Paulsens enjoyed substantial success on the
in duplum rule and in having some of the claims for interest deleted from
the judgment. The order for costs in their favour should accordingly not
be disturbed.
[32] I accordingly grant the following order:
1 The appeal is dismissed with costs, such costs to include
those consequent upon the employment of two counsel.
2 The cross-appeal succeeds with costs, such costs to include
those consequent upon the employment of two counsel.
3 Paragraph 2 of the order of the court below is amended to
read as follows:
The orders made by the court a quo are set aside and the
following substituted orders are made:
‘1 The Eighth and Ninth Respondents are ordered to pay,
jointly and severally, the following amounts:
(a) The sum of R 12 million.
(b) Interest on the sum of R 12 million up until 10 February
2010 in the amount of R 12 million.
(c) Further interest on the capital sum of R 12 million at a
rate of 3% per month from 10 February 2010 to 24
February 2012.
(d) Interest on the total of the amounts set out in paras (a),
(b) and (c) above at a rate of 3% per month from 25
February 2012 to date of payment thereof, such interest
to be limited to the total of the said amounts.
(e) Costs of suit on the party and party scale, such costs to
include the costs of two counsel.’
M J D WALLIS
JUDGE OF APPEAL
Willis JA (concurring in part and dissenting in part)
[33] The appellants were sureties, binding themselves jointly and
severally, in solidum, for a loan agreement concluded between a company
known as Winskor 139 (Pty) Limited (‘Winskor’) and the respondent,
Slip Knot Investments (Pty) Limited (‘Slip Knot’) in terms of which the
respondent lent Winskor R12 million for a twelve month period from 10
July 2006 to 9 July 2007. Slip Knot had lent Winskor the money to assist
with the funding of a property development in Brooklyn. Winskor
defaulted on its obligation to repay the loan together with interest. An
application by Slip Knot for the liquidation of Winskor is still pending.
[34] Slip Knot brought an application in the Western Cape High Court
for an order that the two appellants (the sureties), together with two trusts
which had also been sureties for the debt, the Paulsen Family Trust and
the Keurbos Beleggingstrust, be ordered to be jointly and severally liable
to pay the sum of R12 million, being the capital sum lent to Winskor,
together with R17 million as interest and costs of suit.
[35] Clause six of the loan agreement entered into between Winskor and
Slip Knot reads as follows:
‘6. Interest
SLIP KNOT shall be entitled to payment from the Borrower of interest accrued on the
loan amount, such interest which shall be calculated at 25% (twenty five percent) of
the nett profit in the development, the Borrower having however guaranteed a
minimum interest repayment of R17 000 000.00 (Seventeen million rand). For
example, should 25% of the nett profit in the development be R16 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17 000 000.00 (seventeen million
rand). Should 25% of the nett profit in the development be R18 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
Slip Knot contended in its founding affidavit that the relevant portion of
clause six should read as follows:
‘Slip Knot shall be entitled to payment from the Borrower of a profit share, such
profit share which shall be calculated at 25% (twenty five percent) of the net profit in
the development, the Borrower having however guaranteed a minimum profit share of
R17 000 000.00 (Seventeen million rand)’.
Slip Knot provided the emphasis given to the underlined words and
applied for the rectification of the agreement in order to replace the word
‘interest’ with ‘profit share’. The application for rectification was
opposed by the sureties in their answering affidavit.
[36] After some preliminary skirmishes between the parties, the
application came before Blignault J. He refrained from deciding whether
the underlined words in the preceding paragraph should read as ‘profit
share’, as contended for by Slip Knot, or interest contended for by the
sureties. On 24 February 2012 Blignault J granted judgment against the
sureties but dismissed the application against both the Paulsen Family
Trust and the Keurbos Beleggingstrust. The court of first instance
exonerated the trusts by relying on Thorpe v Trittenwein, 16 which
confirmed the common law principle that unless the trust deed requires
otherwise, all trustees of a trust are required to act jointly in order to incur
liability for the trust. The court of first instance failed to apply the in
duplum rule, in terms of which arrear interest ceases to run once it
reaches the equivalent of the amount of the capital lent.17 The order of the
court of first instance was that the sureties were jointly and severally
liable to pay Slip Knot:
‘A.
(1)
The sum of R12 million;
(2)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from 21 July 2007 to 10 January 2010, such interest to be limited to a maximum
amount of R12 million;
(3)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from 10 January 2010 to the date of judgment;
16 Thorpe & Others v Trittenwein & Another 2007 (2) SA 172 (SCA) at 176H.
17 See, Union Government v Jordan’s Executors 1916 TPD 411 at 413; LTA Construction Beperk v
Administrateur, Transvaal 1992 (1) SA 473 (A) at 482B-H.
(4)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from the date of judgment to the date of final payment, such interest to be limited to a
maximum amount of R12 million;
(5)
The sum of R17 million;
(6)
Interest on the sum of R17 million at the rate of 15,5% per annum, calculated
from the date of judgment to the date of final payment;
(7)
Subject to the provisions of B below, the costs of the application under case
No 26398/09 on an attorney and client scale, such costs to include the costs of two
counsel.
B.
The claims of Slip Knot Investments 777 (Pty) Ltd for payment of the above
amounts by the trustees for the time being of the Paulsen Family Trust and the
trustees, for the time being, of the Keurbos Beleggingtrust, are dismissed with costs,
including the costs of two counsel.’
[37] Sitting as a court of first instance, the high court granted leave to
appeal to the full court. On 12 February 2013 the full court (Louw and
Ndita JJ and Dolamo AJ) upheld the appeal in part but dismissed the
remainder. The full court, applying the in duplum rule, ordered the
sureties to pay the sum of R12 million, being the capital sum lent to
Winskor but limited interest thereon to R12 million (ie a further
R12 million, over and above the R12 million that was to be repaid in
terms of the capital lent to Winskor). The full court held that a surety is
not obliged to pay more interest than the principal debtor.18 As at the time
of delivering judgment no action had been brought by Slip Knot against
the principal debtor, the full court reasoned that, at the time of judgment,
the principal debtor would be obliged to pay no more than R12 million
plus interest in the same amount under the in duplum rule. For this reason
the full court granted the order which it did. The full court, allowing the
18 It relied on Neon and Cold Cathode Illuminations (Pty) Limited v Ephron 1978 (1) SA 463 (A) at
471C-H and Jans v Nedcor Bank Limited 2003 (6) SA 646 (SCA) para 10.
costs of two counsel, ordered the sureties to pay the costs of suit on a
party-and-party scale.
[38] The sureties sought the special leave of this court to appeal hereto,
contending that their appeal should have been upheld in its entirety, to the
extent that Slip Knot’s application should have been dismissed with costs.
Slip Knot then sought special leave to cross-appeal against that part of the
judgment and order of the full court which upheld the appellant’s appeal.
Slip Knot essentially sought the reinstatement of the order of the court of
first instance. This court granted special leave both to appeal and to cross-
appeal further. Accordingly, this court now has before it both the appeal
and the cross-appeal against the decision of the full court (sitting as a
court of appeal). I have profited from reading the judgment prepared by
my brother Wallis
The appeal
[39] The relevant facts are not in issue. This is, in large measure,
illustrated by the sureties having disclosed a tender to pay Slip Knot R12
million together with interest a tempore morae thereon up to the sum of
R12 million. In the appeal the issues are (a) whether, on a correct
interpretation of s 40, read with s 4, of the National Credit Act 34 of 2005
(‘the NCA’), Slip Knot should have been a registered credit provider in
terms of the NCA and (b) if Slip Knot was not so registered, the suite of
agreements in question, including the deeds of suretyship signed by the
sureties, were void. The cross-appeal is concerned with the interpretation
of clause six in the loan agreement concluded between Slip Knot and
Winskor, more particularly the application of the in duplum rule to the
calculation of interest.
[40] In the founding affidavit Slip Knot asserted that the provisions of
the NCA are not applicable either to the loan or the deeds of suretyship
by reason of the fact that Winskor was, in terms of s 1 of the NCA, a
juristic person the asset value of which or annual turnover of which,
together with the combined asset value and annual turnover of all related
juristic persons, at all relevant times exceeded R1 million. In the
answering affidavit the sureties were content that the matter be one for
argument but contended, in addition to interest exceeding the maximum
that is allowed under the in duplum rule in our common law, that the rates
of interest which Slip Knot sought to claim were usurious and contrary to
public policy.
[41] Both the court of first instance and the full court hearing the appeal
accepted that the transaction was one known as ‘mezzanine funding’.
‘Mezzanine funding’ has come to the fore increasingly in recent years.19
It features not infrequently in transactions related to property
development. 20 It involves high risk. 21 Typically, the lender borrows
money from the banks to provide bridging finance to the property
developer at very high rates of interest for a period that is envisaged to be
short term.22
[42] The relevant portions of ss 4(1)(a) and (b) of the NCA read as
follows:
‘4. Application of Act
19 See, for example, Slip Knot Investments 777 (Pty) Limited v Project Law Prop (Pty) Limited &
Others (36018/2009) [2011] ZAGPJHC 21 (1 April 2011) paras 2 and 4.
20 Ibid.
21 Ibid.
22 Ibid.
(1)
Subject to sections 5 and 6, this Act applies to every credit agreement between
parties dealing at arm’s length and made within, or having effect within, the Republic,
except –
(a)
A credit agreement in terms of which the consumer is –
(i)
A juristic person whose asset value or annual turnover, together with
the combined asset value or annual turnover of all related juristic persons, at the
time the agreement is made, equals or exceeds the threshold value determined
by the Minister in terms of section 7(1);
(ii)
the state; or
(iii)
an organ of the state;
(b)
A large agreement, as described in section 9(4), in terms of which the
consumer is a juristic person whose asset value or annual turnover is, at the time the
agreement is made, below the threshold value as determined by the Minister in terms
of section 7(1).’
It is common cause that the agreement is a ‘large agreement’. It has not
been disputed that, at the time when the agreements in question were
concluded, the asset value and annual turnover of Winskor exceeded the
threshold values determined in terms of ss 4(1)(a) and 4(1)(b) of the
NCA.
[43] The relevant portions of ss 40(1) and (4) of the NCA provide as
follows:
‘(1) A person must apply to be registered as a credit provider if –
(a) that person, alone or in conjunction with any associated person, is the credit
provider under at least 100 credit agreements, other than incidental credit agreements;
or
(b) the total principal debt owed to that credit provider under all outstanding credit
agreements, other than incidental credit agreements, exceeds the threshold prescribed
in terms of section 42(1).23
…
23 The parties were ad idem that this threshold currently stands at R500 000. See Reg 5 in terms of the
National Credit Act, GN 713, GG 28893, 1 June 2006.
(4) A credit agreement entered into by a credit provider who is required to be
registered in terms of subsection (1) but who is not so registered is an unlawful
agreement and void to the extent provided for in section 89.’
It is immediately apparent that s 40 (1), which requires registration, is not
unqualified. Section 89(2)(d) of the NCA is also not unqualified: it
renders unlawful an agreement if, ‘at the time that it was made, the credit
provider was unregistered and this Act requires that credit provider to be
registered’ (the emphasis is my own). In other words, the NCA envisages
situations where credit may be provided by a credit provider which is not
registered in terms of the NCA. Moreover, s 89 has to apply to credit
agreements to which the NCA applies and not to credit agreements to
which the NCA does not apply. Not only does this follow as a matter of
logic but it is reinforced by the fact that chapter five, under which 89
falls, nowhere refers to agreements to which the NCA does not apply.
[44] Section 1 of the NCA sets out the definitions that are applicable to
the NCA. The section qualifies all definitions with the words, ‘In this Act
unless the context indicates otherwise’. A ‘credit agreement’ is defined in
s 1 of the NCA as ‘an agreement that meets all the criteria set out in
section 8’. Section 8 enumerates a lengthy list of transactions. There is no
dispute that the loan agreement in question falls within the criteria set out
in s 8. It is neither in dispute that Slip Knot was not registered as a credit
provider in terms of s 40(1) of the NCA nor that the challenged
transaction exceeded the threshold amount prescribed in terms of
s 40(1)(b) of the NCA.
[45] Ex facie the NCA, Slip Knot was not required to be registered in
terms of s 4 but may be required to apply for registration as a credit
provider in terms of s 40. Both the court of first instance and the full
court reconciled that apparent conflict by reference to the words ‘In this
Act unless the context indicates otherwise’ with which s 1 begins. This is
the correct approach. See Amalgamated Packaging Industries Limited v
Hutt. 24 The fact that s 89(2)(d) of the NCA stipulates both (i) non-
registration as a credit provider and (ii) the qualification that the NCA
requires that particular credit provider to be registered, in order for a
credit agreement to be void, gives further impetus to the construction that
non-registration is not necessarily fatal to the provision of credit. The
reference to ‘credit agreements’ in s 40(1) necessarily must be restricted
to include only those agreements which are subject to the NCA or to
which the NCA otherwise extends application.
[46] Mr Burger, who appeared for the sureties, conceded that not every
person who lends money in excess of R500 000 has to be registered as a
credit provider. The example, during argument, of the benevolent uncle
lending money to his nieces and nephews to buy houses for themselves in
different parts of the country, put paid to any notion that good sense
required willy-nilly an interpretation in favour of obligatory registration
for all who lend money in excess of R500 000, no matter what the
circumstances may be.
[47] The appeal on the ground that Slip Knot was not a registered
credit provider in terms of the NCA must fail. The agreements in question
were not void ab initio.
The cross-appeal
[48] As the full court correctly observed, clause six refers, in terms, to
the payment of R17 million, as ‘interest’ no less than five times (even
24 Amalgamated Packaging Industries Limited v Hutt & Another 1975 (4) SA 943 (A) at 949H.
though it also refers to it as a payment for net profit in the development).
The word ‘interest’ is also used in clause 1.1.5 when referring to this sum
as ‘the total amount accrued in interest in terms of clause six. Clause six
provides that the payment is due, even if, as so happened, there was no
profit arising from the venture. The full court correctly found that, upon a
proper reading of clause six, it referred, without rectification, to interest
claimed by Slip Knot and not to profit share.
[49] I agree with Wallis JA that the full court was incorrect in placing
reliance upon the accessory nature of a suretyship agreement as the
reason for limiting the amount of interest that could be recovered to R12
million, being the amount of the capital sum which had been lent to the
borrower. In Millman v Masterbond Participation Bond Trust 25 ,
Friedman JP and Farlam J , after a comprehensive review of the common
law authorities, held that where, as in this case, sureties had renounced
the benefit of excussion, a creditor has an unqualified election whether to
sue the principal debtor or the surety and may do so directly.26 The fact
that a surety’s obligation is accessory does not have the consequence that
it is contingent.27 What is relevant is not whether or, if so, when the
creditor sued the principal debtor but whether, as matter of law, it could
at any time material to the litigation, have done so.
[50] Slip Knot invoked Standard Bank of SA Limited v Oneanate
Investments (Pty) Ltd (in liquidation) 28 in support of its arguments.
Zulman JA, who delivered the judgment of the court in Oneanate,
25 Millman and another NNO v Masterbond Trust Managers (Pty) Limited (under Curatorship) and
others 1997 (1) SA 113 (C)
26 Ibid at 116B-123C.
27 Ibid at 122C.
28 Standard Bank of SA Limited v Oneanate Investments (Pty) Ltd (in liquidation) 1998 (1) SA 811
(SCA) at 828C-E and 834B-D.
observed that the in duplum rule is concerned with public interest. 29
Having accepted that interest is ‘the life-blood of finance’, he decided
that the application of the rule should be relaxed to the extent that it was
suspended pendente lite. 30 In Oneanate this court held that ‘once
judgment has been granted, interest may run until it reaches double the
capital amount outstanding in terms of the judgment’ (The emphasis is
my own).31 The mischief against which Oneanate was directed was a
debtor’s dilatoriness, which may include taking advantage of the courts’
civil procedures and the law’s delays to avoid the prompt payment of a
debt that was obviously due.32
[51] Oneanate was concerned with an ordinary unpaid banker’s
overdraft.33 The case was decided before the repeal of the Usury Act 73
of 1968 in terms of s 172(4)(a) of the NCA. Section 2(1)(a) of the Usury
Act provided for the regulation of ‘the annual finance charge rate’
(largely coextensive with interest) by a ‘money lender’ under the
direction of the Minister by notice in the Gazette. The definition of a
‘money lender’ in terms of s 1 of the Usury Act was widely cast to
include any person granting a loan for a ‘money lending transaction’
which was, in turn, broadly defined as meaning ‘any transaction which,
whatever its form may be, and whether or not it forms part of another
transaction, is substantially one of money lending.’ It is reasonable to
suppose that, until the coming into operation of the NCA, the collective
consciousness of the general public was that interest rates were controlled
across-the-board in South Africa. At the time when Oneanate was
29 At 834B.
30 At 834D..
31 At 834H.
32 See at 834B-E.
33 See at 816J.
decided, the kind of issues with which the courts have been grappling
since the coming into operation of the NCA were not on the horizon.
[52] Slip Knot put its confidence in African Dawn Property Finance
(Pty) Limited v Dreams Travel and Tours CC34 to submit that the courts
must be careful not to let their subjective views interfere with a bargain
deliberately entered into between parties dealing at arm’s length with one
another, even though the rate of interest may be high. The African Dawn
case dealt with the rate of interest, not the capping thereof in terms of the
in duplum rule. In this case there has been no interference with the rate.
That point has not even been argued. It has been accepted throughout that
‘mezzanine funding’ involves high risk and therefore attracts high rates
of interest.
[53] Having had the benefit of reading Wallis JA’s judgment in this
matter, I remain of the view that it cannot have been the intention of the
court in Oneanate Investments to enfeeble the in duplum rule almost
entirely. As Lord Steyn said in R v Secretary for the Home Department,
ex parte Daly,35 ‘In law, context is everything’. This was approved by
this court in Aktiebolaget Hässle and Another v Triomed (Pty) Ltd. 36
Similar views were expressed by Harms DP in KPMG Chartered
Accountants (SA) v Securefin Limited and another. 37 The context of
Oneanate was an ordinary commercial overdraft.38 ‘Mezzanine funding’
is, in the words of Slip Knot itself, a niche market: useful though it may
be, it performs a different role from that of the banks. The money which
34 African Dawn Property Finance (Pty) Limited v Dreams Travel and Tours CC & Others 2011 (3)
SA 511 (SCA).
35 [2001] 3 All ER 433 (HL) at 447 a.
36 2003 (1) SA 155 (SCA) at para [1]
37 KPMG Chartered Accountants (SA) v Securefin Limited and another 2009 (4) SA 399 (SCA) para39.
38 See at 834E.
the banks lend is derived from the deposits therewith of the general
public; the funding for ‘mezzanine’ loans arises from speculative
investments.
[54] LTA Construction Beperk v Administrateur Transvaal 39 remains
unaltered with regard to the retention in our law of the in duplum rule.40
The in duplum rule remains the standard, the benchmark, the yardstick,
the mainstay by which to test the capping of interest.41 As this court said
in LTA Construction, the in duplum rule fulfills a valuable role and a vital
economic function.42 The court quoted Ulrich Hüber as saying, inter alia;
‘ne homines augusta et inclinata re destruantur’,43 the law is not there to
destroy people with a grim and sanctimonious self-righteousness. It is not
creditors alone who deserve the law’s saving hand: debtors may also
qualify. The in duplum rule operates to mitigate a ‘domino effect’
whereby one debtor’s insolvency triggers another, creating a spiral of
economic misfortune with deleterious consequences for society including
the loss of jobs. A relevant factor, when it comes to ‘mezzanine funding’,
is that by its very nature – the lending being short term – a debtor’s
default will very quickly become apparent. In consequence thereof a
creditor should quickly be able to obtain judgment either before or soon
after the in duplum rule caps the interest.
[55] As Zulman JA remarked in Oneanate: ‘A creditor can control the
institution of litigation and can, by timeously instituting action, prevent
39 LTA Construction at 482B-83B.
40 LTA Construction at 482H; Nedbank Limited v National Credit Regulator 2011 (3) SA 581 (SCA)
para 36.
41 Ibid.
42 LTA Construction at 482H.
43 LTA Construction at 482H; Ulrich Hüber Praelectionum Juris, Romani et Hodierni, Pars III (1725)
22.1.28.
prejudice to the debtor and the application of the rule.’44 When it comes
to ‘mezzanine funding’, prompt action by a creditor to recover the debt,
together with interest, has to be incentivised: the public interest in
proceeding speedily with litigation for the recovery of debt due is not
merely to discourage debtors from ensuring that a litis is pendens for as
long as possible; potential prejudice to the debtor is a relevant factor too.
A residual discretion must remain for a court, in appropriate
circumstances, to apply the in duplum rule in the traditional manner.
When it comes to ‘mezzanine funding’ in cases where a debtor has been
‘playing for time’, the suspension of the in duplum rule, as envisaged in
Oneanate, may come into operation.
[56] The sureties for a loan of R12 million, if they were to pay today,
would have to pay an amount of the order of R72 million, if the order of
the court of first instance were to stand. That cannot be correct, especially
in the light of the appellant’s tender. The order which Wallis JA
envisages, although less crippling than that sought by Slip Knot, would
remain inordinately onerous. I come to this conclusion notwithstanding
the fact that the prohibition in Roman and Roman-Dutch law against
‘interest on interest’ has become obsolete.45
[57] It is appropriate in this case for a court to exercise a discretion
which will have the consequence that the in duplum rule is applied in the
traditional way. I arrive at the same conclusion as the full court, albeit by
a different route.
44 At 834D-E.
45 See Davehill (Pty) Limited and others v Community Development Board 1988 (1) SA 290 (A) at
298G-H.
[58] The complexity of the issues and the magnitude of the quantum
have justified the costs of two counsel. I should have dismissed both the
appeal and the cross-appeal with costs.
_______________________
N P WILLIS
JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
W G Burger SC (with him J C Swanepoel)
Instructed by:
Joubert Attorneys, Strand
c/o McIntyre & Van der Post, Bloemfontein
For the Respondent:
R Stockwell SC (with him, J F Pretorius)
Instructed by:
Sim & Botsi Attorneys, Johannesburg
c/o Lovius Block, Bloemfontein
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
24 March 2014
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Paulsen v Slip Knot Investments
The SCA today dismissed an appeal by Mr and Mrs Paulsen
against a judgment of the Western Cape High Court in which they had
been ordered as sureties to pay Slip Knot Investments the sum of R12
million, together with interest and costs. The Paulsens had argued that
although the loan agreement under which the claim was made was not
one to which the National Credit Act (NCA) applied, it was nonetheless
invalid because Slip Knot Investments was not registered as a credit
provider in terms of the NCA. However, the court held that the provisions
of s 89(2)(d) of the NCA on which the sureties relied did not apply to this
credit agreement and it was therefore not invalid because of Slip Knot’s
non-registration as a credit provider.
Slip Knot lodged a cross-appeal in relation to the quantification of
the interest to which it was entitled. Before proceedings commenced the
accrued interest on the outstanding amount of the loan equalled the
amount of the loan. The court held that as a result the interest it could
recover up to the date of institution of proceedings was limited to the
capital sum. However, once proceedings commenced interest would
again commence to run and after judgment it would run on the
cumulative judgment debt until it again reached the amount of the
judgment debt.
|
3879
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1166/2018
In the matter between:
SALEEM QURASHI
FIRST APPELLANT
FARHAN ULLAH
SECOND APPELLANT
SHABBIR GULLAM
THIRD APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Qurashi and Others v The State (Case no 1166/2018) [2022]
ZASCA 118 (22 August 2022)
Coram:
PONNAN, VAN DER MERWE, and CARELSE JJA and
MAKAULA and PHATSHOANE AJJA
Heard:
10 May 2022
Delivered:
22 August 2022
Summary:
Criminal law and procedure – admission of evidence pursuant to
search and seizure allegedly in violation of constitutional right to privacy and fair trial
– distinction between real and self-incriminatory or conscriptive testimonial evidence
– hearsay evidence – admissibility of extra-curial statements by a non-testifying
witness.
ORDER
On appeal from: Free State Division of the High Court, Bloemfontein (Rampai J,
sitting as court of first instance):
The appeal is dismissed.
JUDGMENT
Ponnan JA and Phatshoane AJA (Van der Merwe and Carelse JJA, and Makaula
AJA concurring):
[1] The first, second and third appellants, Saleem Qurashi, Farhan Ullah and
Shabber Ghulam, stood trial as accused 2, 5 and 6 respectively, together with four
others, all Pakistani nationals,1 before the Free State Division of the High Court,
Bloemfontein. Eighteen charges were levelled against the first two and 17 against the
third. Counts 2, 3 and 7 were withdrawn at the commencement of the trial, and at the
close of the State case, the prosecutor intimated that counts 5, 6, 7 and 8 were not
being persisted in. Eleven counts thus remained, namely: the contravention of s
9(1)(a) of the Prevention of Organised Crime Act 121 of 1998 (POCA) (count 1); two
counts of robbery with aggravating circumstances (counts 9 and 16); five counts of
murder (counts 10, 11, 12, 13 and 17); kidnapping (count 14); attempted extortion
(count 15); and, a contravention of s 18(2)(a) of the Riotous Assemblies Act 17 of
1956, being a conspiracy to commit kidnapping (count 18) – a charge that was not
preferred against the third appellant. In what follows, it may be convenient to refer to
the appellants by their appellation before the trial court, namely accused 2, 5 and 6.
[2] Count 1 relates to the alleged participation of the accused in organised criminal
gang activity in contravention of s 9 of POCA. And, that as part of a pattern of such
1 The fact that the accused and several of the witnesses were Pakistani nationals would appear to have
resulted in names not always being consistently spelt. For example, whilst the name of appellant 3 is
reflected in the indictment as Shabir Gullam, the evidence seems to suggest that he is known as
Shabber Ghulam.
activity, the accused either individually or collectively committed the various offences
set out in the indictment. The prosecution alleged that in November 2007, the four
deceased in counts 10 to 13, Malik Yasser Awan, Amanullah Nusrullam, Shabodien
Hussein and Majid Saleem, who were also Pakistani nationals, were lured to Clocolan
in the Free State, were they were robbed of a BMW sedan motor vehicle, four Nokia
cellphones and two firearms (count 9). They were then murdered and buried in a
shallow grave (counts 10, 11, 12 and 13).
[3] On 4 March 2008, the accused allegedly kidnapped Zia Khan and deprived him
of his liberty at 6 Van der Spuy Avenue, in Bloemfontein (count 14). They then
threatened to kill Zia Khan unless his relative, Rashid Anwari Khan, paid them R2
million (count 15). Zia Khan was also robbed of his Opel Corsa bakkie and a cellphone
(count 16). Following the killing of Zia Khan (count 17), he was buried in a shallow
grave at 6 Van der Spuy Avenue. The State further alleged that accused 1, 2 and 5
conspired with Ifthkar Ahmed to kidnap Rashid Khan (count 18).
[4] Save for count 17, on which the appellants were convicted of culpable homicide
instead of murder, the appellants were convicted as charged and each sentenced to
imprisonment for life. The present appeal, with the leave of the trial court, is directed
solely against conviction.
[5] In S v Hadebe and Others, Marais JA had occasion to repeat what had
previously been said by him in Moshephi and Others v R 1980-1984 LAC 57 at 59F- H,
namely that:
‘The breaking down of a body of evidence into its component parts is obviously a useful aid to
a proper understanding and evaluation of it. But, in doing so, one must guard against a
tendency to focus too intently upon the separate and individual part of what is, after all, a
mosaic of proof. Doubts about one aspect of the evidence led in a trial may arise when that
aspect is viewed in isolation. Those doubts may be set at rest when it is evaluated again
together with all the other available evidence. That is not to say that a broad and indulgent
approach is appropriate when evaluating evidence. Far from it. There is no substitute for a
detailed and critical examination of each and every component in a body of evidence. But,
once that has been done, it is necessary to step back a pace and consider the mosaic as a
whole. If that is not done, one may fail to see the wood for the trees.’2
[6] The approach which commended itself in Moshephi seems appropriate in the
particular circumstances of this matter. This, all the more so, because the manner in
which the evidence was presented was oftentimes haphazard and lacking in any
logical coherence, resulting in a rather protracted trial that generated a record in
excess of 2500 pages. Thus, to focus too intently upon each individual part on which
the prosecution case rested, is likely to result in a judgment that would be indigestible.
The mosaic as a whole lends inescapably to the factual foundation upon which the
logical deduction must rest that each of the appellants are indeed guilty of the offences
with which they have been charged. When viewed against the tapestry of all of the
evidence, the claim by them that they were wrongly convicted by the trial court and
that the appeal must consequently succeed cannot be sustained.
[7] It is not necessary to analyse the evidence adduced on behalf of the
prosecution in granular detail, rather it would suffice to paint the evidence in broad
strokes with a view to demonstrating that the broad hypothesis sought to be advanced
by the prosecution finds compelling support in the evidence.
[8] The prosecution case rested, in the main, on:
(a) the viva voce testimony of inter alia Ms Zainub Saleem, Ms Nazira Awan, Mr Rashid
Khan, Mr Steven Musetsi Latela, Mr Ifthkar Ahmed, Mr Leon van Wyk Rossouw,
Warrant Officer Eben van Zyl and Warrant Officer Linda Steyn;
(b) the exhibits seized and the discovery of the body of the deceased in count 17,
pursuant to a search at 6 Van der Spuy Avenue, Bloemfontein;
(c) the exhibits seized following upon the arrest of the various accused in Kestell and
Pietermaritzburg; and
(d) the evidence of Ms Johanna Heyneke, the forensic liaison manager of Vodacom,
relating to various cellphone numbers, pursuant to a subpoena issued in terms of s
205 of the Criminal Procedure Act 51 of 1977 (the Criminal Procedure Act); and
2 S v Hadebe and Others 1998 (1) SACR 422 (SCA) at 426E-H.
(e) several statements, as well as a pointing out by Mr Rehman Khan made to Captain
Francois James Lux, which led to the discovery of the bodies of the four deceased in
counts 10 to 13.
[9] The evidence of each of Ms Zainub Saleem, Ms Nazira Awan and Mr Rashid
Khan, in that order, may be a useful starting point. Ms Zainub Saleem (the wife of
Saleem Majid, the deceased in count 13) testified that her husband had travelled from
Cape Town, where they resided, to Johannesburg on 7 November 2007. She had daily
telephonic contact with him over the following days, until Saturday 10 November 2007,
when unable to reach him because his phone was apparently switched off, she made
contact with Amanullah Nusrullam (the deceased in count 11). Mr Nusrullam told her
that he, her husband, Shabodien Hussein (the deceased in count 12) and Malik Yasser
(the deceased in count 11) had travelled from Johannesburg to Clocolan (a place that
she had not previously heard of) with a person named Qurashi. He informed her that
her husband was in a meeting with Farhan and Shahid and that he will get him to
return her call. The next day she spoke to her husband, who confirmed that he had
travelled from Johannesburg to Clocolan with Saleem Qurashi; and, that he had
concluded his business and would be returning to Cape Town either that evening or
the day thereafter. That was the last time that she spoke to him.
[10] When, by 15 November 2007, Ms Saleem was still unable to get hold of her
husband she travelled to Johannesburg. A case docket in respect of a missing person
was opened at the Booysens’ police station, whereafter she went to Clocolan. The
Clocolan police took her to what was described in the evidence as the A-frame house,
ostensibly because Pakistani nationals lived there. At the A-frame house she
encountered accused 4 (Ali Mamo Mazhir) and another person. Despite confronting
him with the fact that she had knowledge that her blue BMW vehicle, in which her
husband had travelled from Johannesburg to Clocolan, had been seen at the house,
accused 4 was not forthcoming with any information.
[11] The police then took her to another house in Andries Pretorius Street, in
Clocolan, which appeared to be unoccupied and was locked. As they walked around
the yard, they came upon a little shed behind the house, in which she recognised two
CD covers, which according to her had been in the door of her BMW. She went back
to Johannesburg that afternoon and returned the next day to Clocolan together with
Nazira Awan, the wife of Malik Awan Yasser (the deceased in count 10). Accompanied
by the police, they called on the house in Andries Pretorius Street. On this occasion
they were able to gain access to the house with a key supplied by Mr Latela. Amongst
the documents found inside the house, were an asylum seeker permit for accused 2
(Ejaz Ahmed) and Pakistani passports issued in the names of Afzal Hussein and
accused 2. Some thirteen months later on 5 December 2008, she received news that
four bodies – one of which she subsequently identified as being that of her husband –
had been found. She later also had occasion to identify the blue BMW after it had been
recovered.
[12] Ms Awan testified that she had last seen her husband alive on Friday 9
November 2007, when he dropped her off that morning at the taxi rank so that she
could make her way to work. She spent that night after work at her sister’s home. The
next day, when she phoned her husband to ask him to pick her up from her sister’s
place, he replied that he could not because he was on his way to Clocolan to visit
Shahid. He informed her that he was with Majid, Amanullah, Shahab (an apparent
reference to the deceased in counts 11, 12 and 13) and Saleem Qurashi. At around
midnight she spoke to him again, when he intimated that he would see her the next
day. The next morning he told her that he was going ‘somewhere very far’ and that
she must ‘look after herself’. Thereafter, she was unable to contact him telephonically
because his phone appeared to have been switched off. She then reported to the
police that he was missing. Having managed by means of a sim-swap, and with the
assistance of Vodacom, to ascertain the last five numbers dialled from his cellphone,
she called each of those numbers. The second number called was answered by
someone who identified himself as Farhan. Subsequent attempts to contact that
number, however, went unanswered. She testified that she had previously seen the
deceased in count 11, Amanullah Nusrullam, who had come to her house with Saleem
Majid (the deceased in count 13). Saleem Qurashi and Shahid (who she identified
respectively as accused 2 and 1 before the trial court) had also visited her home. For
the rest, she confirmed the account of Ms Zainub Saleem.
[13] Mr Rashid Khan and the deceased in count 17, Zia Khan, were business
partners in a supermarket in Lesotho, where they shared a house in Maputsoe.
Accused 1 (Shahid Saeed), who was a friend of Zia Khan, together with accused 2
(Saleem Qurashi) and 6 (Shabber Ghulam) spent approximately one month at their
house about three months before the disappearance of Zia. In that time, accused 4
and 5 (Farhan Ullah) also visited. On 3 March 2008, Zia Khan travelled to Maseru for
business purposes. When he returned that afternoon, he was accompanied by
accused 1, 2 and 6. After dinner that evening accused 1 left and 2 and 6 slept over.
The next morning Zia Khan left home together with accused 2 and 6 in his black Corsa
bakkie. He took R35 000 with him to meet a tax obligation with the revenue authorities
in Maseru. He was accompanied by accused 2 and 6. Later that day, Rashid tried
unsuccessfully to contact Zia telephonically. He then phoned accused 6 at about 3 pm
that afternoon, who told him that Zia had returned to Maputsoe. Rashid was then
unable to contact either Zia or accused 6 later that day. Zia’s disappearance was
reported thereafter to the Maseru police.
[14] Eight days later, Rashid received a telephone call; he was told: ‘Do you want
your brother alive. You have to arrange R2 million’. He recognised the caller as
accused 1. When he was contacted thereafter, he asked to speak to Zia. He was not
put through to Zia, but heard a recorded message in Zia’s voice saying ‘Rashid,
Rashid, Rashid’. Rashid managed to raise the R2 million and was contacted at regular
intervals thereafter, but refused to undertake delivery until he had spoken to Zia. A
friend suggested that Rashid contact Mr Leon van Wyk Rossouw, a private
investigator. They met in Ficksburg on 16 March 2008. Rossouw took possession of
his cellphone and downloaded and analysed its call history. On the next day, Colonel
Topkin called on, and interviewed, Rashid in Ficksburg. On 18 March, he was told by
Rossouw that a body had been found, which he was asked to identify. He
subsequently identified the body as that of Zia Khan. He was not contacted again
about payment of the ransom. Rashid thereafter returned home to Pakistan. Whilst in
Pakistan, he received three threatening calls. He recognised the caller, who was
speaking Urdu, as accused 1. Rashid saved the three numbers on his phone.
[15] According to Rossouw, he was provided with the cellphone number
0763820620 by Rashid Khan, as the number that had been used by one of the alleged
kidnappers to contact him. Although he did not have access to the data systems of
any of the cellphone providers at that stage, he did have a program to process and
analyse cellphone data. Rashid had also furnished him with the names of the three
persons, namely accused 1, 2 and 6, who he allegedly suspected of being involved in
Zia’s kidnapping and their contact numbers. Rossouw had first approached W/O Van
Zyl, who was at that stage part of a task team investigating vehicle theft, with regard
to Zia’s Corsa bakkie. He had also approached Captain Niemand of Crime Intelligence
and Colonel Kruger. Captain Niemand informed him that he (Niemand) had
established that the cellphone number 0763820620 was active in the Olive Hill area
of Bloemfontein. Rossouw then called on estate agents in that area, which led him to
6 Van der Spuy Avenue, a property situated in Olive Hill, Bloemfontein.
[16] Rossouw was evidently dissatisfied with the lack of progress on the part of the
police in the investigation of Zia Khan’s disappearance. At that stage, 6 Van der Spuy
Avenue had only been observed for approximately two hours by the police, who
reported that the place was unoccupied. Rossouw then contacted Warrant Officers
Van Zyl and Steyn of organised crime, who were known to him. By the time he first
approached them for assistance, he had already established that a person named
Ejaz Ahmed, who had furnished one of his contact numbers as 0763820620, had
signed a lease agreement in respect of 6 Van der Spuy Avenue. He sought and
obtained permission from Captain Niemand to secure a key from the letting agent for
the premises. Having received the key, he together with Warrant Officers Van Zyl and
Steyn entered the premises. The evidence found at 6 Van der Spuy Avenue included:
the body of Mr Zia Khan, which was buried in a shallow grave; Vodacom starter packs
for Sim numbers 0763820594 and 0763820620 as well as an instruction manual for
an Opel Astra vehicle. Rossouw recognised the latter number as the number that was
used to contact Rashid Khan by one of Zia Khan’s alleged kidnappers and was also
reflected on the lease agreement for 6 Van Der Spuy Avenue as one of the contact
numbers for the lessee, Ejaz Ahmed.
[17] The search at 6 Van der Spuy Avenue on 18 March 2008 was described by
counsel for the appellants as a ‘seminal moment in the investigation of the case’. Prior
thereto, there was no information with regard to the whereabouts of Zia Khan and
limited information as to the possible suspects. On 10 April 2008, and after having
obtained information from Vodacom pursuant to a subpoena issued in terms of s 205
of the Criminal Procedure Act relating to the various cellphone numbers that the police
then had to hand, Rossouw and Van Zyl set out to Howick (or more accurately the
GPS co-ordinates obtained from Vodacom for the cellphones in question that pointed
them in that direction). On their way, they received information which led them to
Kestell, where they arrested accused 1, 2 and 5 as well as Tammy MacDonald and
Iftkhar Ahmed, all of whom were seated in an Opel Astra.
[18] The evidence found at Kestell included: the passports of accused 1, 2 and 5
and a Vodaphone 125 cellphone bearing the sim number 0714903366 in the
possession of accused 5. The contact list on that Vodaphone 125 included the
following: Shabber 0797928808, Shahid2 0728776633 and Shahid4 0763820620 (as
already pointed out this number had been used to contact Rashid Khan by one of Zia
Khan’s alleged kidnappers and appeared on the lease agreement for 6 Van Der Spuy
Avenue). Also seized was a book containing contact names and numbers, which
included the following: Farhan 0763820594 (which Rossouw recognised as a number
on one of the starter packs found at 6 Van Der Spuy); Ali 0738602000; Ejaz
+3538633480444; Rashid 072 655 4447 (which Rossouw recognised as Rashid
Khan’s number); Zia +26658569716 (this number was known to Rossouw as Zia
Khan’s number as furnished to him by Rashid Khan); and Ifthkar 0835679156. There
was yet a further number alongside the name Farhan on another page of the book,
namely 0790822420 (this was one of the numbers given to Rossouw at the
commencement of his investigation into Zia Khan’s kidnapping; as belonging to one
of the persons last seen with Zia Khan). So too, was the number 0797928808, which
was listed alongside the name Shaber. Rossouw also recognised the number
0784366666, which was listed alongside the name Mazhar, as one that was reflected
on the lease agreement for 6 Van Der Spuy Avenue, as an alternative contact number
for the lessee, Ejaz Ahmed.
[19] Having received information from accused 5, Rossouw and Van Zyl made their
way with him to Howick. Accused 5 was detained at the Howick Police cells and
Rossouw and Van Zyl spent the night at the Howick Falls Hotel. The next morning,
namely 11 April, and whilst at the hotel, Van Zyl interviewed Ms Alma Dixon, an
employee of the hotel, who later testified that accused 1 arrived in a Black Corsa
bakkie and spent the night of the 29 March 2008 at the hotel. He reflected his address
as Maseru, Lesotho and telephone number as 071165993 in the guest registrar.
[20] That afternoon, and again on the strength of information furnished to them by
accused 5 the previous day, Van Zyl and Rossouw made their way to
Pietermaritzburg; first to Bayat Street and then to Harvard Street. Accused 3, 4 and 6
were arrested at Bayat Street. The evidence found at Bayat Street included: the
passport of accused 4; a Nokia 3410 (bearing an MTN Sim card with number
0784366666) and a copy of accused 3’s passport. The evidence found at Harvard
Street included: a box for the Vodaphone 125 cellphone found in the possession of
accused 5 in Kestell; an invoice from B4U in the name of S Khan for that cellphone;
an envelope addressed to Farhan with cellphone number 0790822420 (one of the
numbers which by this stage had come to feature quite prominently in the
investigation); the passport of one Muhammed Ali and another envelope sent by
Muhammed Ali addressed to Farhan Ullah. On his return to Bloemfontein from
Pietermaritzburg, Rossouw was able to analyse the cellphones found on each of
accused 3 and 5 and two sim cards allegedly belonging to accused 1 that was found
in a black packet in the Opel Astra at the time of their arrest.
[21] According to Steyn, after the discovery of the body of Zia Khan they received
information that the persons involved in his death were also linked to a Booysens’
docket pertaining to the disappearance of four Pakistani men. After attending on 6 Van
Der Spuy Avenue with Rossouw and Van Zyl, she opened a docket at the Clocolan
police station. Inspector Mokgotu was initially the investigating officer, however, when
he took ill during June-July, she was appointed by Colonel Topkin to take over the
investigation. At that stage, accused 1 to 6 had already been arrested. In December
2008, accused 7 (Ali Tanveer) and one Rehman Khan (a cousin of accused 5 and 7)
were arrested after their photographs had been published in a local newspaper.
Pursuant to a pointing out made by Rehman Khan to Captain Francois Laux on 4
December 2008, the bodies of the four deceased in counts 10 to 13 were discovered
in a shallow grave approximately one metre deep in front of a chicken run some 10
metres from the back door of the house at 42 Andries Pretorius Street. Rehman Khan,
who was 19 years old and afraid, was then placed in witness protection at his request,
until he apparently fled about one week before the commencement of the trial. In the
course of her investigation, Steyn obtained several statements from Rehman Khan.
[22] Mr Ifthkar Ahmed testified that he had initially met accused 1 and 2 through an
acquaintance known as Shan. Thereafter he was contacted by Shan, who told him
that accused 1 wanted to meet with him. He then received a phone call from the latter,
who said that he required Ahmed’s assistance to secure a property and proposed that
they meet in Qwa Qwa. Ahmed suggested that they meet in Kestell instead. On
Thursday 10 April 2008, Ahmed, who was accompanied by a friend, Tammy
McDonald, drove to Kestell, where he met accused 1, 2 and 5 at the Excel garage.
Whilst seated in a blue Opel Astra, which was being driven by accused 2, Van Zyl and
Rossouw arrived and they were arrested. At the Kestell police station, where he
shared a cell with accused 1, the latter expressed the hope that the police would not
find the BMW car or Opel Corsa Bakkie, which he stated were in Lesotho in the
possession of a person by the name of Makara or the bodies of the ‘four guys from
Johannesburg’. The next day they were transported to the Bloemfontein police station,
where he shared a cell with accused 2. Accused 2 told him that they had kidnapped
four people from Johannesburg, ‘with their own BMW, a blue car’ and took them to
Clocolan in the Free State. Accused 2 phoned Ejaz Zodah, who was then in
Johannesburg and allegedly the gang leader, and told him ‘minus 2’. Later, he phoned
him again to tell him ‘minus 4’ – a reference, so it would seem, to the fact that initially
two and thereafter all four had been killed. Ejaz Zodah sent accused 6 to confirm that
the four individuals had indeed been killed. Accused 2 also said that all four, who had
been shot, were buried in one grave.
[23] Accused 2 further told Ahmed that they had kidnapped Zia Khan and taken him
to Bloemfontein, where a friend had organised a place for them. It was there that Zia
Khan was killed. Although he was not present when Zia Khan was killed, when he
arrived later that day he washed, dressed and then buried the body. As accused 2
described it, the killing of the four deceased, who were members of a rival gang, was
because ‘they want to put the gang down to come out on top’, whilst the killing of Zia
Khan was not gang-related, but ‘for money’.
[24] It is against that broad factual backdrop that the appeal falls to be considered.
The appeal rests upon four main foundations: first, the admission of evidence, which,
so it is asserted, was obtained unconstitutionally and which infringed the appellants’
right to privacy and to a fair trial; second, the admission of hearsay evidence and the
prominent role that such evidence played in the conviction of the appellants; and, third,
the credibility findings made by the trial court in favour of the prosecution witnesses
and against the appellants.
As to the first:
[25] It is contended that the search of the premises and seizure of exhibits at 6 Van
der Spuy Avenue in Bloemfontein violated the appellants’ right to privacy. So too, the
search of their persons, vehicles and houses upon their arrest. When Rossouw was
testifying, counsel for the appellants raised the following objection:
‘At this stage M’Lord, I would like to indicate my position that I have, I have a problem, I object
against the admissibility of the evidence that the witness is going to tender in respect of
exhibits which was found on this specific premises as well as his further evidence. M’Lord, the
admissibility of that is attacked firstly on the basis that the evidence was obtained unlawfully
by this specific witness that is currently testifying. His actions were not sanctioned by law and
therefore I will propose to His Lordship that that evidence is inadmissible on that basis alone.
M’Lord, furthermore, secondly I would also propose to His Lordship that the evidence that was
obtained was in breach of Section 14 of the Constitution which deals with the privacy rights of
every citizen or every person. Now M’Lord, I am mindful of the fact that Section 35 of the
Constitution, subsection 5 of that Section, provides that any evidence which was obtained
unconstitutionally must be excluded unless it will not have the effect on the fairness of the trial
of the accused or else if it would be in the interest of justice. So M’Lord, my submission would
be that His Lordship does have discretion to allow evidence which was unconstitutionally
obtained, if it does not affect the fairness of the trial or if it is in the interest of justice.
Now M’Lord, my submission in this effect is to determine that admissibility, M’Lord needs to
have a trial within a trial. Now I am mindful of the fact that my learned friend will probably argue
to His Lordship that the onus in respect of whether there is a constitutional infringement will
obviously lie with the accused and if that is the argument I am in agreement with that, that is
so, there is authority for that. However whether this information was obtained lawfully that is
another question M’Lord and that I do not bear the onus, the State has the onus to show to
His Lordship that that evidence was in fact obtained lawfully.
M’Lord, if I may assist my learned friend in that respect, I say it is unlawfully because as a
private detective or a private person, the witness does not have the legal power to first of all
enter a premises, to search a premises, to search a person found on a premises and to gather
information at such a place, because of that M’Lord I submit that there is a need for a trial
within a trial where that point is, admissibility must be determined first before His Lordship
needs to hear the remainder of his evidence, as it pleases.’
[26] The prosecutor agreed with the contention that to determine whether or not the
evidence in question (which was not identified by counsel for the accused) was
admissible, a trial within a trial had to be held. And, the trial court was evidently
persuaded to follow that course. In that, in my view, it was wrong. What is more, the
trial court proceeded to do so without so much as even attempting to identify the
evidence, the subject of the admissibility trial. Be that as it may, the starting point must
be an appreciation that a notable feature of the Constitution’s specific exclusionary
provision (s 35(5)) is that it does not provide for the automatic exclusion of
unconstitutionally obtained evidence. Evidence must be excluded only if it (a) renders
the trial unfair; or (b) is otherwise detrimental to the administration of justice. As no
evidence was adduced on that score on behalf of the appellants, the trial court was
simply unable to make that assessment. Moreover, in this regard it is perhaps
important to recognise the distinction between real and testimonial evidence, and that
unfairness in the method of obtaining the evidence does not necessarily result in
unfairness in the trial. Importantly, here we are not dealing with ‘self-incriminatory’ or
‘conscriptive’ evidence, where the so-called alleged constitutional infringement has
resulted in the creation of evidence which would not otherwise exist. The appellants
were not conscripted to create the evidence against themselves (such as for example
a self-incriminating statement) upon which the prosecution now seeks to rely. Nor was
the evidence found with the compelled assistance of any of the appellants.3
[27] Insofar as Rossouw’s role in the investigation is concerned, the evidence is
clear that every stage of his involvement was at the behest of Van Zyl. All of the
exhibits seized were handed to Van Zyl, who thereafter dealt with them in accordance
with standard police procedure. There has been no challenge on behalf of the
appellants either in this Court or the one below to the chain of custody of the various
exhibits. The suggestion appears to be that Mr Rossouw’s mere presence, without
more, tainted the investigation in some or other undisclosed manner, thereby resulting
in an unfair trial. That, merely has to be stated, to be rejected.
3 See generally Magwaza v S [2015] ZASCA 36; [2015] 2 All SA 280 (SCA); 2016 (1) SACR 53 (SCA)
and the cases there cited.
[28] It is so that 6 Van der Spuy Avenue was searched without a search warrant,
but by that stage the property was to all intents and purposes abandoned. In any event,
the search had been conducted with the permission of the letting agent, National Real
Estate. The searches in Kestell and Pietermaritzburg followed upon the arrest of
suspects and were conducted in terms of s 23 of the Criminal Procedure Act. In any
event, none of the appellants testified during the course of the trial within a trial. The
trial court was thus simply none the wiser as to whose privacy rights had been
infringed, the extent and scope of such infringement and whether or not, as a
consequence, it ought to exercise its discretion in favour of admitting such evidence.
[29] In S v Magwaza it was stated:
‘Although s 35(5) of the Constitution does not direct a court, as does s 24(2) of the [Canadian]
Charter, to consider ‘all the circumstances’ in determining whether the admission of evidence
will bring the administration of justice into disrepute, it appears to be logical that all relevant
circumstances should be considered (Pillay at 433h). Collins lists a number of factors to be
considered in the determination of whether the admission of evidence will bring the
administration of justice into disrepute, such as, for example: the kind of evidence that was
obtained; what constitutional right was infringed; was such infringement serious or merely of
a technical nature and would the evidence have been obtained in any event. In Collins (at
282), Lamer J reasoned that the concept of disrepute necessarily involves some element of
community views and ‘thus requires the Judge to refer to what he conceives to be the views
of the community at large’. Pillay (at 433d-e) accepted that whether the admission of evidence
will bring the administration of justice into disrepute requires a value judgment, which inevitably
involves considerations of the interests of the public.’4
So approached, no justification existed in this case for the exclusion of the evidence.
The result is that at the conclusion of the trial within a trial, a sizeable body of exhibits
came, quite correctly, to be admitted into evidence against the accused.
As to the second:
[30] During the course of the trial, some of the evidence relied upon by the
prosecution was sought to be excluded by the defence on account of its hearsay
nature, such as: (a) the evidence of Ms Saleem of her telephonic conversations with
her husband and Amanullah Nusrullam; (b) Ms Awan’s evidence of her conversations
4 Magwaza fn 3 above para 15.
with her husband; (c) six sworn statements by Rehman Khan, made to three different
police officers; and (d) the pointing out made by Rehman Khan to Captain Laux. The
trial court ruled them admissible in terms of s 3(1)(c) of the Law of Evidence
Amendment Act 45 of 1988 (the Law of Evidence Act).
[31] Hearsay evidence has historically been recognised to tend to be unreliable. It
has thus been said that a court should hesitate long in admitting or relying on hearsay
evidence, which plays a decisive or even significant part in convicting an accused
person, unless there are compelling justifications for doing so.5 Hearsay is defined, in
s 3(4) of the Law of Evidence Act, as statements either oral or written, whose probative
value depends upon the credibility of another independent person not testifying before
court. In Seemela v S, it was stated:
‘For many years our law knew a rigid exclusionary rule which allowed specific exceptions but
no relaxation. Now there is no exclusion as such. Hearsay evidence may now be accepted
subject to the broad, almost limitless criteria set out in s 3(1). Of that section, Schutz JA (s v
Ramavhale 1996 (1) SACR 639 (A) at 647d) had this to say:
“. . . it is necessary to emphasise . . . that s 3(1) is an exclusionary subsection and that the
touchstone of admissibility is the interest of justice, as is made clear by the words ‘. . . hearsay
evidence shall not be admitted as evidence . . . unless - . . . the court, having regard to (the
considerations in ss (c)) is of the opinion that such evidence should be admitted in the interests
of justice’”.’6
[32] The matters listed in s 3(1)(c) are: (i) the nature of the proceedings; (ii) the
nature of the evidence; (iii) the purpose for which the evidence is tendered; (iv) the
probative value of the evidence; (v) the reason why the evidence is not given by the
person upon whose credibility the probative value of such evidence depends; (vi) any
prejudice to a party which the admission of such evidence might entail; and (vii) any
other factor which should in the opinion of the court be taken into account. Insofar as
the evidence of Ms Saleem and Ms Awan are concerned, counsel accepted that their
‘evidence falls squarely within the ambit of s 3(1)(c)’ and that the ‘trial court gave a
lengthy judgment and considered each factor mentioned in section 3(1)(c) (i - vii)’.
5 Seemela v S [2015] ZASCA 41; 2016 (2) SACR 125 (SCA).
6 Ibid para 12.
[33] I may add that there is much in the other evidence that lends material support
to the evidence of the two of them. First, independently of the other, the evidence of
each establishes that: the four deceased were in the company of each other; their
whereabouts and the other persons in whose presence they found themselves.
Second, their evidence establishes that each of the deceased had cellphones with the
following numbers: Saleem Majid 0728731388; Amanullah Nusrullah 0820426282;
Shabodien Hussein 0737611411 and Malik Yasser 0827472516, which Ms Heyneke
of Vodacom testified was active in Clocolan at the relevant time. Third, Ms Saleem
identified her CD covers in a little shed behind the house at 42 Andries Pretorius Street
in Clocolan, the very property on which the bodies of the four deceased were ultimately
discovered. Fifth, Frank Opperman, who lived, and worked as a service provider of
computers and accessories in Clocolan, recognised accused 1 as the driver of a blue
BMW, which he identified from photographs taken after the vehicle had been
recovered, as the vehicle that Ms Saleem testified belonged to her, which had been
driven by her husband from Johannesburg to Clocolan. Support for this is also to be
found in the evidence of Steven Latela, who testified that one morning after 9
November 2007, accused 1 came to fetch him in a blue BMW. There is therefore
sufficient by way of safeguards in the evidence, if viewed holistically, that ought to
satisfy a trier of fact as to the reliability of the hearsay evidence tendered by each of
these witnesses.
[34] Turning to the evidence of Rehman Khan. I cannot agree with the trial court that
his various statements ought to have been admitted into evidence against the
accused. In this regard it is important to recognise why hearsay evidence is in general
inadmissible. A witness who testifies in open court does so under oath or affirmation
and so the potential liability for perjury operates as a natural deterrent against false
testimony. Also, the presence in court of the person against whom the evidence is
tendered encourages circumspection on the part of the witness. Because of the
adversarial nature of court proceedings, a person has the right to confront his or her
accuser and to test by cross-examination the veracity of the witness’s assertions. It
must be remembered that cross-examination is a potent tool in the truth-finding
exercise and discerning who is telling the truth is essential to the fact-finding role of
the court. The court’s ability to observe the demeanour of the witness contributes to a
more reliable assessment of credibility. When hearsay evidence is admitted these
important safeguards are lost. And so, historically the exclusion of hearsay evidence
has been considered necessary to guard against the danger that the trier of fact might
place undue weight on such evidence despite its inherent weaknesses.
[35] As Schutz JA observed in S v Ramavhale ‘[a]n accused person usually has
enough to contend with without expecting him also to engage in mortal combat with
the absent witness’.7 Hence, the intuitive reluctance on the part of our courts to permit
untested evidence to be used against an accused in a criminal case.8 In support of the
admission of Rashid Khan‘s statements, the prosecution argued that he had
repeatedly asked for protection and that he was not in attendance because he and his
family in Pakistan had been threatened by the accused or persons acting on their
behalf. Accordingly, so the argument went, because of the intimidation by or at the
hands of the accused, the witness had disappeared and was not present to testify.
Simply put, there is no factual foundation for that speculative and conjectural
hypothesis.
[36] That aside, in the trial court much store was placed on the judgment of this
Court in S v Ndhlovu,9 which had come to represent a seismic shift in our law inasmuch
as it jettisoned the common law rule that an extra-curial statement by an accused
person is inadmissible against a co-accused. However, the correctness of Ndhlovu
has since been reconsidered in S v Litako.10 The key findings in Litako were: the rule
against the admission of hearsay evidence developed because of the inherent
dangers of permitting the use of extra-curial statements by one accused against
another; such a statement has always been regarded as irrelevant insofar as a co-
accused is concerned; the reliability of such evidence can never ever be properly
tested, because an accused person cannot access the tools traditionally employed for
that very purpose; the rule appreciates that fair trial rights, including the right to fully
challenge the prosecution case, may be hampered; and, consequently the right to
challenge evidence enshrined in s 35(3)(i) of the Constitution may thereby be rendered
nugatory.
7 S v Ramavhale 1996 (1) SACR 639 (A) at 648A.
8 Metadad v National Employers’ General Insurance Co Ltd 1992 (1) SA 494 (W).
9 S v Ndhlovu and Others 2002 (2) SACR 325 (SCA).
10 Litako & Others v S [2014] ZASCA 54; 2014 (2) SACR 431 (SCA); [2014] 3 All SA 138 (SCA); 2015
(3) SA 287 (SCA).
[37] In Mhlongo v S; Nkosi v S,11 the Constitutional Court affirmed the correctness
of Litako. Although Litako, like Ndhlovu, was concerned with extra-curial statements
of co-accused persons and in particular the admissibility of an extra-curial statement
by a non-testifying co-accused, the considerations that weighed in Litako must no
doubt equally apply to a witness in the position of Rehman Khan.
[38] Unlike his extra-curial statements, however, the pointing out by Rehman Khan,
stands on a different footing. The pointing out to Captain Laux on 4 December 2008
led to the discovery of the bodies of the four deceased in counts 10 to 13. In this
regard, as earlier, the importance of the distinction between real and testimonial
evidence looms large. Thus, whilst I have had no regard in my summation of the
evidence to the content of each of Rehman Khan’s extra-curial statements, including
his statements during the course of the pointing out, as recorded by Captain Laux, the
fact of the discovery of the four bodies at 42 Andries Pretorius Street, cannot be left
out of the reckoning.
As to the third:
[39] It is contended that the trial court erred in finding that Latela, Ahmed, Rossouw
and Van Zyl were credible and reliable witnesses. It may be convenient to commence
with the last two. As far as they are concerned, considerations of credibility and, even
for that matter reliability, hardly arise. I have already alluded to the importance of the
distinction between real and testimonial evidence. As should be apparent from the
evidence already summarised, the evidence of each related, in the main, to the former.
Aside from the challenge to the admissibility of such evidence (which as I have shown
is untenable), the fact of the existence or reliability of that evidence was not sought to
be impugned in any way. It must thus follow that as far as Van Zyl and Rossouw are
concerned, credibility can therefore hardly feature in the equation and must recede
into the background.
[40] Mr Steven Latela testified in relation to count 1, as well as 5, 6, 7 and 8; the last
four of which were not persisted with by the prosecution. The relevance of Latela’s
evidence is thus restricted to count 1. I have not recounted his version, because having
11 Mhlongo v S; Nkosi v S [2015] ZACC 19; 2015 (2) SACR 323 (CC); 2015 (8) BCLR 887 (CC).
been warned in terms of s 204 of the Criminal Procedure Act, his evidence falls to be
treated with caution and where it stands alone, I have chosen rather not to place any
reliance upon it. He stated, which was confirmed by accused 1, when the latter
testified, that in 2006 he had been working part-time at a shop in Clocolan belonging
to a Mr Ghani, who had leased 42 Andries Pretorius Street to Mr Ejaz Basra (also
known as Ejaz Zodah). When Basra left, apparently because his wife was going to be
having a baby, accused 1 remained at the house. Over time accused 1 came to be
joined by the other accused.
[41] That accords with the version of accused 2. He stated that he used to go to 42
Andries Pretorius Street to visit his friend Basra in 2007. As he put it, he used to stay
there ‘sometimes two weeks, sometimes four weeks or sometimes three weeks’. After
what appeared to have been a quarrel of some kind accused 4, 5 and 7 moved to the
A-frame house. Later they were joined by Rehman Khan. Accused 2 and 6 remained
at 42 Andries Pretorius Street, whilst accused 1 seemed to move between the two
houses. Although accused 1 was of the view that some of the other accused were
there to a far lesser extent than testified to by Latela, it ultimately came to be
undisputed that each of the accused had more than just a passing acquaintance with
each other as well as 42 Andries Pretorius Street during 2006 and 2007. Latela, who
was then still a scholar, was a daily visitor and had a fairly intimate knowledge of the
goings on at both 42 Andries Pretorius Street and the A-frame house, so much so that
he was entrusted with the key to the latter. That is how he was able to grant access to
Ms Saleem, Ms Awan and the police, when they called on the second occasion.
[42] That leaves Mr Ifthkar Ahmed: his version finds material corroboration in the
other evidence adduced by the prosecution. First, it is not in dispute that both accused
1 and 2 had contact with Ahmed. Both admitted to having spoken to him although each
denied having shared any information about their involvement in the commission of
any of the offences. Second, both the blue BMW and black Corsa bakkie were indeed
recovered in Maseru, Lesotho. They were then in the possession of a person named
Lephoi Makara. Ms Saleem identified the BMW, once recovered, as hers. The Corsa
Bakkie that was recovered from Makara was positively identified as Zia Khan’s.
[43] Third, when asked in the course of his testimony if Malik Yasser was ‘a popular
guy and a gangster’, accused 6 replied: ‘the whole community knows that he was a
gangster’. He added that the people were scared of Malik Yasser and Saleem Majid.
He said: ‘they used to bring guys from overseas, human trafficking’. His evidence then
ran thus:
‘If you say that he was involved in human trafficking, one of the ways of human trafficking is
you get people illegally to a country and then you provide them with documentation, although
they’re not supposed to be here. That’s one of the ways of human trafficking? . . . Yes. I also
came with the very same way.
. . .
And who arranged that for you? . . . Rajah Novazish
And Basra? . . . I met him after that.
. . .
But you do agree that’s one way of human trafficking. Getting people here, get them false
documentation? . . . Yes
And there’s a lot of money involved in that. Isn’t it? The people who want to be illegally in the
country, they pay for the people in order to provide them with either a place to stay, protection
not to be caught by immigration and to get the documentation, illegal? . . . Yes. I agree on it.
And is it also so that there are quite a lot of groups who arrange this human trafficking in South
Africa? . . . Yes, I know some of the people they are doing this business.’
[44] Accused 6 added:
‘M’lord, when I came in 2003, I heard from the community that Majid Saleem, they kill one
woman and a girl. That’s why they in jail.’
This finds support in the evidence of Ms Saleem. She confirmed that her husband and
Amanullah Nusrullam had been arrested by the police in 2003 in connection with the
murder of a woman and her daughter, both of whom were Pakistani nationals. She
testified that in the ensuing trial they were found not guilty. In evidence, she was asked
by counsel for the accused whether she was aware of ‘the principle of an eye for an
eye’.
[45] The relevance of this last exchange is illustrated in the following from the
record:
‘Did Basra at any stage talk to you about these killings? . . . No. Basra never told me.
And did accused number 1, 2, 3, 4, 5 and 7 at any stage talk about these killings of Basra’s
friends? . . . No
So, as far as you are concerned, those two persons who were killed, that’s got nothing to do
with this case? . . . I have no knowledge about that.
. . .
Let me try to make it more easy for you. You didn’t talk to your attorney, to Mr Potgieter your
advocate about the fact that Basra’s friends were killed? . . . I didn’t speak anything to my
lawyer. But I did explain [to] him that Majid and Yasser Awan was gangsters.
That’s all what you said? . . . Yes.
And as far as you know, not one of your co-accused told Mr Potgieter about the fact that
Basra’s friends were killed allegedly by Malik Yasser and Majid Saleem? . . . I’m not sure about
it.
Because if you didn’t tell him anything and if the rest of the accused who testified also denied
that, I’d just like to know if you can assist us . . . why did he put to Zainub Saleem, the wife of
Majid that there is a religious principle of an eye for an eye? . . . M’lord, I can say only about
myself. I’m not sure about the other people what they are saying. But I am sitting here. I said
nothing about that’.
The quoted excerpts whilst accused 6 was being cross-examined lend weighty support
to Ahmed’s version that he was told by accused 2 that the killing of the four deceased
was gang-related. What was put by counsel to Ms Saleem is also telling. It accords
with the foundational hypothesis sought to be advanced by the prosecution.
[46] Fourth, the police did indeed find the bodies of the ‘four guys from
Johannesburg’ (as they were described) in Clocolan in the Free State. On that score,
the key post mortem findings of Dr Robert Book, a specialist forensic pathologist, who
examined the four, was that: they had been bound; had tape wrapped around their
mouths; each had been shot in the back of the head; and, their bodies had been buried
and were in an advanced state of decomposition. The discovery of the various different
passports and execution style killing of the four deceased lends credence to the
assertion of involvement in human trafficking and gang-related activity.
[47] Fifth, Rashid Khan did testify that after Zia Khan had been kidnapped he was
contacted with a ransom demand of R2 million. In that he supports Ahmed’s version
that he was told by accused 2 that the killing of Zia Khan was ‘for money’. Finally, it
must be asked, where else, if not from accused 1 and 2, would Ahmed have obtained
such information, which is entirely consistent with all the other proved facts. He could
hardly have conjured up that information and, what is more, it would take tremendous
guile and ingenuity for him to have pieced together such a coherent account. But even,
were it to have been possible for him to have pieced his version together, where would
he have derived the information from? In short, his version has a ring of truth to it. If
he did derive his information from accused 1 and 2, as it seems that he must have,
then the more important question becomes, how would accused 1 and 2 have been
privy to such details, unless they were intimately involved in the events described?
[48] Thus aside from Rehman Khan’s extra-curial statements and to a lesser extent
Latela’s testimony, where it stood alone, no warrant exists for the exclusion of any of
the other evidence adduced by the prosecution. It bears noting, however, that the
exclusion of such evidence does not materially detract from the cogency of the
prosecution case. Nor, for that matter, does the evidence of the accused, to which I
now turn.
[49] Importantly, it came to be formally admitted that: (i) cellphone number
0790822420 was used by accused 5 from time to time and cellphone number
0714903366 was also his number; (ii) cellphone numbers 0728776633 and
0711659933 were accused 1’s numbers; and (iii) the correctness of the cellphone data
was not in dispute. As shall be demonstrated, the effect of these formal admissions,
particularly that relating to the cellphone data, cannot be overstated.
[50] Accused 1, 2, 3, 5 and 6 testified. The other two did not, nor did they call any
evidence in their defence. Accused 1 testified that during August 2006 to July – August
2007 he often stayed at the house in Andries Pretorius Street in Clocolan and that
after Basra left he paid the rent. In July or August 2007, he rented the A-frame house
although accused 5 paid the rent for it. In this regard he was unable to explain why it
was put to Latela that accused 5 in fact stayed in Mpumulanga, where he had a shop.
Accused 1 stated that whilst he did fetch Latela in a blue BMW, it was not the same
vehicle as that identified by Ms Saleem. Although he had met her husband fleetingly
only once in Johannesburg, he was unable to explain her evidence that her husband
had used her cellphone to call a number on 5 November 2007, which came to be
admitted as his number. Importantly, her evidence in this regard was not disputed
when she testified.
[51] It is not in dispute that accused 1 visited 6 Van Der Spuy Avenue on 4 March
2008. This according to him was the first time that he visited there, which co-
incidentally was the very day that Zia Khan went missing. It was also the place where
his body was eventually found. It will be recalled that the day before, namely 3 March
2008, accused 2 and 6 left Zia Khan’s house, having spent the night there, together
with him in his Corsa bakkie. According to the cellphone data evidence, from 20 March
to 9 April 2008, accused 1 was using Zia Khan’s handset, with number 07111659933.
That was also the contact number reflected on the register for the Howick Falls Hotel,
where Ms Alma Dixon saw accused 1 with the black Corsa bakkie. Inside the Corsa
bakkie, when it was ultimately recovered from Makara in Lesotho, were the original
passports of accused 6 and Rehman Khan. Accused 1 admitted to having called
Rashid Khan in Pakistan, however, it was not to threaten him, but as he put it
‘[b]ecause I want to know from him why I am in prison’. This despite the fact that he
knew that Rashid was a prosecution witness, with whom he ought not to have had any
contact. Accused 1 also admitted that he was the owner of the book seized from the
Opel Astra in Kestell containing the names and numbers of his contacts. The entry
‘Farhan 0763820594’, so he stated, was a reference to accused 5. That, it bears
repeating, was the number on one of the starter packs found by Rossouw at 6 Van
Der Spuy.
[52] When accused 3 testified, he admitted that it was his name on the lease
agreement and that he had in fact concluded the lease agreement in respect of 6 Van
Der Spuy Avenue. He said that he was initially asked by one Rajah to lease a property
for him in Bloemfontein, but refused. Thereafter he was asked by Basra, who is his
first cousin, and he agreed. Although he signed the lease agreement, ‘they took
responsibility to do everything, the rest’ including, so he states, the payment of the
rent. Accused 5 testified that he came to 42 Andries Pretorius Street in Clocolan in
about June 2007 to see his relative, accused 1. He lived there until ‘about the end of
July or first week of August and then we rent our own house’. Accused 5 also admitted
that the envelope found at Harvard Street in Pietermaritzburg was addressed to him
and bore his cellphone number 0790822420.
[53] Saleem Majid last spoke to his wife on 9 November 2007. Thereafter she was
unable to contact him telephonically. The evidence pertaining to the cellphone data
established that accused 1’s SIM card with number 0728776633 was used in Saleem
Majid’s handset with number 0728731388 in the period 9 November to 11 November
2007. That handset was then not active until 30 December 2007, when from 12:07 on
that day until 13:12 on 8 March 2008 it was used with accused 5’s SIM card bearing
number 0790872420. In that period a total of 270 calls were made, 263 of which were
successful.
[54] Accused 5’s other number, 0763693123, came to be used in Saleem Majid’s
handset during the period 30 December 2007 to 9 January 2008; in which time 13
successful calls were made on that SIM card. Accused 5’s number 0790872420 was
also used in the handset of the deceased, Shabodien Hussein, from 1 to 4 January
2008. In that period 111 successful calls were made. The number 0797928808, which
was reflected on the contact list of the Vodaphone 125 phone found on accused 5 at
Kestlell next to the name Shabber, was also used in Shabodien Hussein’s handset in
the period 30 December 2007 to 3 January 2008. Some 50 successful calls were made
on that number using that handset in that period. That SIM card was also used in
Saleem Majid’s handset in the period 1 January to 4 March 2008.
[55] As should be apparent, I have restricted my analysis to the evidence that is, by
and large, either common cause or undisputed. The overall picture that emerges when
the different pieces are stitched together and the seemingly disparate threads
tightened is pretty damning. To borrow from Davis AJA n R v De Villiers:
‘As stated by Best, Evidence (5th ed. sec 298): -
“Not to speak of greater numbers; even two articles of circumstantial evidence – though each taken by
itself weigh but as a feather – join them together, you will find them pressing on the delinquent with the
weight of a milestone. It is of the utmost importance to bear in mind that, where a number of independent
circumstances point to the same conclusion the probability of the justness of that conclusion is not the
sum of the simple probabilities of those circumstances, but is the compound result of them.”’12
Indeed, as stated in S v Reddy:
‘In assessing circumstantial evidence one needs to be careful not to approach such evidence
upon a piece-meal basis and to subject each individual piece of evidence to a consideration
12 R v De Villiers 1944 AD 493 at 508.
of whether it excludes the reasonable possibility that the explanation given by an accused is
true. The evidence needs to be considered in its totality.’13
[56] Accordingly, little value would be served in traversing the evidence of each of
the accused in any greater detail. For the most part, the attempt to distance
themselves from each other, 42 Andries Pretorius Street and 4 Van Der Spuy Avenue
and the incriminating exhibits, bordered on the ridiculous. So too, the disavowal of
what was put by counsel on their behalf to the different prosecution witnesses, as well
as the feigned ignorance or contrived explanations for the various seized exhibits and
the movement of their cellphone handsets and SIM cards as testified to by Ms
Heyneke. As Nugent J pointed out in S v Van der Meyden:
‘Evidence which incriminates the accused, and evidence which exculpates him, cannot both
be true – there is not even a possibility that both might be true – the one is possibly true only
if there is an equivalent possibility that the other is untrue. There will be cases where the State
evidence is so convincing and conclusive as to exclude the reasonable possibility that the
accused might be innocent, no matter that his evidence might suggest the contrary when
viewed in isolation.’14
[57] Nor is it necessary for me to deal with the individual role played by each of the
accused, because as Moseneke J observed in S v Thebus in summing up the
requirements for common purpose liability: ‘[t]he liability arises from an active
association and participation in a common criminal design with the requisite
blameworthy state of mind’.15 Here not only does the evidence show a clear
association between the accused to each other, but also links each of them by means
of several different pieces of evidence to all five deceased and the two properties
where their bodies were buried.
[58] It follows that the points raised on appeal, when viewed either individually or
collectively, can hardly tip the scales in favour of the accused, meaning that the appeal
must fail.
13 S v Reddy and Others 1996 (2) SACR 1 (A) at 8-9.
14 S v Van der Meyden 1999 (2) SA 79 (W) at 81F–G.
15 Thebus and Another v S [2003] ZACC 12; 2003 (6) SA 505 (CC); 2003 (10) BCLR 1100 (CC) para
19.
[59] In the result, the appeal is dismissed.
________________
VM PONNAN
JUDGE OF APPEAL
_________________________
MV PHATSHOANE
ACTING JUDGE OF APPEAL
Appearances:
For appellants:
J Nel SC with J Potgieter
Instructed by:
Jacobs Fourie Inc, Bloemfontein
For respondent:
A Simpson
Instructed by:
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
22 AUGUST 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
Qurashi and Others v The State (Case no 1166/2018) [2022] ZASCA 188 (22 August 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment dismissing the appeal against the
decision of the Free State Division of the High Court of South Africa, Bloemfontein (the high court).
The first, second and third appellants, Saleem Qurashi, Farhan Ullah and Shabber Ghulam (hereinafter
referred to as ‘the accused’), stood trial as accused 2, 5 and 6 respectively, together with four others,
all Pakistani nationals before the high court. The accused had to answer to 11 counts, namely: the
contravention of s 9(1)(a) of the Prevention of Organised Crime Act 121 of 1998 (POCA) (count 1); two
counts of robbery with aggravating circumstances (counts 9 and 16); five counts of murder (counts 10,
11, 12, 13 and 17); kidnapping (count 14); attempted extortion (count 15); and, a contravention of s
18(2)(a) of the Riotous Assemblies Act 17 of 1956, being a conspiracy to commit kidnapping (count 18)
- a charge that was not preferred against the third appellant.
Count 1 relates to the alleged participation of the accused in organised criminal gang activity in
contravention of s 9 of POCA. As part of a pattern of such activity, the State contended in the high court
that the accused either individually or collectively committed the various offences set out in the
indictment. The prosecution alleged that in November 2007, the four deceased in counts 10 to 13, Malik
Yasser Awan, Amanullah Nusrullam, Shabodien Hussein and Majid Saleem, who were also Pakistani
nationals, were lured to Clocolan, Free State, by the accused, where they were robbed of a BMW sedan
motor vehicle, four Nokia cell phones and two firearms (count 9). They were then murdered and buried
in a shallow grave (counts 10, 11, 12 and 13) at a property known as 42 Andries Pretorius Street,
Clocolan.
On 4 March 2008, the accused allegedly kidnapped Mr Zia Khan and deprived him of his liberty at 6
Van der Spuy Avenue, in Bloemfontein (count 14). They then threatened to kill Mr Zia Khan unless his
relative, Mr Rashid Khan, paid them R2 million (count 15). Mr Zia Khan was also robbed of his Opel
Corsa bakkie and a cell phone (count 16). Following the killing of Zia Khan (count 17), he was buried in
a shallow grave at 6 Van der Spuy Avenue, Estoire, Bloemfontein. The State further alleged that
accused 1, 2 and 5 conspired with Mr Ifthkar Ahmed to kidnap Mr Rashid Khan (count 18). Save for
count 17, on which the accused were convicted of culpable homicide instead of murder, the accused
were convicted as charged and each sentenced to imprisonment for life.
The issues before the SCA concerned: first, the admission of evidence, which, the accused contended,
was obtained unconstitutionally and infringed their right to privacy and to a fair trial; second, the
admission of hearsay evidence and the prominent role it played in their conviction; and, third, the
credibility findings made by the high court in favour of the prosecution witnesses against the accused.
At to the first, it was contended for the accused that the search of the premises and seizure of exhibits
at 6 Van der Spuy Avenue in Bloemfontein violated the accused right to privacy. So too, the search of
their persons, vehicles and houses upon their arrest.
The SCA held that the starting point must be an appreciation that a notable feature of the Constitution’s
specific exclusionary provision (s 35(5)) is that it does not provide for the automatic exclusion of
unconstitutionally obtained evidence. Evidence must be excluded only if it (a) renders the trial unfair;
or (b) is otherwise detrimental to the administration of justice. As no evidence was adduced on that
score on behalf of the accused, the high court was simply unable to make that assessment.
The SCA found that although the search at 6 Van der Spuy Avenue was without a search warrant, the
property was for all intents and purposes abandoned. The search had been conducted with the
permission of the letting agent. Furthermore, it held that the searches in Kestell and Pietermaritzburg
followed upon the arrest of suspects and were conducted in terms of s 23 of the Criminal Procedure
Act 51 of 1977 (the CPA). Lastly, the SCA held that as none of the accused testified during the trial
within a trial, the high court was simply none the wiser as to whose privacy rights had been infringed,
the extent and scope of such infringement and whether or not, as a consequence, it ought to exercise
its discretion in favour of admitting such evidence. So approached, the SCA held, no justification existed
for the exclusion of the evidence.
As to the second, during the course of the trial, some of the evidence relied upon by the prosecution
was sought to be excluded by the defence on account of its hearsay nature. The high court ruled them
admissible in terms of s 3(1)(c) of the Law of Evidence Amendment Act 45 of 1988 (the Law of Evidence
Act).
The SCA considered the principles applicable. In respect of the evidence of Ms Saleem and Ms Awan,
with regard to the telephonic conversations they had with their husbands immediately prior to being
reported missing, the SCA held that there were sufficient safeguards in the evidence, if viewed
holistically, which ought to have satisfied a trier of fact as to the reliability of the hearsay evidence
tendered by each of the witnesses.
Furthermore, the SCA held that the various statements attributed to Mr Rehman Khan, who did not
testify, ought not to have been admitted into evidence against the accused. This was so, because a
witness who testifies in open court does so under oath or affirmation and so the potential liability for
perjury operates as a natural deterrent against false testimony. Also, the presence in court of the person
against whom the evidence is tendered encourages circumspection on the part of the witness. Because
of the adversarial nature of court proceedings, a person has the right to confront his or her accuser and
to test, by cross-examination, the veracity of the witness’s assertions.
The SCA further held that, unlike Mr Rehman Khan’s extra-curial statements, the pointing out made by
him stood on a different footing. It led to the discovery of the bodies of the four deceased in counts 10
to 13, which could not have been left out of the reckoning.
As to the third, it was contended that the high court erred in finding that Latela, Ahmed, Rossouw and
Van Zyl were credible and reliable witnesses. In respect of the credibility findings made by the high
court in favour Mr Rossouw and W/O Van Zyl, the evidence of each related to real evidence. Aside from
the challenge to the admissibility of such evidence, which the SCA found to be untenable, the fact of
the existence or reliability of that evidence was not sought to be impugned in any way. Their credibility
could hardly have featured and receded into the background.
As to those made in favour of Mr Latela, the SCA found that the relevance of his evidence was restricted
to count 1, the alleged participation of the accused in the organised criminal gang activity. The court
held that Mr Latela had been warned in terms of s 204 of the CPA and thus his evidence had to be
treated with caution where it stood alone. His evidence found corroboration in that it ultimately came to
be undisputed that each of the accused had more than just a passing acquaintance with each other as
well as 42 Andries Pretorius Street during 2006 and 2007.
As regards Mr Ifthkar Ahmed’s version, the SCA found material corroboration in the other evidence
adduced by the prosecution as detailed in the judgment. More importantly, the evidence adduced
through cross-examination of accused 6 provided weighty support to Mr Ahmed’s version that he was
told by accused 2 that the killing of the four deceased was gang related. Furthermore, he was told by
accused 1 of their involvement in the criminal activities. The SCA found, that Mr Ahmed could hardly
have conjured up that information as it would take tremendous guile and ingenuity for him to have
pieced together such a coherent account.
Regarding the evidence of each of accused’s version, the SCA held that little value would be served in
traversing the evidence of each of them in any greater detail. Not only did the evidence show a clear
association between the accused to each other, but also links each of them by means of several
different pieces of evidence to all five deceased and the two properties where their bodies were buried.
The SCA held that the points raised on appeal, when viewed either individually or collectively, could
hardly tip the scales in favour of the accused.
~~~~ends~~~~
|
2991
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 20430/2014
In the matter between:
MILES PLANT HIRE (PTY) LTD
APPELLANT
and
THE COMMISSIONER FOR THE SOUTH AFRICAN
RESPONDENT
REVENUE SERVICE
Neutral Citation: Miles Plant Hire v Commissioner SARS (20430/2014) [2015]
ZASCA 98 (1 June 2015)
Coram:
Ponnan, Maya and Petse JJA and Van der Merwe and Meyer AJJA
Heard:
8 May 2015
Delivered: 1 June 2015
Summary:
Lapsed appeal (against final order of winding-up) – application for
condonation - cumulative effect of flagrant breaches of the rules of the SCA without
any acceptable explanation, respondent‟s interest in the finality of the judgment and
the evident prejudice to respondent and body of creditors such that condonation
should be refused irrespective of the prospects of success on appeal – condonation
refused.
___________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Van Niekerk AJ
sitting as court of first instance):
(a)
The application for condonation is dismissed.
(b)
Ms Melanie Pandaram is ordered to pay the respondent‟s costs of the
application for condonation and its costs incurred in opposing the lapsed
appeal de bonis propriis on the attorney and client scale, which costs in both
instances shall include those of two counsel.
__________________________________________________________________
JUDGMENT
Meyer AJA (Ponnan, Maya and Petse JJA and Van der Merwe AJA concurring)
[1] The respondent, the Commissioner for the South African Revenue Service
(SARS), was granted leave to institute winding-up proceedings against the appellant,
Miles Plant Hire (Pty) Ltd (Miles), and Miles was placed under final winding-up by an
order of the Gauteng Division of the High Court, Pretoria (Van Niekerk AJ) on 3
October 2013. Leave to appeal to this court was granted by the court a quo on 12
February 2014. Miles lodged its notice of appeal with the registrar of this court on 11
March 2014. The appeal thereafter lapsed for failure on the part of Miles to
timeously prosecute it further. Therefore, the preliminary question that is before us is
whether the non-compliance with the rules of this court should be condoned and the
appeal reinstated. I propose first to deal with the factual background against which
the appeal arose and lapsed.
[2] Miles commenced trading in the year 2000. It conducted a plant hiring
business and performed „contracting services in the construction and road surfacing
industry‟. Its sole director before it was finally wound up had been Ms Melanie
Pandaram (Ms Pandaram).
[3] Miles applied for and was granted tax amnesty under the provisions of the
Small Business Tax Amnesty and Amendment of Taxation Laws Act 9 of 2006 in
respect of the years preceding the 2006 year of assessment. By her own admission
Ms Pandaram on behalf of Miles submitted to SARS an income tax return for the
2008 year of assessment as well as a VAT return for the March 2008 tax period and
supporting documents that were to her knowledge false. Her fraudulent conduct
caused Miles‟ tax liability to be reduced by R1 740 508.77 and resulted in Miles
ostensibly being entitled to a refund of input tax in the sum of R840 245.61.
Following the conclusion of a plea and sentence agreement in terms of s 105A of the
Criminal Procedure Act 51 of 1977, Ms Pandaram representing Miles was convicted
by the Durban Regional Court of income tax evasion (contravening s 104(1)(a) of the
Income Tax Act 58 of 1962) and VAT evasion (contravening s 59(1) of the Value
Added Tax Act 89 of 1991) and she in her representative capacity was sentenced on
each count to a fine of R100 000.00, which was wholly suspended for five years on
certain conditions.
[4] It is also undisputed that Miles had a history of failing to pay taxes when they
became due and it failed to submit income tax returns for the 2010, 2011 and 2012
tax years. On 1 October 2012 Miles requested SARS to provide it with an
opportunity to apply to SARS for a compromise of its outstanding tax debt in terms of
Chapter 14 of the Tax Administration Act 28 of 2011 (the TAA), which debt at that
stage amounted to R59 million.
[5] On 25 October 2012 when SARS was still awaiting Miles‟ request for its tax
debt to be compromised, Miles obtained an order of the North Gauteng High Court,
Pretoria sanctioning a compromise of its financial obligations. The compromise
proposed by Ms Pandaram did not contain all the information required in terms of s
155(3) of the 2008 Companies Act nor were the requirements prescribed by s 155(2)
met. SARS accordingly launched an urgent application for the setting aside of the s
155 sanctioned compromise. Miles did not oppose the application and such order
was granted on 4 December 2012.
[6] SARS served on Miles a demand dated 19 February 2013 in terms of s 345(1)
of the Companies Act 61 of 1973 (the 1973 Companies Act) wherein Miles‟
outstanding tax debt was recorded to be the sum of R37 209 060.51 (inclusive of
penalties and interest). In terms of s 172(1) of the TAA, SARS also filed with the
Registrar of the Kwazulu-Natal High Court, Durban a certified statement in which the
amount of tax due and payable by Miles was certified to be the sum of R37 441
091.55. Section 174 of the TAA provides that „[a] certified statement filed under
section 172 must be treated as a civil judgment lawfully given in the relevant court in
favour of SARS for a liquid debt for the amount specified in the statement.‟
[7] In response to the statutory demand, SARS was requested to afford Miles a
period of three weeks to finalise and present to SARS a request for its tax debt to be
compromised in accordance with the provisions of the TAA and not to proceed with
the winding-up of Miles pending the outcome of the request. It is also stated that
Miles-
„. . . was in the position to offer SARS an amount of R12 million rand to be paid over a period
of 18 months with interest calculated on the outstanding balance . . . .„
and
„[s]hould the offer of compromise be declined, then the company will invariably face financial
ruin . . . .„
[8] A Chapter 14 TAA compromise of Miles‟ tax debt, however, did not
materialise. Ms Pandaram, who deposed to Miles‟ answering affidavit in the
winding-up application, stated that:
„As the Respondent [Miles] was literally with its back against the wall and the liquidation not
being an option that the Respondent could consider, the only viable avenue in terms of
which the Respondent could still attempt to negotiate with the Applicant [SARS], were to
place the Respondent in Business Rescue.‟
On 28 March 2013 Miles‟ board (Ms Pandaram) passed a resolution in terms of s
129(1) of the Companies Act 71 of 2008 voluntarily beginning business rescue
proceedings and placing it under supervision. The resolution took effect when it
was filed with the Companies and Intellectual Property Commission (CIPC) on 2
April 2013. A business rescue practitioner, Mr George Nell, was appointed on 4 April
2013.
[9] SARS instituted the application for the winding-up of Miles in the court a quo
on 22 April 2013. In terms of the notice of motion it also sought the setting aside of
Miles‟ board resolution of 28 March 2013 to begin business rescue proceedings and
place the company under supervision. The business rescue proceedings, however,
ended before the application was finally heard in the court a quo. The business
rescue practitioner concluded that there was no reasonable prospect for rescuing
Miles and he accordingly filed a notice of the termination of the business rescue
proceedings with the CIPC in terms of s 132(2)(b) on 4 June 2013.
[10] One of the issues raised by Miles in resisting its winding-up was that SARS
had failed to comply with the provisions of s 177 of the TAA, which section reads as
follows:
„(1)
SARS may institute proceedings for the sequestration, liquidation or winding-up of a
person for an outstanding tax debt;
(2)
SARS may institute the proceedings whether or not the person-
(a) is present in the Republic; or
(b) has assets in the Republic.
(3)
If the tax debt is subject to an objection or appeal under Chapter 9 or a further appeal
against a decision by the tax court under section 129, the proceedings may only be
instituted with leave of the court before which the proceedings are brought.‟
Miles‟ tax debt was subject to a pending appeal to the tax court at the time when the
winding-up proceedings were instituted.
[11] The parties agreed that the proper interpretation of s 177(3) of the TAA was
the only issue that the court a quo needed to decide and that the fate of the winding-
up application depended solely on the determination of that question of law. Miles
contended that if the tax debt was subject to an objection or appeal as contemplated
in s 177(3), an application for the winding-up of a company may only be instituted by
SARS after it had been granted prior leave by the court before which the winding-up
proceedings are ultimately brought. SARS, on the other hand, contended that the
required leave and the winding-up of a company could legally be sought in the same
application proceedings. From this it is clear, therefore, that Miles had abandoned
its opposition to the winding-up application and confined its argument to the question
of law. (See Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and
Development Company Ltd & others [2013] All SA 251 (SCA); [2013] ZASCA 5 para
17). The interpretation of s 177(3) contended for by SARS found favour with the
court a quo. On 3 October 2013 it granted SARS leave to institute the winding-up
proceedings and it placed Miles under a final order of winding-up.
[12] Against that backdrop I turn to consider Miles‟ condonation application. The
principles relating to condonation are well established. They were thus stated by this
court in Dengetenge:
„[11] Factors which usually weigh with this court in considering an application for
condonation include the degree of non-compliance, the explanation therefor, the importance
of the case, a respondent‟s interest in the finality of the judgment of the court below, the
convenience of this court and the avoidance of unnecessary delay in the administration of
justice (per Holmes JA in Federated Employers Fire & General Insurance Company Limited
& another v McKenzie 1969 (3) SA 360 (A) at 362F-G). . .
[12] In Uitenhage Transitional Local Council v South African Revenue Service 2004 (1) SA
292 (SCA) at paragraph 6 this Court stated:
“One would have hoped that the many admonitions concerning what is required of an
applicant in a condonation application would be trite knowledge among practitioners who are
entrusted with the preparation of appeals to this Court: condonation is not to be had merely
for the asking; a full, detailed and accurate account of the causes of the delay and their
effects must be furnished so as to enable the Court to understand clearly the reasons and to
assess the responsibility. It must be obvious that, if the non-compliance is time-related then
the date, duration and extent of any obstacle on which reliance is placed must be spelled
out.”
[13] What calls for some acceptable explanation is not only the delay in the filing of the
heads of argument, but also the delay in seeking condonation. An appellant should,
whenever it realises that it has not complied with a rule of court, apply for condonation
without delay (Commissioner for Inland Revenue v Burger 1956 (4) SA 446 (A) at 449G-H).‟
[13] The notice of appeal in this matter was lodged with the registrar of this court
on 11 March 2014, which was within the one month period of the granting of leave to
appeal as required in terms of SCA rule 7(1)(b). Miles failed to lodge the record of
the proceedings in the court a quo with the registrar of this court within three months
of the lodging of its notice of appeal as required in terms of SCA rule 8(1) and the
time limit for lodging the record had not been extended in terms of SCA rule 8(2).
SCA rule 8(3) provides that „[i]f the appellant fails to lodge the record within the
prescribed period or within the extended period, the appeal shall lapse‟. Miles only
lodged the record, its heads of argument and an application for reinstatement of the
appeal and condonation with the registrar of this court on 18 August 2014. The
record should have been lodged on or before 10 June 2014 and Miles‟ heads of
argument, according to SCA rule 10(1)(a), within six weeks of the lodging of the
record. SCA rule 10(2A)(a) provides that if an „appellant fails to lodge heads of
argument within the prescribed period or within the extended period, the appeal shall
lapse‟. Furthermore, a decision on appeal in this matter hinges exclusively on a
matter of law. Yet, Miles lodged a voluminous record with the registrar without first
seeking the consent of SARS to limit the record and to omit the unnecessary parts
from it as is required in terms of SCA rule 8(9) or, at the very least, to prepare a core
bundle of documents as is required in terms of SCA rule 8(7), which would have
been appropriate to the appeal.
[14] There are several unsatisfactory features about this matter. Miles did not file
a replying affidavit in the condonation application and left various matters raised in
SARS‟ answering affidavit that obviously called for an answer unchallenged, such as
that:
-
Miles „attempted to defraud the fiscus by fraudulently obtaining‟ the
compromise in terms of s 155 of the 2008 Companies Act, that the court when
sanctioning the compromise was „misled‟, that the true facts were „fraudulently
misrepresented‟ or „not disclosed‟, and that „the ex parte order was obtained on a
mala fide basis;
-
the grounds of objection against certain assessments raised by SARS „do not
disclose a defence‟;
-
it was inappropriate to commence the business rescue proceedings taking
into account the insolvency of Miles;
-
„the only reason why [Miles] applied for leave to appeal was in an attempt to
delay the winding-up‟ and it „is utilizing the pending appeal as a means to avoid
[Miles] being liquidated in circumstances wherein it is hopelessly insolvent‟;
-
the „appeal like the compromise and the business rescue proceedings were
only instituted as a mechanism to bring about delay and/or avoid the winding up of
[Miles]‟;
-
„the reason why Mrs Pandaram failed to prosecute this appeal timeously is
because the pending appeal was merely used as a stratagem to attempt to prevent
the liquidation process proceeding, specifically insofar as the sale of assets is
concerned‟;
-
and that „the only reason why the appeal has been reinstated is to frustrate
the winding-up process‟.
[15] Miles seeks to attribute the causes of delay to: (a) the fact that its attorneys of
record (Symington & De Kok, Bloemfontein and Leahy & Van Niekerk Inc, Pretoria
(Miles‟ erstwhile attorneys)) withdrew on or about 9 May 2014; (b) Ms Pandaram‟s
belief that the liquidators attended to the prosecution of the appeal and that she only
became aware on 5 June 2014 that they were not; and (c) that her present
attorneys of record, Yugan Naidu Attorneys (Miles‟ present attorneys) „were trying to
reconstruct the record‟, but were notified on 25 July 2014 that the court file could not
be located whereafter they obtained the record from the liquidators‟ attorneys,
Tintingers Inc (the liquidators‟ attorneys), on 1 August 2014.
[16] Miles was neither represented by its liquidators in the appeal nor in the
application for condonation, but by Ms Pandaram. She instructed Miles‟ erstwhile
attorneys of record. On 11 April 2014 they withdrew as its attorneys of record. On
12 June 2014, which is two months after their withdrawal, the registrar of this court
was advised by Mr Yugan Naidu that he had been appointed as the attorney of
record for Miles. Ms Pandaram attempts to explain the failure to properly prosecute
the appeal since the withdrawal of Miles‟ erstwhile attorneys by stating that she, until
5 June 2014, believed that the „liquidators would be attending‟ to the prosecution of
the appeal. In this regard she states:
„It appears from an email dated the 4th June 2014 that the liquidators unequivocally
had no intent of having anything to do with the prosecution of the appeal, despite their initial
indications to the contrary. In this email my present attorneys were advised that the
liquidators were not parties to the appeal, and were advised further that the liquidators were
appointed by the Master of the High Court to attend to the administration of the estate, which
they intended to do, save for the realisation of assets until the appeal has either been
finalised or lapsed. Be that as it may, I accordingly became aware on the 5th June 2014 that
I would be required to prosecute the appeal if I so deemed appropriate.‟
[17] Ms Pandaram, however, fails to disclose what the „initial indications‟ from the
liquidators were that allegedly led her to believe that they would be prosecuting the
appeal nor does she disclose any other basis for her alleged belief. SARS pertinently
took issue with this aspect of her explanation in its answering affidavit but she did not
reply. Ms Pandaram could, on the facts presented, hardly have believed that the
liquidators would be attending to the prosecution of the appeal.
[18] Furthermore, with reference to an exchange of correspondence and a
previous inconsistent statement made by Ms Pandaram under oath, SARS has
demonstrated the falsity of Ms Pandaram‟s allegation that she only became aware
on 5 June 2014 that she would be required to prosecute the appeal. Two weeks
earlier, on 21 May 2014, Miles‟ present attorneys wrote to the liquidators:
„We are instructed by the director and creditors to prosecute the appeal and in so doing,
have secured fees to proceed with the appeal.
We are instructed that our clients shall indemnify the estate for any liability for fees and
which in essence will not expose or prejudice the estate for costs at all.
Please revert with a consent for us to proceed with the Appeal on the aforementioned terms.‟
Ms Pandaram deposed to the founding affidavit in an urgent application that was
launched in the Gauteng Division, Pretoria on 1 July 2014 in which an order was
unsuccessfully sought against Miles‟ liquidators and the magistrate presiding at an
enquiry in terms of s 415 of the 1973 Companies Act to interdict the continuation of
the enquiry. In that affidavit Ms Pandaram stated that it had been her understanding
that the liquidators-
„. . . would prosecute the appeal to finalisation thereof, but they have declined to do so and
have advised those representing [her] of their intentions only on or about the 21st May 2014.‟
[19] Ms Pandaram also states that her present attorneys, who „were trying to
reconstruct the record‟, were advised on 25 July 2014 (presumably by their
correspondent attorneys in Pretoria) that they-
„. . . have been unable to obtain the Court File under case number 23533/2013, and wish to
advise that the only other possible way of obtaining the required copies of the papers, will be
to enquire from the Applicant‟s Attorneys to make copies available.‟
Miles‟ present attorneys then obtained the record from the liquidators‟ attorneys on 1
August 2014. Miles failed to proffer any explanation for the delay in obtaining the
record from the time of the appointment of its present attorneys until 25 July 2014.
And there is yet another gap in the chronological sequence advanced by Miles: no
explanation is given for the delay from 1 August 2014 when the record was obtained
until 18 August 2014 when it was lodged with the registrar of this court. The same
holds true for the late filing of its heads of argument.
[20] No acceptable explanation is given why condonation was not applied for
without delay. Furthermore, no attempt is even made to explain Miles‟ failure to seek
the consent of SARS to limit the record before the voluminous record was lodged
with the registrar of this court or for its failure to have prepared a core bundle of
documents. Matters that called for an explanation have simply not been explained
and the explanation that is proffered lacks credence and is sorely wanting.
[21] I now turn to SARS‟ interest in the finality of the judgment of the court a quo.
The process of Miles‟ liquidation commenced once the winding-up order had been
granted on 3 October 2013. The operation of the order remained in force despite the
court a quo having granted Miles leave to appeal on 12 February 2014; it was
wound-up on the ground that it was unable to pay its debts. (See: Express Model
Trading 289 CC v Dolphin Ridge Body Corporate [2014] 2 All SA 513 (SCA); [2014]
ZASCA 17 para 18). In this case the finding that Miles was unable to pay its debts
has not been assailed. The liquidators of Miles took control of its affairs and have
taken steps in its winding-up, including the enquiry in terms of s 415 of the 1973
Companies Act and the realisation of certain of its assets, movable and immovable,
once the appeal had lapsed. It is undisputed that the winding-up is presently at an
advanced stage.
[22] Faced with similar circumstances in Dolphin Ridge, para 18, where the
winding-up had progressed apace, Ponnan JA expressed the view that it may indeed
prove impossible to turn back the clock and that it may thus be arguable that the
appeal has become academic, but he considered it not necessary „to go that far‟.
There is no need for me to go that far either. No information was placed before us to
show that Miles‟ dire financial position has improved since the winding-up order had
been issued. On the contrary, the uncontradicted statement of SARS in its
answering affidavit is that should Miles succeed-
„. . . the result would be that [SARS] would have to bring another application which will lead
to [Miles] being liquidated as it is hopelessly insolvent. The result will merely serve to further
prejudice the creditors, of which [SARS] is the biggest creditor.‟
Business rescue proceedings, on Ms Pandaram‟s own version, were the „only viable
avenue‟ for Miles when faced with the threat of liquidation, but that too failed.
[23] I need not deal with Miles‟ prospects of success on appeal in relation to the
interpretation of s 177 of the TAA. The facts of this case show flagrant breaches of
the rules of this court without any acceptable explanation therefor. The cumulative
effect of these factors coupled with SARS‟ interest in the finality of the court a quo‟s
judgment and the evident prejudice to SARS and the body of creditors, is such that
condonation should be refused irrespective of the prospects of success on appeal.
In The Commissioner for the South African Revenue Service v Candice-Jean van
der Merwe [2015] ZASCA 86 para 19 this court stated:
„In applications of this sort the prospects of success are in general an important,
although not decisive, consideration. It has been pointed out (Finbro Furnishers (Pty) Ltd v
Registrar of Deeds, Bloemfontein [1985] ZASCA 71; 1985 (4) SA 773 (A) at 789C) that the
court is bound to make an assessment of an applicant‟s prospects of success as one of the
factors relevant to the exercise of its 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. . . . 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. This applies even where the
blame lies solely with the attorney.‟
(Footnotes omitted)
[24] Finally the matter of costs. SARS seeks a punitive costs order de bonis
propriis against Ms Pandaram. I am of the view that an award of costs against her
personally on the scale as between attorney and client is warranted and appropriate
in the circumstances of this case. Ms Pandaram is the person who represented
Miles in the appeal and in the application for condonation. The liquidators were
given the assurance that Miles‟ estate would not be exposed to any costs. Ms
Pandaram has shown a general lack of candour and has played loose and fast with
the rules of our courts. There is no justifiable reason why the body of creditors
should financially be prejudiced as a result of this litigation. Moreover, SARS has
been put through the unnecessary trouble from defending a judgment from the high
court in its favour. There seems to be no reason for compliant taxpayers to be
saddled with those costs.
[25] In the result:
(a)
The application for condonation is dismissed.
(b)
Ms Melanie Pandaram is ordered to pay the respondent‟s costs of the
application for condonation and its costs incurred in opposing the lapsed
appeal de bonis propriis on the attorney and client scale, which costs in both
instances shall include those of two counsel.
___________________
PA Meyer
Acting Judge of Appeal
APPEARANCES
For Appellant:
GD Wickins
Instructed by:
Yugan Naidu Attorneys, Durban
C/o Honey Attorneys
Bloemfontein
For Respondent:
E Coetzee SC with L Sigogo
Instructed by:
Edelstein-Bosman Inc., Pretoria
C/o McIntyre & Van der Post 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
1 June 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Miles Plant Hire v Commissioner SARS (20430/2014) [2015] ZASCA 98
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) dismissed an application for condonation by Miles Plant
Hire (Pty) Ltd (Miles) and consequently confirmed the lapsing of its appeal against a final winding-up
order granted by the Gauteng Division of the High Court, Pretoria. The SCA further awarded a
punitive costs order de bonis propriis against the director of Miles, Ms Melanie Pandaram, for the
costs of the Commissioner for the South African Revenue Service (SARS) incurred in respect of the
application for condonation and in opposing the lapsed appeal.
The preliminary (and, in the end, determinative) issue before the SCA was whether condonation
should be granted and the substance of the appeal heard, or whether it should be refused and the
lapsing of the appeal confirmed regardless of the merits of the matter.
Miles was a company conducting plant hire and services in the construction and road industry. In
2013, SARS applied its winding up. This was granted by the Gauteng Division of the High Court,
Pretoria. Before the SCA, Miles’ appeal lapsed as a result of its failure to prosecute the appeal
properly and timeously in accordance with the rules of the SCA. Miles consequently applied for
condonation for these failures. The SCA held that there were flagrant breaches of its rules without
any acceptable explanation therefor. It held that the cumulative effect of these factors coupled with
SARS’ interest in the finality of the matter and the evident prejudice to SARS and the body of
creditors, was such that condonation should be refused irrespective of the prospects of success on
appeal.
In addition, a punitive costs order de bonis propriis was ordered against Ms Pandaram, on the basis
that she was responsible for the troubling manner in which the litigation had been conducted. She
has shown a general lack of candour and has played loose and fast with the rules of our courts.
--- ends ---
|
4169
|
non-electoral
|
2024
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 797/2022
In the matter between:
TRANSNET SOC LTD
APPELLANT
and
TIPP-CON (PTY) LTD
FIRST RESPONDENT
SA FENCE AND GATE (PTY) LTD
SECOND RESPONDENT
GORDIAN FENCE SA (PTY) LTD
THIRD RESPONDENT
SIYANOKU (PTY) LTD
FOURTH RESPONDENT
SINOVILLE FENCING SA (PTY) LTD
FIFTH RESPONDENT
COCHRANE PROJECTS (PTY) LTD
SIXTH RESPONDENT
SECUREMESH CC
SEVENTH RESPONDENT
Neutral Citation:
Transnet SOC Ltd v Tipp-Con (Pty) Ltd and Others (797/2022)
[2024] ZASCA 12 (31 January 2024)
Coram:
Petse DP and Meyer JA and Windell, Keightley and Siwendu
AJJA
Heard:
28 August 2023
Delivered:
31 January 2024
Summary:
Administrative law – legality review – self-review by state organ
– delay – whether delay unreasonable – whether delay should be overlooked.
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Mali J, sitting as a court
of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Windell AJA (Meyer JA and Keightley AJA concurring):
Introduction
[1] This is an appeal against the judgment and order granted by the Gauteng
Division of the High Court, Pretoria, per Mali J (the high court). The appeal is with
leave of the high court. The parties in this appeal are the appellant, Transnet SOC Ltd
(Transnet), and the first respondent, Tipp-Con (Pty) Ltd (Tipp-Con). The remaining
respondents did not participate in the high court proceedings and are not active parties
in this appeal.
[2] The high court dismissed an application by Transnet to self-review its decision
to award a tender to Tipp-Con (the review application). The tender was for the
manufacture, supply, and installation of a high security fence at Transnet’s City Deep,
Kascon and Kaserne premises (the premises). The premises had been the subject of
various incidents of crime, necessitating the installation of a security fence to protect
Transnet’s assets.
[3] After the tender had been awarded to Tipp-Con, the parties concluded a
contract and Tipp-Con proceeded to install the fence. During the installation of the
fence, disagreement arose between the parties regarding the fence’s specifications.
The dispute was referred to an adjudicator, (Mr Patrick Lane SC, the adjudicator), in
accordance with the dispute resolution mechanism of the contract. The adjudicator
found that the fence was installed according to contractual specification and Tipp-Con
was entitled to payment under the contract.
[4] Transnet purported to file a notice of dissatisfaction against the adjudicator’s
determination. Transnet was out of time, so it was unable to contest the ruling of the
adjudicator. Tipp-Con sought Transnet’s permission to return to the premises to
complete the installation of the fence, but Transnet refused. Tipp-Con launched an
application in the Gauteng Division of the High Court, Johannesburg, to make the
adjudication award an order of court. In response, Transnet launched the review
application in the Gauteng Division of the High Court, Pretoria.
[5] Transnet’s case on review was based on three grounds. The first ground related
to the award of the tender. Transnet’s complaint was that Tipp-Con provided a non-
compliant sample of the fence (the tender sample) during the tender evaluation
process (it was not ‘hot dip galvanized’), and even though the actual fence later
erected was hot dip galvanized, and therefore compliant with the terms of the contract,
the tender should be declared unlawful and set aside. Transnet’s second and third
grounds were aimed at the contract that was concluded between the parties after the
tender had been awarded to Tipp-Con. Transnet argued that the contract was not
lawfully concluded because Tipp-Con didn’t submit the test results on the tender
sample which was a pre-condition to the contract being concluded, and the fence
erected did not comply with the tender specifications and Tipp-Con’s ‘best and final
offer’. Thus, the contract was unlawful and must be set aside.
[6] In dismissing the review application, the high court agreed with Tipp-Con that
Transnet had delayed in initiating the self-review and only brought the review
application to ‘escape its contractual obligations’. It is this finding of the high court that
is now the subject of this appeal.
[7] First, Transnet argues that the high court failed to apply the two-stage inquiry
of first establishing whether there was an unreasonable delay in bringing the
application, and if so, whether the delay should be overlooked. As a result of
erroneously concluding that there was no explanation for the delay, the high court
failed to assess the reasonableness of the delay or engage in an enquiry whether the
delay should be overlooked. Secondly, despite the absence of corruption in the
awarding of the tender, the awarding of the tender was unlawful due to non-
compliance with the terms and conditions of the Request for Proposal (RFP) which
constitutes a violation of section 217 of the Constitution.1 Therefore, so it is argued,
the appeal should be upheld and both the award of the tender to Tipp-Con, as well as
the contract concluded between the parties, should be set aside.
[8] Consequently, this appeal involves two preliminary issues: first, whether the
delay in initiating the self-review was unreasonable; and second, if it was, whether the
delay should be overlooked. While the severity of the purported irregularities is a
determinant in the second phase of the inquiry, the merits of the review application will
only be considered if either preliminary point is decided in Transnet’s favour.
[9] Context is paramount. As in so many other cases involving self-review, the
peculiar facts of this case ultimately influence the outcome.
Background facts
[10] Commencing on 29 November 2018, Transnet invited interested parties to
submit tenders for the high security fence at the premises in terms of the RFP. Part 2
of the RFP in section ‘T2.2-47: Contractor’s Design and Technical Compliance’
provides as follows:
‘Note to tenderers:
Tenderers are to submit a sample of the fence in accordance to the specification. The
measurement of the sample should be 400mmx400mm.
The sample checked according to the specification listed below . . .
100% compliance is required, failure to comply will result in disqualification.’
[11] The tender sample provided would be evaluated for compliance with, inter alia,
the following specifications as set out in in the RFP under ‘C3: Scope of Work’: wire
diameter will be 3mm minimum; all panel fixtures shall be on the inside of fence line;
1 Section 217 of the Constitution provides: ‘When an organ of state in the national, provincial or local
sphere of government, or any other institution identified in national legislation, contracts for goods or
services, it must do so in accordance with a system which is fair, equitable, transparent, competitive
and cost-effective’.
and panel and fixtures shall be hot dip galvanised coatings on fabricated steel in
accordance with SANS121:2011. The latter is a process, (simply speaking) by which
a protective zinc coating is applied to steel or iron by dipping it in molten zinc to prevent
rusting.
[12] There were seven bidders that provided tender samples. Tipp-Con’s tender
sample was received on 21 January 2019. The tender sample met the criteria for the
scope of works in the RFP, save that it was not hot dip galvanized. Tipp-Con disclosed
this fact in its tender response and provided a reason for the non-compliance. It
explained that: ‘The sample is not hot dip galvanized coated due to time and closure
of the factory on holiday. However, the actual panels and fixtures will be hot dip
galvanized coated on fabricated steel. Ref SANS 121:2011.’
[13] Transnet accepted the explanation and unanimously rated Tipp-Con’s tender
sample as substantively responsive to the RFP on 30 January 2019. On 19 February
2019, the Tender Evaluation and Evaluation Committee produced a report. Under
‘Prequalification’ and ‘Substantial Responsiveness’ only Tipp-Con and ‘Securemesh
CC’ were compliant. Despite passing the technical evaluation, Securemesh CC was
disqualified at the functionality stage for failing to register with the Construction
Industry Development Board despite being given 21 days to do so. Tipp-Con was
recommended as the ‘highest ranked bidder on the Automated Scorecard’, and
authorization to negotiate with Tipp-Con was requested.
[14] Permission was apparently granted, as there was a meeting of the ‘tender
negotiation team’ on 2 April 2019. Tipp-Con’s price was above market related prices
and it was required to submit its best and final offer (the final offer). On 10 April 2019,
it submitted the final offer, being a total price of R34 371 970.15. It advised that the
final offer had effectively reduced its initial price by R4 862 450.79 and stated that it
was ‘still offering the High Quality Steel welded wire mesh Fencing with a 4mm wire
diameter and . . . using the H-beam posts’. On 11 July 2019, the Transnet Head Office
Acquisition Council met and approved the award of the tender to Tipp-Con. On 7
August 2019, Transnet notified Tipp-Con by letter that the latter had been appointed
the winning bidder. The letter continued by stating:
‘All business transactions emanating from this bid process shall be subject to the terms and
conditions of the bid document, your response thereto, other contractual conditions negotiated
thereafter and the following: Your acceptance of this letter by 9 August 2019.’
[15] Tipp-Con accepted its appointment as successful bidder on 8 August 2019. At
the 'kick-off meeting', Tipp-Con was informed that the project was an expedited one
that had to be completed within Transnet's fiscal year (by 31 March 2020) and that
execution of the works had to begin on 16 September 2019. To meet the anticipated
completion date and to finalize the program, Transnet advised Tipp-Con to initiate the
procurement process and obtain lead times for the material's supply. Concerns were
raised about Tipp-Con’s capacity to perform on time, given that this was the first project
in which Tipp-Con had been appointed to execute and complete works for Transnet.
Transnet proposed an inspection of the manufacturing facilities of Tipp-Con's suppliers
(to inspect capacity and quality control procedures).
[16] Arrangements were made to visit the locations of two material suppliers (these
being Cochrane, the current material supplier, and Bestfence, the supplier of the
tender sample). Transnet instructed Tipp-Con to construct full-scale samples of the
fences in accordance with the RFP's specifications (i.e. the works information
contained in C3: Scope of Work which provides for minimum wire thickness of 3mm).
Tipp-Con procured the installation of three full-size samples of the 3.6-metre-high
fence and two full-size samples of the 1.2-metre-high fence, and on 13 September
2019, representatives of Transnet and Tipp-Con attended the inspection.
Representatives of Transnet examined the physical properties of the samples and
chose one. The mesh wire diameter of the selected fence was 3mm horizontal and
4mm vertical, with a 13mm vertical flat bar per section. They remarked that the chosen
sample ‘complied with the minimum tender requirements’ and was superior to the
product described in the works information because it was modular (comprised of
sections) and featured a 13mm vertical flat bar and double post at the base that
provided increased strength and security. Tipp-Con was instructed to procure the
materials necessary for the construction of the selected sample.
[17] Following the selection of the fence to be erected, the ‘C1.1 Form of Offer’ was
signed and submitted to Transnet on 20 September 2019. The Form of Offer included,
among other things, the works information, the bill of quantities, and a ‘P&G summary’
(the preliminary and general costs not directly related to the building costs).
Significantly, the contract was not signed based on Tipp-Con's final offer of a
4mmx4mm wire diameter, but rather on the fence Transnet selected after inspecting
full-sized samples, namely a 3mm (horizontal) and 4mm (vertical) wire. It is not
disputed that although these specifications differed from Tipp-Con's final offer, it was
in compliance with the RFP that provided for a minimum of 3mm diameter. The initial
shipment of materials was delivered on site on 11 October 2019, and Transnet
accepted, invoiced, and paid for them on 20 November 2019.
[18] On 21 October 2019, Tipp-Con began installation of the fence, with Transnet's
approval. On 31 October 2019, Transnet delivered to Tipp-Con a copy of the contract
based on the June 2005 NEC 3 Engineering and Construction Contract (with
amendments in June 2006).
[19] On 26 November 2019, Transnet requested via email specific information
regarding ‘all tests performed’ on ‘the already installed fence’ (the test request email).
In this regard, Transnet relied on Section C3 of the RFP, which stated:
‘1.3
Description of the works
1.3.1 The works shall conform to the following specifications:
This description of works covers Transnet Freight Rail specification for perimeter fencing and
the galvanising of the material. The material needs to comply to the below specifications and
proof has to be provided that the material was tested by Contractor as stated below. The
security fence tendered must comply to the below tests. The submission of the test results or
test certificates will be a condition precedent for concluding the contract.
CSIR Test
SABS Test 2536/YM139
SABS 064’
[20] This email was responded to by Tipp-Con on 28 November 2019. It provided
Transnet with a document drafted by Cochrane that detailed the specifications and
working drawings for the wire used to construct the fence. Cochrane assured Transnet
that ‘all steel material shall be of good commercial quality, galvanized steel. All pipes
shall be galvanized. . . Zinc coating shall be smooth and essentially free from lumps,
globs or points. Miscellaneous material shall be galvanized and Alu coated. And the
wire diameter will be 3mm’. On 29 November 2019, representatives from Tipp-Con,
Transnet, and Cochrane attended a meeting and site inspection at the location to,
amongst other things, inspect the fence that had been erected at that point (the
November site inspection). During the meeting, Transnet revealed that a third party
had complained that the tender sample submitted by Tipp-Con differed from the actual
fence being erected, and that the actual fence was not galvanized and did not conform
to the specifications. On the surface, the meeting was productive, and Tipp-Con
continued installing the fence. Additionally, Transnet agreed to pay Tipp-Con's second
invoice dated 30 October 2019. Payment was received for this invoice on 4 December
2019.
[21] Tipp-Con submitted a third invoice to Transnet for R7 211 800.40 on 26
November 2019, which was due by 15 December 2019. The invoice was not paid. On
20 December 2019, Transnet's construction sites closed for the annual holiday break,
and Tipp-Con was required to re-establish and resume work on 13 January 2020.
Approximately 57% of the work had been completed by that point. On 7 January 2020
the Project Manager for Transnet issued a ‘Early Warning Notification’, in accordance
with the contract, in which Transnet complained about the specifications of the fence
being installed. It was stated that the final offer submitted to Transnet on 10 April 2019
was for a fence with a 4mm diameter, but what had been installed was entirely
different, as the thickness/diameter of the wire ranged from 2.95mm and 4mm and the
posts were not H beams. Tipp-Con was consequently instructed not to 're-establish
the site' until a risk-reduction meeting had taken place.
[22] At the risk reduction meeting held on 14 January 2020, the complaint remained
about the installation of the fence. The Acting Chief Engineer of Transnet explained
that:
‘The meeting was called because it has come to Transnet’s attention that the fence that is
currently being installed on site at City Deep is not the same as the sample that was submitted
by Tipp-Con when they tendered for the work and were successfully awarded based on the
sample submitted’.
[23] Mr Barbarossa Ntshingila from Transnet's legal department attended the
meeting. The parties were unable to resolve their issues and Transnet informed Tipp-
Con that it should not resume work. In the interim, Tipp-Con inquired about the third
outstanding invoice. Transnet responded on 27 January 2020, stating:
‘The invoice number 3 of amount R 7 211 800.40 was not approved and signed due to decision
taken in our meeting held in City deep on 29 November 11:00 to stop all the payment until we
resolve the issue of quality and standard of fence that was installed.’
[24] On 28 January 2020, Transnet issued a 'Project Manager's Instruction'
instructing Tipp-Con to 'restart stopped work' and to immediately remove the fence
already installed and install the fence according to the specifications on which Tipp-
Con was 'awarded the contract'. On 3 February 2020 Transnet notified Tipp-Con of
alleged defects in the fence, more particularly, that the mesh panels were not hot dip
galvanized and did not comply with SANS121:2011 standard.
[25] On 9 March 2020, Tipp-Con gave notice of the dispute in accordance with the
dispute resolution provisions of the contract. On 25 June 2020, Tipp-Con collected two
mesh wire fence panels (approximately 3m by 3m) from the City Deep site and
delivered them to the 'Hot Dip Galvanizers Association (Southern Africa)' for analysis
and evaluation. According to their report (dated 1 July 2020), the wire was hot dip
galvanized and compliant with SANS675:2009. The adjudicator ruled in favour of Tipp-
Con on 7 August 2020, noting that the average of the wire measurements taken was
marginally less than 3mm, which was insignificant and de minimis. On 7 October 2020,
Transnet initiated the review application.
Delay in bringing the review application.
[26] The principles governing delay in self-reviews by state organs are well
established. The court assesses delay according to a two-step analysis. In step one,
the question is whether the state organ unreasonably or unduly delayed in bringing
the review. If not, the court proceeds to the merits. If the delay was unreasonable, the
court proceeds to the second step: Should the unreasonable delay nevertheless be
overlooked?2
2 Khumalo and Another v Member of the Executive Council for Education: KwaZulu-Natal [2013] ZACC
49; 2014 (3) BCLR 333 (CC); 2014 (5) SA 579 (CC); State Information Technology Agency SOC Ltd v
[27] There is no fixed period within which to bring a legality review. In Buffalo City
Metropolitan Municipality v Asla Construction (Pty) Ltd (Asla),3 the Constitutional Court
stated that ‘the proverbial clock starts running from the date that the applicant became
aware or reasonably ought to have become aware of the action taken’.
[28] The high court determined that Transnet became aware of the alleged non-
compliance with the RFP when Tipp-Con submitted its tender sample on 21 January
2019. Transnet waited approximately 20 months, until October 2021, to launch the
review application. The high court found that the delay was unexplained and dismissed
the review application.
[29] In determining whether the delay was unreasonable, a court engages in a
factual inquiry in the nature of a value judgment, taking into account the relevant
circumstances.4 It exercises a strict discretion, which intimates that a court of appeal
may only interfere if the discretion was not exercised judicially.
[30] The high court seemingly found that there was an unreasonable delay in
bringing the review, but failed to consider whether the delay should nonetheless be
overlooked. The high court erred in this regard, and it is thus open for this Court, as a
court of appeal, to assess the delay afresh.5
[31] Transnet’s first complaint in the review application and basis for setting aside
the award, is that Tipp-Con’s bid was treated as compliant whilst its tender sample
was not hot dip galvanized and therefore should have been disqualified at the pre-
qualification stage. To determine whether Transnet’s delay was unreasonable, it is
therefore necessary to establish the date when Transnet became aware, or ought to
Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018 (2) BCLR 240 (CC); 2018 (2) SA 23 (CC); Department
of Transport and Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2) SA 622
(CC); Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (6)
BCLR 661 (CC); 2019 (4) SA 331 (CC).
3 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (6) BCLR
661 (CC); 2019 (4) SA 331 (CC) para 49.
4 Gqwetha v Transkei Development Corporation Ltd and Others [2005] ZASCA 51; [2006] 3 All SA 245
(SCA); 2006 (2) SA 603 (SCA) para 24.
5 Malan and Another v Law Society of the Northern Provinces [2008] ZASCA 90; [2009] 1 All SA 133
(SCA); 2009 (1) SA 216 (SCA) paras 12-13.
have become aware, of the fact that Tipp-Con’s tender sample was not hot dip
galvanized.
[32] Transnet’s second complaint on review is that the contract was concluded
without the requisite submission of the test results under section C3 of the RFP, which
was a condition precedent to the conclusion of a valid contract. It is thus necessary
also to establish the date when Transnet became, or ought to have become, aware of
the alleged breach of the tender prescripts in this regard. Its third complaint is that the
fence that was erected does not comply with the tender specification, Tipp-Con’s final
offer, and the contract concluded between the parties. This requires a consideration
of when Transnet became, or ought to have become, aware of such failure. It is with
reference to these dates that Transnet’s obligation to initiate its self-review
proceedings arose.
[33] Ms Jabosigo, the Executive Manager: Legal (Litigation) for Transnet, deposed
to the company's founding affidavit. She stated that she became aware of the alleged
irregularities only after Transnet had lost the case before the adjudicator. However,
this is not the test. What matters is the knowledge of the institution, not that of the
deposing legal advisor.6
[34] The evaluation committee that evaluated the bids and scored Tipp-Con as
compliant were all employed by Transnet and consisted of Mr Thakhani Shai
(Transnet's Engineering Manager), Mr Viwe Mshuqwana (Transnet's Technical
Manager), and Ms Monique Lee (Transnet's Senior Engineering Manager). They had
the requisite knowledge at the time that the tender sample was submitted, that it was
not hot dip galvanized and not compliant with section T2.2-47 of the RFP. Yet,
Transnet failed to secure an explanation from any of these employees. In answer to
this, Transnet tries to divert the attention away from this failure, by casting aspersion
on the conduct of the evaluation committee in awarding the tender to Tipp-Con.
Transnet suggests that it must be clear to this Court that there must have been some
mischief or collusion of some sorts during the award of the tender between the parties
and that is why it acted against the ‘wrongdoer’, Mr Shai, who was dismissed by
6 See State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018
(2) BCLR 240 (CC); 2018 (2) SA 23 (CC) paras 45-46.
Transnet for misconduct during July 2021. It is for this reason it could not produce a
version from the evaluation committee.
[35] Firstly, Transnet’s case is not based on corruption or fraud. In its founding
affidavit, it distanced itself emphatically from any manifestations of collusion or
corruption. Second, Mr Shai was not fired for his role in awarding the tender. He was
dismissed for his post-award conduct in failing to ‘correctly implement the contract in
accordance with the award of the tender’ and for deviating ‘from the awarded
specification of 4mm fence contrary to what was specified in the first respondent's best
and final offer as approved and awarded by Transnet’. In other words, he was
dismissed for mishandling a contract that (on Transnet’s case) should not have been
awarded. Thirdly, it does not explain why the other two officials who were part of the
evaluation committee and not disciplined for any misconduct were not approached to
give an explanation.
[36] In City of Cape Town v Aurecon South Africa (Pty) Ltd, 7 the Constitutional Court
rejected the explanation for the delay in instituting a self-review under similar
circumstances:
‘The distinction that the City attempts to draw between what is within its own knowledge and
what is within the knowledge of its committees is superficial. It is common cause that the BEC
and the BAC are committees mandated by the City for purposes of the tender procurement
process. These committees form part of an internal arrangement by the City. Accordingly, it
may reasonably be expected that all information regarding the tender process which is within
the knowledge of the BAC or BEC, may be deemed to be within the City’s knowledge. In my
view, that is a weak attempt by the City to deny knowledge of what it ought reasonably to have
known.’
[37] There is no legally relevant distinction to be drawn between Ms Jabosigo and
other officers of Transnet who had the requisite knowledge. The first complaint, that
the tender sample submitted was not hot dip galvanised, was raised for the first time
in the review application. As noted earlier, it was not a complaint before the adjudicator
7 City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC); 2017
(4) SA 223 (CC) para 39.
and there is no explanation from Ms Jabosigo, or any member of the evaluating
committee as to why the alleged irregularity was not discovered and acted upon
earlier. This, even though Tipp-Con made no attempt to hide the fact that its tender
sample was not hot dip galvanised. Quite the contrary, it drew specific attention to this
fact and tendered rectification.
[38] As to the second complaint - that the test results were not submitted prior to the
contract being concluded - Transnet was aware of this alleged irregularity as early as
26 November 2019, the date the test request email was sent. In a similar vein, the
complaint that the fence erected did not comply with the tender specifications, the final
offer and the contract, was within Transnet’s knowledge prior to 28 November 2019,
when it was discussed at the November site inspection. The nearly year-long delay by
Transnet in initiating the review of the contract on these grounds remains unexplained.
Transnet maintained its stance in the arbitration despite having knowledge of at least
the third complaint upon review and having a reasonable expectation of being aware
of the others. It delayed initiating the review until it could no longer contest the
adjudicator’s award. Likewise, no explanation exists for the delay that this has caused.
[39] In the absence of any explanation from the evaluation committee or any of the
other officials that were involved in the meetings with Tipp-Con after the award of the
tender means that Transnet’s delay is unexplained. As remarked in Asla, if there is an
explanation for the delay, it must cover the entirety of the delay. If there is no
explanation for the delay, it will be necessarily unreasonable.8 In these circumstances
the delay was unreasonable.
Should the delay be overlooked?
[40] It is trite that for the efficient functioning of public bodies, a challenge to the
validity of their decisions by judicial review should be initiated without undue delay.9 In
Asla, it was emphasized that the approach to overlooking a delay in a legality review
is a flexible exercise that entails a legal evaluation considering a number of factors:
8 Asla para 52. See also Special Investigating Unit and Another v Engineered Systems Solutions (Pty)
Ltd [2021] ZASCA 90 (SCA) para 29.
9 Merafong City Local Municipality v AngloGold Ashanti Limited 2017 (2) SA 211 (CC), para 74, citing
Khumalo v Member of the Executive Council for Education: KwaZulu-Natal 2014 (5) SA 579 (CC) at
para 39-73.
Potential prejudice to affected parties as well as the possible consequences of setting
aside the impugned decision; the nature of the impugned decision, which essentially
requires a consideration of the merits of the legal challenge against that decision; and
the conduct of an applicant, taking into account that an organ of state is subject to a
higher duty to respect the law.10
The egregiousness of the alleged irregularities
[41] The review is, at its essence, about the tender sample provided by Tipp-Con
during the tender evaluation process. Transnet's first complaint is that the tender
sample was not hot dip galvanized, which was a requirement of the RFP. Notably, the
adjudicator has determined that the fence being erected conformed to the terms of the
contract and that it has been hot dip galvanized. The non-compliance with the RFP
was certainly not egregious. It had no adverse effect on the tender specifications or
the public purse and Tipp-Con had not displayed any improper conduct. In fact, Tipp-
Con drew attention to the issue, explained the shortcoming and confirmed that the
fence supplied would be hot dip galvanised as required. The evaluation committee
accepted this submission. As noted earlier, the lengthy delay on the part of Transnet
until it sought to review the award of the tender on this basis is unexplained. It is difficult
to escape the inference that the complaint was an afterthought called into action in an
effort to avoid the binding arbitration award in Tipp-Con’s favour.
[42] Furthermore, whilst it is so that ‘the test for irregularities and their import’ should
not be conflated,11 the ancient de minimis non curat lex – the law does not concern
itself with trifles – principle is an established part of our law.12 Looking at the totality of
the facts present here, this is a classic case where the de minimis non curat lex
10 In State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018
(2) BCLR 240 (CC); 2018 (2) SA 23 (CC), the Constitutional Court held that even where there is no
basis for a court to overlook an unreasonable delay, the court may nevertheless be constitutionally
compelled to declare the state's conduct unlawful (the Gijima principle). In Asla, Theron J recognised
the conflict between the Gijima principle and established principles regarding delay and remarked that
the Gijima principle must be interpreted narrowly and restrictively so as not to undermine the valuable
rationale underlying the rules on delay. This is achieved by balancing the objectives of the rules on
delay with those objectives of declaring unlawful conduct as such.
11 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South
African Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR (CC) paras
22, 28-9 and 56.
12 See: Cora Hoexter & Glenn Penfold Administrative Law in South Africa (3rd ed) at 546-7, 640 and
727, and the authorities therein referred to by the learned authors.
principle should be applied as far as the defect with Tipp-Con’s tender sample is
concerned.
[43] Additionally, Transnet complains that the submission of certain test results
(mentioned previously) was a condition precedent to the signing of the contract. It is
argued that due to the fact that the condition precedent was not met, the contract is
unlawful and should be set aside.
[44] On the facts, this argument is without merit for mainly three reasons: First,
Transnet had provided no evidence that it was ever concerned about the test results
prior to the contract's conclusion. It did not request these test results and there is no
allegation that Tipp-Con refused to provide them or was unable to do so. Second, the
contract was signed by Transnet. As with the first complaint, it provided no explanation
from any of the employees involved for why it signed before obtaining the test results.
There is no allegation that it was due to corruption or misrepresentation by anyone.
Without an explanation of why it signed, Transnet must accept responsibility for its
conduct. Third, on 13 September 2019, prior to the signing of the contract, Transnet
selected one of the samples to be erected (after inspecting their physical properties)
and instructed Tipp-Con to procure the materials for the erection of the selected
sample. Not only was it uninterested in the test results, but it also disregarded their
necessity.
[45] The third complaint from Transnet is that the contract between the parties was
different from the RFP, Tipp-Con’s bid, and its final offer. Therefore, so it is argued,
the contract ought to be set aside. The RFP itself contemplates that negotiations may
take place after the award of the tender. This was recognised by Transnet in its letter
of award dated 7 August 2019 referred to earlier. The letter of award came after Tipp-
Con’s final offer, which was made to Transnet on 10 April 2020. Tipp- Con’s final offer
(including the 4mm specification) was thus subject to negotiation. In circumstances
where the contract concluded is what was provided for in the RFP, there can be no
complaint that the contract breached the RFP or s 217 of the Constitution.
[46] In any event, as All Pay13 explains, not all deviances from the requirements of
a tender are material and require a declaration of illegality. An immaterial irregularity
does not establish a ground for review. The materiality of a deviation is gauged by
linking the question of compliance with the purpose of the provision. On the facts of
this case, the purpose of the tender was achieved: Transnet was supplied with a fence
that was hot dip galvanised; the diameter of the wires for all material purposes met the
requirements of the RFP; Transnet itself was satisfied with the superior quality of the
fencing it chose; Transnet secured the benefit of the superior fencing without additional
cost; and no other parties have been shown by Transnet to have been unfairly
prejudiced in the process that was followed. To the extent that there were any
deviations regarding the contract (or indeed in the grant of the tender), they were
immaterial.
Prejudice
[47] There are three categories of affected parties when assessing prejudice: the
state organ, the successful bidder, and the public. Transnet contended that it will be
prejudiced if it is compelled to accept a 3mm fence when Tipp-Con referred to a 4mm
fence in its bid and its final offer.
[48] The alleged prejudice Transnet complains about is attributable to the terms of
the contract and not to the awarding of the tender. Transnet cannot get away from the
fact that a 3mm fence was at all material times considered by it to be sufficient. That
is why the specification in the RFP was 3mm and why the contract refers to a 3mm
diameter fence. Transnet ignores this matter. It is incomprehensible that Transnet
could suffer any prejudice when it solicited bids for the supply of a 3mm fence and
ultimately contracted for exactly that. It did so after inspecting the erected samples
and satisfying itself of the quality. It then pronounced the selected fence to be superior.
The selection of the fence that was erected resulted in no change to the contract price.
In other words, Transnet paid the original negotiated contract price for a product that
it regarded as superior.
13 Ibid, paras 22, 28.
[49] Then, Transnet participated in the adjudication proceedings. In those
proceedings, there was no tender sample-related complaint. The complaint concerned
the installation of the fence. This position was made clear in Transnet's notice of
dissatisfaction, which outlined the grounds for appeal: (1) The fence should have been
hot dip galvanized; and (2) The adjudicator ought to have found that the ‘fence does
not comply with the specification provided for in the agreement’. The adjudicator found
the fence to be hot dip galvanised and any deviation from the 3mm diameter to be so
minor as to be de minimis. It was only when the adjudicator held that Tipp-Con is
entitled to payment that Transnet raised an issue about the tender sample.
[50] Whilst no prejudice had been established by Transnet, Tipp-Con had shown
that it is not only suffering potential prejudice, but actual prejudice. To perform under
the contract Tipp-Con had incurred obligations. It owes approximately R 4 210 000 to
its suppliers. About 57% of the work, at a cost to Tipp-Con of more than R22 500 000
had been finalized. To date it has been paid R10 400 000, approximately only a third
of what it is owed. For as long as Transnet continues to delay payment to Tipp-Con, it
cannot pay its suppliers. It has been listed as a ‘defaulter’ by a credit insurer which
can potentially have a devastating effect on its viability. Tipp-Con’s directors are also
at risk of sanction under the Companies Act 71 of 2008.14 This imperils Tipp-Con’s
very existence.
[51] When it comes to the third category of affected persons (the public), counsel
for Transnet argued that it is in the public interest to overlook the delay and entertain
the review application. In support of this contention counsel relied, amongst other
cases, on Passenger Rail Agency of South Africa v Swifambo Rail Leasing (Pty) Ltd
(Swifambo).15 However, the facts in Swifambo are completely distinct from the facts in
the present case, so relying on this case is erroneous. In that matter, the court dealt
with multiple allegations of bid-rigging, collusion, and corruption. On appeal, this Court
observed that neither party was innocent and that the awarding of the contract to
Swifambo was corrupt.16 The delay was therefore excused in the interest of good
14 Sections 22 and 218 (2) of the Companies Act, 2008.
15 Passenger Rail Agency of South Africa v Swifambo Rail Agency (Pty) Ltd [2017] ZAGPJHC 177;
[2017] 3 All SA 971 (GJ); 2017 (6) SA 223 (GJ). Upheld on appeal Swifambo Rail Leasing (Pty) Ltd v
Passenger Rail Agency of South Africa [2018] ZASCA 167; 2020 (1) SA 76 (SCA).
16 Swifambo Rail Leasing (Pty) Ltd v Passenger Rail Agency of South Africa [2018] ZASCA 167; 2020
governance and justice.17 In the present case, Transnet denied relying on fraud or
corruption during the procurement process. Tipp-Con played open cards by disclosing
to Transnet that the tender sample was not hot dip galvanized when it submitted its
bid. Upon examining the full-size samples, Transnet chose the sample with ‘excellent
technical features’ and ‘superior to the product described in the works information’.
There are no facts to the contrary.
[52] In the present case, the alleged irregularity in the awarding of the contract does
not warrant judicial intervention ‘in the interests of justice and in the public interest’
and the ‘interests of clean governance’.18 The public interest overwhelmingly favours
Tipp-Con. City Deep Terminal is the largest land-based container port in the country
and its security indirectly affects the economy of the country. According to Transnet,
completion of the fence is urgent because an incomplete fence exposes Transnet's
assets to ‘increased criminal activity’. If this Court disregards Transnet's unreasonable
delay and set aside the tender award and contract, Transnet will be required to reissue
the tender and remove the already-erected fence. That would inevitably result in
significant delays and expenses.
Transnet’s conduct in the matter
[53] Consideration of Transnet’s conduct is an important factor in deciding whether
to overlook an unreasonable delay. As an organ of State, Transnet has a heightened
obligation to act properly.19
[54] Transnet not only delayed unreasonably, but also acted in an unreasonable
manner. It did not adhere to the constitutionally prescribed standard for state actors
and did not respect the rights of Tipp-Con. It refused to recognize the outcome of an
adjudicative process in which it had voluntarily participated. In fact, in the adjudication
before the adjudicator, Transnet sought to enforce the very contract it now seeks to
(1) SA 76 (SCA) paras 41-42.
17 Ibid, with reference to Aurecon South Africa (Pty) Ltd v Cape Town City [2015] ZASCA 209; [2016] 1
All SA 313 (SCA); 2016 (2) SA 199 (SCA).
18 Ibid.
19 Member of the Executive Council for Health, Eastern Cape and another v Kirland Investments (Pty)
Limited t/a Eye & Lazer Institute [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC) para
82, see also 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).
annul. The only issue was the fence's alleged lack of hot dip galvanization and the
wire diameter. The adjudicator has rejected both issues.
[55] Having lost the preceding argument, Transnet seeks to circumvent the
adjudicator’s conclusion by focusing on the tender sample. It wants the court to
disregard all of Transnet's prior actions, including its decision to enforce the contract.
This conduct by Transnet is opportunistic, especially when concerns have been raised
in this Court about the growing reliance on legality reviews by state organs where
corruption is not involved. In Altech Radio Holdings Pty Ltd and Others v City of
Tshwane Metropolitan Municipality,20 Ponnan JA remarked as follows:
‘Search hard enough in public procurement cases, such as this, and one will surely find
compliance failures along the way. There will seldom be a public procurement process entirely
without flaw. But, perfection is not demanded and not every flaw is fatal. Nor does every flaw
in a tender process amount to an irregularity, much less a material irregularity. Public contracts
do not fall to be invalidated for immaterial or inconsequential irregularities. Indeed, as it has
been put, “(n)ot every slip in the administration of tenders is necessarily to be visited by judicial
sanction”.’
[56] Transnet cannot escape the facts. There is much to be said in response to Tipp-
Con's counsel's assertion that Transnet did not initiate the review because it sought to
vindicate clean and open governance, but rather to evade its contractual obligations.
Transnet was represented by the same attorneys before the adjudicator, who now
advised it to review the award of the tender. It is only after Transnet realized that it
could not appeal the decision of the adjudicator that, for the first time, it complained
about the tender sample and asserted that it was not hot dip galvanized.
[57] This is a cynical self-review. The purpose of an organ of state's self-
review should be to promote open, responsive, and accountable governance.
Transnet is required to promote these goals through its actions. Given the prejudice
suffered by Tipp-Con, the nature of Transnet’s complaints, the fact that the
irregularities were not egregious, and the unconscionable conduct of Transnet, the
unreasonable delay cannot be overlooked.
20 Altech Radio Holdings Pty Ltd and Others v City of Tshwane Metropolitan Municipality [2020] ZASCA
122; 2021 (3) SA 25 (SCA) para 54.
[58] In the result the following order is made:
The appeal is dismissed with costs, including the costs of two counsel.
_________________________
L WINDELL
ACTING JUDGE OF APPEAL
Siwendu AJA dissenting (Petse DP concurring):
[59] I have read the judgment by my colleague, Windell AJA (the main judgment).
Regrettably, I take a divergent view to the facts and the merits before the high court.
As a result, I differ in the approach to the exercise of the value judgment and discretion
to determine whether the Court should overlook the delay. In my view, the facts
overwhelmingly support a contrary finding that there was no delay, and if there was, it
was not unreasonable21 and it should therefore be overlooked. Besides, the
irregularities complained of cannot be considered in isolated components. They must
be viewed cumulatively to weigh their overall effect on a fair and transparent tender
process. I am constrained to write separately to explain the reasons for my
departure.22
[60] It has been consistently held that lawful procurement is patently a constitutional
issue.23 Although stated in the context of a PAJA review, in Allpay Consolidated
Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African
Social Security Agency and Others,24 Froneman J remind courts that:
‘The suggestion that “inconsequential irregularities” are of no moment conflates the test for
irregularities and their import; hence an assessment of the fairness and lawfulness of the
procurement process must be independent of the outcome of the tender process . . .
. . .
The proper approach is to establish, factually, whether an irregularity occurred . . .
. . .
This legal evaluation must, where appropriate, take into account the materiality of any
deviance from legal requirements . . . the potential practical difficulties that may flow from
declaring the administrative action constitutionally invalid must be dealt with under the just and
equitable remedies provided for by the Constitution and PAJA . . .
21 State Information Technology Agency SOC Limited v Gjiima Holdings (Pty) Limited [2017] ZACC 40;
2018 (2) SA 23 (CC); 2018 (2) BCLR 240 (CC) (Gjiima).
22 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited [2019] ZACC 15; 2019 (6)
BCLR 661 (CC); 2019 (4) SA 331 (CC) (Buffalo City) para 48.
23 Buffalo City supra para 35, referring to Steenkamp NO v Provincial Tender Board of the Eastern Cape
[2006] ZACC 16; 2007 (3) SA 121 (CC); 2007 (3) BCLR 300 (CC) (Steenkamp) para 20. See also
Minister of Finance v Afribusiness NPC [2022] ZACC 4; 2022 (4) SA 362 (CC); 2022 (9) BCLR 1108
(CC) para 19. Allpay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South
African Social Security Agency [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) (Allpay)
para 4.
24 Allpay supra paras 22, 28, 29 and 56.
. . .
Once a finding of invalidity under PAJA review grounds is made, the affected decision or
conduct must be declared unlawful and a just and equitable order must be made.’
[61] It is necessary to place the irregularities complained of in their proper context.
Transnet mounted a two pronged attack of the decisions taken, before and after the
award of the tender to Tipp-Con. The particulars of the irregularities are in respect of:
(a) the sample submitted by Tipp-Con, which rendered the bid a ‘non-responsive
tender’; (b) Tipp-Con’s Best Final Offer (BFO) for a 4 mm x 4mm wire diameter fence
contrasted with; (c) the final terms of the NEC contract providing for a 3mm wire
diameter, which differed from the terms of the RFP and the BFO. The complaint after
the award of the tender concerns the implementation and installation of a fence of
between 3mm and 2.96mm. This was at variance from the terms of (a) the tender
specification, (b) the BFO and (c) the final NEC contract.
[62] The appeal raises important questions of public procurement law which involve
(a) the compass of the right to ‘negotiate’ the NEC contract contemplated in the RFP
after the award of the tender on terms outside those contemplated in the RFP, (b) if
such a right exists, who in the tender adjudication process has the authority to do so.
In the present matter, these questions implicate who had the right to negotiate or
authorise the selection of a fence other than the persons authorised to evaluate the
tenders. Another important question raised is whether this Court on appeal can,
without more, rely on the conclusion made by the Adjudicator that ‘any deviation from
the 3mm diameter to be so minor as to be de minimis’ as the reason to deprive
Transnet the right to a review.
[63] The Constitutional Court in Buffalo City Metropolitan Municipality v Asla,25
comprehensively clarifies the approach to delay in a self-review and lays to rest any
previous misconception that delay and the merits are discrete inquiries.26 This Court
in Valor IT v Premier, North West Province and Others27 pointed to a ‘factual, multi-
25 Buffalo City fn 2 para 40.
26 Buffalo City fn 2 paras 56 to 59 refers to other decisions as well.
27 Valor IT v Premier, North West Province and Others [2020] ZASCA 62; [2020] 3 All SA 397 (SCA);
2021 (1) SA 42 (SCA) para 30; also referred Department of Transport and Others v Tasima (Pty) Ltd
ZACC 39; 2017 (2) SA 622 (CC); 2017 (1) BCLR 1 (CC) para 144 and Khumalo and Another v MEC
factor and context-sensitive inquiry — in which a range of factors — the length of the
delay, the reasons for it, the prejudice to the parties that it may cause, the fullness of
the explanation, the prospects of success on the merits — are all considered and
weighed before a discretion is exercised one way or the other’ come into play.
[64] In the present matter, factors relevant to the question of delay, the
reasonableness thereof and whether it should be overlooked call into the inquiry: (a)
when the deviations occurred during the procurement process, (b) the manner in which
they occurred and (c) their materiality and cumulative effect on the overall tender
process. It merits emphasis that the bulk of the deviations occurred after the award of
the tender. Given the view I take, it is necessary to amplify additional relevant facts to
elucidate the points of departure from the main judgment.
[65] A discernment of the role of Transnet, as the holding company and custodian
of the group’s constitutional obligations, on the one hand, and Transnet Freight Rail
(TFR), a division of Transnet on the other is material in this case. TFR is the division
responsible for the rail transport of commodities for exports within the regional and
domestic markets. City Deep, Kascon and Kaserne, for whose benefit the security
fencing tender was procured, form part of the corridor of inland container terminals
managed by TFR. This is a crucial factor that has not been addressed in the main
judgment. Whilst the invitation for the bids admittedly went out in the name of Transnet,
there can be little doubt – a fact that emerges from the record – that TFR was in fact
at the forefront of the entire bidding process from beginning to end. I elaborate on this
in the paragraphs below.
[66] Although Transnet ‘as employer’ published the invitation to tender (RFP) for the
contract, it assigned TFR to act as ‘its agent’ to manage the tender evaluation process.
The bids were submitted to the TFR RME Acquisition Council. On 30 January 2019,
Mr T Shai (Project Manager); Ms M Lee (Senior Engineering Manager) and Mr V
Mshuqwana (Technical Manager) all employees at TFR, evaluated the bids. After the
evaluation, on 11 July 2019, the Transnet Head Office Acquisition Council (TAC)
for Education, KwaZulu-Natal [2013] ZACC 49; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014
(5) SA 579 (CC) para 44.
supported recommendation to award the tender to Tipp-Con. The resolution by the
Head Office Acquisition Council records that:
‘The matter was before the Council previously in terms of which permission was sought to
negotiate the contract value with the recommended bidder. The CFET reported to the Council
that they had managed to negotiate with the bidder and ultimately obtain a savings of
R 4 862 450.79. The amended contract value thus came to R 34 371 970.15 and the approved
budget was thus adjusted to R 39 155 322.00.’ (Emphasis added.)
[67] The letter dated 7 August 2019, confirming the award and the terms thereof
advised Tipp-Con that, Mr Thakhani Shai (Mr Shai), an employee at TFR, was the
‘initial point of contact’. The letter reflects the ambit of Mr Shai’s responsibilities thus:
‘Management issues:
a)
. . .
performance monitoring of Supplier;
day-to-day service provider arrangements such as premise access and security
issues;
statutory compliance issues such as occupational health and safety, environmental,
industrial and human resources management issues;
payments and remuneration arrangements including invoice processing…’
The letter is consistent with the assignment of the implementation of the tender by
Transnet to TFR.
[68] The review proceedings were brought by the Executive Manager: Legal
(Litigation) of Transnet as the principal, and not by TFR. In the founding affidavit,
Transnet stated amongst others that the employees involved misrepresented the
status of the sample to the TAC, and certified that the sample was hot dip galvanised
when it was not. Tipp-Con’s tender was not a ‘responsive tender’. The Acting Head of
Litigation employed within the TFR division, filed a further affidavit in support of the
review by Transnet, detailing steps taken after the irregularities were uncovered. The
thrust of the further affidavit is that Transnet was misled to make an invoice payment
of R10 467 106.67 for a product which was not in accordance with the scope of work
it had assigned or the BFO it had accepted, flowing from the open tender process. She
confirmed that the resultant contract ought not to have been implemented in the
manner it was.
[69] Tipp-Con did not dispute the above averments. Instead, it focused on the
question of balance convenience, the prejudice it had endured, and the remedy.
However, as All Pay tells us, those matters are, as a matter of law, appropriately
considered and only germane in a separate inquiry and engage the remedial powers
of a court after the decision on the question of invalidity has been made.
[70] Insofar as it is said Transnet’s TAC approved the ‘non- responsive’ sample, I
am not persuaded that the TAC itself engaged the compliance aspects of the tender
before supporting the recommendation of Tipp-Con.28 The record of its deliberation
appeared to confine its involvement to financial negotiation, correctly, to ensure that
value for money accrued to Transnet. Transnet’s assertion that there was a
misrepresentation of compliance with the tender prescript by the employees of TFR
must be accepted. It must be viewed in the light of the principle in Chairperson,
Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and
Others.29 In that case, the Court held that an acceptance by an organ of State of a
tender which is ‘not acceptable’ within the meaning of the prescribed legal framework
is an invalid act and falls to be set aside. Although that case dealt with the Preferential
Act, it makes clear that the requirement of acceptability is a threshold requirement.30
Regardless of the reasons for how it came about that Tipp-Con’s tender was accepted
it cannot, from what emerges from the record, however be gainsaid that it was patently
‘non-responsive’.
[71] Even if it said that Transnet is estopped from relying on the non-responsive
tender on account of the sample, that is not the end of the inquiry. The approach to
overlooking a delay in a legality review is flexible.
28 The resolution by the Head Office Acquisition Council records that: . . . ‘The matter was before the
Council previously in terms of which permission was sought to negotiate the contract value with the
recommended bidder. The CFET reported to the Council that they had managed to negotiate with the
bidder and ultimately obtain a savings of R4 862 450.79. The amended contract value thus came to
R34 371 970.15 and the approved budget was thus adjusted to R39 155 322.00.’ (Emphasis added.)
29 Chairperson: Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others
[2005] ZASCA 90; 2008 (2) SA 638 (SCA); [2005] 4 All SA 487 (SCA).
30 Ibid para 11.
[72] Transnet stated that it was alerted to the irregularities by the contents of the
statement of claim filed by Tipp-Con in the arbitration proceedings. The deponent
states that she became aware of the irregularities after the adjudication process, which
prompted her investigation. A belated investigation and consequent discovery of
tender irregularities is not uncommon. In Swifambo Rail Leasing (Pty) Ltd v Prasa31
the review was brought some 793 days late. Although the length of the delay in the
present review is not comparable, and the period in the present case shorter, a lengthy
period is not in and of itself a bar to overlooking the delay.
[73] Significantly, TFR employees attended to the adjudication process which
completed on 7 August 2020. They claim to have received the ruling dated 4 August
2020 on 7 August 2020. They filed the notice of dissatisfaction with the Adjudicator’s
determination on 7 September rather than on 4 September 2020, thereby denying
Transnet the right to appeal the award. The above facts ineluctably point to yet another
mismanagement of the process by the employee (s) concerned and should not deprive
Transnet the right to a review.
[74] Furthermore, Transnet was not a direct participant in the arbitration process. It
looked at the irregularities retrospectively, similarly to the Prasa board in Swifambo.
Its unchallenged version in that regard must be accepted. The effect is that the
‘proverbial clock’ for computing the delay started ‘ticking’ from the date of the
completion of the arbitration, on 7 August 2020. Transnet instituted the review
application in October 2020. On the strength of the Court’s decision in Buffalo City,
there was no delay, alternatively, the delay was not undue or unreasonable.
[75] Even if it is found that the delay was undue or unreasonable which was not the
case here, that does not bring an end to the inquiry in a legality review. Skweyiya J
explained in Khumalo32 that ‘[a]n additional consideration in overlooking an
unreasonable delay lies in the nature of the impugned decision’. This entails analysing
the impugned decision and considering the merits of the legal challenge made against
that decision. The bulk of the irregularities of which Transnet complains occurred after
31 Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa [2018] ZASCA 167;
2020 (1) SA 76 (SCA).
32 Khumalo fn 9 para 57.
the award of the tender, evidently, after the meeting of the TAC on 11 July 2019. How
the deviations pertaining to the installation of the fence occurred is important.
[76] It should be recalled that the letter of award envisaged that the start date of the
contract would be 16 August 2019, and the completion date 17 March 2020. According
to Tipp-Con, Transnet ‘approved’ the choice of a different sample on 13 September
2019, a month before the contract was signed. TFR signed the contract on 30 October
2019, and furnished it to Tipp-Con on 31 October 2019. Yet, the different sample
ostensibly ‘authorised’ before the signature of the contract was not embodied in the
subsequent contract. Tipp-Con conceded that its final offer was not carried over to the
NEC Contract, a matter I return to later. In any event, part of the complaint is that the
NEC contract deviated from the RFP.33
[77] Tipp-Con’s defence is that: ‘it had put up various samples and what it installed
was selected by Transnet’. It explains the background to the selection of a sample
other than the sample provided in the RFP or its BFO in this manner:
‘[C]oncerns were raised about Tipp-Con’s capacity to perform on time and Transnet enquired
from Tipp-Con who the supplier would be for the fencing material. It was suggested that an
inspection of Tipp-Con’s material supplier’s manufacturing facilities be conducted (so as to
inspect capacity and quality control procedures), given that Tipp-Con had indicated that it had
engaged more than one supplier at the time.’
[78] The first official engagement between Transnet and Tipp-Con after the award
of the tender occurred at a ‘project kick- off’ meeting on 28 August 2019. The concerns
referred to in the answering affidavit were not recorded in the minutes of the ‘project
kick-off’ meeting. The first reference to a need to install samples is in correspondence
from Tipp-Con dated 4 September 2019, by Mr Madiri (of Tipp Con) who wrote to Mr
Shai stating:
‘…We would like our suppliers to erect the fencing samples for your approval. This process
will assist the Quality Control of the fence to be erected. May you let us know the person to
coordinate this with and the place where we can construct the sample. Also indicate the sizes
and detail which must be shown by the samples.
33 Passenger Rail Agency of South Africa v Swifambo Rail Agency (Pty) Ltd 2017 (6) SA 223 (GJ) at
245.
Once we receive the details requested we will inform you the date for the sample construction.
However at the moment, we would like the supplies to erect the sample early next week on
Tuesday the 10th of September 2019 and then review them, the following day, the 11th
of September 2019 . . .’ (Emphasis added.)
Mr Shai wrote in reply on 9 September 2019.
‘Please use the sizes that are on the tender document including the specification.
You can erect the sample fence at the gate where we have a kick off meeting in City deep
terminal.’
[79] Of the two meetings recorded in Tipp-Con’s ‘meeting notes’ on 13 September
2019, the first of which was at the premises of a supplier, only two of TFR’s
representatives attended these meetings. There is no explanation why a meeting to
‘verify the production capacity’ of suppliers occurred after the award of the tender.
Since the tender had already been awarded, such a step is illogical. Members of the
bid evaluation structure were not present. Be that as it may, the recorded extract of
‘meeting notes’ supplied by Tipp-Con states that:
‘On the same day, Transnet’s representative selected one of the samples (after having
inspected their physical properties) to be erected on the sites and Tipp-Con was instructed to
proceed with the procurement of the materials for the erection of the sample so selected,
which had a mesh wire diameter of 3mm horizontal wire and 4mm vertical wire, and 13mm
vertical flat bar per section.
. . .
The Transnet representatives led by the Transnet Project Manager (Mr T Shai) identified and
approved Sample No 1 erected onsite, which also complied with the minimum tender
requirements. (Emphasis added.)
VN as the user client indicate that [the] he approves sample No 1 as it was economic in terms
of maintenance and possibility for other suppliers to be considered for supplying the size of
the panel. The modular joint provided extra rigidity and a solid joint to the panel. The 8mm flat
bar provided more steel and increased the delayed cutting time and the double posts improved
the stability of the fencing system.’
[80] On the other hand, the minutes of the risk reduction meeting attended by TFR
representatives on 14 January 2020 recorded that:
‘Mr. Siala stated the following: Post the award there was an issue whereby Tipp-Conn had to
engage with the technical team and during that time Tipp-Conn realised that there were other
things that they did not foresee. The Project Manager, Mr Shai requested that we install the
sample after we had a kick-off meeting attended by all the Stakeholders from Security and
end users. They emphasized that because it was a high risk area, security was of the utmost
importance. When we were requested to present a sample of what we were going to do we
then proposed two products that could be installed bearing in mind what the minimum
requirement should be. So we brought in these samples (Mr. Siala showed the samples to the
meeting). We had an alternative product which we considered to be a better product for such
a high risk security area. Mr. Siala said after he showed the two samples to the team on site
and demonstrated that the second sample is stronger and more durable, he then suggested
that this product would be better to install. Subsequently the sample was approved where-
after installation took place. In November 2019 we were questioned why we are installing
something different from the original sample and we responded that the product being installed
has much stronger features than the original sample.’ (Emphasis added.)
[81] Tipp-Con unilaterally offered an alternative product outside of the sanctioned
tender process which was accepted by people who were not authorised. The
impression is that it had not fully considered the technical implications of its offer.
There is no evidence that Transnet as the principal authorised the deviations after its
acceptance of Tipp-Con’s BFO. Even if it did, the finding by this Court in State
Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd34 is that an organ
of state did not have the authority to contract outside of a competitive bidding process,
to do so contravenes s 217 of the Constitution. That it must comply with a mandatory
and material procedure prescribed has not changed, and applies with equal force in
this matter. All this falls to be evaluated against Tipp-Con’s undertaking during the
price negotiations and in the light of the price reduction it offered.
[82] The question of the ‘materiality’ of the deviations as well as that of Transnet’s
participation in the arbitration process has a twofold effect on the merits of the review
and why the Court should overlook the delay. Tipp-Con stated that: 'the 3 mm wide
diameter is within the tolerance of +/- 0.08 mm diameter as indicated by SANS
675:2011. In contrast, the tender evaluation criteria required that ‘panel and fixtures
shall be hot dipped galvanised coatings on fabricated steel SANS 121:2011.’ Tipp-
34 State Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd [2016] 4 All SA 842 (SCA)
para 21.
Con in its bid undertook that “the actual panels and fixtures will be hot dip galvanised
coated on fabricated steel. Ref. SANS 121:2011.” The report by the GP Galvanizers
Association Southern Africa dated 1 July 2020 states that from the results of the
laboratory tests, they could surmise that on both panels the horizontal wires were
galvanized to SANS 675:2009-Class D, since the masses of about 60-80g/ correlate
to the requirements of this standard. On 3 February 2020, Ms Ndletyana confirmed
the non- compliance with SANS 121:2011. Even though I make no definitive finding in
this regard, these facts point to questions about the grade and quality of the product
offered to Transnet and installed at the premises. They are in addition to the complaint
about the ‘non-responsive’ tender. Thus, all of these shortcomings cannot redound to
the benefit of Tipp-Con.
[83] Prior to the negotiations after its selection as a preferred bidder, Tipp-Con’s
tender price was considered ‘above market related prices’. Tipp-Con’s BFO offer of
R34 371 970.15 entailed a reduction in its initial preliminary and general price by
R4 827 073.23. It stated that:
‘It should be noted that we have not made any changes to the Technical specification in our
offer. We are offering the High Quality Steel welded wire mesh Fencing with a 4mm wire
diameter and with Aperture of 12 x76mm and using the H-beam Posts’.
[84] As is now common cause, what Tipp-Con ultimately installed varied from its
BFO and as noted above, also varied from the quality assurance standard. That brings
me to the finding by the adjudicator that the variance was a ‘deminimis deviation’ and
the acceptance of this finding in the main judgment. The arbitration process was
conducted on paper without hearing evidence. In view of Transnet’s complaints and
their cumulative effect on the tender process and the impugned contract, such a
finding can only be supported if it was based on a proper consideration of inter alia
the: (a) agreed contract price; (b) impact on the direct cost of the fence; (c) effect on
the margin after the reduction of the bid contract price and (d) the incentive for Tipp-
Con to cut its costs to improve its margin. Accordingly, notwithstanding the differing
quality standard, the consequence of Tipp-Con’s defence, that 'the 3 mm wide
diameter was within the tolerance of +/- 0.08 mm diameter as indicated by SANS
675:2011, albeit on a SANS standard not stipulated in the RFP was never tested. In
my view, a determination of whether there was an incentive to cut costs and benefit
Tipp-Con’s margin on the one hand or whether on the other hand, Transnet
nevertheless obtained value for money, would have been necessary prior to
concluding that the deviation is ‘deminimis deviation’. In any event, the central focus
of the inquiry before the arbitrator was the contract concluded after the award of the
tender. Understandably, the arbitrator was acutely cognisant of the fact that his task
in the arbitration process was not to review the tender process as the power to do so
resides in the exclusive domain of the courts. Thus, the arbitrator's finding cannot avail
Tipp-Con in this case.
[85] It was submitted that Transnet initially sought to enforce the contract,
participated in the arbitration process and should be barred from instituting the review.
To the extent that this suggests that the review is a self-serving, reactive challenge
driven by a desire to avoid the consequences of the arbitration award, the above facts
point to the contrary. In any event, I cannot conceive of any reason why in the context
of the facts of this case Transnet should be precluded from challenging the award of
the tender by one of its divisions to Tipp-Con in circumstances where it subsequently
discovered cumulative irregularities in: (a) the selection of Tipp Con; (b) irregular
deviation from the terms of the RPF; and (c) a contract which deviates from the RFP,
and the accepted offer, leading to an installation of a fence it never tendered for. To
my mind, one ought not to lose sight of the fact that although it was Transnet that
published the RFP, it played a limited role in the process after approving the financial
terms, as is borne out by the record. TFR, independently conducted the entire bidding
process every step of the way from beginning to the end. And when disputes arose in
relation to the contract that precipitated the arbitration process, it was only the
employees of TFR who participated in that process. In these circumstances the finding
in the main judgment that Transnet was lackadaisical and dilatory in challenging the
propriety of the award is not justified. It has the effect of unduly constraining the ability
of a holding company like Transnet from investigating and undoing the consequences
of irregular award of its contracts.
[86] In sum: Transnet was obliged to resist the irregular award, and to set aside a
resultant contract which was not in accordance with a lawful tender process. In
particular, it was compelled to resist the implementation of a contract for goods not
contracted for. In my view, Transnet’s functionary acted in good faith or with the intent
to ensure clean governance.35 During argument, Tipp-Con’s counsel accepted that a
private party contracting with an organ of state has a reciprocal duty to ensure that it
complies strictly with the legislative prescripts and tender requirements. The
concession was well made and is consistent with the requirements for fairness,
transparency, competitiveness and cost efficiency, all of which were breached at every
turn through the tender mismanagement in this case. I therefore cannot subscribe to
the view that in instituting a self-review, Transnet acted otherwise than in good faith.
[87] In the result, I would have upheld the appeal and grant consequential relief with
costs of two counsel.
________________________
N T Y SIWENDU
ACTING JUDGE OF APPEAL
35 Buffalo City fn 3 para 62 referring to Tasima in fn 10.
APPEARANCES
For Appellant:
K N Tsatsawane SC (with him R Ramatselela)
Instructed by:
Chiba Attorneys, Johannesburg
Webbers Attorneys, Bloemfontein
For First Respondent:
L Sisilana (with him S Quinn)
Instructed by:
Van Rensburg Mabokwe Inc., Johannesburg
McIntyre van der Post 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 January 2024
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Transnet SOC Ltd v Tipp-Con (Pty) Ltd and Others (797/2022) [2024] ZASCA 12 (31 January 2024)
Today, the Supreme Court of Appeal (SCA), by a majority of three judges against two, dismissed an
appeal from the Gauteng Division of the High Court, Pretoria (high court). The appeal revolved around
a tender for the manufacture, supply and installation of a high security fence at certain premises of the
appellant. The respondent had been awarded the tender, but during installation of the fence, a dispute
arose regarding the fence’s specifications. This resulted in dispute resolution proceedings before an
adjudicator, as stipulated in the agreement between the parties. The adjudicator found in favour of the
respondent, namely that the fence was installed according to contractual specification and the
respondent was entitled to payment under the contract.
The appellant was unsatisfied with the outcome of the adjudicator and barred the respondent from
resuming with the fence’s installation. The respondent turned to the court to make the adjudicator’s
award an order of court, after which the appellant sough to review the order in the high court, claiming,
inter alia, that the contract entered into was unlawful because the respondent provided a non-compliant
sample of the fence (the tender sample) during the tender evaluation process (it was not ‘hot dip
galvanized’) and should therefore have been disqualified at the pre-qualification stage. As such, the
contract ought to have been set aside. The high court dismissed the review application and held that
the appellant had delayed in initiating the self-review and only brought the review application to ‘escape
its contractual obligations’. The appellant approached this Court, disputing the high court’s decision.
The appellant appealed on two grounds. It held that, in relation to its tardiness, the high court erred
when it did not apply the two-stage inquiry required to determine whether the delay in question was
unreasonable, and secondly, that the award of the tender and the subsequent contract was a violation
of procurement prescripts set out in s 217 of the Constitution and should have been set aside. With
regards to the former, this Court held that the two-step approach entailed an assessment of whether
the delay was unreasonable, and if it was, to initiate the second step by determining whether the delay
could be overlooked. The high court complied with the first step but failed to determine whether the
delay could have been overlooked.
This Court found that the nearly year-long delay by the appellant in initiating the review of the contract
was not explained. In these circumstances the delay was unreasonable. Regarding whether the delay
could be overlooked, this Court considered that the purpose of an organ of state's self-review should
be to promote open, responsive, and accountable governance and that the appellant was required to
promote these goals through its actions. Given the prejudice suffered by the respondent, the nature of
the appellant’s complaints, the fact that the irregularities were not egregious, and the unconscionable
conduct of the appellant, the unreasonable delay cannot be overlooked.
In the result, the Court found that the appellant did not only delay the matter unreasonably, but it also
acted unreasonably; it did not adhere to the constitutionally prescribed standard for state actors and did
not respect the rights of the respondent. It initially sought to enforce the very contract it later sought to
annul and refused to recognize the outcome of an adjudicative process in which it had voluntarily
participated. The appellant sought to circumvent the findings of the adjudicator by raising supposed
tender irregularities, thereby hoping that the Court would disregard all its prior actions.
On the contrary, the minority judgment held that the facts overwhelmingly support a contrary finding.
The irregularities Transnet complains of must be considered cumulatively rather than in discrete parts,
to assess their overall effect on a fair and transparent tender process, in line with the approach in
Khumalo and Another v MEC for Education, KwaZulu-Natal.
Transnet as the holding company assigned its divisions, Transnet Freight Rail (TFR), as ‘its agent’ to
manage the tender evaluation process. TFR employees misrepresented the status of the sample
submitted by Tipp-Con. It had submitted a ‘non-responsive tender.’ The review proceedings were
brought by the Executive Manager: Legal of Transnet as the principal, and not by TFR. Transnet was
alerted to the irregularities after the adjudication process, which prompted an investigation into the
award. The ‘proverbial clock’ for computing the delay started ‘ticking’ from the date of the completion of
the arbitration, on 7 August 2020. Transnet instituted the review application in October 2020. A belated
investigation and discovery of tender irregularities is not uncommon and is analogous with Swifambo
Rail Leasing (Pty) Ltd v Prasa. There was no delay, and if there was, it was not unreasonable and
should be overlooked.
Besides the misrepresentation of the sample, Tipp-Con’s Best Final Offer (BFO) of a 4 mm x 4mm wire
diameter fence compared with the final terms of the NEC contract providing for a 3mm wire diameter,
differed from the terms of the RFP and the BFO. After the award of the tender, Tipp-Con installed of a
fence between 3mm and 2.96mm. This was at variance from the terms of (a) the tender specification,
(b) the BFO and (c) the final NEC contract. It was also at variance from the SANBS standard prescribed
in the RFP. This raises questions about the grade and quality of the product offered and installed at the
premises. The bulk of the irregularities occurred after the award of the tender. The deviations were not
authorised by members of the bid evaluation structure. They fall within the proscription in State
Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd1 since they occurred outside of the
tender process.
The arbitrator's finding was conducted on paper without hearing evidence cannot avail Tipp-Con in this
case. Its central focus was the contract concluded after the award of the tender. The finding by the
adjudicator that the variance was a ‘deminimis deviation’ can only be supported if it was based on a
proper consideration of inter alia the: (a) agreed contract price; (b) impact on the direct cost of the fence;
(c) effect on the margin after the reduction of the bid contract price and (d) the incentive for Tipp-Con
to cut its costs to improve its margin. Whether there was an incentive to cut costs and benefit Tipp-
Con’s margin or whether Transnet nevertheless obtained value for money, would have been necessary
prior to concluding that it was a ‘deminimis deviation’.
Transnet was obliged to resist the irregular award which contravenes s 217 of the Constitution, and to
set aside a resultant contract which was not in accordance with a lawful tender process. Transnet’s
functionary acted in good faith or with the intent to ensure clean governance. In these circumstances,
the minority concluded that it would have upheld the appeal and grant consequential relief.
In the result, the SCA dismissed the appeal.
~~~~ends~~~~
1 State Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd [2016] 4 All SA 842 (SCA)
para 21.
|
4084
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 940/2021
In the matter between:
JACOLIEN BARNARD NO FIRST APPLICANT
BEATRICE LINDA MILLS NO SECOND APPLICANT
and
NATIONAL CONSUMER TRIBUNAL
FIRST RESPONDENT
NATIONAL CREDIT REGULATOR
SECOND RESPONDENT
Neutral citation: Jacolien Barnard NO and Another v National Consumer
Tribunal and Another (940/2021) [2023] ZASCA 121 (18
September 2023)
Coram:
MOCUMIE, MBATHA and MABINDLA-BOQWANA JJA and
KATHREE-SETILOANE and SIWENDU AJJA
Heard:
16 March 2023
Delivered: 18 September 2023
Summary: Section 148(2)(b) of the National Credit Act 34 of 2005 –
jurisdictional factor of applicant’s participation in hearing before National
Consumer Tribunal absent – High Court therefore had no jurisdiction to entertain
the appeal – application for leave to appeal is struck off the roll.
ORDER
On application for special leave to appeal from: Gauteng Division of the High
Court, Pretoria (Janse van Nieuwenhuizen J with Potterill ADJP concurring,
sitting as a court of first instance):
The applicants’ failure to timeously apply to this Court for leave to appeal
is condoned.
The application for leave to appeal is struck off the roll.
The applicants are ordered to pay the costs, including those of two counsel
where so employed.
JUDGMENT
Mbatha JA (Mocumie JA and Kathree-Setiloane AJA concurring):
Introduction
[1] On 10 March 2017, the National Credit Regulator (the Regulator) initiated
an investigation into the business practices of CMR Group (Pty) Ltd (CMR). The
investigation focussed on agreements relating to its core business known as the
‘Pawn your car and still drive it’ scheme (the scheme).
[2] The investigation revealed that CMR advanced funds to consumers against
their fully paid motor vehicles, subject to a pawn agreement. The scheme allowed
the consumers to borrow between 30 to 50 percent of their respective motor
vehicle’s market value. The consumers then transferred their respective motor
vehicles to CMR's name. The consumers remained in possession of the motor
vehicles while renting them from CMR for a period of up to 12 months. The
monthly rental was calculated at 25 to 30 percent of the loan amount. The
consumers would have to settle the rental and loan amounts at the end of the
contract period to have the respective motor vehicles transferred back to their
names. In the event of their failure to comply, the consumers would have to forfeit
their respective motor vehicles to CMR.
[3] The Regulator alleged that the scheme was in contravention of s 101(1)(d)
read with regulation 42 of the National Credit Act 34 of 2005 (NCA) – charging
an excessive amount of interest; s 81(2) of the NCA – failing to conduct
affordability assessments; and s 100(1)(a) of the NCA – imposing a prohibited
charge. This prompted the Regulator to seek a declaratory order against CMR for
repeated contraventions of the NCA in the National Consumer Tribunal (the
Tribunal).
[4] CMR filed an answering affidavit to the Regulator’s application, and
conceded to the orders sought by the Regulator in the event that the Tribunal
found that it was involved in prohibited conduct. CMR furthermore requested the
Tribunal to issue an order which inter alia provided that CMR be interdicted from
any further contraventions of the NCA, and be ordered ‘at [CMR’s] cost, to
submit a report compiled by an independent auditor to [the NCR] in respect of
fees which may have been overcharged by [CMR] and that such fees be set off
against any amounts validly owed and/or owing to [CMR]’.
[5] In making its order, the Tribunal took into account the proposed
concessions made by CMR. The order provides as follows:
‘1.
[CMR’s] registration as a credit provider is hereby cancelled as of the date of issuing of
this judgment;
2.
[CMR] is interdicted from entering into any further credit transactions with consumers
or operating as a credit provider;
3.
All the credit agreements entered into between consumers and CMR are declared
reckless. All the consumers’ obligations in terms of these agreements are set aside. All the
consumers are to be reimbursed with all fees and the charges paid to CMR in terms of those
agreements;
4.
[CMR] is interdicted from proceeding with any current civil proceedings against
consumers under the credit agreements. [CMR] is to rescind any judgments obtained against
any consumers.
5.
. . . [CMR is ordered to] appoint an independent auditor at its own cost. The auditor
must determine all the amounts paid by the consumers under the credit agreements with CMR.
All the amounts paid must be reimbursed to all the consumers. The auditor must provide a
comprehensive report, regarding the consumers identified and the refunded amounts, to the
NCR within 90 days of this judgment being issued; and
6.
There is no order as to costs.’
Developments before the hearing
[6] A special resolution was passed to voluntarily wind-up CMR in terms of
ss 349 and 351 of the Companies Act 61 of 1973 (the Companies Act). The
application lodged by the Regulator was set down for a hearing on 16 April 2019.
On 14 February 2019, the high court granted an order that placed CMR in
voluntary liquidation and appointed the applicants before us as provisional
liquidators of CMR (in liquidation). However, the Regulator only became aware
of this on 12 April 2019, when CMR’s erstwhile attorneys withdrew as attorneys
of record.
[7] This led to the application being postponed to 30 July 2019. The Tribunal
sent both CMR and the provisional liquidators a notice of set down. On 24 July
2019, Ms Barnard, on behalf of the provisional liquidators, acknowledged receipt
of the notice of set down by email, and confirmed her appointment as liquidator
and that she would be appearing before the Tribunal on 30 July 2019.
[8] On 30 July 2019, there was no appearance by either CMR or the liquidators
before the Tribunal. In terms of rule 24 of the Rules for the Conduct of Matters
Before the National Consumer Tribunal (the Tribunal Rules),1 the Tribunal
proceeded with the hearing in the absence of CMR. On 12 August 2019, the
Tribunal granted the orders set out above.
[9] Aggrieved by the decision of the Tribunal, the applicants, in their capacity
as joint liquidators of CMR (in liquidation), noted an appeal in terms of
s 148(2)(b) of the NCA against certain orders of the Tribunal, to a full bench of
the Gauteng Division of the High Court, Pretoria (the high court).
[10] On 22 December 2020, the high court dismissed the appeal with costs. The
applicants’ application for leave to appeal the judgment and order of the high
court met the same fate. Dissatisfied with the decision of the high court, the
applicants applied for special leave from this Court. That application was
accompanied by an application for condonation, as it was filed out of time. On 29
March 2022, this Court ordered that the application for special leave to appeal
and condonation be referred for oral arguments in terms of s 17(2)(d) of the
Superior Courts Act 10 of 2013 (the Superior Courts Act). If called upon to do so,
the parties were directed to be prepared to address this Court on the merits of the
appeal. The application for condonation is unopposed. It need not detain us, as
the delay is short and the explanation is reasonable. It, accordingly, succeeds.
[11] In an application for special leave from this Court, the applicant must, in
addition to showing the existence of reasonable prospects of success on appeal,
show that special circumstances exist for the granting of such leave. Although not
a closed list, special circumstances may include that the appeal raises a substantial
point of law, or that the prospects of success are so strong that a refusal of leave
1 Regulations for matters relating to the functions of the Tribunal and Rules for the conduct of matters before the
National Consumer Tribunal, GN 789, GG 30225, 28 August 2007.
may result in a manifest denial of justice, or that the matter is of great importance
to the public or the parties.2
[12] Be that as it may, this Court in National Credit Regulator v Lewis Stores
(Pty) Ltd and Another3 (Lewis), held that an appeal from the decision of the high
court under s 148(2) of the NCA, whether constituted of a single judge or two
judges or a full court, should be sought in terms of s 16(1)(a) of the Superior
Courts Act and not by way of an application for special leave to appeal to this
Court.
[13] The rationale for arriving at this conclusion was that the decisions of the
Tribunal are administrative decisions, and therefore not judgments or orders of
court. Thus, leave must be sought in terms of s 16(1)(a) of the Superior Courts
Act, as the more stringent test required for special leave to appeal, under s 17(3)
thereof, would limit the right of access to courts in terms of s 34 of the
Constitution. To strike this application from the roll on the basis that the
applicants invoked the wrong remedy would serve no purpose. In the exercise of
this Court’s inherent power to regulate its own processes in terms of s 173 of the
Constitution, I consider it to be in the interests of justice to proceed to deal with
this application as an application for leave to appeal in terms of s 16(1)(a) of the
Superior Courts Act.
Proceedings before the high court
[14] The legal issues raised in the high court for determination were: (a) whether
the Tribunal, in terms of its statutory mandate under s 150 of the NCA, was
empowered to grant the orders against CMR after the granting of the provisional
2 Cook v Morrison and Another [2019] ZASCA 8; [2019] 3 All SA 673 (SCA); 2019 (5) SA 51 (SCA) para 8.
3 National Credit Regulator v Lewis Stores (Pty) Ltd and Another [2019] ZASCA 190; [2020] 2 All SA 31 (SCA);
2020 (2) SA 390 (SCA) paras 55-56.
liquidation order; (b) whether the granting of such orders infringed the vested
rights arising from the concursus creditorum; and (c) whether the orders granted
infringed upon the powers and duties of the liquidators appointed to wind-up the
company.
[15] The high court found that the applicants’ grounds of appeal were limited to
the following three orders granted by the Tribunal against CMR (in liquidation):
‘3.
All credit agreements entered into between consumers and CMR are declared reckless.
All the consumers’ obligations in terms of these agreements are set aside. All the consumers
are to be reimbursed with all fees and the charges paid to CMR in terms of those agreements.
4.
[CMR] is interdicted from proceeding with any current civil proceedings against
consumers under the credit agreements. [CMR] is to rescind any judgments obtained against
any consumers.
5.
. . . [CMR is ordered to] appoint an independent auditor at its own cost. The auditor
must determine all the amounts paid by the consumers under the credit agreements with CMR.
All the amounts paid must be reimbursed to all consumers. The auditor must provide a
comprehensive report, regarding the consumers identified and the refunded amounts, to the
NCR within 90 days of this judgment being.’
It is notable that, at the hearing in the high court, the applicants did not seek to
withdraw the concessions made by the erstwhile director of CMR, in its
answering affidavit, acceding to the granting of the aforesaid orders by the
Tribunal.
[16] One of the grounds of appeal raised in the high court by the applicants was
a point of law that there was a conflict between the provisions of the NCA and
the Companies Act. The high court held that it was entitled to dismiss the appeal
on this ground because even if the applicants were, in terms of the common law,
allowed to raise a point of law on appeal, the statutory provisions of the NCA
militate against such a notion. It held, in this regard, that in terms of s 148(2) of
the NCA a party has to participate in the proceedings before the Tribunal to avail
itself of the appeal and review processes provided for in that provision. The high
court held that participation in the hearing is a jurisdictional requirement for
noting an appeal in terms of s 148(2)(b) of the NCA, a threshold which was not
met by the applicants. Accordingly, the high court held that the applicants should
have followed the rescission procedure envisaged in rule 24A of the Tribunal
Rules, and it thus dismissed the appeal on the basis of a lack of jurisdiction.
[17] The application for leave to appeal in this Court is directed at the two
findings of the high court referenced above. The Regulator contended that the
high court was correct in refusing to determine the point of law, as that issue did
not serve before the Tribunal. It also contended that the high court did not err in
concluding that it had no jurisdiction to entertain the appeal on the basis that the
applicants had not participated in the proceedings before the Tribunal as
contemplated in s 148(2) of the NCA.
[18] Should I find that the high court was correct in concluding that it had no
jurisdiction to hear the appeal, that would be the end of the matter. There would,
therefore, be no need to decide whether the high court erred in not dealing with
the point of law raised by the applicants.
Participation in the legal proceedings
[19] Section 148(2) of the NCA, which governs appeals and reviews provides
as follows:
‘Subject to the rules of the High Court, a participant in a hearing before a full panel of the
Tribunal may –
(a)
apply to the High Court to review the decision of the Tribunal in that matter; or
(b)
appeal to the High Court against the decision of the Tribunal in that matter, other than
a decision in terms of section 138 or section 69(2)(b) or 73 of the Consumer Protection Act,
2008, as the case may be.’
[20] In interpreting the words ‘participating in a hearing’ as envisaged in s
148(2) of the NCA, the rules of interpretation as articulated by this Court in Natal
Joint Municipal Pension Fund v Endumeni Municipality4 apply. There, it was
held:
‘Whatever the nature of the document, consideration must be given to the language used in the
light of the ordinary rules of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed; and the material known to those responsible for its
production. . . The inevitable point of departure is the language of the provision itself, read in
context and having regard to the purpose of the provision and the background to the preparation
and production of the document.’
[21] FindLaw Legal Dictionary describes ‘participant’ as ‘a person who takes
part in something’ and ‘participation’ as ‘the action or state of taking part in
something’.5 On a proper interpretation of the words ‘participant in a hearing’ in
s 148(2) of the NCA, they denote physical participation in the hearing by a party
or his or her legal representative. In other words, a party must participate in person
(or through a representative) in the hearing before the Tribunal in order for it to
note an appeal against its decision, to the high court, in terms of s 148(2)(b) of the
NCA. This interpretation is consistent with the conclusion of this Court in Lewis6
that although the full bench sits as the court of first instance in the appeal in terms
of s 148(2)(b) of the NCA, this does not mean that the litigant should not first
participate in the proceedings before the Tribunal.7
[22] An order granted by a competent court may be appealed against as long as
the required jurisdictional requirements are met. It is trite that jurisdiction is a
4 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) para 18.
5 FindLaw Legal dictionary, available at https://dictionary.findlaw.com.
6 Lewis para 56.
7 The only exception in terms of which the high court can be directly approached, is where a litigant wants to
declare the provisions of the NCA unlawful because that jurisdiction rests with the court and not the Tribunal. In
that regard, relief will be granted under the Tribunal Rules even where the alleged irregularity relates to the lack
of legal competence by the Tribunal to have made the order.
legal issue and nothing precluded the high court from establishing whether it had
competence to deal with the appeal.8 It is regrettable in this matter that neither the
Regulator nor the high court raised the question of its lack of appeal jurisdiction
at the hearing. However, this did not prevent the high court from determining
whether it had jurisdiction to hear the appeal in terms of s 148(2)(b) of the NCA.
[23] Notwithstanding this, the applicants remain adamant that the high court
erred in concluding that it had no jurisdiction to entertain the appeal because the
applicants did not participate in the hearing before the Tribunal. They submit that
a broad meaning should be given to the words ‘a participant in the hearing’. They
argue that the applicants’ participation in the hearing before the Tribunal can be
discerned from the notification that Ms Barnard provided to the Tribunal, after
CMR filed its answering affidavit, where she indicated that she would attend the
proceedings. I disagree, because the notification informing the Tribunal that Ms
Barnard would attend the hearing did not equate to her participation in the
hearing. Nor, for that matter, did the filing of an answering affidavit by CMR
which the applicants associated themselves with.
[24] The words ‘a participant in a hearing before a full panel’ are clear and
unambiguous. The party seeking leave to appeal must have participated either
personally or through a representative in the actual hearing before the Tribunal.
Section 148(2) of the NCA does not contemplate the consideration of an
answering affidavit by the Tribunal, in the absence of a party’s (or its
representative’s) participation in the hearing before it, to constitute participation.
Such an interpretation would render the words ‘in a hearing’ superfluous. That
the Tribunal took into account the concessions made by CMR in its answering
affidavit before making the orders against CMR also does not amount to either
8 Graaff-Reinet Municipality v Van Ryneveld’s Pass Irrigation Board 1950 (2) SA 420 (A).
CMR’s (or the applicants’) participation in the hearing as envisaged in s 148(2)
of the NCA.
The appeal or rescission process
[25] Rule 24(1)9 of the Tribunal Rules gives two options to a presiding member,
where a party who is not an applicant fails to attend or is not represented in the
proceedings before the Tribunal. In the exercise of his or her discretion, the
presiding member of the Tribunal may continue with the proceedings in the
absence of that party or adjourn the hearing to a later date. In exercising his or her
discretion, the presiding member must be satisfied, in terms of rule 24(2), that the
party who is in default of an appearance had been properly notified of the date,
time and venue of the proceedings, before making any decision in terms of rule
24(1)(b)(i) or (ii) of the Tribunal Rules. In this case the presiding member was
satisfied that this requirement was complied with. He accordingly decided to
proceed with the hearing in the absence of the applicants in line with rule
24(1)(b)(i).
[26] A party who did not participate in the hearing before the Tribunal has a
remedy in terms of s 165 of the NCA, which provides for a rescission or a
variation of orders granted by the Tribunal which were, inter alia, erroneously
sought or granted in the absence of a party. Section 165 of the NCA provides:
‘165. Variation of order
The Tribunal, acting of its own accord or on application by a person affected by a decision or
order, may vary or rescind its decision or order-
9 Rule 24 provides:
‘(1) If a party to a matter fails to attend or be represented at any hearing or any proceedings, and that party-
(a) is the applicant, the presiding member may dismiss the matter by issuing a written ruling, or
(b) is not the applicant, the presiding member may dismiss the matter by issuing a written ruling; or
(i) continue with the proceedings in the absence of that party; or
(ii) adjourn the hearing to a later date.
The Presiding member must be satisfied that the party had been properly notified of the date, time and venue
of the proceedings, before making any decision in terms of subrule (1).
The Registrar must send a copy of the ruling to the parties.’
(a)
erroneously sought or granted in the absence of a party affected by it;
(b)
in which there is ambiguity, or an obvious error or omission, but only to the extent of
correcting that ambiguity, error or omission; or
(c)
made or granted as a result of a mistake common to all the parties to the proceedings.’
[27] The applicants ought to have applied to rescind the order of the Tribunal
under s 165 of the NCA as opposed to appealing against it in terms of s 148(2)(b)
of the NCA. Section 165 read together with rule 24A10 of the Tribunal Rules puts
paid to the applicants’ contention that the high court’s finding, that it lacks
jurisdiction to hear the appeal, impacts on their rights of access to court in terms
of s 34 of the Constitution. Importantly, should a rescission application succeed,
then the Tribunal will be required to rehear the matter on the merits.
[28] It is important to consider the express language used in s 165 of the NCA.
On its plain wording, s 165 provides for the rescission or variation of the
Tribunal’s order or decision which was erroneously sought or granted in the
absence of the party seeking to rescind it. That the Tribunal decided the matter on
the merits did not preclude the applicants from seeking to rescind the order in
terms of s 165 of the NCA on the grounds that it was erroneously granted in their
absence.
[29] The applicants misconstrued their remedy under the NCA. Instead of
applying to the Tribunal to rescind its order, they sought to appeal it in terms of
s 148(2)(b). The NCA does not give a party a choice on the remedy to adopt in
the event of its failure to participate in the hearing.
10 Rule 24A(1) provides:
‘Variation or rescission of Tribunal orders
(1) An application for the variation or rescission of a Tribunal order must be made within 20 days of the date on
which the applicant became aware of -
(a) the Tribunal order which was granted in the absence of the applicant;
(b) the ambiguity, error or omission; or
(c) a mistake common to the parties to the proceedings; or
(d) within such longer period as permitted by the Tribunal.’
[30] The high court correctly found that the ‘rescission of an order granted in
the absence of a party, facilitates the rehearing of the matter and affords the absent
party an opportunity to present its submissions on an issue in dispute. This, in
turn, enables the Tribunal to properly consider the issues and deliver a reasoned
judgment in respect of each issue’. This is a very low threshold to be met by an
applicant seeking to rescind an order erroneously sought or granted in its absence.
In this regard, I find that the only route open to the applicants was to apply for a
rescission of the Tribunal’s order, which was made in default of their appearance
at the Tribunal hearing.
Conclusion
[31] In seeking to persuade us that leave should be granted, the applicants made
extensive submissions on the merits of the case. The fact remains that they had to
cross the jurisdictional Rubicon first, before being able to make any submissions
on the merits. That issue is dispositive of the application for leave to appeal.
[32] I have had the benefit of reading my colleagues’ dissenting judgment,
where they raise the question of whether the liquidators should have been cited or
joined as parties to the proceedings before the Tribunal. They contend that
notwithstanding that the Tribunal was alive to the liquidation and suspension of
legal proceedings, the Tribunal proceeded with the hearing in terms of rule
24(1)(b)(i) of the Tribunal Rules. They conclude that the Tribunal erroneously
stated that there was no requirement in the 1973 Companies Act that the liquidator
be joined or cited in the proceedings. As a result, it was not open to the Tribunal
to proceed as if the liquidation order had not been issued, as the liquidation
predated the Tribunal proceedings. I have decided to express my views on this
issue as it is ancillary to the jurisdictional question which I have extensively dealt
with in this judgment.
[33] I reiterate that the liquidation process commenced long after the matter had
been set down for hearing before the Tribunal. CMR was then placed in voluntary
liquidation by its erstwhile sole director shortly before the commencement of the
hearing before the Tribunal. It is common cause that at that stage, the former
director, whose company had been legally represented in the proceedings, had
conceded to unlawful conduct in terms of the NCA and proffered to make
restitution to the concerned consumers. It is not in dispute that when CMR was
placed in liquidation, the Regulator immediately complied with the provisions of
s 359 of the Companies Act. The Tribunal also furnished the applicants with the
pleadings and informed them of a new date for hearing. Ms Barnard, on behalf of
the applicants, acknowledged receipt of the documents and confirmed in writing
that they would attend the proceedings on the date set down for hearing.
[34] Significantly, the applicants contended upfront during the hearing in the
application for leave to appeal in this Court, that they had participated in the
proceedings before the Tribunal on the basis that the answering affidavit had been
filed with the Tribunal. They submitted that this Court should as a result, give a
broad interpretation to the word participation in terms of s 142(2)(b) of the NCA.
For this contention, they relied on the Constitutional Court judgment Morudi and
Others v NC Housing Services and Development Company Limited and Others11.
The applicants never raised the issue of their non-joinder in the application for
leave to appeal before this Court as they considered themselves to be parties
before the Tribunal by virtue of having received notice from the Tribunal.
[35] I find, with respect, that the contention that the applicants should have been
joined in the proceedings at the instance of the Regulator to be gratuitous as it
does not accord with provisions of s 359 of the Companies Act. Section 359
11 Morudi and Others v NC Housing Services and Development Company Limited and Others [2018] ZACC 32.
regulates the process that needs to be followed after a company has been placed
in liquidation, in the event that the applicant in the legal proceedings wants to
proceed with such proceedings. Briefly, it imposes a moratorium on legal
proceedings for a limited period until the appointment of a liquidator. Once the
liquidator is appointed, any person who having instituted legal proceedings
against a company (which were suspended by a winding up) intends to continue
with such legal proceedings, is required within a period of four weeks after the
appointment of the liquidator to give the liquidator not less than three weeks’
notice in writing before continuing with the proceedings.
[36] I must add that the language of s 359(2)(a) is specific as to what
proceedings it refers to, it states that:
‘(a) Every person who, having instituted legal proceedings against a company which were
suspended by a winding-up, intends to continue the same, and every person who intends to
institute legal proceedings for the purpose of enforcing any claim against the company which
arose before the commencement of the winding-up, shall within four weeks after the
appointment of the liquidator give the liquidator not less than three weeks’ notice in writing
before continuing or commencing the proceedings.
(b) If notice is not so given the proceedings shall be considered to be abandoned unless the
Court otherwise directs.’ (emphasis added)
The subsection distinguishes these proceedings from any other proceedings that
may arise post the commencement of the liquidation proceedings. The
proceedings initiated post the company being placed in liquidation may require
that the liquidator be joined to the proceedings. The Tribunal in its judgment
correctly found that the application before it was initiated before the
commencement of the liquidation and that the old Companies Act did not require
that there be a joinder or citation of the liquidators in the proceedings adjourned
in terms of s 359 of the Companies Act. Furthermore, it found that s 359 of the
Companies Act only required that a notice be given to the liquidator. In that regard
nothing prevented the applicants from substituting themselves as respondents
before the Tribunal.
[37] The Constitutional Court in Chisuse and Others v Director General,
Department of Home Affairs and Another,12 reiterated the principles of
interpretation of statutory provisions by affirming that‘(a) the statutory provisions
be interpreted purposively; (b) the relevant statutory provision must be properly
contextualized; and (c) all statements must be construed consistently with the
Constitution...’ In applying the aforesaid principles of interpretation, I come to
the following conclusions: First, s 359 protects the rights of a creditor who if he
fails to give notice to continue with legal proceedings, shall be considered to have
abandoned the legal proceedings against the company in liquidation. Secondly, it
provides the liquidators of a company in liquidation with time to weigh-up and
consider the nature and validity of the claims against the company in liquidation.
If they do not agree with them, this affords them an opportunity to challenge the
claims. Thirdly, the legislation provides for the continued application of the 1973
Companies Act to winding up and liquidation matters, despite its repeal. The
remedy provided in s 359 is an internal remedy provided in terms of the
Companies Act. There is, therefore, no need to seek regulatory answers outside
the perimeters of the Companies Act. Fourthly, the language of the provision does
not expressly or impliedly require that the applicants be joined in the legal
proceedings at the instance of the Regulator. In Umbogintwini Land & Investment
Co (Pty) Ltd (in liquidation) v Barclays National Bank Ltd & another1987 (4) SA
894(A) Viljoen JA said in respect of s 359(2)(b):
‘The provision was designed, in my view, to afford the liquidator an opportunity, immediately
after his appointment, to consider and assess, in the interests of the general body of creditors,
12 Chisuse and Others v Director General, Department of Home Affairs and Another [2020] ZACC 20; 2020 (10)
BCLR 1173 (CC) para 47.
the nature and validity of the claim or contemplated claim and how to deal with it – whether,
for instance, to dispute or settle or acknowledge it.’
[38] Once the notice has been given there is no impediment to the continuation
of the proceedings and to the issuing of any order that the Tribunal or the court
may deem fit. This opens the way for the creditor to lodge and prove a claim in
terms of s 44(1) of the Insolvency Act. The wording of s 359(2)(a) of the
Companies Act confirms that ‘there is no legal bar to a litigant to proceed with
the claim, once there has been compliance with the notice’.13
[39] The s 359 notice gave the applicants adequate time to establish, consider
the merits of the claims and to decide on the legal route to be followed. The
provisions of s 143 of the NCA read with Rule 11 of the Tribunal Rules also allow
any person on application to intervene in the proceedings. I conclude that there
was no onus upon the Regulator to formally join the applicants in the proceedings.
This is supported by the lack of express provisions to that effect in s 359 of the
Companies Act. It was never envisaged that every creditor who had commenced
proceedings would bear a further onerous burden of joining the liquidators of the
company in liquidation. This would also not be in the best interest of the creditors
that the liquidators are forced to come to court, even when they do not have a
defence to the action. I accept that the applicants had a direct and substantial
interest in proceedings before the Tribunal, but it was incumbent upon them to
intervene and participate in the proceedings. They were fully aware of their rights
in terms of the law and considered themselves as parties to the proceedings before
the Tribunal. As alluded to earlier in the judgment, notwithstanding their non-
attendance at the hearing before the Tribunal, they contended that they
participated in the proceedings before the Tribunal through associating
13 Leipsig v Bankorp Ltd (377/92) [1993] ZASCA 198; 1994 (2) SA 128 (AD); [1994] 2 All SA 150 (A) para 16-
17.
themselves with the answering affidavit which was filed by CMR (the company
in liquidation).
[40] The applicants acquiesced in the decision of the Tribunal, as their grounds
of appeal are directed at only three of the six orders of the Tribunal. They clearly
accepted the remaining orders. In that regard non-joinder cannot be raised as a
defence on their behalf. Moreover, that the high court had no jurisdiction to
entertain the appeal means that it could not deal with the point of non-joinder even
if it was raised by the applicants as a ground of appeal, which it was not. Nor in
the circumstances of having no jurisdiction to entertain the appeal, could the high
court raise non-joinder mero motu.
[41] For these reasons, the application for leave to appeal to this Court falls to
be struck off the roll.
[42] In the result, it is ordered:
The applicants’ failure to timeously apply to this Court for leave to appeal
is condoned.
The application for leave to appeal is struck off the roll.
The applicants are ordered to pay the costs, including those of two counsel
where so employed.
_____________________
Y T MBATHA
JUDGE OF APPEAL
Mabindla-Boqwana JA and Siwendu AJA (dissenting):
[43] We have read the judgment of our colleague Mbatha JA (the first
judgment). We agree that the application before us should be treated as an
application for leave to appeal as opposed to an application for special leave to
appeal, as explained in the first judgment. We, however, differ with the first
judgment as to the approach and the fate of this application. In our view, as a
matter of law, the liquidation of CMR impacted materially on the future conduct
of the proceedings before the Tribunal. As a result, we are not persuaded that the
point of departure is one of jurisdiction under s 148 of the NCA. We say that in
declining to entertain the appeal on the grounds of a lack of jurisdiction in terms
of s 148(2)(b) of the NCA, the high court erred. In our view, there arose a
necessary anterior enquiry that ought to have occupied the attention of the high
court.
[44] It is apparent from the Tribunal’s judgment that it considered the effect of
the liquidation of CMR, and whether the rescheduled hearing could have
proceeded in the absence of Ms Barnard. Put differently, whether the liquidators
ought to have been cited or joined as parties to the proceedings before the
Tribunal.
[45] Being alive to the liquidation and the automatic suspension of legal
proceedings against CMR, the Tribunal referred to s 359 of the Companies Act
61 of 1973 (the 1973 Companies Act), which provides:
‘(1)
When the Court has made an order for the winding-up of a company or a special
resolution for the voluntary winding-up of a company has been registered in terms of section
200–
(a)
all civil proceedings by or against the company concerned shall be suspended until the
appointment of a liquidator; and
(b)
any attachment or execution put in force against the estate or assets of the company
after the commencement of the winding-up shall be void.
(2)(a) Every person who, having instituted legal proceedings against a company which was
suspended by a winding-up, intends to continue the same, and every person who intends to
institute legal proceedings for the purpose of enforcing any claim against the company which
arose before the commencement of the winding-up, shall within four weeks after the
appointment of the liquidator give the liquidator not less than three weeks’ notice in writing
before continuing or commencing the proceedings.
(b)
If notice is not so given the proceedings shall be considered to be abandoned unless the
Court otherwise directs.’
[46] Notwithstanding, the Tribunal proceeded on the basis that in terms of
rule 24(2)14 of the Tribunal Rules,15 ‘CMR had been properly notified of the date
of the hearing’. Accordingly, it could proceed with the hearing ‘in the absence of
CMR in accordance with Rule 24(1)(b)(i)’. (Emphasis added.)
[47] The Tribunal concluded that because the Regulator had sent a copy of the
application to the liquidator by registered post and the notice of set down had been
emailed to the liquidator, the latter had been given requisite notice in terms of
s 359 of the 1973 Companies Act. The requirements of the 1973 Companies Act
were thus fulfilled and nothing further was required. The Tribunal thus concluded,
erroneously so in our view, that there was no requirement in the 1973 Companies
Act that ‘the liquidator now be joined in the proceedings or be cited’.
[48] The Tribunal also premised its reasoning for its orders on the grounds that
CMR retained its juristic status and identity despite the final order of liquidation.
14 In terms of Rule 24(2), the Presiding member must be satisfied that the party had been properly notified of the
date, time and venue of the proceedings, before making any decision in terms of subrule (1).
15 Regulations for matters relating to the functions of the Tribunal and Rules for the conduct of matters before the
National Consumer Tribunal, GN 789, GG 30225, 28 August 2007.
It called in aid the decision of Richter v ABSA Bank Limited16 (Richter), where
this Court stated:
‘The correct position is that upon the final order of liquidation being granted the company
continues to exist, but control of its affairs is transferred from the directors to the liquidator
who exercises his or her authority on behalf of the company.’
[49] However, the Tribunal misconceived the effect of Richter in concluding
that ‘[t]he status of CMR has therefore not changed in anyway. It remains a
juristic entity and it remains a credit provider in terms of the NCA. The Tribunal
is therefore still empowered to adjudicate on the application brought against
CMR’. Such an approach cannot be supported. The status of the CMR had
obviously changed – it was now under the legal disability of a winding-up order.
This impacted in a direct and substantial way on its status.
[50] In our view, it was not open to the Tribunal to proceed as if the liquidation
order had not issued. The Tribunal thus erred in regard to the material effect of
the liquidation on the proceedings before it, and this error permeated the approach
by the Regulator, the high court and the parties in the application for leave to
appeal before us.
[51] The liquidation order pre-dated the Tribunal hearing. The effect of the
liquidation order was that the management of the business of CMR was
transferred into the hands of the applicants as its liquidators. Even though the
Tribunal correctly referred to Richter, which affirms a long-standing principle
that upon liquidation, the management of the affairs of CMR vested in the
applicants, it overlooked its full import. The effect of a liquidation order is to
establish a concursus creditorum.17 In Walker v Syfret NO,18 this Court stated:
16 Richter v ABSA Bank Limited [2015] ZASCA 100; 2015 (5) SA 57 (SCA) para 10.
17 Muller NO and Another v Community Medical Aid Scheme [2011] ZASCA 228; 2012 (2) SA 286 (SCA); [2012]
2 All SA 252 (SCA) para 7.
18 Walker v Syfret NO 1911 AD 141 at 166.
‘The object of the Insolvent Ordinance is to ensure a due distribution of assets among creditors
in the order of their preference. And with this object all the debtor’s rights are vested in the
Master or the trustee from the moment insolvency commences. The sequestration order
crystallises the insolvent's position; the hand of the law is laid upon the estate, and at once the
rights of the general body of creditors have to be taken into consideration. No transaction can
thereafter be entered into with regard to estate matters by a single creditor to the prejudice of
the general body. The claim of each creditor must be dealt with as it existed at the issue of the
order.’
[52] The orders of the Tribunal impacted on the statutory powers and duties of
the liquidators to take possession of and administer CMR’s affairs.19 The starting
point, accordingly, was not whether the liquidators were given ‘notice’ of the
proceedings, but whether the liquidators were a necessary party and had a direct
and substantial interest in the Tribunal proceedings. If they were necessary
parties, then they were entitled to be joined. This is especially so because the
Tribunal proceeded to issue orders against the applicants, as if they were indeed
parties to the proceedings.
[53] It is trite that ‘[a] third party who has, or may have, a direct and substantial
interest in any order the court might make in proceedings or if such an order
cannot be sustained or carried into effect without prejudicing that party, is a
necessary party and should be joined in the proceedings, unless the court is
satisfied that such person has waived the right to be joined’.20 (Emphasis added.)
[54] As was held in Matjhabeng Local Municipality v Eskom Holdings Limited
and Others:21
19 Section 386 of the 1973 Companies Act deals with the powers of the liquidators.
20 A C Cilliers et al, Herbstein and Van Winsen: The Civil Practice of the High Courts and the Supreme Court of
Appeal of South Africa 5 ed (2009) ch6-p209; Amalgamated Engineering Union v Minister of Labour 1949 (3)
SA 637 (A).
21 Matjhabeng Local Municipality v Eskom Holdings Limited and Others; Mkhonto and Others v Compensation
Solutions (Pty) Limited [2017] ZACC 35; 2017 (11) BCLR 1408 (CC); 2018 (1) SA 1 (CC) para 92.
‘No court can make findings adverse to any person’s interest, without that person first being a
party to the proceedings before it. The purpose of this requirement is to ensure that the person
in question knows of the complaint so that they can enlist counsel, gather evidence in support
of their position, and prepare themselves adequately in the knowledge that there are personal
consequences . . . .’
[55] In Judicial Service Commission and Another v Cape Bar Council and
Another,22 this Court held that joinder is only required as a matter of necessity as
opposed to a matter convenience. And indeed, when such person is a necessary
party the court will not deal with the issues without a joinder being effected
(unless the waiver thereof), and no question of discretion or convenience arises.23
Importantly, mere notice of the proceedings to the third party is not sufficient.24
Particularly here where relief ultimately issued against the applicants that had not
been foreshadowed in the application. In the circumstances, it was necessary for
a formal application to be filed on notice to the applicants setting out the revised
relief that would be sought against them consequent upon the winding-up of the
company and their appointment as liquidators. A proper joinder was thus
necessary given the nature of the orders that ultimately issued, which operated
against the liquidators. Absent their joinder and absent an application for relief
against them, it was not permissible for the Tribunal to issue orders against the
applicants. Indeed, if it appears ex facie the papers that a person has a direct and
substantial legal interest in the matter before the court entitling it to be heard, the
court may mero motu take steps to safeguard its rights.25
22 Judicial Service Commission and Another v Cape Bar Council and Another [2012] ZASCA 115; 2012 (11)
BCLR 1239 (SCA); 2013 (1) SA 170 (SCA); [2013] 1 All SA 40 (SCA) para 12.
23 Khumalo v Wilkins 1972 (4) SA 470 (N) at 475A–B.
24 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) 659-660 and 661-663.
25 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A).
[56] As pointed out in Rosebank Mall (Pty) Ltd & Another v Cradock Heights
(Pty) Ltd:26
‘There is a distinction between the case of a party whose rights are purely derived from “the
right which is the subject-matter of the litigation” and in which he has no legal interest, on the
one hand, and the case where the third party has a right acquired aliunde the right which is the
subject-matter of the litigation and which would be prejudicially affected if the judgment and
order made in the litigation to which he was not a party, were carried into effect.’
[57] The applicants, as liquidators, had a different role to play as regards the
affairs of CMR, to that of the company prior to liquidation. Furthermore, as the
orders by the Tribunal demonstrate, the relief sought against CMR in liquidation
would not be the same as was the case prior to liquidation.
[58] A liquidator acts in pursuance of powers vested in him or her, inter alia, by
the 1973 Companies Act.27 In issuing some of its orders the Tribunal appears to
have incorrectly assumed that it had the power to instruct the liquidators on the
management of the liquidation when it noted that:
‘The Tribunal considered the imposition of an administrative fine but considering the fact that
CMR is now under liquidation, it would not be appropriate. It would be more appropriate for
the liquidator to use whatever assets the company may have to reimburse consumers.’
(emphasis added.)
[59] It should have been clear to the Tribunal that its judgment was likely to
impact on the applicants’ functions. Distilled to its essence the Tribunal orders
effectively ‘attach’ the assets of CMR, notwithstanding the prohibition in
s 359(1)(b) of the 1973 Companies Act.28 Moreover, the orders of the Tribunal if
complied with by the liquidators, may well result in the beneficiaries of those
orders being preferred to the other creditors of the company in winding-up. To
26 Rosebank Mall (Pty) Ltd and Another v Cradock Heights (Pty) Ltd 2004 (2) SA 353 (W); [2003] 4 All SA 471
(W) para 37.
27 See s 386 of the 1973 Companies Act.
28 See for example Rennie NO v South African Sea Products Ltd 1986 (2) SA 138 (C) at 143.
that extent, it may well be that the orders of the Tribunal cannot simply co-exist
with the winding-up order and the insolvency regime under the Insolvency and
Companies Acts. The Tribunal appears to have unwittingly created a new order
of preference not countenanced by those Acts to the prejudice of the general body
of creditors. To the extent that the orders of the Tribunal have that effect, they
may well be nullities, offending as they do, the insolvency regime ordained by
the legislature. In the event, the approach of the high court in non-suiting the
applicants would leave them without a remedy.
[60] We therefore conclude that the applicants were necessary parties to the
proceedings before the Tribunal. Their non-joinder is fatal. The matter
accordingly could not have proceeded to finality in their absence.
[61] As to the question of ‘participation’ in the hearing before the Tribunal, a
jurisdictional basis upon which the high court non-suited the liquidators: If it is
accepted, as we have shown, that as a matter of law, the hearing could not proceed
without their joinder, the issue of non-participation in terms of s 148(2)(b) of the
NCA does not arise. In any event, to the extent that participation is relied upon, it
seems that the notice was only sent to one of the liquidators, Ms Barnard, the first
applicant. It follows that all of the orders of the Tribunal, having been issued in
the absence of the liquidators, cannot stand. Likewise, the high court erred in
dismissing the appeal. In the result, the application for leave to appeal should
succeed and the appeal upheld.
[62] As to costs, the second respondent is a statutory body in terms of the NCA,
which did not act unreasonably in opposing the matter at various stages of this
case. It will accordingly not be just to award costs against it.29
29 National Credit Regulator v Southern African Fraud Prevention Services NPC [2019] ZASCA 92; [2019] 3 All
SA 378 (SCA); 2019 (5) SA 103 (SCA) para 45.
[63] In the result, we would issue the following order:
The application for leave to appeal succeeds.
The appeal is upheld.
The order of the high court is set aside and replaced with the following:
‘(a)
The appeal is upheld.
(b)
The order of the Tribunal is set aside.
(c)
The proceedings before the Tribunal are stayed for a period of three
months pending the joinder of the liquidators of CMR.
(d)
The three months shall be reckoned from the date of this order.’
____________________________
N P MABINDLA-BOQWANA
JUDGE OF APPEAL
___________________________
N T Y SIWENDU
ACTING JUDGE OF APPEAL
Appearances
For the applicants:
M Louw (with D Hewitt)
Instructed by:
Mathys Krog Attorneys, Pretoria
Honey Attorneys, Bloemfontein
For the second respondent:
L Kutumela (with M Nguta)
Instructed by:
Mothle Jooma Sabdia Inc, Pretoria
Matsepes Inc, Bloemfontein
|
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
18 September, 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and
does not form part of the judgments of the Supreme Court of Appeal
Jacolien Barnard NO and Another v National Consumer Tribunal and Another (940/2021)
[2023] ZASCA 121 (18 September 2023)
The Supreme Court of Appeal (SCA) dismissed an appeal from the Gauteng Division of the
High Court, Pretoria (high court).
The facts:
The National Credit Regulator (the Regulator) initiated an investigation into the business
practices of CMR Group (Pty) Ltd (CMR) in 2017. This investigation focussed on agreements
relating to its core business known as the ‘Pawn your car and still drive it’ scheme. The
investigation revealed that CMR advanced funds to consumers against their fully paid motor
vehicles, subject to a pawn agreement. The scheme allowed the consumers to borrow
between 30 to 50 percent of their respective motor vehicle’s market value. In terms of this
arrangement, the consumers had to transfer their motor vehicles to CMR’s name. The
consumers remained in possession of the motor vehicles while renting them from CMR for a
period of up to 12 months. The Regulator alleged that the scheme was in contravention of a
number of provisions; section 101(1)(d) read with Regulation 42 of the National Credit Act (34
of 2005) (NCA) - charging an excessive amount of interest; s 81(2) of the NCA – failing to
conduct affordability assessments; and s 100(1)(a) of the NCA – imposing a prohibited charge.
It was these contraventions that prompted the Regulator to seek a declaratory order against
CMR before the National Consumer Tribunal (the Tribunal).
In its answering affidavit, NCR conceded to the orders sought by the Regulator in the event
that the Tribunal found that it was involved in prohibited conduct. Furthermore the Regulator
requested the Tribunal to issue an order that CMR be interdicted from any further
contraventions of the NCA, and be ordered to submit a report compiled by an independent
auditor (to the NCR) in respect of fees which may have been overcharged and that such fees
be set off against any amounts validly owed and/or owing to CMR. In its order, the Tribunal
took into account the proposed concessions and made the following order: CMR’s registration
as a credit provider be cancelled; CMR be interdicted from entering into future credit
transactions; all CMR agreements be declared reckless and obligations arising therefrom be
set aside, CMR must reimburse the consumers; and CMR had to appoint an independent
auditor who had to determine all amounts paid under all the credit arrangements (within 90
days of the judgment).
Nonetheless, just before the hearing that was set for April 2019, a special resolution to
voluntarily wind-up CMR was passed, and the high court granted the order that placed CMR
in voluntary liquidation and appointed provisional liquidators of CMR (the applicants before
this Court) in February 2019. The Regulator only became aware of this when CMR’s attorneys
withdrew from their mandate. The application lodged by the Regulator before the Tribunal had
to then be postponed to a later date, upon which neither the NCR nor the provisional liquidators
appeared. The abovementioned orders were therefore set in their absence. Aggrieved by that
decision, the liquidators appealed to the Gauteng Division of the High Court (full bench) and
the appeal was dismissed. The application for leave to appeal the judgment and order of the
high court met the same fate.
It is against this background that the special leave and condonation (out of time) were sought
before this Court. Herein, the issue was whether the high court erred in not dealing with the
point of law raised by the applicants. The parties were then directed to directly address the
merits of the appeal. However, since the condonation application was unopposed and the
reasoning was credible, this Court saw it fit to grant the condonation. With regard to the special
leave application, as with any application of this kind, there had to be reasonable prospects of
success and special circumstances. In this light, this Court highlighted and concluded that the
an appeal from the decision of the high court should have been sought in terms of section
16(1)(a) of the Superior Courts Act (10 of 2013) and not section 148(2) of the NCA, irrespective
of the constitution of the court (number of judges); more so because the decisions of the
Tribunal are administrative in nature. Nonetheless, this Court proceeded with the application
under section 16(1)(a).
Importantly, this Court discussed the high court’s approach and judgment as well as the appeal
and rescission process therein, to showcase how the applicants misconstrued their remedy
under the NCA. Instead of applying to the Tribunal to rescind its order, they saw it fit to do so
under section 148(2) before the high court. Hence, the high court found that the ‘rescission of
an order granted in the absence of a party, facilitates the rehearing of the matter and affords
the absent party an opportunity to present its submissions on an issue in dispute.’ This Court
found it befitting for the applicants to have applied for a rescission of the Tribunal’s order
instead of making an application to the high court. As a result, the applicants’ failure to
timeously apply to this Court for leave to appeal was condoned. In the result, this Court found
that although the applicants made extensive submissions on the merits of the case, the
jurisdictional Rubicon first had to be crossed, a hurdle which they failed to overcome. The
Court therefore struck the matter off the roll, with costs.
In a separate dissent, the Court differed with the main judgment as to the approach and the
fate of this application. This view based on the fact that as a matter of law, the liquidation of
CMR impacted materially on the future conduct of the proceedings before the Tribunal.
Therefore, the dissent was not persuaded that the point of departure be rested on the
jurisdiction issue under section 148 of the NCA. They found the high court to have erred in
dismissing the appeal because there arose a necessary anterior enquiry that ought to have
occupied the attention of the high court. Further that, the Regulator should have formally joined
the applicants in the proceedings. This finding was countered by the majority judgment, which
emphatically stated that joinder was not required where the Regulator acted in terms of section
359 of the old Companies Act (1973 Act) as such provisions do not expressly or impliedly
require the joinder of the liquidators. In the same manner, the majority elucidated that the
provisions of section 359 needed to be interpreted purposively and contextually. Finally that,
the joinder of the liquidators may only be envisaged in actions that are instituted after the
commencement of liquidation proceedings.
--------ends--------
|
4059
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
Reportable
Case no: 67/2022
In the matter between:
DEMOCRATIC ALLIANCE
FIRST APPELLANT
and
THE MINISTER OF HOME AFFAIRS
FIRST RESPONDENT
THE DIRECTOR-GENERAL OF THE DEPARTMENT
OF HOME AFFAIRS SECOND RESPONDENT
Neutral citation:
Democratic Alliance v The Minister of Home Affairs and another
(67/2022) [2023] ZASCA 97 (13 June 2023)
Coram:
ZONDI,
SCHIPPERS
and
MATOJANE
JJA
and
KATHREE-
SETILOANE and UNTERHALTER AJJA
Heard:
23 March 2023
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 13 June 2023.
Summary: Constitutional Law – South African Citizenship Act 88 of 1995– loss of
citizenship – whether s 6(1)(a) is unconstitutional – s 3(3) of the Constitution –
authorising national legislation to provide for loss of citizenship – does not permit
limitation of right of citizenship – loss of citizenship under s 6(1)(a) when acquiring
citizenship of another country – irrational and constitutionally invalid – just and
equitable remedy under s 172 of the Constitution.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Kollapen J, sitting as
court of first instance):
1.
The appeal is upheld with costs including the costs of two counsel.
2.
The order of the High Court is set aside and replaced with the following order:
‘(a) It is declared that s 6(1)(a) of the South African Citizenship Act 88 of 1995 is
inconsistent with the Constitution and is invalid from its promulgation on 6 October
1995.
(b) It is further declared that those citizens who lost their citizenship by operation
of s 6(1)(a) of the South African Citizenship Act 88 of 1995 are deemed not to have
lost their citizenship.
(c)
The respondents are ordered to pay the applicant’s costs including the costs of
two counsel where so employed.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi JA (Schippers and Matojane JJA and Kathree-Setiloane and Unterhalter
AJJA concurring):
Introduction
[1] This appeal concerns the constitutional validity of s 6(1)(a) of the South African
Citizenship Act 88 of 1995 (the Act) which provides that adult citizens automatically
lose their South African citizenship when they voluntarily and formally acquire
citizenship or nationality of another country (except through marriage), without first
applying for and obtaining ministerial permission to retain their citizenship. The
appellant, the Democratic Alliance (DA) brought an application in the Gauteng Division
of the High Court, Pretoria (the high court) in which it sought, among other things, the
following order:
‘1. declaring that section 6(1)(a) of the South African Citizenship Act 88 of 1995 (“the Act”) is
inconsistent with the Constitution of the Republic of South Africa, 1996 (“the Constitution”) and
invalid from the date of 6 October 1995;
2. declaring that all persons who had lost their South African Citizenship in terms of section
6(1)(a) of the Act on or after 6 October 1995, are South African citizens;
3. declaring that all persons referred to in paragraph [2] may apply to the first respondent in
terms of section 15 of the Act for the appropriate certificate of citizenship.’
[2] The high court dismissed the application with no order as to costs. It rejected
the contentions that s 6(1)(a) of the Act violates the principle of legality due to its
irrationality and that it unjustifiably infringes certain constitutional rights. The high court
dismissed the DA’s application for leave to appeal. The appeal is before us with the
leave of this Court.
Background
[3] The DA brought the application on behalf of South African citizens who, to their
surprise, discovered that they had lost their South African citizenship through the
operation of s6(1)(a). It relied on the evidence of Mr Phillip James Plaatjes, a South
African living in the United Kingdom (UK). Mr Paatjes alleges that on 27 February
2004, while working in South Korea, he married a British citizen. Shortly thereafter, the
couple moved to the UK. On 8 November 2006, Mr Plaatjes was granted indefinite
leave to remain in the UK and became a naturalised citizen on 19 November 2007. In
December 2007 he obtained his first British passport. Mr Plaatjes alleges that it was
only in July 2014 that he discovered that he had probably lost his South African
citizenship after reading an online article. Between 2007 and 2014, he had travelled
a number of times using his South African passport without any queries from South
African immigration officials.
[4] On 20 July 2015 Mr Plaatjes went to the South African embassy in London to
renew his South African passport. He was told he had automatically lost his South
African citizenship by acquiring British citizenship. The embassy officials thereupon
cancelled his South African passport. Mr Plaatjes says that he never wanted to leave
South African permanently, nor relinquish his South African citizenship.
[5] Mr Plaatjes, the DA alleged, is one of many South African citizens living abroad
who have acquired a second citizenship in good faith, but lost their South African
citizenship by virtue of s 6(1)(a) of the Act. The DA contended that s 6(1)(a) takes
away their right of citizenship, without any notice to them.
[6] The respondents opposed the application. They denied that s 6(1)(a) is
unconstitutional. They asserted that the DA misconstrued s 6(1)(a). It failed to read
s 6(1)(a) with s 6(2) to which the former is subject. The respondents contended that
the loss of citizenship under s 6(1)(a) occurs as a result of a voluntary act on the part
of the citizen, not the State; and that s 6(2) enables the citizen to retain South African
citizenship on application to the first respondent, the Minister of Home Affairs (the
Minister).
[7] Against this background, two issues arise for determination. The first is whether
s 6(1)(a) is inconsistent with the Constitution due to its irrationality; and the second,
whether the section infringes any right in the Bill of Rights and, if so, whether such
infringement is justifiable under s 36(1) of the Constitution.1
The constitutional and statutory provisions
[8] Section 3 of the Constitution is headed ‘Citizenship’. Section 3(1) declares that
‘There is a common South African citizenship’. In terms of s 3(2)(a)-(b) ‘all citizens are
equally entitled to the rights, privileges and benefits of citizenship’; and they are
‘equally subject to the duties and responsibilities of citizenship’. Section 3(3) mandates
1 Section 36 provides:
(1) The rights in the Bill of Rights may be limited only in terms of law of general
application to the extent that the limitation is reasonable and justifiable in an open
and democratic society based on human dignity, equality and freedom, taking into
account all relevant factors, including—
(a) the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.
(2) Except as provided in subsection (1) or in any other provision of the Constitution, no
law may limit any right entrenched in the Bill of Rights.
that national legislation must be enacted to provide for the acquisition, loss and
restoration of citizenship.
[9] The Constitution protects citizenship. It expressly provides in s 20 that ‘no citizen
may be deprived of citizenship’. The Constitutional Court in Chisuse and Others v
Director General of Home Affairs and Another explained why it is important to protect
the citizenship. It held:
‘Citizenship is the gateway through which a number of rights in the Constitution can be
accessed. It enables a person to enjoy freedom of movement, freedom of trade, and political
representation. However, caution must be exercised not to overemphasise the importance of
citizenship. While it is true that certain rights in our Constitution adhere to South African
citizens alone, this Court has repeatedly affirmed that arbitrary and irrational distinctions
between citizens and non-citizens are inconsistent with the Constitution. It bears reiterating
that the Preamble to the Constitution states that “South Africa belongs to all who live in it” and
the rights in the Bill of Rights are afforded to everyone, unless expressly stated otherwise.’2
[10] The Constitutional Court provided the following historical context within which
the protection of the citizenship must be understood:
‘Citizenship in South Africa, in particular, has a controversial history. Many black Africans were
denied their citizenship through unfair and discriminatory colonial and apartheid laws. Under
the Black Land Act, Population Registration Act and Bantu Homeland Citizenship Act, black
African people were segregated to the detriment of their enjoyment of full citizenship.’3
[11] The Court went on to say that it was important to protect the right to citizenship
to prevent the negative impact the deprivation of, or interference with, the right to
citizenship will have on the citizen’s ability to enjoy his or her life.
‘Citizenship and equality of citizenship is therefore a matter of considerable importance in
South Africa, particularly bearing in mind the abhorrent history of citizenship deprivation
suffered by many in South Africa over the last hundred and more years. Citizenship is not just
a legal status. It goes to the core of a person’s identity, their sense of belonging in a
community and, where xenophobia is a lived reality, to their security of person. Deprivation of,
or interference with, a person’s citizenship status affects their private and family life, their
2 Chisuse and Others v Director General of Home Affairs and Another [2020] ZACC 20; 2020(6) SA 14
(CC) para 24.
3 Ibid para 26.
choices as to where they can call home, start jobs, enrol in schools and form part of a
community, as well as their ability to fully participate in the political sphere and exercise
freedom of movement.’4
[12] The South African Citizenship Act is the legislation contemplated in s 3(3) of
the Constitution. It came into effect on 6 October 1995. Its purpose as set out in the
Preamble is ‘to provide for the acquisition, loss and resumption of South African
citizenship…’. That purpose is reflected in the design of the Act. Chapter 2 deals with
the acquisition of South African citizenship. It stipulates how South African citizenship
can be acquired. This can be by birth, descent, naturalisation or by grant by the
Minister of a certificate of naturalisation to any foreigner who meets certain specified
requirements.
[13] Chapter 3 of the Act, in which ss 6, 7, 8 and 105 are located, deals with the loss
of citizenship. Section 6 provides:
4 Ibid para 28.
5 Sections 7, 8 and 10 provide:‘7 Renunciation of citizenship
(1) A South African citizen who intends to accept the citizenship or nationality of another country, or
who also has the citizenship or nationality of a country other than the Republic, may make a declaration
in the prescribed form renouncing his or her South African citizenship.
(2) The Minister shall upon receipt of a declaration made under this section cause such declaration to
be registered in the manner prescribed, and thereupon the person who made the declaration shall
cease to be a South African citizen.
(3) Whenever a person ceases under subsection (2) to be a South African citizen, his or her minor
children who are under the age of 18 years shall also cease to be South African citizens if the other
parent of such children is not, or does not remain, a South African citizen.
8 Deprivation of citizenship
(1) The Minister may by order deprive any South African citizen by naturalisation of his or her South
African citizenship if he or she is satisfied that-
(a) the certificate of naturalisation was obtained by means of fraud, false representation or the
concealment of a material fact; or
(b) such certificate was granted in conflict with the provisions of this Act or any prior law.
(2) The Minister may by order deprive a South African citizen who also has the citizenship or nationality
of any other country of his or her South African citizenship if-
(a) such citizen has at any time been sentenced in any country to a period of imprisonment of not less
than 12 months for any offence which, if it was committed outside the Republic, would also have
constituted an offence in the Republic; or
(b) the Minister is satisfied that it is in the public interest that such citizen shall cease to be a South
African citizen.
(3) Whenever the Minister deprives a person of his or her South African citizenship under this section
or section 10, that person shall cease to be a South African citizen with effect from such date as the
Minister may direct and thereupon the certificate of naturalisation or any other certificate issued under
this Act in relation to the status of the person concerned, shall be surrendered to the Minister and
cancelled, and any person who refuses or fails on demand to surrender any such certificate which he
or she has in his or her possession, shall be guilty of an offence and liable on conviction to a fine or to
imprisonment for a period not exceeding five years, or to both such fine and imprisonment.
‘(1) Subject to the provisions of subsection (2), a South African citizen shall cease to be a
South African citizen if-
(a) he or she, whilst not being a minor, by some voluntary and formal act other than marriage,
acquires the citizenship or nationality of a country other than the Republic; or
(b) he or she in terms of the laws of any other country also has the citizenship or nationality of
that country, and serves in the armed forces of such country while that country is at war with
the Republic.
(2) Any person referred to in subsection (1) may, prior to his or her loss of South African
citizenship in terms of this section, apply to the Minister to retain his or her South African
citizenship, and the Minister may, if he or she deems it fit, order such retention.
(3) Any person who obtained South African citizenship by naturalisation in terms of this Act
shall cease to be a South African citizen if he or she engages, under the flag of another
country, in a war that the Republic does not support.’
[14] The consequences of loss of South African citizenship are dealt with in chapter
4. The relevant provisions are contained in s 11(3) which provides the following:
‘Whenever-
(a) a South African citizen by naturalisation or registration ceases to be a South African citizen
by virtue of the provisions of any prior law; or
(b) a South African citizen by naturalisation ceases to be a South African citizen by virtue of
the provisions of section 6, 7, 8 or 10,
he or she shall, for the purposes of the Immigration Act, but subject to the provisions of
subsection (4), be deemed to be a foreigner who is not-
(i) in possession or deemed to be in possession of a permit referred to in section 10(2) or 25(2)
of that Act; or
(ii) in terms of section 31(2)(a) of the said Act, exempted or deemed to be exempted from the
provisions of section 10(1) of that Act.’
Finally, chapter 5 deals with resumption of South African citizenship.
The high court’s findings
9 ......
10 Deprivation of citizenship in case of children
Whenever the responsible parent of a minor has in terms of the provisions of section 6 or 8 ceased to
be a South African citizen, the Minister may, with due regard to the provisions of the Children's Act,
order that such minor, if he or she was born outside the Republic and is under the age of 18 years, shall
cease to be a South African citizen.’
[15] The high court rejected the DA’s argument that s 6(1)(a) is irrational, for two
reasons. First, s 6(1)(a) serves a legitimate government purpose, namely the State’s
interest in regulating and managing citizenship, given its connection to the work of
government, which in turn requires a connection between citizen and country. Second,
the provision is not irrational because a person through a voluntary act acquires the
citizenship of another country and does not avail himself or herself of the right to
approach the Minister for permission to retain their South African citizenship.
[16] The high court reasoned that the scenario contemplated in s 6(1)(a) and (2) is
about personal and individual choices people make about the future and often choices
come with consequences. According to the high court, it could not be said that the
scheme of the section is irrational as it carefully weighs and balances the choices and
interests of the individual with those of the State and public purposes, which are
inextricably linked to the status of citizenship.
[17] As regards the contention that the section unjustifiably violates various
constitutional rights, such as the right not to be deprived of citizenship in s 20 of the
Constitution, the high court held that the DA’s argument conflates deprivation of
citizenship with loss of citizenship, which are different concepts. The court concluded
that while deprivation of citizenship is prohibited by s 20 unless it can be justified under
s 36 of the Constitution, the same is not true for the loss of citizenship. Section 20,
reasoned the high court, contains no prohibition on the loss of citizenship. On the
contrary, s 3(3) of the Constitution recognises the loss of citizenship as a
constitutionally permissible and mandated outcome.
[18] The high court found that there is a textual difference between s 6 and s 8 of
the Act. Section 6 deals with the loss of citizenship. Section 8 deals with deprivation
of citizenship, which may be ordered by the Minister if a citizen is sentenced in any
country to a period of imprisonment of not less than 12 months for any offence; or if
the Minister is satisfied that it is in the public interest that such citizen ceases to be a
South African citizen.
The parties’ submissions
[19] The DA contended, firstly, that the effect of s 6(1)(a), read with s 6(2), is that
South African citizens automatically and without their knowledge, lose their South
African citizenship if they voluntarily acquire the citizenship or nationality of another
country, unless they obtain prior permission from the Minister to retain their citizenship.
It submitted that s 6(1)(a) is irrational, arbitrary and serves no legitimate government
purpose. Secondly, the DA contended that s 6(1)(a) unjustifiably violates the right to
citizenship enshrined in s 20 of the Constitution.
[20] The DA argued, even if there was a basis to assume that affected citizens
intended to renounce their citizenship, there is no reason why the respondents
themselves should be largely ignorant as to who a citizen is. This is the effect of s
6(1)(a), proceeded its argument. It operates without notice to the respondents or any
official in the Department of Home Affairs. Moreover, the DA argued, it is not the
purpose of s 6(1)(a) to allow citizens to renounce their citizenship: that is the explicit
purpose of s 7 of the Act. Statutes should not be interpreted in a manner which renders
one of its provisions redundant.
[21] In response the respondents denied that s 6(1)(a) results in the automatic loss
of citizenship. They contended that s 6(1)(a) deals with South African citizens who
have taken a voluntary and conscious decision to take the citizenship of another
country, by formally applying for citizenship of that country. Upon approval of that
application, proceeded the argument, the loss of South African citizenship occurs by
the operation of law. The respondents argued that these citizens do not wish to retain
their South African citizenship, neither do they desire dual citizenship. They submitted
that s6(1)(a) serves a legitimate government purpose, namely to control the attainment
of dual citizenship to which the section is not averse.
[22] The respondents asserted that South Africa, like many other countries permits
dual citizenship with selected countries, by prior arrangement. They submitted that
South Africans who take up citizenship of one of the countries which has a dual
citizenship arrangement with South Africa, do not lose their South African citizenship
and need not apply to the Minister for permission to retain their South African
citizenship.
Is s 6(1)(a) irrational ?
[23] The question whether s 6(1)(a) of the Act is irrational involves an objective
enquiry. As was stated in Levenstein and Others: 6
‘The constitutional requirement of rationality is an incident of the rule of law, which in turn is a
founding value of our Constitution. The rule of law requires that all public power must
be sourced in law. This means that (s)tate actors exercise public power within the formal
bounds of the law. Thus, when making laws, the legislature is constrained to act rationally. It
may not act capriciously or arbitrarily. It must only act to achieve a legitimate government
purpose. Thus, there must be a rational nexus between the legislative scheme and the pursuit
of a legitimate government purpose.’
[24] In Pharmaceuticals Manufacturers,7 the Constitutional Court, however, made it
clear that the fact that rationality is a minimum requirement for exercise of public power
‘does not mean that the courts can or should substitute their opinions as to what is appropriate,
for the opinions of those in whom the power has been vested. As long as the purpose sought
to be achieved by the exercise of public power is within the authority of the functionary, and
as long as the functionary’s decision, viewed objectively, is rational, a court cannot interfere
with the decision simply because it disagrees with it or consider that the power was exercised
inappropriately.’8 See also United Democratic Movement v President of the Republic of
South Africa.9
[25] Before this Court, counsel for the respondents were unable to point to a
legitimate government purpose which s 6(1)(a) seeks to achieve, by the cessation of
citizenship when a South African citizen formally acquires the citizenship of another
country, save for a generalised submission that its purpose is to regulate the
acquisition and loss of South African citizenship.That is not to state a legitimate
purpose. All legislation regulates something. That is its function. But this overarching
function is not the purpose of a particular piece of legislation. To meet the standard of
rationality the Minister was required, in the first place, to provide the specific and
legitimate purpose that the impugned provision was designed to foster. That is not
6 Levenstein and Others v Estate Late Sidney Lewis Frankel [2018] ZACC 16; 2018 (2) SACR 283 (CC)
para 47.
7 Pharmaceutical Manurfactureres Association of South Africa and Another: In re Ex Parte President of
the Republic of South African and Others 2000 (2) SA 674; 2000 (3) BCLR 241 para 86.
8 Ibid para 90.
9 United Democratic Movement v President of the Republic of South Africa 2003 (1) SA 494(CC) para
55.
done by saying that the legislation is there to regulate. Moreover, the answering
affidavit discloses no legitimate government purpose. It merely states that the citizen
makes a conscious decision, accompanied by a formal act, to accept foreign
citizenship.
[26] However, the respondents’ counsel sought refuge in s 6(2), which allows
citizens to retain their South African citizenship on application to the Minister. But s
6(2) merely underscores the arbitrariness and irrationality of s 6(1)(a). Section 6(2)
authorises the retention of citizenship on application to the Minister. What then is the
purpose of the automatic loss of citizenship in s 6(1)(a)? That remains unspecified.
And it cannot be a legitimate object to threaten the deprivation of citizenship so as to
invest the Minister with power to avoid that consequence. If that were so, every
arbitrary deprivation would be transformed into the legitimate exercise of power simply
because the Minister is given an untrammeled discretion to avoid that outcome. In
sum, to deprive a citizen of their rights of citizenship for no reason is irrational. That
irrationality is not cured because a power is conferred on the Minister to exercise a
discretion to decide whether that deprivation should take place. The scheme of ss 6(1)
and (2) is simply to compound an irrational deprivation effected by operation of law,
with an arbitrary discretionary power in respect of that power. The compounding of
one irrationality upon another does not save the provision. It makes the want of
constitutionality even more apparent.
[27] What is more, s 7(1) and s 8(2) expressly recognise dual citizenship and
nationality of another country. Section 7(1) permits a South African citizen ‘who intends
to accept the citizenship or nationality of another country, or who also has the
citizenship or nationality of a country other than the Republic’, to renounce his or her
South African citizenship.10 Section 8(2) provides that the Minister may by order
deprive a South Afircan citizen who also has citizenship or nationality of another
country, if such citizen has been sentenced to a certain period of imprisonment, or if it
is in the public interest to do so.11 These provisions make it clear that Parliament has
10 Note 5.
11 Note 5.
sanctioned the holding of dual citizenship, and that s 6(1)(a) cannot be based on a
proposition that dual citizenship is inherently undersirable.
[28] Section 6(1)(a) is arbitrary and irrational, also because it treats South African
citizens who already have dual citizenship differently from those who intend to acquire
citizenship or nationality of another country. The high court held that s 6(1)(a) was
rational because citizenship is often a prerequisite to hold office in government, and is
connected to the work of government, which in turn requires a connection between
citizen and country. This is an error. The Act expressly recognises dual citizenship.
South African citizens who hold dual citizenship do not ‘lose their connection’ with
South Africa, and can run for public office. But those who acquire foreign citizenship,
by the operation of law somehow lose their connection and become ineligible to run
for public office. The Act simply fails to provide a coherent basis as to how dual
citizenship may be recognised as permissible and unobjectionable, but also warrants
the drastic consequence of the loss of South African citizenship in terms of s 6(1),
save for the exercise of ministerial discretion. The statutory scheme is indefensible
and the impugned provision is irrational.
[29] The purpose of s 6(1)(a) cannot be to regulate the renunciation of citizenship,
for that would render s 7 of the Act, which expressly deals with renunciation,
redundant. In Qwelane v South African Human Rights Commission and Another12 the
Constitutional Court held that ‘a statute ought to be so construed that, if it can be
prevented, no clause shall be superfluous, void or insignificant’. So, s 6(1)(a) and s 7
of the Act cannot have the same purpose.
[30] Likewise, the purpose of s 6(1)(a) cannot be the control and regulation of dual
citizenship. The legislative scheme it envisages permits the loss of South African
citizenship without any decision being made by any person, and without any notice to
the affected citizen. The loss of citizenship – a fundamental right entrenched in s 20
of the Constitution – in these circumstances is arbitrary. Citizenship is an important
right that brings with it many benefits. To deprive persons of this right, with no regard
12 Qwelane v South African Human Rights Commission and Another [2021] ZACC 22; 2021(1) (6) SA
579 (CC) para 153.
for their individual circumstances and the reasons that they are taking out another
citizenship is both unfair and capricious. The legislature is not against dual citizenship
we were told. If that is so, why take away South African citizenship by automatic
operation of law, and require that its retention depends upon the invocation of a
ministerial discretion that is entirely unspecified as to what its exercise is intended to
achieve? Moreover, given the operation of s 6(1)(a), the Department of Home Affairs
(Department) would not know when or how South Africans obtain second citizenship
in foreign countries. It is often only when South African citizens renew their passports,
that the Department becomes aware of this, as the case of Mr Plaatjes shows.
[31] Section 6(2) does not remedy the arbitrariness and irrationality of s 6(1)(a). The
discretion to decide whether to grant or deny the retention of the South African
citizenship is vested entirely in the Minister. It reposes in the Minister a vague and
undefined discretionary power in relation to the retention of a fundamental right,
inextricably linked to other fundamental rights such as the political rights guaranteed
by s 19(1) of the Constitution (which includes the right to vote and stand for public
office), the right to enter and remain in the Republic (s 21) and the right to freedom of
trade, occupation and profession (s 22).13 In terms of s 6(2) the Minister may, if he or
she deems it fit, order the retention of citizenship. The Minister is thus afforded an
unconstrained discretion without any guidelines as to how such discretion is to be
exercised. Nothing is specified as to what the Minister should seek to secure by a
decision to permit a citizen to retain their citizenship. The discretion is cast in terms
that do not permit of an assessment of reasons that may support retention, nor, by
implication, what it is that requires the loss of citizenship. The scheme of the
legislation, automatic loss, subject to unbounded discretionary retention, is a recipe
13 Section 19 of the Constitution provides:
‘Political rights
(1) Every citizen is free to make political choices, which includes the right-
(a) to form a political party;
(b) to participate in the activities of, or recruit members for, a political party; and
(c) to campaign for a political party or cause.
(2) Every citizen has the right to free, fair and regular elections for any legislative body established in
terms of the Constitution.
(3) Every adult citizen has the right-
(a) to vote in elections for any legislative body established in terms of the Constitution, and to do so in
secret; and
(b) to stand for public office and, if elected, to hold office.’
for capricious decision-making, without the specification of legitimate objects. Nor is it
clear why the voluntary act of taking another citizenship should warrant automatic loss
of South African citizenship. Since we have been told that there is no policy that is
hostile to dual citizenship, the drastic automatic consequence of loss of citizenship is
supported by no clearly articulated legitimate object. Yet the exercise of that discretion
may result in the denial of the right of citizenship and other political rights protected by
the Constitution.
[32] In Dawood and Another v Minister of Home Affairs and Others; Shalabi and
Another v Mininster of Home Affairs and Others; Thomas and Another v Minister of
Home Affairs and Others,14 the Constitutional Court held:
‘It is an important principle of the rule of law that rules be stated in a clear and accessible
manner. It is because of this principle that section 36 requires that limitations of rights may be
justifiable only if they are authorised by law of general application. Moreover, if broad
discretionary powers contain no express constraints, those who are affected by the exercise
of the broad discretionary powers will not know what is relevant to the exercise of those powers
or in what circumstances they are entitled to seek relief from an adverse decision.’
[33] What all of this shows, is that there is no rationale for why an individual adult
citizen who applies for citizenship of another country, must by operation of law lose
their South African citizenship.15 The high court’s reasoning does not provide an
explanation as to why the State may automatically strip its citizens of their citizenship
merely because they acquired another citizenship. This is so more especially because
the legislature has offered no clear basis why dual citizenship is a problem, indeed
they say it is permissible but should be subject to ministerial discretion. But why? Also,
simply to say that the retention or loss of citizenship is itself a legitimate use of power
is to state the matter at such a high level of generality as to be meaningless. Rationality
is tested against substantively legitimate objects and not by saying that because the
power may be one that the State could exercise legitimately, its existence makes its
exercise legitimate.
14 Dawood and Another v Minister of Home Affairs and Others; Shalabi and Another v Mininster of Home
Affairs and Others; Thomas and Another v Minister of Home Affairs and Others 2000 (3) SA 936 (CC)
para 47.
15 See D Bilchitz and R Ziegler ‘Is the automatic loss of South African citizenship for those acquiring
other citizenships constitutional? Democratic Alliance v Minister of Home Affairs’ (2023) South African
Journal on Human Rights at 5.
Whether s 6 (1)(a) infringes constitutional rights
[34] This brings me to the DA’s contention that s 6(1)(a) infringes constitutional
rights. Section 20 of the Constitution stipulates that ‘no citizen may be deprived of
citizenship’. The high court found that s 6(1)(a) does not result in the infringement of
a right of citizenship, and for that reason found it necessary to undertake a s 36
limitation of rights analysis. As indicated, it rejected the DA’s contention that s 6(1)(a)
of the Act deprives a citizen of his or her citizenship holding that the DA’s construction
of the section conflates the concepts of the ‘deprivation of citizenship’ and the’ loss of
citizenship’. According to the high court s 20, which deals with the deprivation of
citizenship, is not implicated in cases where there is loss of citizenship. This is so,
reasoned the high court, because s 3(3) of the Constitution does not prohibit loss of
citizenship. In its view s 20 of the Constitution only applies in cases where the
deprivation of citizenship results in statelessness, and since s 6 of the Act is not
dealing with the deprivation but with loss of citizenship, it is incorrect to resort to the
language of deprivation to ‘house a claim concerning the loss of citizenship’.
[35] The high court’s analysis of the relationship between s 20 and s 3 of the
Constitution is incorrect. First, the national legislation referenced in s 3(3) is subject to
the Bill of Rights, as s 8 of the Constitution makes clear. In other words, if legislation
is passed in terms of s 3(3) of the Constitution that legislation may not infringe the
rights in the Bill of Rights unless the legislation is justified in terms of s 36 of the
Constitution. Second, s 3(3) of the Constitution cannot be read as authorising
legislation that limits a right in the Bill of Rights. Third, the high court’s interpretation
disregards the fact that any form of deprivation of citizenship under any circumstances
may constitute an infringement of s 20. Finally, legislation passed pursuant to s 3 (3)
of the Constitution providing for the loss of citizenship is subject to the constitutional
conformity with s 20 of the Constitution. The loss of citizenship is one type of
deprivation of citizenship.
[36] The purpose of s 20, among other things, is to prevent the denial of citizenship
which may arise in any manner other than renunciation under s 7 of the Act and which
may not necessarily result in statelessness. This is because citizenship is a gateway
to political rights under s 19, freedom of movement and residence rights under s 21
and
freedom
of
trade,
occupation
and
profession
under
s 22 of the Constitution. Thus when a citizen loses his or her citizenship through the
mechanism of s 6(1)(a) of the Act he or she faces the risk of being denied the
constitutional guarantees and other rights under ss 19, 21 and 22 of the Constitution.
The existence of these rights cannot depend on a decision of the Minister who may
in the exercise of his wide and unconstrained discretion under s 6(2) allow or refuse a
citizen to retain his or her South African citizenship.
[37] I therefore find that s 6(1)(a) of the Act is irrational and inconsistent with the
Costitution. It also unjustifiably limits political rights, the right to enter and remain in the
Republic, and the right to freedom of trade, occupation and profession, guaranteed
by the Constitution.
Remedy
[38] Section 172(1) of the Constitution provides:
‘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.’
[39] In terms of s 172(1) of the Constitution, a declaration of constitutional invalidity
must be made, including any order that is just and equitable. The offending portion of
s 6(1)(a) of the Act must be struck down. That leaves the question whether it should
be struck down with immediate effect or the striking down should be suspended to
allow Parliament to enact remedial legislation. Related to this question is the question
as to when the order of invalidity shall take effect.
[40] The Constitutional Court has said that in granting appropriate relief, and making
an order that is just and equitable under s 172(1)(b), it is imperative that where possible
and appropriate, successful litigants should obtain the relief they seek.16 Relief should
also be effective, as Ackermann J stated in Fose v Minister of Safety and Security:
‘ In our context an appropriate remedy must mean an effective remedy, for without effective
remedies for breach, the values underlying and the rights entrenched in the Constitution
cannot properly be upheld or enhanced. Particularly in a country where so few have the means
to enforce their rights through the courts, it is essential that on those occasions when the legal
process does establish that an infringement of an entrenched right has occurred, it be
effectively vindicated. The courts have a particular responsibility in this regard and are obliged
to ‘forge new tools’ and shape innovative remedies, if needs be, to achieve this goal.’17
[41] The Act came into effect on 6 October 1995 at the time when the Interim
Constitution was still in force. The Interim Constitution was repealed by the current
Constitution which came into effect on 4 February 1997. The Act was inconsistent with
the Interim Constitution and remained so when the current Constitution took effect. To
the extent that it was inconsistent with the Interim Constitution, it was therefore invalid
and unconstitutional. The declaration of invalidity should therefore take effect from the
date of its promulgation on 6 October 1995. This principle has been ‘endorsed many
times’, in the words of Cameron J in Estate Agency Affairs Board v Auction Alliance
(Pty) Ltd and Others:
‘It is as well to clarify that it is misleading to speak of a ”default rule” that declarations of
invalidity operate retrospectively. In the case of pre-constitutional legislation, an order of
invalidity takes effect, if not otherwise specified, with retrospective effect to the effect to the
date the Constitution came into operation. That is the default position simply because, if a
court does not make an order limiting the retrospective effect of a declaration of invalidity, its
effect reaches back to its constitutional roots. This flows from the objective theory of
constitutional invalidity this court adopted in Ferreira v Levin and which it has endorsed many
times. It means that all pre-existing laws inconsistent with the Constitution are invalid from the
date of the Constitution and that post-constitutional enactments are invalid from the date they
came into effect. But this is subject to the court’s remedial power, afforded by the Constitution,
when declaring law or conduct inconsistent with the Constitution invalid, to make any order
16 S v Bhulwana; S v Gwadiso [1995] ZACC 11; 1996 (1) SA 388 (CC); 1995 (12) BCLR 1579 (CC) at
para 32.
17 Fose v Minister of Safety and Security 1997 (7) BCLR 851 (CC) para 69.
that is just and equitable, including an order limiting the retrospective effect of a declaration of
invalidity.’18
[42] Similarly, in Gory v Kolver NO and Others, the Constitutional Court held:
‘As already discussed, a pre-existing law or provision of a law which is unconstitutional
became invalid at the moment the Constitution took effect. This is the effect of the so-called
‘supremacy clause’ of the Constitution (section 2), in terms of which the Constitution is the
supreme law of the Republic and all law or conduct inconsistent with it is invalid. Item 2(1) of
Schedule 6 to the Consitution provides that all law that was in force when the Constitution took
effect, continues in force until amended or repealed, but only to the extent that it is consistent
with the new Constitution. When making a declaration of invalidity, a court simply declares
invalid what has already been invalidated by the Constitution. This doctrine, known as
”objective constitutional invalidity”, means that an unconstitutional law in force at the time of
the commencement of the interim Constitution might be invalidated by that Constitution with
effect from 27 April 1994, even if the applicant’s cause of action arose after the coming into
force of the 1996 Constitution on 4 February 1997. Thus, in terms of s 172(1)(a) of the
Constitution, a court deciding a constitutional matter must declare any law or conduct that is
inconsistent with the Constitution, a court deciding a constitutional matter must declare any
law or conduct that is inconsistent with the constitution to be invalid to the extent of its
inconsistency.’19
[43] As no good grounds exist to limit retrospectivity, an order of full retrospectivity
should be made. An order of full retrospective force would restore South African
citizenship to all persons who had lost their South African citizenship in terms of
s 6(1)(a) of the Act between 6 October 1995 when the Interim Constitution was
operative and 4 February 1997 when the current Constitution came into effect. In other
words, those citizens who lost their citizenship by reason of s 6(1)(a) are deemed not
to have lost their citizenship. This restoration remedy, which is a consequential relief
under our fair and equitable remedial jurisdiction, is necessary to ensure that those
citizens, such as Mr Plaatjes, who have had their citizenship revoked by some formal
administrative action, taken in reliance upon s 6(1)(a), will enjoy the benefit of
restoration, without the need for any further litigation.
18 Estate Agency Affairs Board v Auction Alliance (Pty) Ltd and Others [2014] ZACC 3; 2014 (3) SA 106
(CC); 2014 (4) BCLR 373 (CC) para 47.
19 Gory v Kolver NO and Others [2006] ZACC 20; 2007 (4) SA 97 (CC); 2007 (3) BCLR 249 (CC) para
39.
[44] The next question is whether the order of invalidity in respect of s 6(1)(a) of the
Act should be suspended, and, if so, for how long? In J and Another v Director
General, Department of Home Affairs and Others the Constitutional Court explained
the rationale for granting an order suspending invalidity:
‘The suspension of an order is appropriate in cases where the striking down of a statute would,
in the absence of a suspension order, leave a lacuna. In such cases, the Court must consider,
on the one hand, the interests of the successful litigant in obtaining immediate constitutional
relief and, on the other, the potential disruption of the administration of justice that would be
caused by the lacuna. If the Court is persuaded upon a consideration of these conflicting
concerns that it is appropriate to suspend the order made, it will do so in order to afford the
legislature an opportunity “to correct the defect”. It will also seek to tailor relief in the interim to
provide temporary constitutional relief to successful litigants.’20
[45] The striking down of s 6(1)(a) of the Act without a suspension order would not
result in the disruption of the administration of justice, as those South African citizens
who lost their citizenship because of the operation of s 6(1)(a) of the Act would
automatically regain their citizenship. There is no suggestion that an interim regime is
necessary to facilitate the processing of any pending applications for the retention of
citizenship under s 6(2) of the Act by persons who consider taking citizenship or
nationality of another country.
[46] As far as the liability for costs is concerned, there is no reason to deviate from
the general principle that costs should follow the event. The DA, being a successful
party, is entitled to its costs.
The order
[47] In the result the following order is made:
1 The appeal is upheld with costs including the costs of two counsel where
employed.
2 The order of the high court is set aside and replaced with the following order:
20 J and Another v Director General, Department of Home Affairs and Others [2003] ZACC 3; 2003 (5)
SA 621 (CC) at para 21.
‘(a) It is declared that s 6(1)(a) of the South African Citizenship Act 88 of 1995 is
inconsistent with the Constitution and is invalid from its promulgation on 6 October
1995.
(b) It is further declared that those citizens who lost their citizenship by operation of
s 6(1)(a) of the South African Citizenship Act 88 of 1995 are deemed not to have lost
their citizenship.
(c)
The respondents are ordered to pay the applicant’s costs including the costs of
two counsel where so employed.’
_________________
D H ZONDI
JUDGE OF APPEAL
Appearances
For the appellant:
A Katz SC
D Simonsz
Instructed by:
Minde Schapiro & Smith Inc, Pretoria
Symington De Kok Attorneys, Bloemfontein
For the first respondent:
W R Mokhare SC
M Zondo
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
13 June 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Democratic Alliance v The Minister of Home Affairs and another (67/2022) [2023] ZASCA 97 (13 June
2023)
Today the SCA upheld with costs, including costs of two counsel, an appeal against the decision of the
Gauteng Division of the High Court of South Africa, Pretoria (the high court).
The appeal was concerned with the constitutional validity of s 6(1)(a) of the South African Citizenship
Act 88 of 1995 (the Act) which provides that adult citizens automatically lose their South African
citizenship when they ‘freely and voluntarily’ acquired citizenship or nationality of another country
(except through marriage) without first applying for and obtaining a ministerial permission to retain their
citizenship. It arises from the application which was brought by the appellant to the high court, in which
it sought the following order: declaring that (a) s 6(1)(a) the Act was inconsistent with the Constitution
and invalid from the date of 6 October 1995; (b) all persons who had lost the South African Citizenship
in terms of s 6(1)(a) of the Act on or after 6 October 1995, are South African citizens; (c) all persons
referred to in paragraph [b] may apply to the first respondent in terms of s15 of the Act for the appropriate
certificate of citizenship.
The high court dismissed the application with no order as to costs. It rejected the contentions that
s 6(1)(a) of the Act violated the principle of legality due to its irrationality and that it unjustifiably infringed
certain constitutional rights. The high court dismissed the appellant’s application for leave to appeal.
The appeal was with leave of this Court.
Two main issues arose for determination. The first was whether s 6(1)(a) was inconsistent with the
Constitution due to its alleged irrationality and the second, was whether the section infringed any right
in the Bill of Rights and, if so, whether such infringement was justifiable under s 36(1) of the Constitution.
The SCA held that the high court erred in dismissing the application. It held that there is no rational
nexus between s 6(1)(a) and the pursuit of a legitimate government purpose. It further held that while it
was correct that the purpose of the Act was to provide for the acquisition, loss and resumption of South
African citizenship, the rule of law required that the purpose sought to be achieved by the exercise of
public power must be subject to the Constitution itself. The mere fact that the Constitution provided for
its enactment cannot be used as a basis to justify its existence when its rationality is under scrutiny.
Furthermore, it held that it was not enough to say the Act was enacted for the purposes of controlling
or regulating the acquisition or loss of citizenship. A link must be established between the means
deployed by s 6(1)(a) and that purpose. A clear rationale must be articulated as to why an individual
adult citizen who acquired the citizenship of another political community must by operation of law lose
their South African citizenship. The SCA found that the high court’s reasoning did not provide an
explanation as to why the State may legitimately automatically strip its citizens of their citizenship merely
because they acquired another citizenship.
On whether s 6(1)(a) infringed constitutional rights, the SCA found that when a citizen lost his or her
citizenship through the mechanism of s 6(1)(a) of the Act he or she faced the risk of being denied of the
constitutional guarantees and other rights under ss 19, 21 and 22 of the Constitution. The existence of
these rights cannot depend on a decision of the Minister who may in the exercise of his wide and
unconstrained discretion under s 6(2) allow or refuse a citizen to retain his or her South African
citizenship.
The SCA set aside the order of the high court and replaced it with an order declaring that s 6(1)(a) of
the South African Citizenship Act is inconsistent with the Constitution and invalid from its promulgation
on 6 October 1995 and that those citizens who lost their citizenship by reason of s 6(1)(a) are deemed
not to have lost their citizenship.
~~~~ends~~~~
|
1333
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 318/09
Louis Johann Olivier
Appellant
and
The State
Respondent
Neutral citation:
Olivier v The State (318/09) [2010] ZASCA 48 (31 March
2010)
Coram:
Nugent JA, Griesel et Majiedt AJJA
Heard:
10 March 2010
Delivered:
31 March 2010
Summary:
Sentence – evidentiary weight of ex parte submissions
from the Bar – six counts of fraud – sentence of seven
year's imprisonment, of which three years conditionally
suspended, confirmed.
______________________________________________________________
ORDER
On appeal from:
Eastern Cape High Court, Grahamstown (Jones and
Alkema JJ sitting as court of appeal).
The appeal is dismissed.
JUDGMENT
MAJIEDT AJA (Nugent JA and Griesel AJA concurring)
[1] It has become common practice during the sentencing stage of a
criminal trial for an accused's legal representative to make ex parte
submissions from the Bar on his or her client's behalf. These unattested
statements often contain material averments which impact directly on
sentence considerations.1 The primary issue for determination in this appeal
is what evidentiary weight, if any, the ex parte allegations contained in the
submissions made by appellant's counsel on sentence at his trial carried.
[2] The appellant, Mr Louis Johann Olivier, was convicted on his plea of
guilty of six counts of fraud by the regional court at East London. The six
counts were taken together for sentence purposes and a sentence of seven
years' imprisonment, of which three years were suspended for a period of four
years on condition that the appellant is not convicted of fraud or theft
committed during the period of suspension, was imposed.
An appeal to the Eastern Cape High Court at Grahamstown (Jones and
Alkema JJ) against sentence was unsuccessful. The present appeal against
sentence is with the leave of the court below.
1 In my experience, prosecutors would only in rare instances convey to the court whether
these ex parte submissions are disputed or not, which further complicates the matter.
[3] In a comprehensive written plea explanation the appellant admitted
having perpetrated fraud in six instances in respect of monies entrusted to
him by his clients for secure investment as their financial adviser.2 The frauds
were committed over a period of approximately one year from 18 February
2002 until 5 February 2003. The total sum lost through the appellant's
fraudulent conduct amounts to R807 000. The appellant explained that he,
contrary to the express instructions of his clients (the complainants) that he
should invest their money with either Sanlam or Old Mutual, handed the
money to one Shane Richter who deposited same into the account of Mini
Stores (owned by Richter) at FNB Kingwilliamstown. Richter was one of the
appellant's clients. The complainants' cheques were cashed through a special
arrangement that Richter had with a specific teller at FNB. Richter did not pay
over the full proceeds of the amounts thus deposited, thereby causing loss to
the complainants.
[4] During the sentencing stage, the appellant's counsel did not lead any
oral evidence and contented himself with an ex parte address on sentence
from the Bar. Given the importance of this aspect it is necessary to quote in
full counsel's opening remarks:
'Your Worship, in respect of sentence, I am not calling any evidence, I will address the court
on sentence. However if there's anything that I'm saying that my learned colleague is
not in agreement with, if she can just indicate and then we will consider whether it's
necessary to call evidence to disprove [prove] our allegations'3 (emphasis added).
The prosecutor did not take up this invitation to dispute any of the ex parte
averments at that time, but instead challenged same in the course of her
address on sentence.
2 In his plea explanation the appellant described himself as a financial planner doing business
as such as sole member of Louis Olivier Financial Services CC, trading as 'the Brokerage' in
East London.
3 Both addresses by defence counsel and the prosecutor on sentence were transcribed and
form part of the record before us.
[5] In his judgment on sentence the regional magistrate expressed the
view that he would have expected the appellant to testify under oath to
explain, inter alia, the appellant's relationship with Richter, upon whom the
appellant sought to shift considerable blame for the fraud. I shall revert to
Richter's alleged role later in the judgment; suffice to record at this juncture
that the regional magistrate correctly observed that much of the blame for the
commission of the offences was shifted onto Richter by the appellant in the
written 'address on sentence.'4 The regional magistrate was further of the view
that many important questions relating to the commission of the offences
remained unanswered in the absence of oral testimony by the appellant.
[6] Writing for the high court, Alkema J firmly dispelled the supposition on
which appellant's counsel premised his submissions, namely that the facts set
forth in the written address on sentence repeated by counsel in his address
should have been accepted as a matter of fact by the trial court. The learned
Judge drew a distinction between formal and informal admissions and
categorized under the latter an agreement between the State and the defence
on issues such as the accused's personal circumstances, his background and
history, for sentence purposes. The learned Judge stated that he knew of no
practice whereby counsel may simply place ex parte facts before a sentencing
court, having invited the State to object to any such facts and, absent any
objections, to obligate the sentencing court to accept these ex parte facts as
proven facts. If indeed there is such a practice, said Alkema J, it cannot
simply be elevated to a rule of law. It should be discouraged since it is open to
abuse and it has no place in our jurisprudence.
[7] In this court, appellant's counsel submitted that the approach adopted
by Alkema J conflicts with other decisions (to which I shall allude later) and
that the facts presented ex parte at trial should have been accepted by the
4 A curious feature of the case is that the appellant's counsel handed in as exhibit B at the trial
a written 'address on sentence' containing legal and factual submissions and incorporated
therein a statement written by the appellant himself setting out in some detail his personal
circumstances. It also contains a brief, rather incomplete description of the circumstances
under which the offences had been committed.
trial court as proved facts. Relying on this court's decisions in S v Cele5 and S
v Heslop6, counsel submitted that, in the context of the appellant's fair trial
right7, the regional magistrate was obliged to convey in advance which of the
ex parte facts were not accepted, before drawing an adverse inference
against the appellant in the absence of any testimony from him. The disputed
factual averments advanced by appellant's counsel at the trial include, inter
alia, the allegation that the complainants had all been compensated by the
appellant, that the appellant did not personally benefit from the various
instances of fraud and of course Richter's role in the whole affair. These are
matters which may have a material bearing on sentence. A discussion of the
evidentiary weight, if any, to be attached to factual averments contained in ex
parte submissions on sentence, is accordingly necessary.
[8] It is trite that during the sentencing phase, formalism takes a back seat
and a more inquisitorial approach, aimed at collating all relevant information,
is adopted.8 The object of the exercise is to place before the court as much
information as possible regarding the perpetrator, the circumstances of the
commission of the offence and the victims' circumstances, including the
impact which the commission of the offence had on the victim. The
prosecutor, defence counsel and the presiding officer all have a duty to
complete the picture as far as possible at sentencing stage. Material factual
averments made during this phase of the trial ought, as a general proposition,
to be proved on oath.9
[9] Pedantic formalism in respect of minor, uncontentious issues such as
an accused's personal circumstances is unnecessary and such matters can
readily be disposed of in oral argument. Quite often these concern matters
5 1990 (1) SACR 251 (A); [1991] ZASCA 31.
6 2007 (1) SACR 461 (SCA); [2006] ZASCA 20.
7 As provided for in s 35(3) of the Constitution, Act 108 of 1996.
8 S v Siebert 1998 (1) SACR 554 (A) [1996] ZASCA 135 at 558g-d; Rammoko v Director of Public
Prosecutions 2003 (1) SACR 200 (SCA) [2002] ZASCA 138 at 205d-i; Du Toit: Straf in Suid-Afrika at
161; Terblanche & Roberts: 'Sentencing in South Africa: lacking a principle, but delivering justice?'
2005 SACJ 187 at 195.
9 S v Rooi; S v van Neel 1980 (1) SA 363(C). This is also the position in comparable foreign
jurisdictions; cf R v Gardiner [1982] 368 S.C.R 2; R v Newton (1982) 4 Cr. App. R(S) 388; R v Donges
& Sutton [2007] SADC 88.
within an accused's personal knowledge and which are often incontrovertible
by the State. But different considerations apply as far as the nature and
circumstances of the crime is concerned. The prosecutor would be fully
conversant with these aspects from the docket contents. Any ex parte
averments from the defence at variance with the state's information ought to
be unequivocally disputed. An accused and his or her legal representative
should be alerted timeously about disputed facts, so that an accused can be
afforded an opportunity to adduce oral evidence on such facts.
[10] Prosecutors are duty bound to assist the sentencing court by placing all
known aggravating and mitigating circumstances before the court, particularly
so in the case of an unrepresented accused.10 The following prosecutorial
guidelines are apposite:11
'It is the duty of the prosecutor to ensure that sufficient facts are placed before the
court for it to impose an appropriate sentence. In this regard prosecutors must
ensure that the court is informed of the existence of aggravating and (particularly
where the accused is undefended) mitigating factors'.
[11] The sentencing phase in a criminal trial is of no less importance than
the preceding determination of the guilt or otherwise of the accused. All too
often prosecutors adopt a lackadaisical approach to sentence, permitting ex
parte averments to be made willy nilly in the defence's submissions from the
Bar, notwithstanding that it is at variance with the information in the docket.
This is particularly so in the case of the circumstances of the offence of which
the accused had been convicted. Quite often this is attributable to slothfulness
on the part of prosecutors. It is a practice which must be deprecated, since it
does not serve the interests of the justice system.
[12] Turning from the general to the specific – in this matter strong reliance
was placed on behalf of the appellant on the cases of R v Shuba12, S v
Mabala13 and S v Caleni14. Reference was also made to S v Sanei15 wherein
10 R v Motehen 1949 (2) SA 547 (A) at 550.
11Contained in part 31 para 3 of the National Prosecuting Authority's Policy Document.
12 1958 (3) SA 844 (C) at 844H-845A.
13 1974 (2) SA 413(C) at 421H-422A.
Masipa J, with reference to S v Siebert, above, affirmed the duty on a
presiding officer to investigate all the relevant circumstances at sentencing
stage. Shuba, Mabala and Caleni are of no assistance to the appellant in the
present matter. In all three cases, the State and/or the presiding officer
accepted (at the very least tacitly) the ex parte averments from the Bar. The
various dicta in these cases hold that, unless unattested factual averments
are disputed or queried, a presiding officer must accept same. But the present
case is materially different in this respect. During the course of her address on
sentence, the prosecutor unequivocally took issue with some of these factual
averments. So, for example, she placed on record oral communications from
certain of the complainants and, in one instance, referred to the evidence of a
complainant before court, that the appellant had not in fact compensated them
for their losses (as was claimed on his behalf). She pertinently challenged the
averment that the appellant had not acted for personal gain and she
submitted that the appellant himself should shoulder the blame for the fraud
and not Richter. The regional magistrate did not take these disputed factual
averments into account in appellant's favour during his judgment on sentence.
[13] In S v Jabavu16 the trial court had relied on evidence taken at the
preparatory examination (under the previous Criminal Procedure Act, 56 of
1955) where the accused had pleaded guilty and where no evidence on
sentence had been led. On appeal a similar contention to the one in the
present case was advanced, namely that, in the absence of any comment
from the prosecutor on the appellant's counsel's submissions, the trial court
was obliged to accept the facts emanating from the ex parte submissions. In
distinguishing the facts in that case from those in R v Hartley17, Botha JA
held18 that no such obligation existed since the facts adumbrated by counsel
ex facie the appellant's confession had not been accepted by the State.
14 1990 (1) SACR 178 (C) at 181f-g.
15 2002 (1) SACR 625 (W) at 627g-628a.
16 1969 (2) SA 466 (A).
17 1966 (4) SA 219 (RA).
18 At 472B-D.
[14] Ultimately considerations of fairness will be the deciding factor in a
determination of whether an accused person has been prejudiced by a refusal
to elevate unattested factual averments contained in an ex parte address on
sentence to proved facts.19 Cele and Heslop do not support the appellant's
contentions, as they are distinguishable on the facts. In Cele the trial judge
had disregarded intoxication as an extenuating circumstance, even though the
accused had made mention of his intoxicated state in his s 112(2) plea
explanation. On appeal, this Court (per Nestadt JA) held that this constituted a
misdirection – the trial judge should have conveyed to the defence that he
was not prepared to take into consideration the accused's state of intoxication,
so that the accused could be afforded an opportunity to establish that
averment under oath.20 In Heslop, the trial judge had drawn an adverse
inference against the accused on matters not canvassed in evidence. On
appeal Cloete JA held that it is a requirement of an accused's fair trial right
under s 35(3) of the Constitution that if a court intends drawing an adverse
inference against an accused, the facts upon which this inference is based
must be properly ventilated during the trial before the inference can be
drawn.21
[15] Considerations of fairness will also determine whether an accused's
right to a fair trial has been violated in terms of s 35(3) of the Constitution.
Counsel's submission in this regard is that the appellant did not have a fair
trial, since adverse inferences had been drawn against him, without the facts
in respect of those inferences having been ventilated at the trial (this did not
form part of the grounds of appeal listed in the appellant's notice of appeal).
This submission can be dismissed without more. Section 35(3)(i) of the
Constitution entrenches an accused person's right to adduce and challenge
evidence at his or her trial. No violation of this right has occurred in the
present case, as I have demonstrated above.
19 Jabavu at 472E-F.
20 At 254h-j.
21 Para 22.
[16] When it became evident during the prosecutor's address that some of
the material factual averments advanced on the appellant's behalf were being
challenged by the prosecutor, it was open to the appellant's counsel to make
a re-assessment in consultation with his client. An opportunity for such re-
assessment presented itself when the time came for counsel to reply to the
prosecutor's address. By not adducing oral evidence in the face of these
challenges, counsel took a calculated risk that the court may not accept the
unattested disputed material factual allegations. By electing to simply proceed
with an oral address in reply, counsel consciously passed on the opportunity
to adduce oral evidence. In these circumstances, there has not been any
misdirection by the trial court, nor can the approach of the high court be
faulted. It follows that there can also be no sustainable challenge on
constitutional grounds, more particularly on s 35(3) of the Constitution.
[17] The sentence was accordingly properly considered by the trial court
and the high court with the exclusion of the various mitigating circumstances
advanced ex parte but challenged by the State. In the absence of a material
misdirection by the trial court, I turn to a consideration whether the sentence
imposed is excessive.
[18] The State adduced the evidence of two witnesses on sentence, viz Ms
Kutala Sikweza and Mr Madoda Jeke. Ms Sikweza is the daughter of the
complainant in count 3, who lost R177 000 which was supposed to have been
invested at Old Mutual. This amount was the proceeds of life policies of Ms
Sikweza's late brother and his wife who died in a motor vehicle accident. The
returns on the proposed investment at Old Mutual was intended to provide a
monthly income to the deceased couple's three young children who were in
the complainant's care. Mr Jeke, a 68 year old retired policeman, had
received the sum of R330 000 as a globular pension payout after 36 years'
service. This money he entrusted to the appellant for investment with Old
Mutual so that Mr Jeke could obtain a monthly income for himself and his
dependants.
[19] The tale narrated by these witnesses is a poignant rendition of severe
hardship and suffering. Their plight appears to be representative of all the
complainants' circumstances. The appellant defrauded poor people, many of
whom were dependent on these monies to support themselves and/or needy
dependants. In Mr Jeke's case, the reward for a lifetime's toil had been lost as
a result of the fraud, leaving him penniless and resulting in Mr Jeke having to
sell his cattle and to go around with begging bowl in hand in a quest to
survive. The gravity of the offences is beyond question.
[20] Richter's alleged role in the fraud was described by the appellant in his
plea explanation, amplified by the written address on sentence, as set out in
para 3 above. After the default in paying over the complainants' money,
Richter's business (it is not clear if this was conducted through a close
corporation or a company), was placed under liquidation on the application of
FNB. Most of the complainants were subsequently compensated by FNB
when the frauds and concomitant losses became known to the bank.
[21] It can be accepted that the appellant's personal circumstances are
mitigating – he is a first offender with fixed employment and with a wife and
adopted daughter who depend on him for their livelihood. One must accept in
his favour that his plea of guilty is indicative of a measure of remorse. But, like
the trial court and the high court I do not accept in the appellant's favour the
disputed ex parte factual averments that the appellant repaid all the
complainants, that Richter was mostly to blame for the commission of these
offences and that the appellant did not act out of self-interest. These are
matters which required proof by way of oral evidence so that it could be tested
by cross-examination. Moreover, there is direct evidence controverting the
averment that the appellant had compensated all the complainants. The
complainants in counts 4 and 5 had not been reimbursed and the appellant's
counsel was constrained to withdraw his earlier submission to this effect when
he replied to the prosecutor's address at the trial. Richter's alleged
blameworthiness raised more questions than answers. The averment that the
appellant was not actuated by self-interest in committing the various instances
of fraud, was pertinently contested by the prosecutor in her address. The
evidence of Ms Sikweza furthermore directly contradicted the appellant's ex
parte assertion that he reported these matters to the police first. On Ms
Sikweza's uncontested version a criminal charge was laid some 3 months
before the appellant allegedly reported the matters.
[22] The trial court was left in the dark on Richter and the appellant's
precise modus operandi. The trial court had no information whatsoever about
the amounts received by the appellant and, as was alleged by the appellant,
by Richter. No explanation was forthcoming why the appellant, who on his
own version earned approximately half a million Rand annually as a financial
adviser, had to misappropriate (at least some of) the monies entrusted to him.
He would have earned handsome commission on the investments if they had
been made by the appellant as instructed by the complainants.
[23] What is plain is that the appellant abused the trust that the six
complainants placed in him. They were by and large poor, less educated
simple folk who entrusted what to them must have been princely sums, to the
appellant for secure investment for the betterment of their lives and that of
their dependants. It bears mention that both complainants, Mrs Sikweza and
Mr Jeke, had been referred by social workers to the appellant for financial
advice.
[24] The approach of this court to sentencing in so-called 'white collar
crimes is well-established.22 Direct imprisonment is not uncommon, even for
first offenders. The sentence imposed in the present matter does not induce a
sense of shock at all. On the contrary, I share the view of Alkema J in the
court below that the sentence borders on the lenient. The trial court balanced
the aggravating and mitigating factors and gave recognition to the factors
favourable to the appellant by suspending a portion of the sentence of
imprisonment. It ameliorated the cumulative effect of the sentence by taking
the six counts together for purposes of sentence.
22 See S v Sadler 2000 (1) SACR 331 (SCA); ([2000] 2 All SA 121); [2000] ZASCA 13 paras 11-13,
S v Barnard 2004 (1) SACR 191 (SCA); [2003] ZASCA 63 para 15, S v Michele 2010 (1) SACR 131
(SCA); [2009] ZASCA 116 para 10.
[25] There are no grounds to interfere with the sentence. In the result, the
appeal is dismissed.
…………………..
S A MAJIEDT
ACTING JUDGE OF APPEL
APPEARANCES:
FOR APPELLANT:
S D Slabbert
Instructed by
J H Slabbert Attorneys, Durban North
Van Wyk & Preller Inc, Bloemfontein
FOR RESPONDENT:
T van Zyl
Instructed by
The Director of Public Prosecutions, Grahamstown
The Director of Public Prosecutions, 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:
31 MARCH 2010
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
LOUIS JOHANN OLIVIER V THE STATE
The Supreme Court of Appeal (SCA) today dismissed an appeal by the appellant, Mr
Louis Johann Olivier, against the sentence imposed on him by the Regional Court at
East London for six counts of fraud, viz 7 years imprisonment, of which three years
had been conditionally suspended. The SCA held that where an accused's legal
representative makes factual averments in his oral address on sentence which are
disputed by the prosecutor, a Court cannot take such averments into account in
considering an appropriate sentence since they bear no evidentiary weight.
The SCA held that, notwithstanding the appellant's favourable personal
circumstances, in view of the gravity of the offences, particularly that the fraud had
been perpetrated over a considerable period against poor, uneducated people who had
entrusted substantial sums of money to the appellant for investment, warranted direct
imprisonment. As a result the appeal was dismissed and the sentence imposed by the
Regional Court was confirmed.
|
4000
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1329/2021
In the matter between:
THE SPECIAL INVESTIGATING UNIT
APPELLANT
and
PHOMELLA PROPERTY INVESTMENTS
(PTY) LTD
FIRST RESPONDENT
REBOSIS PROPERTY FUND LIMITED SECOND RESPONDENT
Neutral citation: The Special Investigating Unit v Phomella Property Investments
(Pty) Ltd and Another (Case no 1329/2021) [2023] ZASCA 45
(3 April 2023)
Coram:
VAN DER MERWE, NICHOLLS, GORVEN, MATOJANE and
MOLEFE JJA
Heard:
22 February 2023
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 on 10h00 on 3 April 2023.
Summary: Administrative law – lease declared unlawful – equitable relief under
s 172(1)(b) of the Constitution – true discretion – test for interference on appeal –
no misdirection on fact or law – no basis to interfere.
__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Rabie J, sitting as
court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Van der Merwe, Nicholls, Matojane and Molefe JJA concurring)
[1] This matter arises from a lease of the SALU building in Pretoria to
accommodate the Department of Justice and Correctional Services (the DOJ). It was
concluded between the Department of Public Works (the DPW) and the owner,
Phomella Property Investments (Pty) Ltd, the first respondent (Phomella). The
building and lease were subsequently transferred to the second appellant, Rebosis
Property Fund Limited (Rebosis). Phomella and Rebosis were part of the same group
of companies whose guiding mind was a certain Mr Ngebulana. The lease was
concluded on 22 September 2009 for a period of 9 years and 11 months. It was
concluded after utilising the procedure for a negotiated lease rather than an open
bidding process. Authority to conclude the lease was subject to the condition that,
prior to signature, an assessment of the space required by the DOJ was to be
conducted. Despite this not having been done, the lease was signed.
[2] In February 2017, the Special Investigating Unit (the SIU), the appellant,
launched an application in the Gauteng Division of the High Court, Pretoria (the
high court). The initial relief sought was that the lease be reviewed and set aside as
void ab initio. By the time the matter came before the high court, the lease had run
its course. As a result, the SIU did not persist in that relief. It simply sought an order
declaring the lease agreement to be unlawful. In addition, the SIU sought an order
that Phomella and Rebosis should jointly and severally pay the Minister of Public
Works the amount of R103 880 357.65. This was said to represent wasteful
expenditure incurred during the lease. It was contended that an area greater than was
needed by the DOJ had been leased. The figure represented the SIU’s calculation of
the rental which had been paid for that excess area.
[3] The declaration of unlawfulness was sought in terms of s 172(1)(a) of the
Constitution. Two bases for this relief were relied on. First, that the DPW had failed
to follow an open bidding process in concluding the lease. Secondly, and if it was
found that a negotiated lease was competent, the prior requirement of a needs
assessment of the space required by the DOJ had not been met. The prayer for
payment of R103 880 357.65 was sought under the provisions of s 172(1)(b) of the
Constitution.
[4] The high court, per Rabie J, declared the lease unlawful but dismissed the
further relief sought by the SIU under s 172(1)(b) of the Constitution. There is no
appeal against the declaration of unlawfulness which, accordingly, stands. The SIU
sought leave to appeal against the refusal to make an order under s 172(1)(b) of the
Constitution. That leave was granted by the high court. In essence, therefore, this
appeal concerns whether the high court’s application of the provisions of s 172(1)(b)
of the Constitution warrant interference by this Court.
[5] It is important to note the basis on which the high court granted the
declaration. Section 172(1)(a) of the Constitution reads:
‘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 . . .’
The lease had to comply with the provisions of the Supply Chain Management
Policy of the DPW1 which give effect to constitutional prescripts. In certain
circumstances, it permits a negotiated process instead of an open bidding process.
Of the two grounds advanced by the SIU, the high court found that there was
insufficient evidence to conclude that a negotiated process had not been properly
decided upon. Accordingly, the failure to follow an open bidding process and the
utilisation of a negotiated process in concluding the lease could not be declared
unlawful. The high court granted the declaration because the approval to contract
was subject to a complete needs assessment being conducted prior to signature. As
mentioned above, this was not complied with and the conduct in concluding the lease
accordingly failed to comply with the Supply Chain Management Policy of the
DPW. This implicated s 172(1)(a) of the Constitution. The high court was thus
obliged to make the declaration of invalidity.2
[6] The peremptory requirement of s 172(1)(a) of the Constitution is to declare
that ‘law or conduct that is inconsistent with the Constitution is invalid to the extent
of its inconsistency’. No less, no more. Accordingly, any order which goes beyond
such a declaration is not one made under s 172(1)(a). The SIU, however, called in
1 This is found in Notice 1665 of 2005 published in Government Gazette Number 278985 of September 2005 and is
titled, ‘Department of Public Works: Space Planning Norms and Standards for Office Accommodation used by Organs
of State.’
2 The high court declared the lease to be unlawful whereas s 172(1)(a) requires a declaration of invalidity. Nothing
turns on the distinction.
aid the matter of South African Broadcasting Corporation SOC Ltd and Another v
Mott MacDonald SA (Pty) Ltd (Mott MacDonald), where Keightley J held:
‘I have found that the awarding of the consulting contract was done irregularly in contravention of
the SABC's regulatory procurement framework. As such, it undermines the principle of legality
and is unlawful. Under section 172(1)(a), I am enjoined to set it aside and to declare it to be void ab
initio.’3
[7] The dictum in Mott MacDonald conflated the two subsections of s 172(1) of
the Constitution: a declaration of invalidity under s 172(1)(a) and a just and
equitable order under s 172(1)(b). The setting aside and the declaration of voidness
are orders which fall under the latter section. The distinction between the two
subsections was explained in Bengwenyama Minerals (Pty) Ltd and Others v
Genorah Resources (Pty) Ltd and Others (Bengwenyama):
‘It would be conducive to clarity, when making the choice of a just and equitable remedy in terms
of PAJA, to emphasise the fundamental constitutional importance of the principle of legality,
which requires invalid administrative action to be declared unlawful. This would make it clear that
the discretionary choice of a further just and equitable remedy follows upon that fundamental
finding. The discretionary choice may not precede the finding of invalidity.’4
[8] The declaration of unlawfulness by the high court brought into play the
provisions of s 172(1)(b) of the Constitution. This reads:
‘(1) When deciding a constitutional matter within its power, a court–
. . .
(b) may make any order that is just and equitable including–
(i) an order limiting the retrospective effect of the declaration of invalidity; and
3 South African Broadcasting Corporation SOC Ltd and Another v Mott MacDonald SA (Pty) Ltd [2020] ZAGPJHC
425 (GJ) (Mott MacDonald) para 87.
4 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others [2010] ZACC 26; 2011 (4)
SA 113 (CC); 2011 (3) BCLR 229 (Bengwenyama) (CC) para 84.
(ii) an order suspending the declaration of invalidity for any period and on any conditions,
to allow the competent authority to correct the defect.’
[9] In State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
(Gijima), the nature of the remedial power afforded to a court by s 172(1)(b) of the
Constitution was described:
‘…[U]nder s 172(1)(b) of the Constitution, a court deciding a constitutional matter has a wide
remedial power. It is empowered to make “any order that is just and equitable”. So wide is that
power that it is bounded only by considerations of justice and equity.’5
An example of the exercise of that power would be if, after declaring the lease
invalid, the high court had set it aside. It could, in addition, have declared it to have
been void ab initio. It could have preserved the lease if it had a few months to run
and there was insufficient time to conclude a new lease for the DOJ. These are but
some examples of orders which might follow a declaration of invalidity. The only
qualification is that any order made must be just and equitable in the particular
circumstances of the matter.
[10] Such an order clearly involves the exercise of a discretion. The nature of two
kinds of discretions has been decisively established:
‘A discretion in the true sense is found where the lower court has a wide range of equally
permissible options available to it. This type of discretion has been found by this court in many
instances, including matters of costs, damages and in the award of a remedy in terms of s 35 of the
Restitution of Land Rights Act. It is “true” in that the lower court has an election of which option
it will apply and any option can never be said to be wrong as each is entirely permissible.
5 State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40; 2018 (2)
BCLR 240 (CC); 2018 (2) SA 23 (CC) (Gijima ) para 53.
In contrast, where a court has a discretion in the loose sense, it does not necessarily have a choice
between equally permissible options. Instead, as described in Knox, a discretion in the loose sense
—
“means no more than that the court is entitled to have regard to a number of disparate and
incommensurable features in coming to a decision”.’6
[11] There are different tests for interference by an appeal court, depending on the
nature of the discretion exercised by a lower court. As regards a loose discretion:
‘. . . an appellate court is equally capable of determining the matter in the same manner as the court
of first instance and can therefore substitute its own exercise of the discretion without first having
to find that the court of first instance did not act judicially.’7
The approach on appeal against the exercise of a true discretion, however, is very
different:
‘When a lower court exercises a discretion in the true sense, it would ordinarily be inappropriate
for an appellate court to interfere unless it is satisfied that this discretion was not exercised —
“judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or
that it had reached a decision which in the result could not reasonably have been made by a court
properly directing itself to all the relevant facts and principles”. [Footnote omitted.]
An appellate court ought to be slow to substitute its own decision solely because it does not agree
with the permissible option chosen by the lower court.’8
[12] This Court has confirmed that the discretion exercised under s 172(1)(b) of
the Constitution is a true one:
‘The exercise of a remedial discretion under s 172(1)(b) of the Constitution…constitutes a
discretion in the true sense. It may be interfered with on appeal only if [the appeal court] is satisfied
6 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another [2015]
ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) (Trencon) paras 85 and 86.
7 Ibid para 87.
8 Ibid para 88.
that it was not exercised judicially, or had been influenced by wrong principles or a misdirection
of the facts, or if the court reached a decision which “could not reasonably have been made by a
court properly directing itself to all the relevant facts and principles”. Put simply, the appellants
must show that the high court’s remedial order is clearly at odds with the law.’9
[13] The high court, in the exercise of its true discretion, declined to make any
order under s 172(1)(b). Thus the question is whether the SIU has shown any of the
aforementioned grounds for interference with the exercise of that discretion.
[14] The first ground relied on by the SIU was a submission that the high court was
influenced by a wrong principle on the basis of another dictum in Mott MacDonald:
‘In the first place, as this Court found in Vision View, the principle is clear: even an innocent
tenderer has no right to retain what it was paid under an invalid contract. In procurement matters,
the public interest is paramount and the default position ought to be that payments made should be
returned, unless there are circumstances that justify a deviation.’10
The SIU submitted that because the high court had failed to apply that principle, this
Court was at large to reconsider the remedy claimed.
[15] The question is whether any such principle applies to the exercise of a
discretion under s 172(1)(b). In support of the dictum that ‘even an innocent tenderer
has no right to retain what it was paid under an invalid contract’, Keightley J cited
the full court judgment in Special Investigating Unit and Another v Vision View
Productions CC.11 In turn, that court cited as authority for the proposition Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer,
9 Central Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2022] ZASCA 54; 2022 (5)
SA 56 (SCA) (Central Energy Fund) para 43.
10 Mott MacDonald para 91.
11 Special Investigating Unit and Another v Vision View Productions CC [2020] ZAGPJHC 421 para 63.
South African Social Security Agency and Others (Allpay 2), where the
Constitutional Court said:
‘… It [Cash Paymaster] has no right to benefit from an unlawful contract. And any benefit it may
derive should not be beyond public scrutiny.’12
[16] This requires careful evaluation. First, the dictum in Allpay 2 stopped well
short of what was held by Keightley J. She said, ‘even an innocent tenderer has no
right to retain what it was paid under an invalid contract’. But the full dictum in
Allpay 2 was:
‘It is true that any invalidation of the existing contract as a result of the invalid tender should not
result in any loss to Cash Paymaster. The converse, however, is also true. It has no right to benefit
from an unlawful contract. And any benefit it may derive should not be beyond public scrutiny.’13
A contextual reading of this dictum in Allpay 2 clarifies matters. The Constitutional
Court did not require Cash Paymaster Services (Pty) Ltd (Cash Paymaster) to repay
amounts paid to it under what was found to be an unlawful contract. In the exercise
of its discretion, the Constitutional Court ordered that a new tender be issued but
that:
‘If the tender is not awarded, the declaration of invalidity of the contract in para 1 above will be
further suspended until completion of the five-year period for which the contract was initially
awarded’.14
When the tender had not been awarded within the five year period, in the follow-up
matter of Black Sash Trust v Minister of Social Development and Others (Freedom
Under Law Intervening), the Constitutional Court granted an order further
12 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social
Security Agency and Others [2014] ZACC 12; 2014 (4) SA 179 (CC); 2014 (6) BCLR 641 (Allpay 2) para 67.
13 Ibid para 67.
14 Ibid para 4 of the order.
suspending the order of invalidity for a period of twelve months and requiring Cash
Paymaster to continue its services for that period, explaining:
‘…Our order below reflects that SASSA and [Cash Paymaster] should continue to fulfil their
respective constitutional obligations in the payment of social grants for a period of 12 months as
an extension of the current contract.’15 (My emphasis.)
[17] To that extent, Cash Paymaster benefited despite the initial contract having
been found to be unlawful. There was no order that the amounts paid and to be paid
should exclude the profits it had factored into its price when tendering. On the
contrary, in Allpay 2, the only order concerning those profits was that:
‘Within 60 days of the completion of the five-year period for which the contract was initially
awarded, Cash Paymaster must file with this court an audited statement of the expenses incurred,
the income received and the net profit earned under the completed contract.’16
Such an order was designed to give effect to that part of the dictum which held that,
‘… any benefit it may derive should not be beyond public scrutiny.’
[18] A careful and contextual reading of Allpay 2 thus shows that the Constitutional
Court did not hold that a party could derive no benefit from an unlawful contract.
The approach in Allpay 2 of allowing a party to retain payments, and thus to benefit,
under an unlawful contract has been echoed in a number of matters.17 One such
example is found in Buffalo City, where the majority in the Constitutional Court
held:
‘…I therefore make an order declaring the Reeston contract invalid, but not setting it aside so as
to preserve the rights to [which] the respondent might have been entitled. It should be noted that
15Black Sash Trust v Minister of Social Development and Others (Freedom Under Law NPC Intervening) [2017]
ZACC 8; 2017 (3) SA 335 (CC); 2017 (5) BCLR 543 (CC) para 50.
16 Allpay 2, paragraph 4.2 of the order.
17 See eg Gijima para 54.
such an award preserves rights which have already accrued but does not permit a party to obtain
further rights under the invalid agreement.’18
There, too, the contractor had performed its obligations under the contract. The
Constitutional Court held that the contractor was entitled to payment for the work
which had been done.
[19] Therefore, it must be said that the ‘principle’ relied upon by the SIU as set out
in Mott MacDonald is no principle at all. The same must be said of the following
dictum in Central Energy Fund:
‘The second guiding principle is the “no-profit-no-loss” principle which the Court articulated as
follows:
“It is true that any invalidation of the existing contract as a result of the invalid tender should not
result in any loss to Cash Paymaster. The converse, however, is also true. It has no right to benefit
from an unlawful contract.”’19
Deriving as it does from the same dictum in Allpay 2, it is clearly wrong and should
not be followed. Therefore, the failure of the high court to apply the ‘principle’ relied
upon by the SIU does not afford a basis to interfere with the true discretion exercised
by the high court in the present matter.
[20] Because there is a true discretion to be exercised under s 172(1)(b) of the
Constitution, it is unwise to elevate dicta dealing with the facts in past matters to
rules or principles. The discretion must be exercised on a case-by-case basis. This
was clearly articulated in Bengwenyama, where the Constitutional Court held:
‘I do not think that it is wise to attempt to lay down inflexible rules in determining a just and
equitable remedy following upon a declaration of unlawful administrative action. The rule of law
18 Buffalo City para 105.
19Central Energy Fund para 41.
must never be relinquished, but the circumstances of each case must be examined in order to
determine whether factual certainty requires some amelioration of legality and, if so, to what
extent.’20
This, of course, accords with the broad remedial powers with which courts are
clothed under s 172(1)(b) of the Constitution.
[21] The second basis on which the SIU relied was its contention that the high court
misdirected itself on fact. It submitted that paragraph 57 of the judgment of the high
court was factually incorrect. That paragraph reads:
‘During its investigation many years after the event, the applicant found minutes of meetings
referring to the requirement of a needs assessment which had to be done prior to the signing of the
lease agreement. I mentioned above that certain documents were found reflecting the needs of
some of the sections of the DOJ but no comprehensive document as was required according to the
applicant. The applicant then took it upon itself to compose such a needs assessment
retrospectively and on the basis thereof submitted that the DOJ only required approximately 75%
of the SALU building.’
The SIU objected to the last sentence in particular.
[22] The context of this paragraph is important. The high court had considered the
contention that the lease was rendered unlawful because an open bidding process
had not been followed. It had found that this case was not made out. It then turned
its attention to the second basis on which the SIU contended that the lease was
unlawful, namely, the fact that no needs assessment had been conducted prior to
signature of the lease. This paragraph considers that issue.
20 Bengwenyama para 85.
[23] The high court did not find that the DOJ actually required more than the 75
percent spoken of. It found that no composite needs assessment had been performed
prior to signature and held, on that basis, that the conclusion of the lease was
unlawful. That paragraph was directed to the enquiry conducted under s 172(1)(a)
of the Constitution. It is that finding which led to the peremptory declaration of
unlawfulness under that section. I can find no such factual misdirection in that
paragraph and, if there was any misdirection, it was certainly not material to the
exercise of the discretion under s 172(1)(b) of the Constitution. Paragraph 57 of the
high court judgment is thus no basis on which to interfere with the true discretion
exercised by the high court.
[24] Our courts distinguish between third parties who are complicit in corruption
or impropriety and those who are innocent parties.21 The SIU submitted that both the
extent of, and the manner in which, officials of the DPW committed breaches of
requirements reflected malfeasance. It submitted that the high court misdirected
itself in failing to find that the guiding mind behind Phomella and Rebosis,
Mr Ngebulana, was complicit in this malfeasance and knew that the conduct of the
officials in concluding the lease was unlawful. The primary thrust of this submission
was that he was aware of the need for an open bidding process. Since there is no
appeal against the finding that there was no evidence that such a process was
required in the circumstances, that contention cannot found complicity on the part
of Mr Ngebulana.
[25] The high court considered whether there was evidence that Phomella, Rebosis
or persons associated with them, or Mr Ngebulana himself, were aware of the
21 Central Energy Fund para 42.
requirement for a needs assessment prior to signature of the lease. It held that there
was no such evidence. That finding is manifestly correct. This was also no basis for
the high court to have inferred complicity on the part of the respondents. Its finding
in this regard cannot be faulted.
[26] The SIU also submitted that the high court ought to have found that there was
complicity on the part of the respondents due to the restructuring of the property
portfolio of Phomella and other entities under the control of Mr Ngebulana. The
various entities under his control transferred properties into Rebosis so as to facilitate
its listing on the Johannesburg Stock Exchange. As part of that exercise, Mr
Ngebulana requested that the DPW transfer the lease over the SALU building to
Rebosis. The various interlinking agreements which achieved the restructuring were
made subject to the consent of Mr Ngebulana. Prior to the listing, the Amatola
Family Trust (the Trust), of which Mr Ngebulana was the guiding mind, owned the
Billion Group which in turn held all of the shares in Phomella. The Trust also owned
100 percent of the shares in Rebosis prior to the listing. I cannot see how this in any
way leads to an inference of complicity. Businesses the world over restructure to
their advantage without nefarious purpose or knowledge. There is no evidence that
this restructuring exercise was any different.
[27] The refusal of the high court to exercise its discretion to order Rebosis to pay
the almost R104 million requested by the SIU was based on the following findings
and considerations. The respondents were unaware of any irregularities in the
conclusion of the lease. The respondents were unaware of any contention that the
DOJ required less than the entire SALU building. The DOJ in fact occupied the
entire building for the duration of the lease. The rental charged was a market-related
one. In order to prepare the building for occupation by the DOJ, Phomella had
cleared it of some 100 tenants. It had spent more than R81 million in refurbishing
the building. It had been informed by the DPW that all of the requisite formalities
for the conclusion of the lease had been complied with. No undue benefit was
received under the lease by Phomella, Rebosis or Mr Ngebulana.
[28] None of the findings of the high court can be faulted. The consideration of
those facts in the exercise of the high court’s discretion cannot be faulted. It
accordingly cannot be said the exercise of the high court’s true discretion is subject
to interference by an appeal court. For these reasons, there is no basis on which this
court can uphold the appeal.
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
____________________
T R GORVEN
JUDGE OF APPEAL
Appearances
For the appellant:
R J Raath SC and J A Motepe SC
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
For the respondents:
J Babamia SC (heads also prepared by
M Mbikiwa)
Instructed by:
Norton
Rose
Fulbright
South
Africa
Incorporated, Johannesburg
Webbers Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
3 April 2023
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 Special Investigating Unit v Phomella Property Investments (Pty) Ltd and
Another [2023] ZASCA 45
Today the Supreme Court of Appeal dismissed with costs an appeal from a judgment
of Rabie J in the Gauteng Division of the High Court, Pretoria (the high court). The
matter arose from a lease of the SALU building in Pretoria to accommodate the
Department of Justice and Correctional Services (the DOJ). It was concluded
between the Department of Public Works (the DPW) and the owner, Phomella
Property Investments (Pty) Ltd, the first respondent (Phomella). The lease was
concluded on 22 September 2009 for a period of 9 years and 11 months. It was
concluded after utilising the procedure for a negotiated lease rather than an open
bidding process. Authority to conclude the lease was subject to the condition that,
prior to signature, an assessment of the space required by the DOJ was to be
conducted. Despite this not having been done, the lease was signed.
In February 2017, the Special Investigating Unit (the SIU) applied in the high court
for the lease to be declared unlawful and for an order that Phomella and Rebosis
pay to the DPW the sum of R103 880 357.65. This was said to represent wasteful
expenditure incurred during the lease. It was contended that an area greater than
was needed by the DOJ had been leased. The figure represented the SIU’s
calculation of the rental which had been paid for the supposed excess area. The high
court declared the lease unlawful on the basis that the condition to which signature
of the lease was subject had not been complied with. It declined, however, to order
payment of the amount claimed to represent wasteful expenditure.
The basis for the declaration was s 172(1)(a) of the Constitution which requires a
court to declare conduct invalid where it is inconsistent with the Constitution. A
discretion then arises under s 172(1)(b) whereby a court may make any order that
is just and equitable.
The Supreme Court of Appeal rejected the argument that, where the lease was held
to be unlawful, it was necessary to set it aside and declare it to have been void ab
initio. That is because the enquiries under these two subsections are discreet and
not to be conflated. Section 172(1)(a) obliged a court to declare conduct invalid. No
more no less. Any additional order fell such as setting aside a contract fell within the
ambit of s 172(1)(b).
The discretion exercised under s 172(1)(b) is a true one. As such, an appeal court
can interfere with it only if it is not exercised ‘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’.
The SIU contended that where a contract has been declared unlawful, the party
concerned may not benefit from it. This, however, was based on an incorrect reading
of the dictum of the Constitutional Court in Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency
and Others (Allpay 2) relied upon by the SIU. Because the discretion is a true one,
it is not appropriate to lay down inflexible rules. The remedial power of a court is a
wide one, subject only to its being just and equitable. As such, it cannot be based on
a principle of no profit, no loss, but on a consideration of the pertinent facts of each
case.
After evaluating the grounds relied upon by the SIU, the Supreme Court of Appeal
held that the SIU had not shown that the true discretion exercised by the high court
met the threshold for interference on appeal. Its approach could not be faulted. As a
consequence, the appeal was dismissed with costs, including those of two counsel
where so employed.
|
2672
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case no: 30/2014
In the matter between:
NEW PORT FINANCE COMPANY (PTY) LTD First Appellant
DAVID CARL MOSTERT
Second Appellant
and
NEDBANK LIMITED
Respondent
(WCHC Case No 20896/2010)
and in the matter between:
DAVID CARL MOSTERT
First Appellant
NEW PORT FINANCE COMPANY (PTY) LTD Second Appellant
and
NEDBANK LIMITED
Respondent
(WCHC Case No 22331/2010)
Neutral citation: New Port Finance Company (Pty) Ltd v Nedbank Ltd
(30/2014)[2014] ZASCA 210 (1 December 2014)
Coram:
Navsa ADP, Majiedt, Wallis, Saldulker and Zondi JJA
Heard:
25 NOVEMBER 2014
Delivered: 1 December 2014
Summary: Companies undergoing business rescue in terms of
Companies Act 71 of 2008 – effect of business rescue on obligations of
sureties discussed – section 154 of Act – interpretation of deed of
suretyship
ORDER
On appeal from: Western Cape High Court (Blignault J sitting as court
of first instance):
The appeals are dismissed with costs such costs to include those
consequent upon the employment of two counsel.
JUDGMENT
Wallis JA (Navsa ADP, Majiedt, Saldulker and Zondi JJA
concurring)
[1] Wedgewood Village Golf and Country Estate (Pty) Ltd
(Wedgewood) and Danger Point Ecological Development Company (Pty)
Ltd (Danger Point) both borrowed money from the respondent, Nedbank
Ltd (Nedbank) for the purposes of pursuing two property developments.
The loans in both instances were secured by deeds of suretyship executed
by the appellants, New Port Finance Company (Pty) Ltd (New Port) and
Mr David Mostert, the sole director of New Port.1 Wedgewood and
Danger Point defaulted on their obligations to Nedbank and in 2010 it
instituted separate proceedings against each of them and New Port and
Mr Mostert. On 27 September 2011, judgments were entered in favour of
Nedbank against Wedgewood and the two sureties jointly and severally,
the one paying the other to be absolved, for some R55 million, interest
and costs, and against Danger Point and the two sureties, also jointly and
severally, for a little over R10 million, interest and costs. Thereafter
Nedbank obtained provisional and final liquidation orders against
Wedgewood and Danger Point.
1 In the case of Wedgewood there were other sureties but that is irrelevant for present purposes.
[2] On 29 March 2012 Nedbank launched an application for Mr
Mostert’s sequestration and on 17 May 2012 it launched an application
for New Port’s liquidation. The present appeals arise because Mr Mostert
and New Port sought to prevent Nedbank from pursuing those
applications. They relied for the relief they sought on the fact that both
Wedgewood and Danger Point had been taken out of liquidation, placed
under supervision under orders of court granted in terms of s 130(1) of
the Companies Act 71 of 2008 (the Act), and business rescue plans had
been adopted, become final and were being implemented in respect of
both companies. In those circumstances, in separate applications, the one
relating to Wedgewood and the other to Danger Point, Mr Mostert and
New Port applied for orders interdicting Nedbank from taking any further
steps against them in relation to the enforcement or execution of the two
judgments, including pursuing the applications for their respective
sequestration and liquidation. The orders were to be final unless the
business rescue plans proved unsuccessful and were terminated in one of
the ways provided in terms of the Act. Blignault J dismissed their
applications in the high court, but granted leave to appeal to this court.
[3] Two arguments were advanced on behalf of Mr Mostert and New
Port. The first was that the terms of the business rescue plans, which were
binding on Nedbank, altered the obligations of the principal debtors,
Wedgewood and Danger Point. This, so it was argued, had the effect as a
matter of law of altering the obligations of Mr Mostert and New Port as
sureties for the debts of Wedgewood and Danger Point, so as to render
them liable for no more than the obligations of Wedgewood and Danger
Point under the business rescue plans. Accordingly, the argument
proceeded, they were no longer liable immediately to satisfy the
judgments taken against them, because the principal debtors had been
given time to pay the same debts, and if the business rescue proved
successful in each case their obligations to Nedbank would be discharged
because the obligations of Wedgewood and Danger Point would have
been discharged.
[4] The alternative argument was that the court should in any event
grant a stay of execution on the two judgments, either in terms of its
common law powers, or in terms of rule 45A of the Uniform Rules of
Court, in order to prevent them suffering a grave injustice. They said that
it would be unfair to permit Nedbank to pursue execution on the
judgments
when
there
was
a
possibility
that the
successful
implementation of the business rescue plans would result in the complete
discharge of the debts by Wedgewood and Danger Point. In addition Mr
Mostert claimed that his own and New Port’s involvement in the business
rescue plans was integral to their success and his sequestration would
hinder that.
[5] An immediate difficulty confronted both Mr Mostert and New
Port arising from events subsequent to the hearing in the court below.
According to affidavits delivered shortly before the appeal and admitted
without opposition, the business rescue in relation to Wedgewood had
failed and Nedbank had given notice to the business rescue practitioner to
terminate it and to dispose of the assets. In the order sought in the court
below it was accepted that in that eventuality there could be no bar to the
sequestration of Mr Mostert’s estate and the liquidation of New Port.
[6] Mr Mostert and New Port sought an interdict against execution
being levied against them and particularly an interdict prohibiting the
continuation of the sequestration and liquidation applications. The
interdict was to be made conditional (‘unless’) on certain events
occurring, in which event it would fall away. Two of those events were
the business rescue proceedings being terminated in terms of s 132(2)(a)
of the Act or Nedbank becoming entitled to call on the business rescue
practitioner to dispose of the assets of Wedgewood where there had been
a failure to pay it in accordance with the business rescue plan, or the plan
had not been complied with, or the conditions in the plan had not been
fulfilled. Nedbank delivered an affidavit saying that these events had
occurred and that they rendered the appeals moot. In an affidavit
delivered in response to this, Mr Mostert accepted that there had been a
default under the Wedgewood business rescue plan. This meant the
fulfilment of the conditions that would cause the proposed interdict to fall
away. All that he could proffer as a reason for continuing with the appeals
was the possibility or more accurately the hope that some fresh
compromise could be reached with Nedbank.
[7] These events effectively spelled the end of the appeal so far as the
Wedgewood business rescue plan was concerned. In turn that meant that
Nedbank can pursue Mr Mostert’s sequestration and New Port’s
liquidation on the basis of the judgment it obtained against them jointly
with Wedgewood. That destroyed the underlying rationale for the
application for an interdict, in similar terms and subject to similar
conditions, based on the Danger Point judgment. In the founding affidavit
in the Danger Point application, Mr Mostert said that the application was
precipitated by Nedbank’s election to continue with the sequestration and
liquidation applications. Once Nedbank was free to pursue those
applications, based on the judgments in relation to the Wedgewood
development, no purpose would be served by an order interdicting it from
doing so, in the wording suggested by counsel ‘in reliance on any claim
made under’ the judgment in the Danger Point case. If Nedbank is free to
pursue these applications it cannot be prevented from doing so by an
order in the terms suggested. That order would amount to a pointless
restraint – a brutum fulmen.
[8] The appeals must therefore be dismissed on that ground alone.
However, the matter has been fully argued, the issues are of some general
importance and that would in any event have been their fate, even had
intervening circumstances not rendered the two applications pointless. In
those circumstances it is appropriate to state briefly why that would have
been the result. At the heart of the submissions on behalf of Mr Mostert
and New Port was the proposition that the successful outcome of the
business rescue proceedings would be that the sureties would have been
relieved of any indebtedness to Nedbank over and above the payment of
the amounts already received by Nedbank under those two plans. For
various reasons that would not have been the case.
[9] The first reason is that Nedbank had obtained judgments that
served to fix the liability of the sureties. There were no grounds for
rescinding those judgments nor any attempts to do so and they had
become final, with no avenue open for them to be challenged on appeal.
Even if it is accepted that they did not novate the claims under the deeds
of suretyship, but merely strengthened those claims and replaced the right
of action on the deeds of suretyship by a right to execute on the
judgment,2 the fact remained that the liability of the sureties was thereby
established. If any payment was made by the principal debtor thereafter
that would enure to the benefit of the sureties, but that would follow from
2 Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A) at 942C-E.
the fact that the judgment established joint and several liability so that, in
the time honoured expression, if the one paid the others would be
absolved. But we were referred to no authority and I have discovered
none, in which it has been held that a compromise of the principal
debtor’s liability under the judgment, whether as a result of business
rescue or otherwise, would accrue to the advantage of the surety after
judgment had been taken against them. There can be no question of the
surety’s rights or interests being prejudiced thereby,3 because the extent
of the surety’s liability for the debt in question has been fixed and
determined. How the creditor thereafter sets about executing the
judgment against the principal debtor does not affect either the nature or
the extent of the surety’s liability.
[10] The second reason is that the terms of the deeds of suretyship in
this case, as is frequently the situation, had been drafted so as to cater for
this very eventuality. Clauses five, six and seven entitled the bank to
pursue the sureties notwithstanding their dealings with the principal
debtor and the grant of any extension of time, or any compromise in
relation to the scope and extent of the principal debtor’s indebtedness.
Any default on the part of the principal debtor entitled the bank to sue the
sureties. The benefit of excussion was waived. I will not lengthen this
judgment by quoting the clauses. They were relatively standard clauses to
be found in most commercial deeds of suretyship.
[11] Clause five is in similar terms to the clause in the deed of
suretyship that was in issue in Cape Produce Co (Port Elizabeth) (Pty)
3 Bock and Others v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA) paras 18-21.
Ltd v Dal Maso and Another NNO.4 There, a power to give time to or
release the principal debtor ‘without prejudice to its rights hereunder’ was
held to entitle the creditor to demand immediate payment from the surety,
notwithstanding its having subordinated its claim against the principal
debtor in favour of other creditors. Similarly here, the fact that the bank
agreed, by way of its agreement to the business rescue plans, to give
Wedgewood and Danger Point time to pay their indebtedness to it and,
conditional on them doing so, agreed to limit the amounts that would be
paid to them, fell squarely within clause five.
[12] Of necessity therefore it had to be argued that the liquidation of
Wedgewood and Danger Point had altered the situation. But that only
brought clause six into sharper focus. It identified four broad situations
when its terms would apply. They were liquidation, judicial management
under the Companies Act 61 of 1973, the submission of an offer of
compromise by the debtor and the submission of a scheme of
arrangement by the debtor. If any of those events occurred, clause six
entitled Nedbank to accept any dividend on account or any alternative
securities arising out of that event and ‘to recover from the surety, to the
full extent of this suretyship’ any sums remaining owing thereafter. In
other words, the fact that in any of those situations the principal debtor
would be released in whole or in part from its obligations would not
disentitle the bank from recovering the outstanding amount from the
sureties. Neither suggestion by counsel as to ways in which this could be
avoided held water. In particular the suggestion that a clause in these
terms did not encompass business rescue – an institution that did not exist
under that name when the deeds were executed – was incorrect.
4 Cape Produce Co (Port Elizabeth) (Pty) Ltd v Dal Maso and Another NNO 2002 (3) SA 752 (SCA)
paras 9 to 11.
[13] Counsel eschewed any contention that the sureties were entitled to
the benefit of the statutory moratorium afforded Wedgewood and Danger
Point under s 133(1) of the Act. He was right to do so.5 He also did not
go so far as to contend that the effect of the business rescue provisions in
ss 128 to 154 of the Act is to deprive creditors of the company of their
rights against sureties under the deeds of suretyship by which they have
bound themselves for the debts of the company, although that was
implicit in his argument that the debts owed by the sureties were altered
by the terms of the business rescue plans and would ultimately be
discharged if the plans succeeded. He fortified this argument by reference
to the judgment of Rogers J in Tuning Fork,6 which in turn was largely
based on the learned judge’s reading of the decision in Moti and Co v
Cassim’s Trustee.7
[14] As the case will be disposed of on the grounds already set out
above it is inappropriate to explore in detail the reasoning of Rogers J. I
simply record that it is by no means clear to me that it is correct. Moti and
Co v Cassim’s Trustee was decided on the basis of the court’s
interpretation of a specific provision in the 1916 Insolvency Act8 that has
no direct counterpart in the Act. The key provision in that regard is s 154,
which, in subsec 1, simply says that in certain circumstances a creditor
will not be able to enforce a debt against a company in business rescue
and, in subsec 2, says that the company may enforce a debt in accordance
with and to the extent permitted by the terms of the business rescue plan.
That section is capable of the construction that it deals only with the
5 Investec Bank Ltd v Bruyns 2012 (5) SA 430 (WCC) paras 17-19.
6 Tuning Fork (Pty) Ltd t/a Balanced Audio v Greeff and Another 2014 (4) SA 521 (WCC) paras 14(i)
and (ii).
7 Moti and Co v Cassim’s Trustee 1924 AD 720.
8 Section 126(2)(b) of the Insolvency Act 32 of 1916.
ability to sue the principal debtor and not with the existence of the debt
itself. If that is the case then the liability of the surety would be
unaffected by the business rescue, unless the plan itself made specific
provision for the situation of sureties.
[15] There was also a contention that the court should have exercised a
discretion to stay the enforcement of the judgments granted against Mr
Mostert and New Port pending the outcome of the business rescue plans.
That became academic once the Wedgewood plan failed and, if the large
debt in that case can be enforced, there seems to be little reason to
postpone enforcement of the far smaller debt in Danger Point.
[16] On every ground advanced before us therefore the appeals must
fail. It is unnecessary therefore to consider the criticism directed at the
judgment of the high court, as the result it reached was correct. We were
asked to award Nedbank the costs of three counsel on the grounds that the
case involved a lot of money; that there was an attack on its standard
form of suretyship and that the implications of business rescue are
important to the bank and the wider commercial community. Whilst all
that is correct it is true of much litigation that comes to this court and it
does not warrant the employment of three counsel. The additional costs
incurred thereby are an expense that the bank must bear.
[17] The appeals are dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
Paul Farlam (with him Grant Quixley)
Instructed by:
John Taylor & Associates Inc, Cape Town;
Webbers, Bloemfontein
For respondent:
Schalk Burger SC (with him Brendan Manca
SC and Stephan Wagener)
Instructed by:
Cliffe Dekker Hofmeyr, Cape Town;
Honey Attorneys Inc, Bloemfontein.
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
1 December 2014
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
New Port Finance Company (Pty) Ltd v Nedbank Ltd
The SCA today delivered judgment in one of the first cases
involving the new provisions of the Companies Act 71 of 2008 dealing
with business rescue. The case arose from the failure of two property
development schemes, one at Wedgewood near Port Elizabeth and one at
Danger Point. The two appellants, New Port and Mr Mostert, its sole
director, had bound themselves as sureties for the repayment of the loans
form Nedbank taken to finance the developments. When the schemes
collapsed the bank took judgment against the property development
companies and the sureties. Thereafter the companies were liquidated and
the bank commenced proceedings to wind up New Port and sequestrate
Mr Mostert.
After
these
proceedings
had
commenced
both
property
development companies were taken out of liquidation, placed under
supervision and business rescue plans were adopted in respect of each of
them. Based on that New Port and Mr Mostert brought applications in the
Western Cape High Court to interdict Nedbank from executing on the
judgments it had obtained against them, and in particular from pursuing
the liquidation and sequestration applications, pending the outcome of the
business rescue plans. The applications were dismissed but leave to
appeal was given.
By the time the appeal was heard the one business rescue plan had
failed and there were accordingly no longer any grounds for the interdict
that had been sought. However, the court nevertheless dealt with the
merits and held that the appeal would in any event have failed. In the first
instance judgment had been granted against the sureties prior to the
commencement of business rescue and those judgments had finally
determined the scope and extent of the liability of the sureties in regard to
these debts. That liability would not be affected by the subsequent
business rescue of the property development companies.
Secondly, the terms of the deeds of suretyship provided that the
liability of the sureties would be unaffected by the bank affording the
property development companies time or even compromising the extent
of their liability. Thirdly, while not expressing a final view, the court
expressed reservations as to the correctness of a high court decision in
which it had been suggested that the effect of a debtor being wholly or
partially discharged from liability for a debt under a business rescue plan
was to release the surety from liability. The court drew attention to s 154
of the Act and said that it was capable of an interpretation that it merely
operated to preclude the creditor from recovering the full amount of the
debt from the debtor, leaving the liability of the surety unaffected.
|
1882
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 566/10
In the matter between:
MARK JULIAN ATKIN
Appellant
and
PETRUS JACOBUS BOTES
Respondent
Neutral citation: Atkin v Botes (566/10) [2011] ZASCA 125 (9 September
2011).
Coram:
CLOETE, VAN HEERDEN, BOSIELO and SERITI JJA,
and MEER AJA
Heard:
17 AUGUST 2011
Delivered:
9 SEPTEMBER 2011
Summary:
An interdict restraining the respondent from disposing of part
of its assets pending an action for damages is not appealable.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: North Gauteng High Court (Pretoria) (Makgoka J sitting as
court of first instance):
The appeal is struck off the roll. The appellant is ordered to pay the
respondent's costs.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (VAN HEERDEN, BOSIELO and SERITI JJA, and MEER AJA
concurring):
[1] This appeal raises the question whether the grant of an interdict, which
prevents a respondent from freely dealing with its assets in order to defeat a
judgment the applicant believes it will obtain in due course in an action for
damages, is appealable.
[2] In May 2009 the respondent, Botes, was shot with a firearm by the
appellant, Atkin. On 5 February 2010 Botes instituted an action against Atkin
for delictual damages arising from the shooting. On 26 February 2010 and at
the suit of Botes, Van der Byl AJ in the North Gauteng High Court granted, ex
parte, an urgent interim interdict with immediate effect. The interdict restrained
Atkin's attorneys (the second respondent in the court a quo) from paying out
the nett proceeds of the sale of Atkin's house, and directed them to invest
such proceeds in an interest bearing account 'with an acknowledged bank'
pending finalisation of Botes' action for damages. Atkin anticipated the return
day. Makgoka J confirmed the interim order on 31 March 2010 and
subsequently granted leave to appeal to this court.
[3] The interdict granted by the court a quo is of the type discussed in
Knox D'Arcy Ltd & others v Jamieson & others 1996 (4) SA 348 (A). Its factual
basis was the conclusion by Makgoka J that Botes' apprehension that Atkin
was dissipating his assets with the intention of defeating Botes' claim for
damages, was well founded. It is this finding which Atkin sought to challenge
on appeal.
[4] At the request of the court, counsel filed heads of argument dealing
with the appealability of the order. Not surprisingly, counsel for Atkin
contended that the order was appealable, whilst counsel for Botes contended
to the contrary. As in many cases where this question has been raised, the
answer is far from obvious. Schutz JA said in Cronshaw & another v Coin
Security Group (Pty) Ltd1 1996 (3) SA 686 (A) at 690D-E:
'Where to draw the line between decisions which are "interlocutory" and such as
have to await their decision on appeal until the proceedings in the court of first
instance have been concluded, and those which are "final", deserving to be
appealable before the main suit is, is a question that has vexed the minds of eminent
lawyers for many centuries, and the answer has not always been the same. The
question is intrinsically difficult, and a decision one way or the other may produce
some unsatisfactory results.'
[5] In Knox D'Arcy it was definitively held,2 approving previous authority to
this effect, that the refusal of an interim interdict is appealable. However, E M
Grosskopf JA also discussed, obiter, the position in regard to the grant of an
interim interdict, as follows:3
'In passing it may be noted that the grant of an interim interdict stands, historically, on
a different footing. As far back as Prentice v Smith (1889) 3 SAR 28 the Court held
(at 29) that an order granting an interim interdict "is an interlocutory order, and that
consequently there can be no appeal". On the whole this view was followed in the
Provincial Divisions (see Loggenberg v Beare 1930 TPD 714; Davis v Press & Co
[1944 CPD 108]; and authorities referred to in those cases) and, ultimately, prevailed
in the Appellate Division (African Wanderers Football Club (Pty) Ltd v Wanderers
1 Incorrectly cited in the law reports and on the internet as 'Cronshaw & another v Fidelity
Guards Holdings (Pty) Ltd'.
2 At 356H-359E.
3 At 359F-360C.
Football Club 1977 (2) SA 38 (A) at 46H-47A and Cronshaw's case supra). Some
Judges have questioned the validity of the distinction between the refusal and grant
of an interim interdict. This distinction cannot be justified by the nature of the
proceedings giving rise to the decision ─ it is the same in both cases (see, for
example, Davis v Press & Co (supra at 118 per Fagan J)). And it may be argued that
the prejudice suffered by the unsuccessful party also does not differ in principle. See
Davis' case supra at 112-13 (De Villiers J). However, in Loggenberg's case supra,
Greenberg J expressed the view (at 723) that "there is in fact a real distinction on the
question of irreparability between the case of a granting of a temporary interdict and
the refusal of a temporary interdict". There may also be a difference in the finality of
the decision. Thus, as stated above, the refusal of an interim interdict is final. It
cannot be reversed on the same facts (I disregard the possibility, discussed above, of
a refusal on some technical ground). The same may not be true of the grant of an
interim interdict. It may be open to the unsuccessful respondent to approach the
Court for an amelioration or setting aside of an interdict, even if the only new
circumstance is the practical experience of its operation. And, apart from the
theoretical differences between the grant and the refusal of an interdict, there is also
the practical one, discussed in Cronshaw's case at 12-15,4 that an appeal against the
grant of a temporary interdict would often be inconsistent with the very purpose of
this remedy. See also Davis v Press & Co (supra at 119 (Fagan J)). It is, however,
not necessary to pursue this matter any further. The appealability of the grant of an
interim interdict does not arise directly for decision in this matter and is in any event
concluded by authority.'
[6] In Metlika Trading Ltd & others v Commissioner, South African
Revenue Service 2005 (3) SA 1 (SCA) this court held that an interim interdict
is appealable if it is final in effect and not susceptible to alteration by the court
of first instance. The decision also emphasised5 that in determining whether
an order is final in effect, it is important to bear in mind that 'not merely the
form of the order must be considered but also, and predominantly, its effect'.6
The crucial question in the appeal is therefore whether the granting of the
4 The reference is to the typed judgment in the archives of this court. The passage in question
appears at 691B-G of the reported judgment.
5 In para 23.
6 South African Motor Industry Employers' Association v South African Bank of Athens Ltd
1980 (3) SA 91 (A) at 96H. See also Zweni v Minister of Law and Order 1993 (1) SA 523 (A)
at 532I and JR 209 Investments (Pty) Ltd & another v Pine Villa Country Estate (Pty) Ltd; Pine
Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd 2009 (4) SA 302 (SCA) para 25.
interim interdict was final in effect. Counsel for Atkin relied on Metlika and JR
209 Investments (Pty) Ltd & another v Pine Villa Country Estate (Pty) Ltd;
Pine Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd 2009 (4)
SA 302 (SCA) in support of his argument that this was indeed so.
[7] The JR 209 Investments case is not of assistance in deciding the
present appeal. The order there was clearly final in effect. The same applies
to Maccsand CC v Macassar Land Claims Committee & others [2005] 2 All
SA 469 (SCA), another decision of this court. I shall deal with these two
decisions first, and then with Metlika.
[8] In the JR 209 Investments case there was a dispute between the seller
and the purchaser of an erf, Portion 7, in a township being developed by a
developer. The seller instituted action for retransfer of the erf. The court a quo
granted an interim interdict pending the final adjudication of the action. This
court said:7
'The order which was sought and granted had as its substrate that the purchaser and
the developer were prohibited from proceeding with the establishment of the
township as a whole and not only in respect of the development of Portion 7. The
order affected the entire development, yet the dispute between the parties related to
Portion 7 only. The order was overbroad. The right to develop the township as a
whole is not an issue that would be decided by the trial court and it was consequently
final in effect even if only for a limited period. In our view the merx could have been
preserved without the necessity for an order in those terms. It follows therefore that
the order of Rabie J was appealable.'
[9] In the Maccsand case, the Macassar Land Claims Committee brought
a claim in the Land Claims Court for restoration of the erf on which Maccsand
conducted its sand mining operations, on the basis of unregistered
commonage rights previously held by the owners of certain lots situated
adjacent to the erf. This court said:8
'It is settled law that in determining whether a decision is appealable "not merely the
form of the order must be considered but also, and predominantly, its effect" (South
7 In para 26.
8 In para 12.
African Motor Industry Employers' Association v South African Bank of Athens Ltd
1980 (3) SA 91 (A) at 96H, Zweni (supra) at 532I and Metlika (supra) at paragraph
23). Maccsand's right to mine exists for a limited period. The Land Claims
Commission, despite the passage of a considerable length of time, has not, because
of the complexity of the matter and the expense involved, commenced with the
verification of the claim. It was perhaps for this reason that the Committee decided to
approach the LCC directly. Counsel for the Committee conceded in argument that to
date the necessary research to verify the claim had not even commenced because of
a shortage of funds. The conclusion is inevitable in that because of the interdict
Maccsand will be unable to invoke its right to mine for a substantial period of time, if
at all, since if the delays that have occurred till now are an indicator, its rights to mine
may be lost forever. Accordingly as far as Maccsand is concerned the interim
interdict is final in effect. The interim order granted by the court a quo is therefore in
my view appealable.'
[10] In Metlika, interdicts were granted by the court a quo aimed at
preserving certain assets (including an interest in an aircraft) pending a claim
by the Commissioner of the South African Revenue Service for a declaratory
order that the owners of the assets were persons against whom income tax
assessments had been raised. Subsequent developments were held by the
court a quo to have been designed to undermine the preservation order. That
court accordingly made further orders inter alia directing that the aircraft be
returned to South Africa. The decisive question on appeal was whether the
court a quo had jurisdiction to make this order. Streicher JA first considered
whether the order was appealable, and then considered whether the court a
quo had jurisdiction to make it. Both questions were answered in the
affirmative. In coming to this conclusion on the first question, the learned
Judge of Appeal said:9
'The order that steps be taken to procure the return of the aircraft to South Africa, as
well as the other orders relating to the aircraft, were intended to have immediate
effect, they will not be reconsidered at the trial and will not be reconsidered on the
same facts by the Court a quo. For these reasons, they are in effect final orders.'
9 In para 24.
[11] It was not, with respect, necessary for the court to have followed the
approach which it did. A challenge to a court's jurisdiction, which (as I have
said) was the decisive issue in the appeal, is appealable simply because it
concerns the competence of the court to grant the relief sought: Moch v
Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) at
10E-11B; Phillips v National Director of Public Prosecutions 2003 (6) SA 447
(SCA) para 19. In any event, the decision in Metlika does not provide an
answer in the present appeal inasmuch as the order made by the court a quo
is, for the reasons which follow, capable of being altered by that court.
[12] Howie P said in Phillips,10 in the course of contrasting provisions of the
Prevention of Organised Crime Act 121 of 1998:
'And in the case of a common-law interim interdict or attachment pendente lite there
is no reason why, for sufficient cause, they would not, generally, be open to variation,
if not rescission.'
This is just such a case. To borrow from the passage already quoted from
Knox D'Arcy, Atkin could approach the court a quo for an amelioration or
setting aside of the interdict because of the practical experience of its
operation. According to Atkin, he was unemployed at the time the interdict
was made final and he had sold his house to tide him and his dependants
over until he obtained employment. The trial was due to commence earlier
this month, ie some 18 months after the order was made, but we were
informed from the bar that it had been postponed sine die. It may well be that
Atkin could show that the continued operation of the order would work great
hardship on him, his family, and his ex-wife and severely handicapped minor
child whom he is obliged to maintain in terms of a court order. If so, he would
be entitled to request the court a quo to reconsider the order and that court
would be entitled to vary or even rescind it. For that reason the order made in
the interdict proceedings cannot be said to have final effect. It is therefore not
appealable.
10 In para 21.
[13] The appeal is struck off the roll. The appellant is ordered to pay the
respondent's costs.
_______________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
G C Muller SC
Instructed by Gerard Stoop Attorney, Pretoria
Honey Attorneys Inc, Bloemfontein
RESPONDENTS:
J G W Basson
Instructed by Pieterse & Curlewis Inc, Pretoria
Martins Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 9 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
MARK JULIAN ATKIN v PETRUS JACOBUS BOTES
1.
The appellant, Atkin, shot the respondent, Botes, with a firearm. Botes sued Atkin for
damages. Botes also alleged in ancillary proceedings that Atkin was dissipating his assets in
order to defeat Botes' claim. The North Gauteng High Court agreed and issued an interdict
preventing Atkin's attorneys from paying over to him the proceeds of the sale of his house,
pending the conclusion of Botes' action for damages.
2.
Atkin noted an appeal to the SCA. The SCA pointed out that the interdict could be
altered or even discharged by the North Gauteng High Court if its continued operation caused
hardship to Atkin or his family. The interdict was therefore not final, and not appealable for
that reason. The appeal was struck off the roll.
--ends--
|
4110
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 728/2022
In the matter between:
LUEVEN METALS (PTY) LTD
APPELLANT
and
COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
RESPONDENT
Neutral citation:
Lueven Metals (Pty) Ltd v Commissioner for the South African
Revenue Service (Case no 728/2022) [2023] ZASCA 144 (8
November 2023)
Coram:
MOLEMELA P and PONNAN and MEYER JJA and KEIGHTLEY
and MALI AJJA
Heard:
31 August 2023
Delivered:
8 November 2023
Summary:
Tax law – declaratory order – whether appropriate not considered by
high court – narrow basis for entertaining application for declaratory relief in tax
matters.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (N Davis J, sitting as
court of first instance):
The appeal is dismissed with costs including those of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Ponnan JA (Meyer JA and Keightley and Mali AJJA concurring):
[1] This is an appeal against a judgment of the Gauteng Division of the High Court,
Pretoria (per Davis J) (the high court), dismissing an application for declaratory relief
pertaining to s 11(1)(f) of the Value Added Tax Act 89 of 1991 (the VAT Act).1
[2] The appellant, Lueven Metals (Proprietary) Limited, is engaged in the business
of the trade and refining of precious metals, such as gold, as well as the silver by-
product derived from the gold refining process. It is a registered Category C vendor in
terms of the VAT Act.2 The appellant purchases lesser purity gold in manufactured
form (such as scrap jewellery) or in unwrought form (such as gold bars) (described as
gold-containing material) from certain preapproved suppliers. The gold sourced by the
appellant is invariably of a lesser purity than pure gold because the latter is usually too
soft, susceptible to scratches and thus not suited for everyday use as jewellery. Hence,
gold is alloyed with other metals to manufacture jewellery. The alloying of gold with
other metals (such as copper and silver) reduces the special characteristics and
quality of gold – the colour changes and the density and purity reduces.
1 Section 11(1)(f) provides: ‘Where, but for the provisions of this section, a supply of goods would be
charged with tax under section 7(1)(a), such supply of goods shall, subject to compliance with
subsection (3) of this section, be charged with tax at the rate of zero per cent where the supply is to the
South African Reserve Bank, the South African Mint Company (Proprietary) Limited or any deposit-
taking institution registered under the Deposit-taking Institutions Act, 1990 (Act No. 94 of 1990), of gold
in the form of bars, ingots, buttons, wire, plate or granules or in solution, which has not undergone any
manufacturing process other than the refining thereof or the manufacture or production of such bars,
ingots, buttons, wire, plates, granules or solution.’
2 Category C means the category of vendors whose tax periods are periods of one month ending on
the last day of each of the 12 months of the calendar year.
[3] The appellant has contracted with Absa Bank Limited, a bank registered under
the Banks Act 94 of 1990 (Absa), to supply pure gold bars, after such gold has been
refined to a purity level of at least 99.5%, namely pure or fine gold. According to the
appellant, the gold-containing material sourced by it (in its lesser state of purity) is not
acceptable to Absa, who requires pure (fine) gold refined by a refinery accredited by
the London Bullion Market Association (LBMA). The gold-containing material is
therefore melted and refined on behalf of the appellant for supply to Absa.
[4] As the appellant is not accredited to refine the gold-containing material to meet
the standards of the LBMA required by Absa, the appellant deposits its lesser purity
gold bars with Rand Refinery, who is so accredited. All gold-containing material
deposited with Rand Refinery for further refining must comply with certain
specifications. Where these specifications are not met, Rand Refinery will either reject
the deposit or impose penalties or additional fees. The appellant therefore refines and
processes all gold-containing material in-house to remove deleterious elements to
enable it to deposit the gold with Rand Refinery in bar form. The appellant generally
refines the gold-containing material to a purity level of between 80 to 90%, to maximise
the yield and minimise the penalties or additional fees.
[5] The lesser purity gold bars (refined and produced by the appellant from the
gold-containing material) are transported from the appellant’s premises to Rand
Refinery, where they are deposited. Rand Refinery requires large quantities to operate
effectively and efficiently, which no single depositor can satisfy. When Rand Refinery
receives the appellant’s lesser purity gold bars, they are melted and refined together
with (co-mingled with) the gold of other depositors. Rand Refinery refines the gold
received from the various depositors to a purity level of at least 99.5% to produce gold
bars that meet the minimum LBMA standard in conformity with Absa’s requirements.
Rand Refinery thereafter delivers the gold bars to Absa.
[6] During the appellant’s 2018 to 2020 tax periods, it supplied gold bars to Absa
and zero-rated such supplies in terms of s 11(1)(f) of the VAT Act. As matters then
stood, according to the appellant, refunds in the total amount of R51 036 867.34,
together with interest thereon, was due to it by the respondent, the Commissioner for
the South African Revenue Service (SARS). On 27 March 2020, SARS, acting in terms
of s 40 of the Tax Administration Act 28 of 2011 (the TAA), notified the appellant of a
VAT verification for the relevant period pursuant to s 46. After an exchange of
correspondence, on 19 June 2020, SARS notified the appellant of a VAT and Income
Tax audit. SARS then requested the appellant to submit relevant material in terms of
s 46. On 10 March 2021, the appellant was requested to attend in person on 18 March
2021 in terms of s 47 of the TAA, to enable SARS to obtain further clarification and to
expedite the audit. Following the interview, on 30 March 2021, SARS sought an
extension until 8 April 2021 for the issuance of a letter of audit findings.
[7] On 8 April 2021, SARS issued an ‘outcome of the audit conducted as envisaged
in terms of section 42(2)(b) of the [TAA]’ (the letter of audit findings). SARS indicated
that the audit findings do not concern the 2019 tax period and that further findings in
that regard would issue in due course. According to SARS, the VAT declarations and
tax invoices provided by the appellant reflected that, in total, zero-rated supplies of
R4 059 018 550 had been made to Absa and Rand Refinery. SARS stated that it had
reviewed the nature of the goods provided by suppliers to the appellant and
determined that the gold purchased by it had previously been subjected to a
manufacturing process.
[8] SARS took the view that s 11(1)(f) of the VAT Act prohibits the supply at a zero-
rate to the South African Reserve Bank (SARB), the South African Mint Company (Pty)
Ltd (Mintco) or any Bank registered under the Banks Act, of gold in any form that has
undergone any manufacturing process ‘other than the refining thereof or production of
such bars’. SARS accordingly expressed an intention to re-classify the zero-rated
sales to Absa as standard-rated sales with VAT of 15% in terms of s 7(1)(a), read with
s 11(1) and s 64 of the VAT Act. SARS also intimated that it was considering imposing
an understatement penalty and raising interest on the appellant’s outstanding VAT
liability.
[9] On 2 June 2021, the appellant responded to SARS’ letter of audit findings (the
appellant’s response). The appellant’s response stated:
‘14.1. S 9(1) of the TAA provides that:
“A decision made by a SARS official or a notice to a specific person issued by SARS under a
tax Act, excluding a decision given effect to in an assessment or a notice of assessment that
is subject to objection and appeal, may in the discretion of a SARS official described in
paragraph (a), (b) or (c) or at the request of the relevant person, be withdrawn or amended
by-
(a) the SARS official;
(b) a SARS official to whom the SARS official reports; or
(c) a senior SARS official.” (Emphasis added)
14.2. With reference to the taxpayer’s contentions set out in this response letter, the taxpayer
hereby requests in terms of s 9(1) of the TAA that SARS forthwith:
14.2.1. reconsiders its intention in terms of the letter of audit findings to negatively assess the
taxpayer;
14.2.2. withdraws its decision to raise assessments and to reclassify the taxpayer’s zero-rated
sales to standard rated sales; and
14.2.3. to pay the taxpayer its outstanding VAT refunds in the amount of R51, 036, 867.34
plus interest.’
[10] It concluded:
‘In the premises, the taxpayer’s gold sales to ABSA during the relevant tax periods were
correctly zero rated in terms of s 11(1)(f) of the VAT Act and, accordingly, the intended VAT
assessments should not be raised. As no VAT liability will arise in this regard, penalties,
interest and/or understatement penalties cannot validly be imposed by SARS. Should SARS
decide to impose understatement penalties despite the contentions advanced herein, SARS
is requested to state the facts on which it bases the imposition thereof, as contemplated in
s 102(2) of the TAA.’
[11] The appellant’s response was dated 2 June 2021. So too, its notice in terms of
s 11(4) of the TAA of an intention to institute legal proceedings against SARS. The
appellant issued the application, which forms the subject of this appeal, out of the high
court on 24 June 2021. It sought the following relief:
‘1.
Directing (in terms of section 105 of the Tax Administration Act, 28 of 2011 (as
amended)), insofar as it may be required, that the dispute between the parties (as set forth in
this application) be adjudicated by this Court;
2.
That a declaratory order be issued in terms whereof it be declared that:
2.1.
The word “gold” in section 11(1)(f) of the Value-Added Tax Act, 89 of 1991 (as
amended) (“the VAT Act”) refers to, and only applies to: gold (in any of the eight unwrought
forms permitted in the subsection) refined to the grade of purity required for acquisition by the
South African Reserve Bank (“SARB”), the South African Mint Company (Proprietary) Limited
(“Mintco”), or any bank registered under the Bank Act, 1990 (Act No. 94 of 1990) (“bank”);
2.2.
“Gold” in the form of “bars” supplied to the SARB, Mintco or a bank, in terms of section
11(1)(f) of the VAT Act, refers to gold of a purity equal to or greater than 99.5%;
2.3.
The phrase “which has not undergone any manufacturing process other than the
refining thereof or the manufacture or production of” in section 11(1)(f) of the VAT Act,
precludes the zero rating of a supply of gold:
(i)
not being in one of the eight unwrought forms identified in the subsection; and
(ii)
that has undergone further manufacturing or production processes once it has reached
the state of purity required for acquisition by SARB, Mintco or a bank;
2.4.
The phrase “which has not undergone any manufacturing process other than the
refining thereof or the manufacture or production of” in section 11(1)(f) of the VAT Act, refers
to any manufacturing process(es) carried out by the vendor supplying gold to the SARB,
Mintco or a bank, and does not refer to any process(es) to which gold may have been
subjected historically, prior to being refined to the grade of purity required for acquisition by
the SARB, Mintco or a bank.’
The application failed before the high court. Davis J dismissed it with costs, but granted
leave to the appellant to appeal to this Court.
[12] Section 21(1)(c) of the Superior Courts Act 10 of 2013 provides a statutory
basis for the grant of declaratory orders without removing the common law jurisdiction
of courts to do so. It is a discretionary remedy. The question whether or not relief
should be granted under this section has to be examined in two stages. In the first
place, the jurisdictional facts have to be established. When this has been done, the
court must decide whether the case is a proper one for the exercise of its discretion.3
Thus, even if the jurisdictional requirements are met, an applicant does not have an
entitlement to an order. It is for such applicant to show that the circumstances justify
the grant of an order. I am by no means satisfied that those circumstances are present
in this matter. Quite the contrary, there are several considerations that suggest that
the high court ought to have exercised its discretion against the hearing of the
application.
3 See Family Benefit Friendly Society v Commissioner for Inland Revenue and Another 1995 (4) SA
120 (T) at 124E-F (Family Benefit Friendly Society) and the cases there cited.
[13] At the outset of the hearing of the appeal, Counsel were required to address
whether absent a directive in terms of s 105 of the TAA,4 the high court could enter
into and pronounce on the merits of the application for declaratory relief. This, in the
light of the relief sought in prayer 1 of the Notice of Motion. At the bar in this Court, the
argument advanced by both counsel was that as there was neither an ‘assessment’
nor a ‘decision as described in s 104’, and as the nature of the relief sought was a
declaration of rights, the default rule that a taxpayer may only dispute an assessment
by the objection and appeal procedure under the TAA, did not find application.
[14] The legislative scheme is designed to ensure that the objection and appeal
process and the resolution of tax disputes by means of alternative dispute resolution
and then the tax board or the tax court be exhausted, before the high court can be
approached. It also contemplates that in the ordinary course the tax court deal with
the dispute, by way of a trial, as the court of first instance before the high court can be
approached. Nowhere is this clearer than from the language, context, history and
purpose of s 105, which makes it plain that a taxpayer may only dispute an assessment
by the objection and appeal procedure under the TAA, unless a high court directs
otherwise (Commissioner for the South African Revenue Service v Rappa Resources
(Pty) Ltd).5
[15] What Counsel’s argument boiled down to was not that s 105 did not find
application at all in circumstances where declaratory relief was sought; but, properly
construed, reduced itself essentially to one of timing. There seemed to be an
acceptance that if the appellant had approached the high court for precisely the same
relief after an assessment had issued, then s 105 would apply. However, because an
assessment had not yet issued, but only a notice of intention to assess, the section
did not apply. Why the one taxpayer would be better placed, when both sought
precisely the same relief, could not be explained. The illogicality of such a
differentiation appears to be compounded when one considers that a taxpayer (such
as the appellant) on the receiving end of a decision that is capable of revision and
4 Section 105 provides: ‘A taxpayer may only dispute an assessment or ‘decision’ as described in
section 104 in proceedings under this Chapter, unless a High Court otherwise directs.’
5 Commissioner for the South African Revenue Service v Rappa Resources (Pty) Ltd [2023] ZASCA
28; 2023 (4) SA 488 (SCA).
reconsideration would have a lower bar to surpass as opposed to one with a final
decision in the form of an assessment. The latter would have to establish exceptional
circumstances for a high court to authorise a departure from the default rule.
[16] It is contended that authority for granting declaratory orders in tax matters is
clearly established. In particular, much store was sought to be placed on two recent
judgments of this Court, namely Commissioner for the South African Revenue Service
v Langholm Farms (Pty) Ltd (Langholm Farms),6 and Commissioner for the South
African Revenue Service v United Manganese of Kalahari (Pty) Ltd,7 which followed
it. The argument being, to borrow from Langholm Farms, ‘that is exactly the situation
for which declaratory orders are made and seeking one in the context of a taxing
statute was endorsed by the Constitutional Court in Metcash’.8
[17] In Metcash Trading Limited v Commissioner for the South African Revenue
Service (Metcash), Kriegler J had this to say:
‘Indeed, it has for many years been settled law that the Supreme Court has jurisdiction to hear
and determine income tax cases turning on legal issues. Thus in Friedman and Others NNO
v Commissioner for Inland Revenue: In re Phillip Frame Will Trust v Commissioner for Inland
Revenue McCreath J was asked to resolve the legal question whether a testamentary trust
was a person within the meaning of the Income Tax Act. Having referred to half a dozen
reported cases, four of them in the Appellate Division, where the existence of such jurisdiction
was accepted without discussion, and one Prentice Hall report where the point was specifically
considered, McCreath J concluded as follows as to his competence to determine the case:
“I am in agreement with the finding of the Court in that case that where the dispute involved
no question of fact and is simply one of law the Commissioner and the Special court are not
only competent authorities to decide the issue – at any rate when a declaratory order such as
that in the present case is being sought.”’9 (Footnotes omitted)
[18] As Kriegler J acknowledged in Metcash, in many of the earlier cases there was
an acceptance without discussion of the existence of the jurisdiction of the high court
6 Commissioner for the South African Revenue Service v Langholm Farms (Pty) Ltd [2019] ZASCA 163
(Langholm Farms).
7 Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020]
ZASCA 16; 2020 (4) SA 428 (SCA).
8 Langholm Farms fn 6 above para 10.
9 Metcash Trading Limited v Commissioner for the South African Revenue Service and Another [2000]
ZACC 21; 2001 (1) SA 1109 (CC); 2001 (1) BCLR 1 (CC) para 44 (Metcash).
to hear and determine income tax cases turning on legal issues. In what is referred to
in Metcash as the ‘one Prentice Hall report’, Emary NO v CIR, a point in limine was
taken that the applicants should have submitted the returns demanded of them and
that it was for the Commissioner to determine whether or not the applicants are liable
for and should be assessed to tax, leaving to them their remedy by way of objection
and appeal in terms of the Act. It was accordingly submitted that the court had no
jurisdiction to hear and decide the application. In dismissing the point in limine,
Harcourt AJ held: ‘where the dispute involves no question of fact and the question is
simply one of law the Commissioner and the Special Court are not the only competent
authorities.’10 In that, reference was made by the learned Judge to the following
reported decisions: Whitfield v Phillips;11 Gillbanks v Sigournay;12 Bailey v
Commissioner for Inland Revenue;13 Commissioner for Inland Revenue v Delfos;14
Parekh v Receiver of Revenue;15 R v Kruger;16 R v Sachs;17 AG, Natal v Johnstone &
Co. Ltd;18 and, British Chemicals & Biologicals v SA Pharmacy Board.19
[19] Of the nine cited references in Emary NO v CIR, the point appears not to have
been touched on in Bailey v Commissioner for Inland Revenue, Commissioner for
Inland Revenue v Delfos, Parekh v Receiver of Revenue & Another or R v Kruger,
whilst Attorney-General of Natal v Johnstone & Co Ltd, British Chemicals & Biologicals
v SA Pharmacy Board and R v Sachs, were concerned with the competency of the
Court to grant a declaratory order that would have the effect of ensuring an applicant
against successful prosecution was recognised. Thus, none of those decisions are
directly on point. That leaves Whitefield v Phillips and Gillbanks v Sigournay: In the
former, Steyn JA said:
‘In dealing with the question whether the award is for income tax purposes to be regarded as
a capital accrual or as income, the very first difficulty which would be encountered would be
that by Act of Parliament the determination of the merits of that question, as distinct from a
10 Emary NO and Another v CIR 1959 (2) PH T 16 (D).
11 Whitfield v Phillips & Another 1957 (3) SA 318 at 345 (AD) (Whitfield).
12 Gillbanks v Sigournay 1959 (2) SA 11 at 18-19 (N) (Gillbanks).
13 Bailey v Commissioner for Inland Revenue 1933 AD 204 at 226.
14 Commissioner for Inland Revenue v Delfos 1933 AD 243 at 252.
15 Parekh v Receiver of Revenue & Another 1948 (4) SA at 954 (N).
16 R v Kruger 1958 (2) SA 673 (C).
17 R v Sachs 1953 (1) SA 392 (A) at 410.
18 AG, Natal v Johnstone & Co Ltd 1946 AD 256 at 261-2.
19British Chemicals & Biologicals v SA Pharmacy Board 1955 (1) SA 184 (A) at 192.
question of law, has been entrusted entirely to the Commissioner for Inland Revenue and, on
appeal from his decision, to the Special Court for hearing income tax appeals. Another court
cannot usurp that function.’20
In the latter, Henochsberg J expressed his disagreement with Steyn JA in these terms:
‘I find myself, with very great respect, in a difficulty in trying to appreciate the reasoning of the
learned Judge of Appeal. It seems to me that the question as to whether, in a case such as
this, an award of damages for personal injuries in respect of loss of earning capacity is to be
regarded as a capital accrual or as income, is purely one of law and therefore a matter which
is competent for any Court to determine.’21
[20] As this survey of the authorities illustrates; that the high court has jurisdiction to
hear and determine income tax cases turning on legal issues, can, so it would seem,
be traced back to the unreasoned conclusion of Henochsberg J in Gillbanks v
Sigournay, which found uncritical acceptance in Emary NO v CIR and thereafter
appears to have taken root In re Phillip Frame Will Trust v Commissioner for Inland
Revenue.
[21] That aside, it is important to recognise that the legislative landscape has
changed significantly since the decision of the Constitutional Court in Metcash.22 Prior
to the amendment of s 105, the taxpayer could elect to take an assessment on review
to the high court instead of following the prescribed procedure. That is no longer the
case. The amendment was meant to make clear that the default rule is that a taxpayer
had to follow the prescribed procedure, unless a high court directs otherwise. For the
present, it suffices to say that the judgments relied upon appear to have far too readily
and uncritically accepted that a taxpayer could, in general and without more, approach
a high court for declaratory relief. Importantly, those judgments do not lay down that
where declaratory orders are sought in tax matters, different principles apply.23 In fact
the question whether a declaratory order was appropriate was not considered by the
high court in this case.
20 Whitfield fn 11 above at 345.
21 Gillbanks fn 12 above at 19.
22 Metcash fn 9 above.
23 Family Benefit Friendly Society fn 3 above at 126F.
[22] Thus, even on the acceptance of Counsel’s primary contention that s 105 was
not implicated because there was neither an ‘assessment’ nor a ‘decision as described
in s 104’, the purpose of s 105 (which was an innovation introduced by the TAA from
1 October 2011 and narrowed down by an amendment made in 2015) and, which
accords with the overall scheme of the TAA, was not wholly irrelevant. At the very
least, it represented an important pointer to legislative intent and, read together with
the other provisions in the TAA, set the overall contextual scene. It was thus not an
wholly irrelevant consideration in the determination of whether or not the
circumstances were such that relief in the form of a declaratory order was appropriate.
The enquiry was far more nuanced than one may at first blush apprehend. After all, a
declaratory order is not appropriate if there are other specific statutory remedies
available.24
[23] This is not to suggest that there will never be tax disputes for which declaratory
orders can rightly be sought and made. However, their occurrence, in my view, is likely
to be rare and their circumstances exceptional or at least unusual. In general, and
without attempting to lay down any hard and fast rules, the exercise of what after all is
a purely discretionary power, should be regarded as a reserve or occasional
expedient. No doubt, each case would have to be judged on its own facts and
circumstances. I have expressly refrained from formulating a test as I believe that each
such case can confidently be left to the good sense of the judge concerned in the
exercise of his or her broad general discretion. On any reckoning, this is certainly not
such a case.
[24] In responding to the letter of audit findings, the appellant seems to have simply
gone through the motions. It did not thereafter afford SARS the opportunity to
reconsider or alter the proposed assessments in the light of the response. Having
responded to SARS’ notice of assessment with fairly detailed representations, the
appellant then pre-empted a reconsideration by or reply from SARS by giving notice
and launching the application for declaratory relief. On the very day that the appellant
had written to SARS, with a view to persuading it (SARS) to reconsider its position,
24 Director of Public Prosecutions v Mohamed NO and Others [2003] ZACC 4; 2003 (1) SACR 56; 2003
(5) BCLR 476; 2003 (4) SA 1 (CC) para 56.
the appellant gave the requisite notice in terms of s 11(4) of its intention to institute
proceedings before the high court and some three weeks thereafter proceeded to do
so. That the appellant genuinely sought to engage with SARS seems doubtful;
because the giving of notice without allowing a reasonable time for a reply, and
meaningful engagement, were mutually incompatible. In simply ignoring the emphasis
placed by the TAA on alternative dispute resolution and in disregarding the need to
exhaust its internal remedies, the high court became the appellant’s first port of call.
The danger with such an approach is that high courts could potentially be flooded with
like matters. There is little to commend an approach by a taxpayer to the high court,
without awaiting a response from SARS, including perhaps one that may well be
favourable. SARS would be placed in an invidious position if it were forced on a regular
basis to defend such matters before the high court.
[25] This is not a matter where ‘there is a set of clear, sufficient, uncontested,
facts’.25 On the appellant’s own showing, the parties had adopted divergent views not
only in relation to the law but also the facts. The appellant’s response addressed a
range of issues, including: the requirements of s 11(1)(f), the relevant principles of
statutory interpretation and the application of international law; what constitutes gold
and the gold supply chain; the manufacturing process; the definition of refining and the
refining process; the distinction between manufacturing and production; co-mingling
and a relevant class ruling; the reasonable care standard and understatement
penalties; and, lawful, reasonable and procedurally fair administrative action. All of
those were, in truth, matters for adjudication in accordance with the special machinery
created by the TAA.26 Nowhere is this more clearly illustrated than in the relief sought.
From the range of orders sought in this matter it is clear that unlike, for example In re
Phillip Frame Will Trust v Commissioner for Inland Revenue, the dispute in this matter
is not simply one of law but also involves questions of fact. The orders sought are all
thus inextricably linked to the facts.
[26] The circumstances here certainly did not favour a piecemeal consideration of
the case and, as it transpires, failed to lead to a reasonably prompt resolution of any
25Mobile Telephone Networks (Pty) Ltd v Commissioner for the South African Revenue Service [2022]
ZASCA 142; [2023] (1) All SA 330 (SCA); 2023 (1) SA 420 (SCA); 85 SATC 235 para 27
26 Ibid para 12.
of the real issues between the parties. If anything, the approach adopted opened ‘the
door to the “fractional disposal” of actions and the “piecemeal hearing of appeals”’.27
In Consolidated News Agencies (Pty) Ltd (in liquidation) v Mobile Telephone Networks
(Pty) Ltd & another, this court said the following:
‘Before concluding we are constrained to make the comments that follow. Piecemeal litigation
is not to be encouraged. Sometimes it is desirable to have a single issue decided separately,
either by way of a stated case or otherwise. If a decision on a discrete issue disposes of a
major part of a case, or will in some way lead to expedition, it might well be desirable to have
that issue decided first.
This court has warned that in many cases, once properly considered, issues initially thought
to be discrete are found to be inextricably linked. And even where the issues are discrete, the
expeditious disposal of the litigation is often best served by ventilating all the issues at one
hearing. A trial court must be satisfied that it is convenient and proper to try an issue
separately.’28 (Footnotes omitted.)
[27] Likewise, it is generally considered inappropriate to allow an appeal when the
entire dispute between the parties has yet to be resolved by the court of first instance.29
In Guardian National Insurance Co Ltd v Searle NO, the following was stated:
‘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.’30
In this regard, it is important to emphasise that the business of a court, and in particular
an appellate court such as this, is generally retrospective; it deals with situations or
problems that have already ripened or crystallised and not with prospective or
hypothetical ones.31 No doubt, if a declaratory application avails the appellant now, it
will still avail the appellant after the issues have crystallised.
27 Levco Investments (Pty) Ltd v Standard Bank of SA Ltd 1983 (4) SA 921 (A) at 928H.
28 Consolidated News Agencies (Pty) Ltd (in liquidation) v Mobile Telephone Networks (Pty) Ltd &
another [2009] ZASCA 130; [2010] 2 All SA 9 (SCA); 2010 (3) SA 382 (SCA) paras 89 and 90.
29 Health Professions Council of South Africa and Another v Emergency Medical Supplies and Training
CC t/a EMS [2010] ZASCA 65 2010 (6) SA 469 (SCA); [2010] 4 All SA 175 (SCA) at para 16 (Health
Professions Council of South Africa).
30 Guardian National Insurance Co Ltd v Searle NO [1999] ZASCA 3; [1999] 2 All SA 151 (A); 1999 (3)
SA 296 (SCA) at 301A-C; see also Health Professions Council of South Africa fn 29 above para 16.
31 Ferreira v Levin NO & others; Vryenhoek v Powell NO & others 1996 (1) SA 984 (CC) para 199; see
also Clear Enterprises (Pty) Ltd v Commissioner for South African Revenue Services and Others [2011]
ZASCA 164 paras 17 and 18.
[28] In Luzon Investments (Pty) Ltd v Strand Municipality,32 the full court (per
Friedman J (Howie J and Conradie J concurring)) referred to an article by Prof AH
Hudson entitled ‘Declaratory Judgments in Theoretical Cases: The Reality of the
Dispute’ (that was approved by the Supreme Court of Canada in Solosky v The
Queen),33 where the learned author stated:
‘The declaratory action is discretionary and two factors which will influence the Court in the
exercise of its discretion are the utility of the remedy, if granted, and whether, if it is granted,
it will settle the questions at issue between the parties.’34
Here, the declarator fails both tests – it lacks utility and fails to settle the questions at
issue between the parties.
[29] In any event, we may well be precluded from entering into the substantive
merits of the appeal. This is so because the matter was approached as if an appeal
lies against the reasons for judgment. It does not. Rather, an appeal lies against the
substantive order made by a court.35 The order in this case reads: ‘the application is
dismissed with costs, including the costs of senior and junior counsel’. The high court
was called upon to resolve the competing contentions of the parties in respect of s
11(1)(f) of the VAT Act, and although it evidently inclined against the appellant on that
score, absent a counter application by SARS, it could do no more than dismiss the
appellant’s application with costs.
[30] The cumulative consequence of all of the factors that I have alluded to is that
an application for declaratory relief was not appropriate in this matter. The nature of
the dispute more properly lent itself to resolution by use of the special machinery of
the TAA set up for that purpose. Thus, although the high court incorrectly entertained
an application for declaratory relief, it was correct in dismissing it. I may add, that this
Court could not interfere with the exercise of the high court’s discretion to deal or not
32 Luzon Investments (Pty) Ltd v Strand Municipality and Another 1990 (1) SA 215 (C) at 229I–230A.
33 Solosky v The Queen 105 DLR (3d) 745 at 754.
34 A H Hudson ‘Declaratory Judgments in Theoretical Cases: The Reality of the Dispute’ (1976-77) 3
Dalhousie Law Review 706 at 708.
35 Western Johannesburg Rent Board & another v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A) at
355; Absa Bank Ltd v Mkhize and Another, Absa Bank Ltd v Chetty, Absa Bank Ltd v Mlipha [2013]
ZASCA 139; [2014] 1 All SA 1 (SCA); 2014 (5) SA 16 (SCA) para 64.
deal with a matter (as should have happened here), unless there was a failure to
exercise a judicial discretion.36
[31] In the result, the appeal is dismissed with costs including those of two counsel.
________________
V M PONNAN
JUDGE OF APPEAL
Molemela P
[32] I have read the judgment of my brother, Ponnan JA (the majority judgment).
Although I too conclude that the appeal must be dismissed, I however respectfully
disagree with the majority judgment’s finding that the high court incorrectly entertained
the application for declaratory relief.
[33] The facts of this matter have been comprehensively set out in the majority
judgment and it is therefore not necessary to rehearse them in this section of the
judgment. It is trite that every case must be judged on its own facts and circumstances.
As correctly set out in the majority judgment, s 105 of the TAA makes it plain that a
taxpayer may only dispute an assessment by the objection and appeal procedure to
the Tax Court under the TAA, unless a high court directs otherwise. The term
‘assessment’ means ‘the determination of the amount of a tax liability or refund, by
way of self-assessment by the taxpayer or assessment by SARS’,37 while ‘decision’ is
defined as ‘a decision referred to in s 104(2)’38 of the TAA, which includes the decision
not to extend the period for lodging the objection, or a decision not to extend the period
for the lodging of the appeal.
[34] In this matter, the appellant specifically pleaded in its founding affidavit that its
application was not intended to dispute an assessment or decision as contemplated
36 D Harms Civil Procedure in the Superior Courts Service Issue 77 (August 2023) at A4.18.
37 Section 1 of the TAA.
38 Section 101 of the TAA.
in s 104 of the TAA and went on to assert that the jurisdiction of the high court was
consequently not ousted by the absence of a directive as contemplated in of s 105 of
the TAA. SARS took no issue with that assertion in its answering affidavit. It is worth
noting that both counsel confirmed that by the time the application was heard, SARS
had still not issued any assessments. Having taken the pleadings and all the
circumstances of this case into account, I am satisfied that there was neither an
assessment nor decision within the contemplation of s 104 of the TAA. That being the
case, s 105 was not implicated. Put differently, on the facts of this case, the s 105
directive did not find application. Rappa is clearly distinguishable on the facts because
in that matter, an assessment had already been issued by SARS whereas no
assessment had been issued in the matter under consideration; furthermore, the
applicant in that matter had instituted a review application and not sought a declarator
as is the case here.
[35] In terms of s 21(1)(c) of the Superior Courts Act the court has the power, in its
discretion and at the instance of any interested person, to grant declaratory relief. It is
trite that two main considerations occupy the presiding judge’s mind when adjudicating
an application in which declaratory relief is sought, namely (a) whether an applicant
has an interest in an existing, future or contingent right or obligation and, if so, (b)
whether the order ought to be granted,39 all things considered. During the first leg of
this two-stage enquiry the court focuses on the necessary condition precedent,
namely, whether the applicant has shown an ‘existing, future or contingent right or
obligation’.40 This is the jurisdictional requirement. If the court is satisfied that the
existence of such conditions has been proven, the second leg of the enquiry is the
consideration, within the court’s discretion, whether to refuse or grant the order
sought.41
[36] Given the common cause fact that an assessment or decision had not been
made by SARS and that the narrow issue presented to the high court for determination
was the interpretation of s 11(1)(f), a fortiori, no directive was required from the high
39 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; [2006] 1 All
SA 103 (SCA); 2005 (6) SA 205 (SCA) para 16.
40In terms of s 21(1)(c) of the Superior Courts Act, the court has the power:
‘In its discretion and at the instance of any interested person, to enquire into and determine any existing,
future or contingent right or obligation, notwithstanding that such a person cannot claim any relief
consequential upon the determination.’
41 Ibid para 18.
court for it to exercise its jurisdiction under s 21(1)(c) of the Superior Courts Act. In a
nutshell, nothing barred the high court from entertaining the appellant’s application for
the declaratory relief. In coming to this conclusion, I am fortified by two judgments of
this Court in which the bringing of an application for a declarator in respect of the
interpretation of legislation pertaining to tax matters came up for consideration.
[37] In Commissioner for South African Revenue Service v Langholm Farms (Pty)
Ltd42, Langholm Farms had submitted diesel refund claims to SARS, which prompted
SARS to perform an audit. Based on SARS’ interpretation of s 75(1C)(a)(iii) of the
Customs and Excise Act 91 of 1964 (CEA), SARS subsequently issued a notice of
intention to issue a revised assessment disallowing Langholm Farms’ claim on the
basis that the diesel refund claims were excessive. Langholm Farms was invited to
submit representations. Instead of responding to SARS’ notice of intent, Langholm
Farms approached the high court for a declaratory order concerning the correct
interpretation of s 75(1C)(a)(iii) of the CEA and obtained declaratory relief. On appeal,
this Court remarked as follows:
‘…SARS expressed a clear view as to the proper construction of s 75(1C)(a)(iii). Langholm
disagreed and responded with the application, in an effort to resolve the dispute. It is true that
Langholm could have waited and provided SARS with the documents it required for a revised
assessment, and then challenged such an assessment, and argued the point of law at that
stage. The issue is whether it was obliged to do so. In my view there was nothing objectionable
in Langholm seeking clarity on an issue of statutory interpretation that would clearly influence
the outcome of SARS’ audit…There was little point in Langholm entering into a debate or
providing further information when none of it would be at all relevant given SARS’ legal view.
That is exactly the situation for which declaratory orders are made and seeking one in the
context of a taxing statute was endorsed by the Constitutional Court in Metcash.’ 43
[38] It is clear from the dictum above that this Court’s approval for a taxpayer
approaching a high court for declaratory relief in tax matters in the circumscribed
circumstances of seeking clarity on a statutory interpretation was unequivocal. Given
that Metcash held that a court would have jurisdiction to grant declaratory relief to a
vendor if it were to be alleged that the Commissioner had inter alia misapplied the law
42 Commissioner for South African Revenue Service v Langholm Farms (Pty) Ltd [2019] ZASCA 163.
43 Ibid para 10.
in holding a particular transaction to be liable to VAT or failed to apply the proper legal
test to a particular set of facts,44 this Court’s reliance on Metcash was apposite.
[39] In Commissioner for the South African Revenue Service v United Manganese
of Kalahari (Pty) Ltd45 (UMK), UMK had approached the high court for a declaratory
order in circumstances where SARS had differed from UMK on the correct manner of
calculation based on s 6 of the Mineral and Petroleum Resources Royalty Act 28 of
2008. The audit process had not yet been finalised. The circumstances in which UMK
approached the high court are similar to those in the matter under consideration. On
appeal, the appellant decried the granting of a declaratory order by the high court and
contended that the respondent should have awaited the outcome of the audit process
and exhausted internal remedies under the TAA. Once this Court had brought the
parties’ attention to the Langholm Farms judgment, SARS abandoned the above
contentions and confined its arguments to the legal issue concerning the proper
interpretation of the relevant legislation.46 Significantly, these two judgments were
delivered well after the 2015 amendment pertaining to s 105 of the TAA. It must be
accepted that this Court’s remarks as quoted in the preceding paragraph were made
in the context of an awareness about the 2015 amendment to s 105 of the TAA.
Clearly, this Court did not consider the dictum in Metcash to have been impacted by
the 2015 amendment.
[40] It is evident from these two judgments47 that this Court considered the
interpretation of legislative provisions to be within the realm of disputes of a legal
nature in respect of which a high court could grant a declarator in tax matters. It follows
44 Metcash para 71.
45 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd
Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020]
ZASCA 16; 2020 (4) SA 428 (SCA).
46 That this Court considered itself bound by Langholm Farms’ judgment is evident from para 4 of that
judgment, where the following was stated: ‘In its opposing affidavit, in argument before the high court,
and in its heads of argument in this court, SARS argued that UMK’s application was premature as the
audit process had not yet been finalised. It contended that UMK should have awaited the outcome of
that process and then pursued its internal remedies under the Tax Administration Act 28 of 2011, by
way of objection and appeal against any assessment with which it did not agree. Alternatively, it
contended that it was inappropriate for UMK to seek relief by way of a declaratory order. However, after
the parties’ attention was drawn to a recent judgment of this court dealing with a similar argument, we
were informed that SARS no longer persisted with these points and would confine its arguments to the
legal issue raised by UMK concerning the proper interpretation of the relevant provisions of the Royalty
Act’. (Own emphasis.).
47 It was not submitted before us that any of the two judgments were wrongly decided.
by parity of reasoning that in the present case, where the only issue for determination
was the interpretation of a provision of the VAT Act, the high court indeed had the
jurisdiction to entertain the application for declaratory relief. On that basis, nothing
precluded the high court from entertaining that application for a declaratory order
within the contemplation of s 21(1)(c) of the Superior Courts Act. Moreover, both
counsel stated from the bar that the jurisdiction issue was not raised before the high
court. Against the backdrop of the discussion canvassed above, it is hardly surprising
that the high court’s judgment did not make any pronouncements on the aspect of
jurisdiction. That should really be the end of the matter insofar as the issue regarding
whether the jurisdiction of the high court was engaged or not is concerned.
[41] From my point of view, considerations regarding the utility of the remedy and
whether, if granted, it would settle the questions at issue between the parties (as
alluded to in para 28 of the majority judgment) are aspects that arise during the
exercise of the discretion whether to grant the declaratory relief. Thus, when
declaratory relief is refused on account of the court not being satisfied on those two
aspects, it simply means that the court, in its discretion, held the view that such a relief
was not appropriate, given the circumstances of the particular case; this does not
equate to the court not being competent to entertain the declarator. It bears noting that
in Langholm Farms, this Court did not uphold the interpretation given by the high court
to the relevant provision; instead, it held that the declaratory orders were granted on
the mistaken view of the law. It replaced the high court’s order with one dismissing the
application for the declarator. It did not find that the high court had incorrectly
entertained the application for a declarator.
[42] Lastly, it is evident from the papers that both parties held the view that the
declarator pertained to the interpretation of s 11(1)(f) of the VAT Act and believed that
the high court’s interpretation would lead to greater certainty for all concerned. The
majority judgment correctly asserts that on the appellant’s own showing, the parties
had adopted divergent views not only in relation to the law but also the facts. I am of
the view that given the factual disputes alluded to in the majority judgment, the granting
of declaratory relief was not appropriate under those circumstances (even though the
court did have the jurisdiction to entertain the application for the declarator).48 That
being the case, it follows that the high court’s dismissal of the application for
declaratory relief cannot be faulted. On this score, there is no basis for tampering with
the high court’s decision to dismiss the application for declaratory relief, precisely
because ultimately an appeal lies against an order and not the reasons.
[43] For all the reasons mentioned in this separate concurrence, I agree that the
appropriate order is to dismiss the appeal with costs, including those occasioned by
the employment of two counsel.
____________________
MB MOLEMELA
PRESIDENT OF THE SUPREME COURT OF APPEAL
48 See Mobile Telephone Networks (Pty) Ltd v Commissioner for the South African Revenue Service
[2022] ZASCA 142; [2023] 1 All SA 330 (SCA); 2023 (1) SA 420 (SCA); 85 SATC 235 paras 17 and 27.
Appearances
For the appellant:
PA Swanepoel SC and CA Boonzaaier
Instructed by:
Edward Nathan Sonnenbergs Inc., Pretoria
McIntyre van der Post Inc., Bloemfontein.
For the respondent:
EC Coetzee SC and S Maritz
Instructed by:
VLZ Inc., Pretoria
Honey Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
8 November 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Lueven Metals (Pty) Ltd v Commissioner for the South African Revenue Service (Case no 728/2022)
[2023] ZASCA 144 (8 November 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs including the
costs of two counsel, an appeal against a decision of the Gauteng Division of the High Court of South
Africa, Pretoria (the high court), dismissing an application for declaratory relief pertaining to s 11(1)(f)
of the Value Added Tax Act 89 of 1991 (the VAT Act).
The appellant, Lueven Metals (Proprietary) Limited, claimed refunds in the total sum of R 51 million
from the respondent, the Commissioner for the South African Revenue Service (SARS). After
conducting a VAT and Income Tax Audit, SARS concluded that the appellant’s gold had previously
been subjected to a manufacturing process. SARS took the view that s 11(1)(f) of the VAT Act prohibited
the supply at a zero-rate to the South African Reserve Bank (SARB), the South African Mint Company
(Pty) Ltd (Mintco) or any Bank registered under the Banks Act, of gold that has undergone any
manufacturing process other than the refining thereof or production of such bars. SARS accordingly
expressed an intention to re-classify the zero-rated sales as standard-rated sales with VAT of 15% in
terms of s 7(1)(a), read with s 11(1) and s 64 of the VAT Act. SARS also intimated that it was considering
imposing an understatement penalty and raising interest on the appellant’s outstanding VAT liability.
The appellant instituted legal proceedings against SARS before the high court for a declaratory order.
The application, however, failed before the high court and was dismissed with costs. Leave to appeal
to this Court was nonetheless granted by the high court.
Before the Supreme Court of Appeal (SCA), Counsel were required to address whether absent a
directive in terms of s 105 of the Tax Administration Act (TAA), the high court could enter into and
pronounce on the merits of the application for declaratory relief. The argument advanced by both
counsel was that as there was neither an ‘assessment’ nor a ‘decision as described in s 104’ and as
the nature of the relief sought was a declaration of rights, the default rule that a taxpayer may only
dispute an assessment by the objection and appeal procedure under the TAA, did not find application.
The majority of the SCA (the majority judgment), however, expressed the view that the legislative
scheme was designed to ensure that the objection and appeal process and the resolution of tax disputes
by means of alternative dispute resolution and then the tax board or the tax court be exhausted, before
the high court could be approached. It also contemplated that in the ordinary course the tax court would
deal with the dispute, by way of a trial, as the court of first instance before the high court could be
approached. Nowhere was that clearer than from the language, context, history and purpose of s 105,
which made it plain that a tax payer may only dispute an assessment by the objection and appeal
procedure under the TAA, unless a high court directs otherwise. The majority judgment further held that
prior to the amendment of s 105, the taxpayer could elect to take an assessment on review to the high
court instead of following the prescribed procedure. That was no longer the case. The amendment was
meant to make it clear that the default rule was that a taxpayer had to follow the prescribed procedure,
unless a high court directed otherwise. The majority judgment further held that a declaratory order was
not appropriate if there were other specific statutory remedies available. In responding to the letter of
audit findings, the appellant seemed to have simply gone through the motions and did not thereafter,
afford SARS the opportunity to reconsider or alter the proposed assessments. Having responded to
SARS’ notice of assessment with fairly detailed representations, the appellant then pre-empted a
reconsideration by or reply from SARS by giving notice and launching the application for declaratory
relief. That the appellant genuinely sought to engage with SARS seemed doubtful; because the giving
of notice without allowing a reasonable time for a reply, and meaningful engagement, were mutually
incompatible. In simply ignoring the emphasis placed by the TAA on alternative dispute resolution and
in disregarding the need to exhaust its internal remedies, the high court became the appellant’s first
port of call. The danger with such an approach was that high courts could potentially be flooded with
like matters. There was little to commend an approach by a taxpayer to the high court, without awaiting
a response from SARS, including perhaps one that may well be favourable. As a result, the majority
judgment held that an application for declaratory relief was not appropriate in this matter. The nature of
the dispute more properly lent itself to resolution by use of the special machinery of the TAA set up for
that purpose. Thus, although the high court incorrectly entertained an application for declaratory relief,
the majority judgment found that it was correct in dismissing it.
In the minority judgment, the view was expressed that in the circumstances of the matter the seeking
of declaratory relief was appropriate. However, because of the factual disputes the granting of such
relief was not.
~~~~ends~~~~
|
2506
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case No: 545/13
In the matter between:
PETER MASHUDU NEVILIMADI
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Peter Mashudu Nevilimadi v The State (545/13) [2014]
ZASCA 41 (31 March 2014)
Coram:
Mhlantla, Wallis and Saldulker JJA
Heard:
5 March 2014
Delivered:
31March 2014
Summary: Criminal law and procedure - appeal against conviction on a
charge of rape - sentence – whether sentence of 39 years’ imprisonment
appropriate. On appeal – conviction confirmed – sentence set aside and
replaced with one of 15 years’ imprisonment.
_____________________________________________________________
ORDER
________________________________________________________________
On appeal from: Limpopo High Court, Thohoyandou (Lukoto J sitting as
court of first instance):
1 The appeal against conviction is dismissed and the conviction is confirmed.
2 The appeal against the sentence is upheld.
3 The sentence imposed by the court below is set aside and replaced with the
following:
‘The accused is sentenced to 15 years’ imprisonment.’
4 The sentence is antedated in terms of section 282 of the Criminal
Procedure Act 51 of 1977 to 24 December 2001, being the date upon which
the sentence was imposed.
JUDGMENT
Mhlantla JA (Wallis and Saldulker JJA concurring):
[1] Mr Mashudu Nevilimadi (the appellant) stood trial in the Sexual Offences
Court, Thohoyandou, Limpopo on a charge of rape.1 He pleaded not guilty and
at the end of the trial was found guilty of rape involving a girl under the age of
16 years. The magistrate stopped the proceedings in terms of section 52 of the
1 The charge sheet read:
“The accused is guilty of rape in that upon or about the 10 February 2001 and at or near Masia Sinthumele in
district of Vuwani, Northern Province Regional Division the said accused did wrongfully, unlawfully and
intentionally have sexual intercourse with Ms X, a female person.”
Criminal Law Amendment Act 105 of 1997 (the Act)2 and referred the matter to
the Limpopo High Court, Thohoyandou for sentence. On 24 December 2001 the
court below (Lukoto J) imposed a sentence of 39 years’ imprisonment. The
appeal against conviction and sentence is before us with leave granted by
Makhafola J on 4 December 2012.
[2] The trial in the Sexual Offences Court commenced on 8 June 2001. The
appellant pleaded not guilty and in amplification of his plea stated that the
complainant was his girlfriend and that they had consensual sexual intercourse.
The complainant was due to testify when it became evident that she was 12
years old. The magistrate immediately stopped the proceedings and warned the
appellant about the consequences in the event of conviction on a charge of rape
involving a girl under the age of 16. In this regard, he warned the appellant that
the minimum sentence was 15 years’ imprisonment and that his case would be
referred to the high court for sentencing. It is noteworthy to state that the
prescribed sentence in the circumstances of this case was imprisonment for life.
The magistrate thereafter adjourned the proceedings and afforded the appellant
an opportunity to engage the services of an attorney.
[3] The case was postponed on numerous occasions to enable the appellant to
secure the services of a legal representative. On 27 October 2001 the trial
resumed. At that stage the appellant was legally represented. The complainant
2 Section 52 prior to its amendment provided:
Committal of accused for sentence by High Court after conviction in regional court of offence referred to
in Schedule 2– (1) If a regional court, following on –
(a) a plea of guilty; or
(b) a plea of not guilty,
has convicted an accused of an offence referred to in –
(i) Part I of Schedule 2
(ii) …
The court shall stop the proceedings and commit the accused for sentence as contemplated in section 51(1) or
(2), as the case may be, by a High Court having jurisdiction.
and Ms Rosinah Rasimphi, to whom the first report was made, testified on
behalf of the State. A medical report (J88 form) prepared by Dr Sivhada of
Tshilidani Hospital was handed in by consent between the parties. The appellant
testified in his defence. It is not in dispute that sexual intercourse between the
appellant and the complainant took place on the day in question. The only issue
that had to be determined by the trial court was whether the sexual intercourse
was consensual. The essential facts may be briefly stated.
[4] The complainant’s version was that she was alone at home when the
appellant approached her. He requested some water to drink. She was inside the
hut when she discovered that the appellant had entered the hut. Upon enquiry,
he told her not to ask questions. He took a knife that was on the table and locked
the door. He threatened her with it and ordered her to lie down. She resisted
whereupon he wielded the knife at her. She eventually complied and removed
her clothes. The appellant had sexual intercourse with her. She felt pain in her
vaginal region and cried during this encounter. She could not scream for help as
the appellant had covered her mouth and was still in possession of the knife. He
eventually stopped and put on his clothes. As he left, he ordered her not to tell
anyone about the incident otherwise he would assault her.
[5] As her mother had not yet returned from attending a funeral, she waited
outside her home for her neighbour Ms Rasimpi to return. She subsequently
made a report to her and Ms Rasimpi in turn related this to her mother when she
returned. Her mother thereafter took her to the clinic and to the police station.
[6] The complainant denied the appellant’s version that they had an intimate
relationship which had been on-going for three years. She stated that this was
her first sexual encounter and it was without her consent. She and the appellant
were not friends, albeit she knew him as at some stage they had attended the
same school and been in the same class. She denied ever arranging to meet him
or telling him that her parents would be away attending a funeral and that he
could visit her.
[7] She testified that the incident had emotionally affected her as she had
become afraid of men. She struggled to play with other children and has lost her
self-esteem and confidence.
[8] Ms Rosinah Rasimpi confirmed that she and the complainant were
neighbours. On the day of the incident at about 19h00 she was proceeding to her
house when she saw the complainant standing outside her premises. The
complainant appeared upset, withdrawn and was crying. Upon enquiry, the
complainant just shook her head and followed her inside her house.
[9] Once inside, the complainant made a report about the incident; that she
was alone at home when the appellant arrived; entered the hut under false
pretences, closed the door; threatened her with a knife and raped her. He did this
after enquiring about the whereabouts of her parents and siblings. Rosina took
the complainant to her home and related what she had been told by the
complainant to her mother. After reporting the matter, the complainant was
taken to the clinic and to the police station.
[10] The medical report was handed in by agreement between the parties. The
examination was conducted on the same day of the incident by Dr T H Sivhada.
He recorded that the complainant was physically small and had small breasts
which were still developing. She was healthy and mentally healthy. He recorded
that the complainant had never menstruated. The doctor’s gynaecological
examination was painful for the complainant. Her vagina admitted only one
finger of the doctor. The labia3 were normal whilst the hymen was rugged.
Rugged means having a rocky and uneven surface. There was no bleeding. A
slight watery discharge was detected. The doctor concluded that the absence of
injuries did not exclude forceful penetration.
[11] The appellant testified in his defence and stated that he was born on 16
June 1983. His defence was that he and the complainant had been having an
intimate relationship for more than a year and that they had sexual intercourse
on more than ten occasions. In this regard, he denied the earlier version put by
his counsel that the relationship had been on-going for three years. He stated
that on the day in question, the complainant had initiated everything. He denied
the complainant’s version that he had threatened her with a knife and was
unable to explain why this was never contested when the complainant testified.
He conceded that the complainant appeared to be very young. He thereafter
closed his case.
[12] On 1 November 2001, the regional magistrate rejected the appellant’s
version as not being reasonably possibly true and convicted him of rape
involving a girl under the age of 16 years. Pursuant to the conviction, he
stopped the proceedings and referred the matter to the Limpopo High Court,
3 The inner folds of the skin forming the margins of the vaginal orifice.
Thohoyandou, in terms of the provisions of the section 52 of the Act for
sentencing.
[13] On 24 December 2001, the matter came before Lukoto J in the court
below. He confirmed the conviction of the appellant. At that stage all the parties
were aware that the prescribed sentence was imprisonment for life in terms of
section 51(1) of the Act. The defence adduced evidence in mitigation. The judge
thereafter proceeded to consider the question of an appropriate sentence. The
judge found that the youthfulness of the appellant as well as other mitigating
factors constituted substantial and compelling circumstances to deviate from
imposing the sentence of imprisonment for life. He imposed a sentence of 39
years’ imprisonment. The appellant appeals against this conviction and
sentence.
[14] At the commencement of the appeal, counsel for the appellant conceded,
correctly in my view, that the conviction was in order. He advised us that the
appellant had abandoned his appeal against conviction and only persisted in his
appeal against the sentence imposed. In the light of this concession it remains
only for me to consider the appeal against sentence.
[15] Suffice it to state that I agree that there is no merit in the appeal against
conviction. The appellant’s version that he had a long - term relationship with a
12 year old girl was patently false. If true, that would mean that the relationship
commenced when the complainant was nine or eleven years old. The trial court
observed that she was very young. Furthermore his version that he had sexual
intercourse with her on more than ten occasions is inconsistent with the medical
evidence which clearly showed that the complainant was not sexually active.
[16] On a conspectus of the evidence and the findings of the court below, I am
satisfied that the appellant’s version was correctly rejected. His conviction must
stand. The appeal against conviction therefore fails.
[17] Regarding the appeal against sentence, the imposition of sentence is pre-
eminently within the discretion of the trial court. A court of appeal will be
entitled to interfere with the sentence imposed by the trial court if the sentence
is disturbingly inappropriate or out of proportion to the seriousness of the
offence or is vitiated by a misdirection showing that the trial court exercised its
discretion unreasonably.4
[18] Counsel for the appellant submitted that the court below, notwithstanding
its conclusion that substantial and compelling circumstances did exist, over-
emphasised the seriousness of the offence and interests of society and imposed a
sentence that is startlingly inappropriate and excessive. Counsel for the
respondent, rightly conceded, that the sentence was indeed shockingly
inappropriate and that this Court should interfere and impose sentence afresh.
[19] I agree. It is difficult to comprehend how the court below determined the
sentence it imposed in this matter. This Court is at large to interfere.
4 S v Romer 2011 (2) SACR 153 (SCA) para 22.
[20] It is important for the court to maintain the delicate balance between the
triad. In S v Banda and others5, the court said:
‘The elements of the triad contain an equilibrium and a tension. A court should, when
determining sentence, strive to accomplish and arrive at a judicious counterbalance between
these elements in order to ensure that one element is not unduly accentuated at the expense of
and to the exclusion of the others. This is not merely a formula, nor a judicial incantation, the
mere stating whereof satisfies the requirements. What is necessary is that the Court shall
consider, and try and balance evenly, the nature and circumstances of the offence, the
characteristics of the offender and his circumstances and the impact of the crime on the
community, its welfare and concern. This conception as expounded by the Courts is sound
and is incompatible with anything less.’
[21] Rape is a horrific offence which deserves severe punishment. In S v
Chapman,6 Mahomed CJ stated:
‘Rape is a very serious offence, constituting as it does a humiliating, degrading and brutal
invasion of the privacy, the dignity and the person of the victim.’
[22] The aggravating factors in this case are: the complainant was a very
young girl of 12 years of age. She had not reached puberty and her breasts were
still developing. She was at an early stage of her sexual development. She
endured the humiliation of being attacked in the sanctity of her home. The
experience left her traumatised and has emotionally affected her.
[23] On the other hand, the appellant’s personal circumstances are that he was
17 years old when the offence was committed and 18 years of age at the time of
5 S v Banda and others 1991 (2) SA 352 (BGD) at 355A-D.
6 S v Chapman 1997 (2) SACR 3 (SCA) at 5B.
sentencing. He was raised by a single parent, his mother and due to financial
constraints left school in Standard 3; he was employed as a general worker and
has no previous convictions.
[24] The appellant has been convicted of a very serious offence and deserves a
sentence of direct imprisonment. However, the sentence to be imposed must not
have the effect of over – emphasising the elements of retribution and deterrence.
Having regard to all the relevant factors, I am of the considered view that a
sentence of 15 years’ imprisonment will be appropriate under the
circumstances.
[25] In the result, the following order is made:
1 The appeal against conviction is dismissed and the conviction is confirmed.
2 The appeal against the sentence is upheld.
3 The sentence imposed by the court below is set aside and replaced with the
following:
‘The accused is sentenced to 15 years’ imprisonment.’
4 The sentence is antedated in terms of section 282 of the Criminal
Procedure Act 51 of 1977 to 24 December 2001, being the date upon which
the sentence was imposed.
__________________
N.Z MHLANTLA
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
A L Thomu
Instructed by:
Thohoyandou Justice Centre,
Justice Centre, Bloemfontein
For Respondent:
A Madzhuta
Instructed by:
Director of Public Prosecution, Limpopo
Director of Public Prosecution, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
31 March 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.
PETER MASHUDU NEVILIMADI v THE STATE
The Supreme Court of Appeal (SCA) today, partially upheld an appeal against a decision
of the Limpopo High Court, Thohoyandou in that, the appeal against conviction was
dismissed whilst appeal against sentence was upheld. This court set aside a sentence of 39
years’ imprisonment and replaced it with one of 15 years imprisonment.
Mr Nevilimadi (the appellant) stood trial in the Sexual Offences Court, Thohoyandou,
Limpopo, on a charge of rape. He pleaded not guilty and at the end of the trial was found
guilty of rape involving a girl under the age of 16 years. The magistrate stopped the
proceedings and referred the matter to the Limpopo High Court, Thohoyandou for
sentencing. At that stage, the appellant was 18 years old. The high court found substantial
and compelling circumstances and imposed a sentence of 39 years’ imprisonment.
In this court, the appellant abandoned his appeal against conviction and persisted in his
appeal against sentence. On a conspectus of the evidence and the findings of the court below
this court was satisfied that the appellant’s version was correctly rejected. The conviction was
therefore confirmed.
With regards to the appeal against sentence, this court agreed with counsel for both parties
that the court below, notwithstanding its conclusion that substantial and compelling
circumstances did exist, imposed a sentence that was disturbingly inappropriate and unduly
harsh. This court concluded that, for those reasons, it was entitled interfere and impose
sentence afresh.
After considering all the relevant factors, this court concluded that a sentence of 15 years’
imprisonment would be appropriate under the circumstances.
Accordingly the SCA made an order dismissing the appeal against conviction and upholding
the appeal against sentence. A sentence of 15 years’ imprisonment was imposed. The
sentence was antedated to 24 December 2001, being the date upon which the sentence was
imposed.
|
3707
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 644/2020
In the matter between:
THE CLICKS GROUP LTD
FIRST APPELLANT
NEW CLICKS SOUTH AFRICA (PTY) LTD
SECOND APPELLANT
UNICORN PHARMACEUTICALS (PTY) LTD
THIRD APPELLANT
CLICKS INVESTMENTS (PTY) LTD
FOUTH APPELLANT
CLICKS RETAILERS (PTY) LTD
FIFTH APPELLANT
and
THE INDEPENDENT COMMUNITY
PHARMACY ASSOCIATION
FIRST RESPONDENT
THE MINISTER OF HEALTH
SECOND RESPONDENT
THE CHAIRPERSON OF THE
SECTION 22(11) APPEAL COMMITTEE
THIRD RESPONDENT
THE DIRECTOR-GENERAL OF
THE DEPARTMENT OF HEALTH
FOURTH RESPONDENT
Neutral Citation:
The Clicks Group Ltd and Others v The Independent
Community Pharmacy Association and Others (644/2020)
[2021] ZASCA 167 (3 December 2021)
Coram:
PETSE AP, MATHOPO, MAKGOKA and PLASKET JJA and
KGOELE AJA
Heard:
31 August 2021
Delivered:
This judgment was handed down electronically by circulation to
the parties' representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be 11h00 on 3 December 2021.
Summary:
Pharmacy Act 53 of 1974 (the Act) – regulation 6(d) of the Regulations
relating to Ownership and Licencing of Pharmacies – beneficial interest in
community pharmacies and manufacturing companies – revocation of retail and
manufacturing licences – definition of ‘beneficial interest’ – constitutional challenge of
s 22A of the Act – whether Clicks Group had contravened the Act and licensing
regulations because entities within the Clicks Group owned community (retail)
pharmacies while at the same time having a beneficial interest in a manufacturing
company – Clicks Group has no beneficial interest in the pharmaceutical
manufacturing companies – constitutional challenge has no merit.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Sievers AJ
sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application is dismissed with costs including the costs of the
two counsel where so employed.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mathopo JA (Petse AP, Plasket JA and Kgoele AJA concurring):
[1] The first respondent, the Independent Community Pharmacy Association
(ICPA), is a registered non-profit company, which represents more than 1 000
independently owned community pharmacies, with 2 500 pharmacists and 20 000
supportive healthcare personnel. The ICPA lodged a complaint with the Department
of Health against the first to fifth appellants (to whom I shall collectively refer to as
the Clicks Group of Companies or Clicks Group). It sought the revocation of retail
and manufacturing licences held within the Clicks Group on the basis that the Clicks
Group contravened regulation 6(d) of the Regulations relating to the Ownership and
Licencing of Pharmacies (the Regulations),1 promulgated under s22A of the
Pharmacy Act 53 of 1974 (the Act).
[2] Regulation 6(d) which is headed: ‘Ownership of community pharmacies’ reads
as follows:
1 Regulations relating to the Ownership and Licencing of Pharmacies GNR 553 of 25 April 2003.
‘Any person may, subject to the provisions of regulation 7, own or have a beneficial interest
in a community pharmacy in the Republic, on condition that such a person or in the case of a
body corporate, the shareholder, director, trustee, beneficiary or member, as the case may
be, of such body corporate –
(a) . . .
. . .
(d)
is not the owner or the holder of any direct or indirect beneficial interest in a
manufacturing pharmacy.’
[3] Section 22A of the Act reads as follows:
‘Ownership of pharmacies – The Minister may prescribe who may own a pharmacy, the
conditions under which such person may own such pharmacy, and the conditions upon
which such authority may be withdrawn.’
[4] The Clicks Group operates over 500 community (retail) pharmacies, with over
2 000 pharmacy staff (pharmacists and pharmacists assistants) and 200 nursing
practitioners. The third appellant, Unicorn Pharmaceuticals (Pty) Ltd (Unicorn), is a
manufacturing pharmacy and a holder of 39 generic medicines under the regulatory
regimes that apply to the sale of medicine.
[5] Clicks Retailers Pty Ltd (Retailers) is a leading provider of pharmaceutical
services in South Africa and a leading retailer of health and beauty products. It
operates approximately 470 licensed community pharmacies throughout the country.
Retailers employs approximately 1830 pharmacists, 1430 pharmacist assistants and
315 nursing practitioners at those pharmacies. These pharmacies are part and
parcel of Clicks stores that employ thousands more, both in-store and in the supply
chain and corporate office infrastructure that supports the stores.
[6] The Clicks Group corporate structure is constituted as follows:
(a) Clicks Group is the holding company;
(b) It holds all the shares in New Clicks;
(c) New Clicks holds all the shares in Unicorn and in Clicks Investments (Pty) Ltd
(Investments);
(d) Unicorn owns a licenced manufacturing pharmacy;
(e) Investments holds all the shares in Retailers;
(f) Retailers owns licenced community pharmacies countrywide.
[7] The ICPA summarised the complaint to the Department of Health as being
‘that entities within the Clicks Group have a beneficial interest in community
pharmacies while they also own a beneficial interest in a manufacturing pharmacy’.
In its redress it requested the Director-General to: ‘revoke the manufacturing
pharmacy licence of Unicorn as well as all the retail pharmacy licences obtained
after 30 May 2012, as they were granted on incorrect facts’. The ICPA also
requested the Director-General to investigate Retailer’s alleged contravention of the
applicable statutory framework.
[8] The complaint was expanded as follows: (a) ‘Clicks Retailers and Unicorn
Pharmaceuticals (Pty) Ltd are amongst Clicks Group Ltd’s subsidiaries and have “at
the very least indirect beneficial interest in each other”’; (b) ‘Unicorn is “clearly
conducting business as a manufacturer of medicine”’; (c) ‘in terms of the Pharmacy
Act and the Licensing Regulations, “the Minister has prohibited manufacturers to
have a direct or indirect beneficial interest in a retail pharmacy.”’; and (d) that the
conduct of the Clicks Group results in a conflict of interest between a patient’s best
interest and financial interests.
[9] The Director-General rejected the ICPA’s complaint and held that neither
Retailers nor its shareholders could be said to have a beneficial interest in Unicorn.
In the underlying reasons for his decision, the Director-General stated the following:
‘In view of the above, the Department may only exercise its power as conferred on it by law.
It would thus not be permitted to disqualify Clicks Retailers from owning a community
pharmacy outside of the preclusion provided for in regulation 6 of the [Licensing
Regulations].’
[10] Dissatisfied with the outcome, the ICPA appealed to the Appeal Committee.
Curiously, it no longer contended for the revocation of the licences. The ICPA
submitted that although reference was specifically made to the revocation of the
licences of Unicorn and Retailers in the original complaint, the crux of the complaint
was directed at investigating the perversities that were created by the vertical
integration of the subsidiaries of the Clicks Group of Companies. In essence, the
complaint was directed at the corporate structure of the Clicks Group of Companies
on the basis that they had contravened the Act and licensing regulations because
entities within the Clicks Group owned community pharmacists while at the same
time having an interest in a manufacturing pharmacy.
[11] In arriving at its decision the Appeal Committee found that the Clicks Group of
Companies did not contravene licencing regulations 6. The relevant part of the
decision of the Appeal Committee is set out hereafter:
‘The Appeal Committee has considered the arguments of the parties concerning the merits
of this matter and finds that since the prohibition in Licensing regulation 6(d) is directed inter-
alia at the body corporate (legal person in terms of Section 1 of the Pharmacy Act), the
shareholder or the director of such body corporate from having “any direct or indirect
beneficial interest” in manufacturing pharmacy, it stands to reason therefore that since
assets of a company do not belong to the shareholder of the company but to the company
itself, it may never be safely argued that because one company has 100% shareholding in
another company, it can now be said that the company has beneficial interest in the other
company.’
[12] The Appeal Committee concluded with the following statement:
‘In this appeal it is common cause that Retailers own community pharmacies and looking at
the corporate structure of the Clicks Group of companies, it is clear that neither Clicks
Group, the 100% shareholder of New Clicks nor New Clicks, the 100% shareholder of
Unicorn and Investments can be said [to] own or have beneficial interest in Retailers’
community pharmacies since a shareholder may never be said to have a beneficial interest
in the assets of the company other than his/her entitlements to the share of the profits or in
the event that the company is liquidated, to the share of the surplus of the liquidation
account.’
[13] After considering the ratio in The Princess Estate and Gold Mining Co, Ltd v
The Registrar of Mining Titles,2 the Appeal Committee held that since the assets of a
company do not belong to the shareholder of the company but to the company itself,
it may never be safely argued that because one company has 100% shareholding in
another company, it can now be said that the company has a beneficial interest in
the other company.
[14] It is against those findings that the ICPA approached the high court to review
and set aside the decision of the Appeal Committee. The high court agreed with the
ICPA and rejected the findings of the Appeal Committee. In dismissing the Clicks
Groups’ contentions, it made a number of orders and, in sum, found that the Clicks
Group structure was unlawful, it then remitted the matter to the Appeal Committee
and alternatively to the Director-General in respect of various other orders not
particularly relevant to this appeal.
[15] Of particular significance to this appeal is the finding of the high court that the
Clicks Group had a beneficial interest in Unicorn as a result of its shareholding in
various entities within the Group. It reasoned that New Clicks and Investments hold a
beneficial interest in the manufacturing pharmacy owned by Unicorn and the
community pharmacies owned by Retailers and this was especially so because as
shareholders, New Clicks and Investments have financial interests in Unicorn and
Retailers. It further held that the regulations recognised that where a community
pharmacy is owned by an entity other than pharmacists themselves, it is undesirable
for there to be a direct or indirect beneficial interest in both such a community
pharmacy and a manufacturing pharmacy. It concluded that an entity having
interests in both types of pharmacies would gain financially if the manufacturing
pharmacy’s products are promoted by the pharmacist in the community pharmacy
over the other. In sum the high court expressed itself as follows:
‘It would be artificial to contend that a company which owns 100% of the shares in a
company does not have a direct or indirect beneficial interest in the business owned and
operated by that company. The shareholder appoints directors to the company’s board. The
board determines what dividend is declared, which is then paid to the shareholder from the
2 The Princess Estate and Gold Mining Co, Ltd v The Registrar of Mining Titles 1911 TPD 1066 at
1078.
funds generated by the business. The proceeds of the winding up of the company go to its
shareholder. The shareholder thus clearly has a beneficial interest in the business owned by
the company.’
It seems to me that the high court equated a beneficial interest in a pharmacy owned
by a company with the financial interest its shareholder has in the company. More is
to follow on this point later in the judgment. This appeal is with the leave of the high
court.
[16] The appeal turns essentially on three main considerations namely: (a) the
revocation of the licences; (b) beneficial interests; (c) a constitutional challenge to s
22A of the Act, an issue which the high court declined to deal with. I deal with these
issues in turn.
Revocation of the licences
[17] In this Court the principal argument advanced by the Clicks Group is that the
Director-General and the Appeal Committee were correct in dismissing the complaint
and subsequent appeal brought by the first respondent as fatally flawed from the
outset. The Clicks Group put up a spirited criticism of the high court’s judgment by
contending that the original complaint by the ICPA was explicitly for the revocation of
licences held by Unicorn and Retailers. The complaint was misconceived because
on appeal the ICPA changed tack by no longer alleging that Unicorn and Retailers
contravened regulation 6(d) but rather that it was their holding company,
Investments, New Clicks and the Clicks Group who contravened the regulation. This,
according to the Clicks Group was a new matter as it resulted in the ICPA relying on
a different cause of action but, paradoxically seeking the same relief, which was now
in the form of the withdrawal of the licences without any justifiable basis.
[18] In short it was contended that the Director-General and the Appeal Committee
did not have the power to revoke the licences even if they were found to have
contravened regulation 6(d) simply because the jurisdictional factors for the
revocation, suspension, cancellation, or withdrawal of the licences were not met by
the ICPA.
[19] To counter these arguments, the ICPA at a later stage shifted the ground and
repeated the same arguments that were raised before the Appeal Committee, which
were endorsed by the high court. It emphasised that whilst particular reference was
made to Unicorn and Retailers, the essence of the complaint was not directed at
them but at the Clicks Group of companies. It submitted that there was no
mischaracterisation of the complaint and neither was a new cause of action
advanced.
[20] The submission that there was no change in the original complaint is
unsustainable. Although the ICPA sought different relief, its complaint remained
unchanged; it was for the revocation of the licences held by Unicorn and Retailers.
The ICPA persisted with the argument that the complaint was strictly directed at the
structure of the Clicks entities, which contravened regulation 6(d) and the conditions
under which retailers may own community pharmacies. The Appeal Committee
concluded that the complaint was not directed at the original grant of the licences but
rather the revocation or withdrawal of the licences on the basis that they were used
in contravention of the Pharmacy Act and the Regulations. This change of tack is a
new matter and overlooks the fact that documents accompanying the original
complaint, namely the founding affidavit and letter of complaint, stated that the
complaint was directed at the revocation of the licences of Unicorn and Retailers. In
my view there was never any basis for the revocation of the licences.
[21] Another factor which militates against the ICPA is that it failed to adduce
evidence that Unicorn and Retailers did not comply with licencing conditions as
required by ss 22(7) and 22(10) of the Act and regulation 9(d). In terms of the Act
and the Regulations, a licence may only be cancelled, suspended or withdrawn after
the pharmacy has been given a full and proper opportunity to explain why the licence
in question should be cancelled or suspended. In my view the entire process
offended the legality principle because there was no underlying power in the
Director-General’s purview to review complaints relating to the revocation of the
licences.
[22] There is yet another reason why the argument of the ICPA is incorrect. In this
case, Unicorn and Retailers were not asked for reasons or an explanation by the
Department of Health following the complaint lodged by the ICPA. Retailers was only
asked to make representations regarding the corporate structure which it complied
with. Having not asked Unicorn and Retailers to make representations, the
jurisdictional facts for the cancellation, suspension and withdrawal of the licence
were not met. I sum up the position as I see it as follows. It was stressed in argument
by counsel for the Clicks Group that the ICPA first sought the revocation of licences
on the basis of a contravention of regulation 6(d) and s22A. When it realised the
shortcomings in its argument, it shifted ground and sought to attack the corporate
structure of the Clicks Group. Against this view, we were urged to accept that the
way the complaint was framed was without merit. First, Unicorn and Retailers did not
contravene regulation 6(d): Retailers is not a shareholder of Unicorn and neither
does it hold a beneficial interest in Unicorn. Secondly, the Director-General did not
have the power to revoke the licences. Lastly, the high court erred in not
distinguishing the complaints against Unicorn and Retailers on the one hand and the
complaint against the Clicks Group on the other. In doing so, the high court failed to
recognise that the dismissal by the Appeal Committee was lawful. Ideally this should
be the end of the matter. However, in the view that I take of this matter, it is
necessary to consider other grounds of appeal. It is to the issue of beneficial interest
that I now turn
Beneficial interest
[23] The nature of this argument will be better understood against the background
of what follows. The concept of beneficial interest is derived from English law. It
connotes someone who is not the legal owner of a thing but has a legal right to the
benefits of ownership. The most helpful decision which I deal with first is the
Princess Estate and Gold Mining Co Ltd v The Registrar of Mining Titles.3 This case
was the cornerstone of the Clicks Group argument. In that case, Wessels J said the
following:
‘But although our law does not recognise an equitable estate, it does admit of a person
having an interest in property which is not registered in his name, and this interest does in
some respects resemble the “beneficial interest” of the English law. To this extent our law
does recognise a severance of interests. Thus, a trustee under an ante-nuptial contract or a
3 The Princess Estate and Gold Mining Co Ltd v The Registrar of Mining Titles 1911 TPD 1066.
trustee for church, building society or lodge, a curator of a lunatic or prodigal may have trust
property registered in their names whilst the parties virtually interested are the spouses, the
congregation, the members of the building society or lodge and the lunatic or prodigal.
. . .
The trustee under an ante-nuptial contract may be registered as the owner of land for the
benefit of one of the spouses or of the children of the marriage. Here the trustee is vested
with the nuda proprietas, whilst the person entitled to the benefits flowing from the property
may be said to be beneficially interested.
. . . .
So if land is registered in the name of the curator of a lunatic there are in fact two interests –
a legal interest in the curator and another interest in the lunatic, which may be described as
a “beneficial interest”. . ..
Now let us see whether the same principle applies to the case of a company in liquidation.
. . .
A shareholder has no jus in re in any of the assets of the company; he can only lay claim to
such a share of the profits as are awarded to him, or in case of liquidation to such a share in
the surplus as he is entitled to according to the liquidation account. There is no severance of
interests between the company and the shareholder, and, therefore, I fail to see how the
latter can be said to have any “beneficial interest”. Nor does it appear to me to make any
difference that one person has bought up all the share. This can make no difference to the
relationship between the sole shareholder and the company.
Unless we go to the length of giving to “beneficial interest” so wide a meaning as to include
all persons who may in some way or other eventually derive a benefit from immovable
property, I cannot see how a shareholder of a company or the successor to all the
shareholders can be said to have a beneficial interest in the land of the company.’4
[24] This point was forcefully made by Corbett CJ in Shipping Corporation of India5
as follows:
‘It seems to me that, generally it is of cardinal importance to keep distinct the property rights
of a company and those of its shareholders, even where the latter is a single entity, and that
the only permissible deviation from this rule known to our law occurs in those (in practice)
rare cases where the circumstances justify “piercing” or “lifting” the corporate veil.’
4 Fn 4 above at 1078-1080.
5 Shipping Corporation of India Ltd v Evdomon Corporation and Another [1993] ZASCA 167; 1994 (1)
SA 550 (A); [1994] 2 All SA 11 (A) para 43.
[25] A terse but useful explanation of the distinction between a shareholder and a
company is to be found in the judgement of Macaura v Nothern Assurance
Company6 where the House of Lords held that a shareholder of a company does not
have a beneficial interest in its underlying assets. In the same judgement, Lord
Buckmaster said that ‘no shareholder has right to any item of property owned by the
company, for he has no legal or equitable interest therein’.
[26] More recently, this Court in City Capital SA Property Holdings Limited v
Chavonnes Badenhorst St Clair Cooper NO and Others7 endorsed the principle that
a company is a legal entity distinct from its shareholders. Its property is its own and
not that of its shareholders.
[27] The ICPA’s argument as to why we should deviate from the above authorities
is threefold. First, Investments has a beneficial interest in Retailers’ pharmacies in
that Investments is the sole shareholder of Retailers and the shareholder of
Investments is New Clicks. In terms of regulation 6, New Clicks may not have a
direct or indirect beneficial interest in a manufacturing pharmacy. New Clicks has
such an interest because it is the sole shareholder of Unicorn, which owns the
manufacturing pharmacy.
[28] Secondly, New Clicks has a beneficial interest in a community pharmacy
through its 100% shareholding in Investments which, in turn, has 100% shareholding
in Retailers, which owns the community pharmacy. This means that New Clicks
cannot have a direct or indirect beneficial interest in a manufacturing pharmacy but,
it does because it wholly owns Unicorn, which owns a manufacturing pharmacy.
[29] Thirdly, the thrust of the ICPA’s complaints was that persons and entities
within the Clicks Group have beneficial interests in community pharmacies, while at
the same time having a beneficial interest in a manufacturing company. According to
the ICPA the answer to whether regulation 6(d) has been contravened or not centres
on two propositions: (a) is there an entity that owns or has a beneficial interest in a
6 Macaura v Nothern Assurance Company [1952] AC 619.
7 City Capital SA Property Holdings Limited Chavonnes Badenhorst St Clair Cooper NO and Others
[2017] ZASCA 177; 2018 (4) SA 71 (SCA) para 27.
community pharmacy; and (b) does this entity own or have any direct or indirect
beneficial interest in a manufacturing pharmacy. The ICPA states that regulation 6
does not only deal with the owners of community pharmacies but also with those
having a beneficial interest in such pharmacies. It contended that a shareholder
(New Clicks) of any entity with a beneficial interest in a community pharmacy
(Investments) may not also have a direct or indirect beneficial interest in a
manufacturing pharmacy (Unicorn).
[30] In essence, the ICPA took issue with the fact that under English law
ownership can be separated into two parts, namely a legal estate and an equitable
or beneficial estate. Relying on the case of Lucas’ Trustee v Ismail & Amod,8 it
contended that that distinction does not exist in our law. It asserted that it would have
been inconceivable for the legislature to have intended the use of the term ‘beneficial
interest’ in the regulation to carry a similar meaning to the English concept. To shore
up its argument it called in aid the judgment of the high court which held that ‘[i]t
would be artificial to contend that a company which owns 100% of the shares in a
company does not have a direct or indirect beneficial interest in the business owned
and operated by that company’.
[31] Spurred on, no doubt by the high court’s finding, the ICPA argued that in the
context of regulation 6(d), the term beneficial interest is a phrase of wide import
intended to cover a wide range of relationships, including the relationship between a
company and its shareholders and directors. It submitted that on a proper
interpretation of regulation 6(d), the Clicks Group of companies have an interest in
both Unicorn and Retailers and this conduct falls foul of regulation 6(d), which aims
to prevent the same entity from holding beneficial interests in both a community and
manufacturing pharmacies.
[32] To counter these arguments, the Clicks Group briefly indicated that neither
Unicorn nor Retailers contravened the impugned regulation. As regards Retailers, it
argued that neither it nor its shareholders hold a direct or indirect beneficial interest
in a manufacturing pharmacy. It further contended that because none of the holding
8 Lucas’ Trustee v Ismail & Amod 1905 TS 239.
companies own community or retail pharmacies, it cannot be said that by virtue of
their shareholding in Retailers and Unicorn, they or their shareholders have a
beneficial interest in community pharmacies and that they are holders of any direct
or indirect beneficial interest in a manufacturing pharmacy. Put simply, it cannot be
said that because the holding companies hold shares in Unicorn and Retailers, they
have beneficial interests in the underlying pharmacies held by the two entities.
[33] It is now appropriate to consider whether the high court correctly reviewed
and set aside the decision of the Appeal Committee. A good starting point is to first
analyse the meaning of the words ‘beneficial interest’. The answer to this question
depends on what is meant by beneficial interest in a pharmacy and whether it can be
said that because the holding company (New Clicks) holds shares in Unicorn and
Retailers, they have beneficial interests in the underlying pharmacies owned by the
two entities. The Clicks Group contended that the answer is in the negative. On the
other hand, the ICPA contended that the question should be answered in the
affirmative; it proffers two questions that must be answered in determining whether
New Clicks has a beneficial interest in the in the pharmacies owned by Unicorn and
Retailers. First, is there an entity that owns or has beneficial interest in a community
pharmacy? Secondly, does this entity have a direct or indirect beneficial interest in a
manufacturing company?
[34] In my view, the structure of the Clicks Group represents separate and
different juristic persons. New Clicks has no beneficial interest or control of the
assets of Retailers, which assets are mainly Clicks Pharmacies. Consequently, New
Clicks cannot exercise the rights that derive from Retailers’ community pharmacy
licence. There is no evidence and neither has any been adduced by the ICPA that
because New Clicks is a 100% shareholder of Unicorn, it gives instructions to the
staff employed by Retailers on the benchmarks to be achieved in terms of minimum
percentage of Unicorn products sold.
[35] It is equally not correct to contend that because New Clicks holds shares in
Unicorn or Retailers, they have a beneficial interest in the underlying pharmacies
owned by them. It is clear that New Clicks and the Clicks Group do not own a
community pharmacy or retail pharmacy and thus do not contravene regulation 6(d).
Any suggestion that, by virtue of their shareholding in Retailers and Unicorn, they or
their shareholders have a beneficial interest in a community pharmacy, or that they
have a direct or indirect beneficial interest in a manufacturing pharmacy, is
misplaced.
[36] It seems clear to me that the high court misconceived the correct legal
position. The arguments raised by the ICPA as to why the English law cannot be
imported into our law is unsustainable. It should be borne in mind that a shareholder
of a company does not have a beneficial interest in its underlying assets. This
principle is deeply rooted in both our law and English law, from which the concept of
beneficial interest is derived. The distinction between a shareholder and company’s
assets was explained in Dadoo Ltd and Others v Krugersdorp Municipal Council
where Innes CJ said the following:
‘A registered company is a legal persona distinct from its members who compose it. In the
words of Lord MacNaghten (Salomon v Salomon & Co 1897 AC at 51), “the company is at
law a different person altogether from the subscribers to its memorandum; and though it may
be that, after incorporation, the business is precisely the same as it was before, and the
same persons are managers, and the same hands receive the profits, the company is not in
law the agent of the subscribers or a trustee for them.” That result follows from the separate
legal existence with which such corporations are by statute endowed, and the principle has
been accepted in our practice. Nor is the position affected by the circumstance that a
controlling interest in the concern may be held by a single member. This conception of the
existence of a company as a separate entity distinct from its shareholders is no merely
artificial and technical thing. It is a matter of substance; property vested in the company is
not, and cannot be, regarded as vested in all or any of its members.’9
[37] It must be spelt out that property vested in a company cannot be regarded as
vesting in any of its members (shareholders). A shareholder has no legal or
equitable interest in the property of the company. Regulation 6(d) does not refer to
beneficial owners of shares but to a direct or indirect beneficial interest in a
pharmacy. On a purposive and textual interpretation, regulation 6(d) must be
interpreted to be limited to a proscription of who may own a pharmacy, whether
9 Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 550-551.
legally or beneficially. It would be invalid or ultra vires if it is interpreted to extend
beyond ownership prescribed in s 22A.
[38] I do not think we can, with all the facts or evidence at our disposal, give the
term ‘beneficial interest’ so wide a meaning so as to include the Clicks Group of
companies. Similarly, I cannot see how it can be said that New Clicks has a
beneficial interest in Unicorn and Retailers. It cannot be denied, as was said in the
United Kingdom Supreme Court in Sevilleja v Marex Financial that ‘[a] share is not a
proportionate part of a company’s asset . . . Nor does it confer on the shareholder
any legal or equitable interest in the company’s assets’. 10
[39] The suggestion that the Clicks Group interposed Investments to circumvent
the mischief which the regulation sought to protect is misguided. This argument runs
contrary to the concession by the ICPA that shareholders do not own assets of the
company in a juridical sense but do have a beneficial interest in how the company
and its assets perform. Equally misconceived is the contention that the mischief
sought to be prevented was the minimisation of the risks of one entity promoting the
medicines of the other, which would not be in the best interest of patients. The ICPA
has not adduced any evidence to trigger regulation 6(d) that a conflict of interest
exists in the Clicks Group, which may jeopardise the right of patients. I accept as
correct the submission by Clicks Group of Companies that there is no scope for
Retailers, the pharmacists employed by Retailers, Investments or any pharmacy in
the Clicks Group to gain financially at the expense of patients or to prescribe and sell
medicines to patients who do not need them.
[40] The ICPA has not shown a single instance of a patient being sold a Unicorn
product by a pharmacist employed by Retailers to the prejudice of the patient or in
circumstances where the patient did not need the medicine. The ICPA has not
adduced any evidence to support its claims that the Clicks Group structure
negatively affected the nature, quality, or extent of public access to medicines at
Clicks pharmacies. It should have been easy for the ICPA to collect and collate such
information if it existed. What further militates against the ICPA’s case is that there is
10 Sevilleja v Marex Financial [2020] UKSC 31 at para 31
no evidence to suggest that Clicks, through its arrangement, has been able to
reduce the costs of medicines to the extent that Unicorn products are generally
amongst the lowest priced generic products available on the market.
[41] My conclusion on this aspect is that the cases which I have quoted above
apply with equal force to the present case. I fully endorse those decisions as
correctly reflecting our law. It follows that the submission that beneficial interest is
based on English law and has no place in our law is misplaced. There is indeed a
huge conceptual difference between a shareholder and a company. This principle
was reaffirmed in Standard Bank of SA v Ocean Commodities Inc11 and in Shipping
Corporation of India.12 I now proceed to consider the constitutional challenge which
the high court declined to deal with.
Constitutional challenge
[42] In short, the argument advanced on behalf of the ICPA is that interpreting s
22A narrowly imperils the patient’s rights to have access to quality and affordable
medicines as entrenched in s 27(1)(a) of the Constitution (right to health) and s 1(c)
of the Constitution (rule of law). Another attack on the constitutionality of s 22A is
that a narrow interpretation would lead to arbitrariness and offend the rule of law
because it would only apply if specific owners of community pharmacies apply to
obtain licences of manufacturing pharmacies but not if that owner interposes a legal
person between it and the community or the manufacturing pharmacies, as was
done by the Clicks Group with the interposition of Investments.
[43] As to the remedy, the ICPA submitted that a just and equitable order under s
172 of the Constitution would be to declare s 22A as contrary to ss 1(c) and 27 of the
Constitution and therefore invalid, but that the order of invalidity be suspended for a
period of two years to allow the Minister to rectify the situation. As an interim
measure the ICPA proposed some reading-in to save the regulation from invalidity
during the interim period whilst Parliament addresses the shortcoming in the Act.
11Standard Bank of SA v Ocean Commodities Inc [1983] 1 All SA 145 (A); 1983 (1) SA 276 (A) 288 to
12 Shipping Corporation of India Ltd v Evdomon Corporation and Another 1994 (1) SA 550 (A); [1994]
2 All SA 11 (A).
[44] The validity of this argument depends on the construction to be placed on
regulation 6(d) and s 22A. In Chisuse and Others v Director-General, Department of
Home Affairs and Another, the Constitutional Court stated the position on statutory
interpretation as follows:
‘In interpreting statutory provisions, recourse is first had to the plain, ordinary, grammatical
meaning of the words in question. Poetry and philosophical discourses may point to the
malleability of words and the nebulousness of meaning, but, in legal interpretation, the
ordinary understanding of the words should serve as a vital constraint on the interpretative
exercise, unless this interpretation would result in an absurdity. As this Court has previously
noted in Cool Ideas, this principle has three broad riders, namely:
“(a) that 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, that is, where
reasonably possible, legislative provisions ought to be interpreted to preserve their
constitutional validity. This proviso to the general principle is closely related to the purposive
approach referred to in (a).”
Judges must hesitate “to substitute what they regard as reasonable, sensible or business-
like for the words actually used. To do so in regard to a statute or statutory instrument is to
cross the divide between interpretation and legislation”.’13
[45] The purposive or contextual interpretation of legislation must, however, still
remain faithful to the literal wording of the statute. This means that if no reasonable
interpretation may be given to the statute at hand, then courts are required to declare
the statute unconstitutional and invalid. It is now settled that this approach to
interpretation is a unitary exercise.
[46] On the issue of s 22A, it was submitted that it must be read and interpreted in
the manner that the Minister did not make a wide prohibition as contended by the
ICPA. We were urged to accept that he could have done so if he wanted but chose
to confine the prohibition to the company and its shareholders. With reference to
regulation 6(d), it was contended that the regulation must not be interpreted in the
13 Chisuse and Others v Director-General, Department of Home Affairs and Another [2020] ZACC 20
paras 47 & 48.
light of empowering provision. To do so, it was argued, would render the regulation
unlawful and ultra vires. As stated earlier, it was pointed out that the Minister may
only prescribe who may own a pharmacy however, the Minister does not have the
power to concern himself with the financial interest of the company.
[47] It seems clear to me that when the Minister promulgated the ownership
regulations under s 22A, the purpose was to determine who may own a pharmacy
and the conditions under which such a person may own a pharmacy. It was not
intended to prescribe who may hold a financial interest in a pharmacy. In terms of s
22A the power of the Minister is only limited to ‘who may own a pharmacy’. The high
court erred in equating a beneficial interest in a pharmacy owned by a company with
the financial interest its shareholder has in the company. The reasoning of the high
court is out of step with the legal principle that a shareholder has a real interest in a
company in which he or she holds shares and some array of rights, but those rights
are in relation to the company and not its assets.
[48] Regulation 6 can only be interpreted on the basis of its purpose under the
enabling provision (s 22A), which is limited to a prescription of who may own a
pharmacy whether legally or beneficially because it would be invalid if it were to
extend beyond ownership which is prescribed in s 22A. In my view, departing from
that rationale would do violence to the language of s 22A read with regulation 6(d). In
the light of the foregoing, it can safely be concluded that when enacting s 22A the
legislature must have been aware of the concept of a beneficial interest.
Consequently, on a purposive and textual interpretation, the regulation must be
interpreted to mean, someone who is the legal owner of the pharmacy or is legally
entitled to the benefits of ownership of the pharmacy. Accordingly, the submission
that the whole scheme of regulation 6(d) is to cast the net as widely as possible with
the dominant purpose of preventing an alleged mischief in the Clicks’ Group
structure has no substance. The regulations cannot be used to interpret primary
legislation and neither can they be used to extend the meaning of the words in the
primary legislation. In my view, the constitutional challenge has no merit
[49] Before I conclude, there is one more important observation to make. This
relates to a number of declaratory orders made by the high court. It set aside the
decisions of the Director-General and the Appeal Committee despite its finding that
Retailers and Unicorn were innocent of any wrongdoing. As a result of this error, it
granted declaratory orders in relation to the decisions of the Director-General and
the Appeal Committee. There was no basis for this as they were not sought before
the Director-General and the Appeal Committee. Another fallacy relates to its
declaratory order that the Clicks Group, New Clicks, Investment, Unicorn and
Retailers contravened s 22A and regulation 6(d). The supreme irony and fatal flaw is
that its findings did not implicate Unicorn and Retailers. Another misdirection relates
to the issue of sanction to the Director-General and the Appeal Committee, the
sanction was never part of the complaint.
[50] For these reasons the appeal must succeed. The following order is made:
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application is dismissed with costs including the costs of
the two counsel where so employed.’
________________________
R S Mathopo
Judge of Appeal
Makgoka JA (dissenting):
[51] I have had the benefit of reading the majority judgment prepared by my
Colleague, Mathopo JA. Regrettably, I am unable to agree with the conclusion of the
majority judgment upholding the appeal, and the reasons underpinning it. I would
dismiss the appeal for the brief reasons set out below. The relevant facts giving rise
to the dispute are common cause, and have been admirably set out in the majority
judgment. They will therefore not be repeated in this judgment. However, for
contextual purposes, I quote in full the two legislative enactments in issue, namely
s 22A of the Pharmacy Act 53 of 1974 (the Act) and regulation 6 of the Regulations
on Ownership and Licensing of Pharmacies.14
[52] Section 22A reads as follows:
‘Ownership of pharmacies
The Minister may prescribe who may own a pharmacy, the conditions under which such
person may own such pharmacy, and the conditions upon which such authority may be
withdrawn.’
[53] Regulation 6 provides as follows:
‘Ownership of community pharmacies
‘Any person may, subject to the provisions of regulation 7, own or have a beneficial interest
in a community pharmacy in the Republic, on condition that such a person or in the case of a
body corporate, the shareholder, director, trustee, beneficiary or member, as the case may
be, of such body corporate –
(a) . . .
(b) . . .
(c) . . .
(d) is not the owner or the holder of any direct or indirect beneficial interest in a
manufacturing pharmacy.’
[54] The primary issue is the proper interpretation of the above legislative scheme.
14 ‘Regulations relating to the Ownership and Licensing of Pharmacies, GN R553, 25 April 2003.’
The outcome of this interpretive exercise will inform a conclusion whether the
corporate structure of the appellants, the Clicks Entities, contravenes the legislative
scheme. Section 22A of the Act empowers the Minister to prescribe who may own a
pharmacy, the conditions under which such a person may own such a pharmacy,
and regulation 6 is a measure which the Minister considered necessary to achieve
the purpose of s 22A. Regulation 6(d) prohibits an owner of a community pharmacy,
or a person who owns or has a ‘beneficial interest’ in a community pharmacy, from
owning, or having a ‘beneficial interest’ in, a manufacturing pharmacy. In the case of
a corporate entity, such a prohibition extends to the shareholder, director, trustee,
beneficiary or member of such entity.
[55] With regard to s 22A, the parties differed as to its ambit and reach. The Clicks
Entities favoured a restrictive, narrow construction of the section. The first
respondent, the Independent Community Pharmacy Association (ICPA) contended
for a wider interpretation. According to the Clicks Entities, the Minister’s power
conferred by the section is merely to determine who may own a pharmacy.
Therefore, so went the submission, regulation 6(d) should be interpreted restrictively
as if dealing only with ownership of pharmacies. This contention found favour with
the Appeal Committee, which held that the regulations must be interpreted so as to
avoid rendering them ultra vires the Act. This could only be done if the regulations
are read as if dealing only with the ownership of pharmacies.
[56] The difficulty with this reasoning is that it places undue focus on ‘ownership’,
and ignores the fact that s 22A also allows the Minister to prescribe the conditions
under which a person may own a community pharmacy, and the conditions upon
which such authority may be withdrawn. It also ignores the express and plain
wording of regulation 6(d), which, apart from ownership, also refers to ‘direct or
indirect beneficial interest’. Lastly, absent an attack on the regulations being ultra
vires, they stand and must be applied, even were they (notionally) ultra vires the
Act.15
[57] The high court concluded that to the extent that regulation 6(d) deals with the
15 Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) SA 211
(CC) para 41.
kind of entities which may have a direct or indirect beneficial interest in a pharmacy,
it deals with conditions of ownership, and sets out when the authority for owning a
pharmacy may be withdrawn. I cannot fault this reasoning. Differently put, the
regulations allow one to own a community pharmacy. But that ownership is not
unfettered. The regulations impose a condition to it, namely that a person should not
have a beneficial interest in such a community pharmacy whilst such a person also
has a direct or indirect beneficial interest in a manufacturing pharmacy. To that
extent, this is a condition of ownership envisaged in both regulation 6(d) and s 22A,
bearing in mind that the latter empowers the Minister to ‘prescribe . . . the conditions
under which such person may own’ a pharmacy. Those conditions find expression in
regulation 6(d). Viewed in this light, s 22A and regulation 6(d) neatly complement
each other.
[58] I turn to the meaning of ‘beneficial interest’ as employed in regulation 6(d). To
recap, regulation 6(d) postulates two legs of the enquiry. The first leg is whether
there is a person or an entity that owns or has a beneficial interest in a community
pharmacy. The second leg is whether such person or entity, or the entity’s
shareholder, director, trustee, beneficiary or member, also owns or has a beneficial
interest in a manufacturing pharmacy. But what does the concept of ‘beneficial
interest’ mean in the context of regulation 6(d)?
[59] Counsel for the Clicks Entities placed much reliance upon the English law
concept of ‘beneficial interest’, which connotes someone who, not being the legal
owner of a thing, nevertheless has a right to the benefits of ownership. Counsel also
relied upon certain dicta from The Princess Estate,16 to make the point that a
shareholder of a company does not have a beneficial interest in its underlying
assets. Reliance was also placed on the settled principle of our law that a
shareholder has no claim to the assets of a company. Reference was also made to
various English authorities, including Sevilleja v Marex,17 in which it was reiterated
that a shareholder of a company has no legal or equitable interest in the property of
16 The Princess Estate and Gold Mining Co Ltd v The Registrar of Mining Titles 1911 TPD 1066.
17 Sevilleja v Marex Financial Ltd [2020] UKSC 31.
the company. Lastly, counsel referred to Standard Bank v Ocean Commodities,18
which is to the effect that in certain instances, the registered shareholder may hold
the shares as the nominee of another, generally described as the ‘beneficial owner’
of the shares, despite this fact not appearing on the company’s register.
[60] On these bases, the contention was advanced on behalf of the Clicks Entities
that when regulation 6(d) refers to someone who owns or has a beneficial interest in
a pharmacy, it means someone who is the legal owner of the pharmacy or is legally
entitled to the benefits of ownership of the pharmacy. I have no qualms with the
principles set out in the various authorities relied upon by counsel on behalf of the
Clicks Entities. As stated already in the preceding paragraph, the principle that a
shareholder has no claim to the assets of a company is well-settled in our law.19
[61] However, this principle does not assist with the central question in the present
case, namely whether a person (natural or juristic) who has a beneficial interest in a
community pharmacy, maintains a similar interest in a manufacturing pharmacy, in
the context of regulation 6(d). The concept of beneficial ownership as discussed in
Ocean Commodities is also of no assistance. There, this Court confirmed the
principle that although normally the person in whom the share vests is the registered
shareholder in the books of the company, there are some instances where the
registered shareholder may hold the shares as the nominee, ie agent, of another,
generally described as the ‘owner’ or ‘beneficial owner’ of the shares, although this
fact does not appear on the company’s register.
[62] It remains to consider the English law concept of ‘beneficial interest’ as
contended for on behalf of the Clicks Entities. At the outset I must state a conceptual
difficulty with the notion of ‘beneficial interest’ as applied in English law bearing a
similar meaning to that in regulation 6(d). While in terms of s 39(1)(c) of the
18 Standard Bank of South Africa Limited and Another v Ocean Commodities Inc and Others 1983 (1)
SA 276; [1983] 1 All SA 145 (A).
19 Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 (AD); Shipping Corporation of
India Ltd v Evdomon Corporation and Another 1994 (1) SA 550; [1994] 2 All SA 11 (A); City Capital
SA Property Holdings Limited v Chavonnes Badenhorst St Clair Cooper N O and Others [2017]
ZASCA 177; 2018 (4) SA 71 (SCA).
Constitution foreign law may be considered when interpreting the Bill of Rights,20 the
proper interpretation of regulation 6(d) is a matter of South African law in accordance
with our established principles of interpretation of statutes. There is no need to have
regard to foreign law case.21
[63] Regulation 6(d) should be construed using the 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. This is
subject to three interrelated riders, 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.22 In line with Endumeni23, we must therefore consider, among others,
the context in which the concept of beneficial interest appears in regulation 6(d), the
apparent purpose to which regulation 6(d) was directed and the material known to
those responsible for enactment of the provision.
[64] As a matter of fact, the concept of ‘beneficial interest’ as understood and
applied in the English law of property is not part of our law. As explained in Lucas’
Trustee,24 English law ownership of property can be separated into two parts,
namely a legal estate and an equitable or beneficial estate, which can vest in two
different persons at the same time. Our law does not recognise such division.
Solomon J explained at 247-248:
‘The English law holds that there can be two estates in land, the legal estate and the
equitable or beneficial estate, and that these two estates can be vested in different persons
at the same time; and under the old practice before the Judicature Acts those estates would
20 As noted by Klug, s 39(1)(c) has seeped into South Africa's constitutional jurisprudence beyond the
interpretation of the Bill of Rights. See H Klug The Constitution of South Africa: A Contextual
Analysis (2010) at 79-80.
21 In Sanderson v Attorney-General, Eastern Cape 1998 (2) SA 38 (CC) para 26, the Constitutional
Court warned that ‘the use of foreign precedent requires circumspection and acknowledgment that
transplants require careful management’. See also the remarks of Chaskalson P in S v Makwanyane
1995 (3) SA 391; 1995 (6) BCLR 665 (CC) para 39.
22 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (8) BCLR 869; 2014 (4) SA 474
(CC) para 28.
23 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA
262; 2012 (4) SA 593 (SCA) para 18; Airports Company South Africa v Big Five Duty Free (Pty) Ltd
[2018] ZACC 33; 2019 (2) BCLR 165; 2019 (5) SA 1 (CC) para 29.
24 Lucas’ Trustee v Ismail and Amod 1905 TS 239 (TS).
be dealt with and cognisable in two separate courts of law – the common law courts and the
courts of equity. Our law, as I understand it, does not recognise that there can be any such
division of the dominium, or that there can be two estates in landed property, but that the
person who is registered in the Deeds Office as the owner of the landed property is the one
dominus of such property.’
[65] In The Princess Estate,25 the issue was whether transfer of property from a
company in liquidation to its sole shareholder was exempted from payment of stamp
duty in terms of the Stamp Duties and Fees Act 30 of 1911.26 The Act provided the
exemption when the transfer caused ‘no change of beneficial interest in the property
transferred’.27 It was held that even though shareholders have no legal right to the
property (land) of the company, they may in certain instances be considered to have
a ‘beneficial interest’ in the company’s property. After noting that the words
‘beneficial interest’ had been borrowed from the English law, where it has acquired a
technical meaning, Wessel J sounded this warning:
‘The use of these technical words in a South African Stamp Duty Act is very unfortunate. By
using technical terms which have in English law acquired a specific meaning it is difficult to
avoid grafting English legal ideas on to our law which may be foreign to it.
Now the words, “beneficially interested,” are used in connection with English real property,
and as our law of fixed property differs toto caelo from that of England, it becomes at once
manifest to what confusion the use of such words may lead us.’28
[66] After a survey of English law where the concept of ‘beneficial interest’ was
used in various statutes, the learned judge continued:
‘From the above references it seems clear to me that the Legislature of the Union never
intended to import from England into this country all the technical meanings which have
been given to the words “beneficially interested” in English statutes or in English decisions
dealing with the complicated machinery of the English law of real property. I think that we
should restrict the words "beneficially interested” to that meaning which it usually has when
the term is used to call attention to a severance of interests . . .’29
25 The Princess Estate and Gold Mining Co Ltd v The Registrar of Mining Titles 1911 TPD 1066.
26 Act 30 of 1911 was repealed by s 35 of Act 59 of 1962, which in turn was repealed by s 34 of Act
77 of 1968, which Act has been repealed by s 103 of the Revenue Laws Amendment Act 60 of 2008.
27 The Princess Estate at 1075.
28 The Princess Estate at 1076.
29 The Princess Estate at 1077.
[67] This Court had occasion in EBN Trading (Pty) Ltd v Commissioner for
Customs and Excise and Another30 to consider the concept of ‘beneficial interest’.
There the issue was whether the appellant, EBN, was an ‘importer’ in terms of the
definition contained in s 1 of the Customs and Excise Act 91 of 1964 in respect of
imported goods, for which EBN had provided finance for their procurement. The
goods were EBN’s security for the amounts owed to it by the importers. Upon arrival
in the country, the Commissioner for Customs and Excise, and the Controller of
Customs and Excise, Durban, detained the goods on the basis that customs duty
had not been paid for them. EBN was not an importer in the ordinary sense of the
word. However, one of the extended meanings contained in the definition of importer
in the Act included any person who ‘is beneficially interested in any way whatever in
any goods imported’. After analysing the relationship between the actual importers
and EBN, the Court concluded that EBN had a beneficial interest (‘advantageous
and profitable to it’) in the context of the extended definition, and was, therefore, the
‘importer’ of the goods.
[68] EBN Trading emphasises the point that a contextual approach should be
adopted, in accordance with the well-established principles. And, as cautioned in
both Lucas’ Trustee and The Princess Estate, it is not helpful to link the meaning of
the term ‘beneficial interest’ when used in our statutory enactments to the English
concept. In addition, I am of the view that it is undesirable to use concepts developed
in the law of ownership to interpret a socio-constitutional provision such as regulation
6(d).
[69] This brings me to the structure of the Clicks Entities, which is as follows: the
first appellant, the Clicks Group, is the holding company of the Clicks Entities, which
comprise the second appellant, New Clicks, the third appellant, Unicorn
Pharmaceuticals, the fourth appellant, Clicks Investments, and the fifth appellant,
Clicks Retailers. New Clicks is a wholly-owned (100 percent) subsidiary of the Clicks
Group. In turn, New Clicks holds all shares in Unicorn Pharmaceuticals, a
manufacturing pharmacy. New Clicks also holds all the shares in Clicks Investments,
30 EBN Trading (Pty) Ltd v Commissioner for Customs and Excise and Another [2001] ZASCA 6;
[2001] 3 All SA 117; 2001 (2) SA 1210 (SCA).
which in turn holds all the shares in Retailers, which owns and operates the
community pharmacies.
[70] As mentioned already, to determine whether a corporate structure such as
that of the Clicks Entities contravenes regulation 6(d), it must be established first,
that there is an entity that owns or has a beneficial interest in a community
pharmacy. Next, it must be established whether such owner or the entity’s
shareholder, director, trustee, beneficiary or member, owns or has any direct or
indirect beneficial interest in a manufacturing pharmacy.
[71] On behalf of the Clicks Entities, it was submitted that since the assets of a
company do not belong to the shareholders of the company but to the company
itself, even 100 percent shareholding in a company does not translate into a
‘beneficial interest’ in the company. Proceeding from that premise, it was submitted
that, although Retailers owns all the community pharmacies, Clicks Investments
does not own the pharmacies and does not have any rights to the benefits of
ownership of the pharmacies, and that Clicks Investments does not have any
beneficial interest in the pharmacies.
[72] This contention places undue focus on beneficial ownership, and fails to take
into account that not only ownership is targeted, but also beneficial interest, whether
directly or indirectly. The inclusion of the words ‘direct or indirect beneficial interest’
in regulation 6(d) is an indication that the legislature intended a wider scope of
prohibition beyond beneficial ownership. It follows that the concept of ‘direct or
indirect beneficial interest’ must be given a wider import than strict ownership.
[73] In any event, the fact that the assets of a company do not belong to the
shareholders, does not necessarily mean that the shareholders do not have an
interest in them. Of course they do. The high court summed it up neatly as follows (at
para 18):
‘It would be artificial to contend that a company which owns 100% of the shares in a
company does not have a direct or indirect beneficial interest in the business owned and
operated by that company. The shareholder appoints directors to the company's board. The
board determines what dividend is declared, which is then paid to the shareholder from the
funds generated by the business. The proceeds of the winding up of the company go to its
shareholder. The shareholder thus clearly has a beneficial interest in the business owned by
the company.’
[74] The high court further pointed out, an entity having interests in both types of
pharmacies would gain financially if the manufacturing pharmacy’s products are
promoted by the pharmacists in the community pharmacies over other products. This
could result in consumers not getting the best quality product at the best price.
Products which are not strictly needed might be recommended and sold. The conflict
of interest could also result in the manufacturing pharmacy favouring community
pharmacies belonging to the same group above outside or independent pharmacies.
This might affect the availability of products to customers. I agree with this
reasoning.
[75] As explained in the explanatory affidavit of the Minister, the main mischief
sought to be prevented by regulation 6(d) is the dispensing or recommendation of a
medicine, supplied by a sufficiently commercially connected manufacturing
pharmacy, where a generic substitute was available. The obvious purpose of the
regulation was to ensure that pharmacists did not have a vested interest in the drugs
which they dispensed or recommended. Another danger is that if pharmacies are
permitted to create their own affiliated manufacturers whom they control, directly or
indirectly, they would directly be involved in setting prices and have strong incentives
to keep those prices high. There is an inherent conflict of interest when a pharmacist
is employed and remunerated by an entity which forms part of a group which also
owns or has an interest in a manufacturing entity.
[76] The mischief aimed at by regulation 6(d) is very clear: simultaneous
ownership or beneficial interest in both a community pharmacy and a manufacturing
pharmacy. In my view, this is one case where the mischief intended to be addressed
must receive some prominence when interpreting the provision. As such, a
purposive and generous interpretation must be given to the regulation to achieve its
apparent purpose, namely to prevent a conflict of interest and the entrenchment of
monopolies in dispensing medicines. Anything less would render the regulation
nugatory, as all what it would take to circumvent the purpose of the legislative
scheme is a sophisticated corporate arrangement, such as interposing a juristic
entity between an owner of a community pharmacy and that of a manufacturing
pharmacy.
[77] Indeed, this is what happened here. To circumvent the prohibition of
regulation 6(d), the Clicks Entities’ structure interposed Clicks Investments between
New Clicks and Retailers. It is clear that the only reason for this is to attempt to
circumvent the prohibition in the regulation. But the mischief sought to be addressed
by the regulation does not fall away merely because of this. To achieve the purpose
of regulation 6(d), a court should incline to an interpretation that sees through this
clever and sophisticated corporate structuring in order to give effect to the purpose of
regulation 6(d). The regulation must be given such construction as will advance the
remedy rather than limit it.31
[78] It must also be borne in mind that the regulation squarely implicates a right
enshrined in the Bill of Rights, namely the right to have access to health care
services.32 As the Constitutional Court recognised in Minister of Health v New
Clicks,33 that right embraces the right to access quality and affordable medicines.
Two interpretive injunctions are relevant in this regard. The first is that 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.34 The second is that where a
31 Smyth and Others v Investec Bank Limited and Another [2017] ZASCA 147; [2018] 1 All SA 1;
2018 (1) SA 494 (SCA) para 20.
32 Section 27 of the Constitution of South Africa, 1996 provides:
‘(1) Everyone has the right to have access to –
(a) Health care services, including reproductive health care;
(b) . . .
(c) . . .
(2) The state must take reasonable legislative and other measures, within its available resources, to
achieve the progressive realisation of each of these rights.
(3) No one may be refused emergency medical treatment.’
33 Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others [2005] ZACC 14;
2006 (2) SA 311; 2006 (1) BCLR 1 (CC) para 704.
34 Investigating Directorate: Serious Economic Offences v Hyundai Motor Distributors (Pty) Ltd: in re
Hyundai Motor Distributors (Pty) v Smit N O [2000] ZACC 12; 2001 (1) SA 545 (CC) paras 23-25.
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.35
[79] As stated already, according to the Clicks Entities, to be a beneficiary or to
have a direct or indirect beneficial interest relates only to the benefits of ownership of
the pharmacies. In my view, this construction of regulation 6(d) permits the clear
circumvention of the apparent purpose of the regulation. It is not one that best
promotes the spirit, purport and objects of the Bill of Rights, and in particular the right
of access to health care services as stated above. By all accounts, both textually and
contextually, the interpretation of regulation 6(d) advanced by ICPA is to be
preferred. It gives effect to the purpose of the regulation and fulfills the injunction in s
39(2) of the Constitution to prefer an interpretation that best gives effect to the spirit,
purport and objects of the Bill of Rights.
[80] In the light of the interpretation I prefer, I conclude that the Clicks corporate
structure contravenes regulation 6(d) through the beneficial interests of Clicks
Investments and New Clicks in both community pharmacies and the manufacturing
pharmacy. This is how those beneficial interests occur. As to Clicks Investments, it
has, on the one hand, a beneficial interest in community pharmacies owned by
Retailers as it is the sole shareholder of Retailers. On the other, Clicks Investments’
sole shareholder, New Clicks, is the sole shareholder of Unicorn Pharmaceuticals,
which owns a manufacturing pharmacy. As to New Clicks, it has a beneficial interest
in community pharmacies as the sole shareholder of Clicks Investments, which in
turn is the sole shareholder of Retailers, which owns the community pharmacies.
The board of Retailers is controlled though Clicks Investments. As far as interest in a
manufacturing pharmacy is concerned, New Clicks is the sole shareholder of
Unicorn Pharmaceuticals, which owns the manufacturing pharmacy. It thus has a
beneficial interest in that pharmacy.
35 Wary Holdings (Pty) Ltd v Stalwo (Pty) and Another [2008] ZACC 12; 2009 (1) SA 337 (CC) paras
46, 84, 107.
[81] I have already concluded that s 22A is capable of a wider interpretation to
enable the Minister to make regulations in terms thereof, to deal with issues beyond
mere ownership of pharmacies. In view of that conclusion, like the high court, I deem
it unnecessary to consider the constitutional challenge to the section.
[82] It remains to comment briefly on Clicks Entities’ dilatory technical point – the
only one it still pursues after many others were advanced, but dismissed by the
Appeal Committee. Clicks Entities argue that ICPA’s complaint was ‘stillborn’,
because originally it was aimed at revoking the pharmacy licences of Unicorn
Pharmaceuticals and Retailers, but ‘replaced’ that with a complaint that Clicks
Investments and New Clicks are in contravention of regulation 6(d). As correctly
pointed out by ICPA’s counsel, whilst particular reference was made to those entities
in the original complaint, it is clear that the ICPA complained about the structure of
the Clicks Group. But, the nature of the original complaint has become irrelevant for
the following reasons. The corporate structure of the Clicks Entities was the
complaint as formulated before the Appeal Committee. The Appeal Committee fully
considered ICPA’s complaint about Clicks Investments and New Clicks, and
dismissed it in a comprehensive decision.
[83] That complaint was carried through in the founding affidavit in the high court,
and became the main focus of the submissions in that court. In this Court, we have
similarly had the benefit of full and comprehensive argument on the real dispute
between the parties. What is more, the Clicks Entities have not alleged any prejudice
resulting from the ‘mutation’ of the complaint. I am unable to fathom any. The dispute
between the parties is of public importance and as mentioned already, it implicates a
constitutional right. In the light of these considerations, I take a view that it is
inappropriate to non-suit ICPA on an overly technical and dilatory point, and which
occasions no prejudice at all to any of the parties. Whereas technical points have
their place, this is not the occasion for such. It amounts to placing form over
substance, for which no real purpose would be served by it other than to delay the
adjudication of the dispute between the parties.
[84] For all of these reasons, I would dismiss the appeal with costs, including the
costs occasioned by the employment of two counsel.
___________________
T M Makgoka
Judge of Appeal
APPEARANCES:
For appellants:
W Trengove SC (with him L Sisilana)
Instructed by:
Cliff Dekker Hofmeyr Inc., Sandton
Webbers Attorneys, Bloemfontein
For respondent:
J Muller SC (with him J de Waal SC)
Instructed by:
Van Der Spuy, Cape Town
Hill, McHardy & Herbst 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:
3 DECEMBER 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
The Clicks Group Ltd and Others v The Independent Community Pharmacy Association and
Others (644/2020) [2021] ZASCA 167 (3 December 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with costs, an appeal
against a decision of the Western Cape Division of the High Court (the high court).
The issue before the SCA was whether Clicks Group had contravened the Pharmacy Act 53 of 1974
(the Act), read with regulation 6(d) of the Regulations relating to Ownership and Licencing of
Pharmacies the Act, on the basis that entities within the Clicks Group owned community (retail)
pharmacies while at the same time having a beneficial interest in a manufacturing company.
The first respondent is the Independent Community Pharmacy Association (ICPA). The ICPA lodged a
complaint with the Department of Health against the first to fifth appellants (collectively referred to as
the Clicks Group of Companies or Clicks Group). It sought the revocation of retail and manufacturing
licences held within the Clicks Group on the basis that the Clicks Group contravened regulation 6(d) of
the Regulations relating to the Ownership and Licencing of Pharmacies (the Regulations), promulgated
under s22A of the Pharmacy Act 53 of 1974 (the Act).
The Clicks Group operates over 500 community (retail) pharmacies, with over 2 000 pharmacy staff
(pharmacists and pharmacists’ assistants) and 200 nursing practitioners. The third appellant, Unicorn
Pharmaceuticals (Pty) Ltd (Unicorn), is a manufacturing pharmacy and a holder of 39 generic medicines
under the regulatory regimes that apply to the sale of medicine. Clicks Retailers Pty Ltd (Clicks
Retailers) is a leading provider of pharmaceutical services in South Africa and a leading retailer of health
and beauty products. It operates approximately 470 licensed community pharmacies throughout the
country. These pharmacies are part and parcel of Clicks stores that employ thousands more, both in-
store and in the supply chain and corporate office infrastructure that supports the stores.
The Clicks Group corporate structure is constituted as follows:
(a) Clicks Group is the holding company;
(b) It holds all the shares in New Clicks;
(c) New Clicks holds all the shares in Unicorn and in Clicks Investments (Pty) Ltd (Investments);
(d) Unicorn owns a licenced manufacturing pharmacy;
(e) Investments holds all the shares in Clicks Retailers;
(f) Retailers owns licenced community pharmacies countrywide.
Of particular significance to this appeal was the finding of the high court that the Clicks Group had a
beneficial interest in Unicorn as a result of its shareholding in various entities within the Group. It
reasoned that New Clicks and Click Investments (Pty) Ltd (Investments) held a beneficial interest in the
manufacturing pharmacy owned by Unicorn and the community pharmacies owned by Retailers and
this was especially so because as shareholders, New Clicks and Investments have financial interests
in Unicorn and Retailers.
The SCA held that the structure of the Clicks Group represents separate and different juristic persons.
New Clicks has no beneficial interest or control of the assets of Retailers, which assets are mainly Clicks
Pharmacies. Consequently, New Clicks cannot exercise the rights that derive from Retailers’ community
pharmacy licence.
The SCA held further that it was equally not correct to contend that because New Clicks holds shares
in Unicorn or Retailers, they have a beneficial interest in the underlying pharmacies owned by them. It
was clear that New Clicks and the Clicks Group did not own a community pharmacy or retail pharmacy
and thus did not contravene regulation 6(d).
Makgoka JA writing the dissenting judgment, held that the fact that the assets of a company do not
belong to the shareholders, does not necessarily mean that the shareholders do not have an interest in
them. Therefore, Makgoka JA concluded that that the Clicks corporate structure contravenes regulation
6(d) through the beneficial interests of Clicks Investments and New Clicks in both community
pharmacies and the manufacturing pharmacy.
~~~~ends~~~~
|
2295
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 42/09
HERMAN ZüRICH
Appellant
and
THE STATE
Respondent
Neutral citation:
Zürich v The State (42/09) [2009] ZASCA 108 (22
September 2009)
Coram:
Streicher JA, Hurt et Bosielo AJJA
Heard:
31 August 2009
Delivered:
22 September 2009
Summary:
Criminal law – Appeal against conviction of unlawful trade
in ivory – Admissibility of evidence obtained as a result of
improper conduct not involving the accused.
_____________________________________________________
ORDER
On appeal from:
Northern Cape High Court (Williams J and Mokgohloa
AJ) on appeal from the Regional Court, Upington.
The appeal is dismissed.
JUDGMENT
BOSIELO AJA (Streicher JA et Hurt AJA concurring).
[1] The appellant, an attorney practising in Upington was charged,
together with a co-accused Jacques Andrew Esterhuizen (Esterhuizen) in the
Regional Court, Upington on various counts relating to the contravention of
the Northern Cape Nature and Environmental Conservation Ordinance 19 of
1974 (the Ordinance). On 22 November 2005 the appellant was convicted on
counts one and two on the basis that he had been an accomplice in the
unlawful importation and subsequent sale of elephant tusks by Esterhuizen to
one Jaco Oberholzer (Oberholzer) in contravention of ss 44(1)(b)(i)1 and 462
of the Ordinance.
' s 44(1)(b)(i) Subject to the provisions of this ordinance, no person shall without a permit
authorising him to do so-
(a)
. . . .
(b)(i)
import into the Province from any place outside the Republic the carcass of
any wild animal, or . . .'
2 's 46 No carcass of any wild animal shall be sold by any person other than-
(a)
the owner of any land on which the animal concerned was hunted in
accordance with the provisions of this ordinance;
(b)
a market master at a public or municipal market; or
(c)
a person authorised by a permit issued under this ordinance or a licence
issued under the Licences Ordinance, 1981(Ordinance 17 of 1981), to sell such
carcass.'
[2] On appeal to the Northern Cape High Court, the conviction and
sentence on count 1 were set aside. The conviction on count 2 was confirmed
but the sentence was set aside and replaced with a fine of R5 000,00 (five-
thousand rand) or imprisonment for nine months with a further imprisonment
for nine months suspended for 3 years on prescribed conditions. The
appellant is appealing against that judgment with the leave of the court below.
[3] The facts of this case are common cause. During or about December
1998, the South African Police Services (SAPS) launched a special covert
operation dubbed 'Operation Rhino' in Upington. This was in direct response
to reports of some widespread criminal activities in Upington involving
unlawful dealing in uncut diamonds and unlawful dealing in protected species.
In the course of their initial investigations, some twenty-six suspects, including
the appellant were identified.
[4] The required authority to undertake the covert operation in terms of s
252A of the Criminal Procedure Act 51 of 1977 (the CPA) was obtained from
the office of the Director of Public Prosecutions (DPP) in Kimberley. Jaco
Oberholzer (Oberholzer), a member of the Gold and Diamond Unit,
Bloemfontein was to be used as the undercover agent. In order to facilitate
this covert operation Oberholzer was employed by one Nickey Celliers, also
one of the police informers involved in 'Operation Rhino', at Celliers' business
called North Western Transport in Upington. The authority thus conferred
included the interception and recording of communications between the
police, the undercover agent and the suspects.
[5] It appears that, during the period between December 1998 and
January 1999, Oberholzer's credibility in the role he was playing began to be
questioned. This posed a serious threat to the entire covert operation. In order
to save the project the police decided to clothe Oberholzer with more
convincing credibility. They decided to stage a bogus arrest of Oberholzer for
unlawful dealing in uncut diamonds. The necessary authority for this bogus
arrest was granted by the office of the DPP in Kimberley.
[6] Pursuant to this ploy, Oberholzer was duly arrested on 25 February
1999 for unlawful dealing in uncut diamonds. It was part of the scheme that
Oberholzer would contact the appellant for legal representation. This
Oberholzer did but, as the appellant had a prior engagement on the date set
for Oberholzer's court appearance the appellant instructed one, Mr de Beer,
his professional assistant to attend to the bail application, which de Beer did
successfully. It was an essential part of the plot that Oberholzer should use
this arrest to establish and maintain a relationship with the appellant. It was in
the course of the relationship which ensued that the appellant told Oberholzer
that he knew of someone from Rietfontein who had elephant tusks to sell. He
offered to introduce Oberholzer to that person. In pursuance of this offer the
appellant called Oberholzer to his offices on 29 March 1999 to meet the man
from Rietfontein who turned out to be Esterhuizen (who later became accused
two). The appellant introduced Esterhuizen to Oberholzer at his offices. As a
direct consequence of this introduction, Esterhuizen sold and delivered two
elephant tusks to Oberholzer. In a recorded conversation on 1 April 1999, the
transcript whereof was handed in as 'Exh K,' Oberholzer reported to appellant
that a sale was successfully concluded for R20 500,00.
[7] In terms of s 252A of the Criminal Procedure Act 51 of 1977 any law
enforcement officer, official of the State or any other person authorised
thereto for such purpose may make use of a trap or engage in an undercover
operation in order to detect, investigate or uncover the commission of an
offence, or to prevent the commission of any offence, and the evidence so
obtained shall be admissible if that conduct does not go beyond providing an
opportunity to commit an offence. The appellant conceded that the conduct of
the police in this case did not go beyond providing an opportunity to commit
an offence. It follows that the evidence against the appellant was not rendered
inadmissible by virtue of the fact that it was obtained by way of a trap. Before
us the appellant accepted that to be the case.
[8] In the court below the appellant contended that the evidence against
him was rendered inadmissible by s 35(5) of the Constitution. The section
provides:
‘Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if
the admission of that evidence would render the trial unfair or would otherwise be detrimental
to the administration of justice.’
The court below held that the section did not render the evidence against the
appellant inadmissible as the admission of such evidence would not have
rendered the trial unfair. Before us the appellant conceded that the section did
not apply as no right in the Bill of Rights was violated. The appellant did
however submit that the evidence against him should not have been admitted
in that it was obtained in an improper manner in that the magistrates and the
prosecutor concerned were misled and the judicial process was abused by
police officers in cooperation with senior officials of the National Prosecuting
Authority in order to create an opportunity for Oberholzer to make contact with
the appellant so as to uncover the commission of an offence.
[9] The respondent conceded that the investigative methods employed by
the police were unacceptable and that a court had a discretion to disallow
evidence improperly obtained but submitted that the facts relied upon by the
appellant did not justify the exclusion of the evidence.
[10] In S v M 2002 (2) SACR 411 (SCA) at 431g-i Heher JA said that there
is no doubt that a court at common law has a discretion to exclude evidence
improperly obtained on the basis of ‘a proper balancing of the competing
interests so clearly identified’ in S v Hammer and Others 1994 (2) SACR 496
(C). In that case Farlam J said at 499a-e:
‘The following factors may be useful in deciding whether to exercise the discretion: (a)
society’s right to insist that those who enforce the law themselves respect it, so that a citizen’s
precious right to immunity from arbitrary and unlawful intrusion into the daily affairs of private
life may remain unimpaired; (b) whether the unlawful act was a mistaken act and whether in
the case of mistake, the cogency of evidence is affected; (c) the ease with which the law
might have been complied with in procuring the evidence in question (a deliberate “cutting of
corners” would tend towards the inadmissibility of the evidence illegally obtained); (d) the
nature of the offence charged and the policy decision behind the enactment of the offence are
also considerations; (e) unfairness to the accused should not be the only basis for the
exercise of the discretion; (f) whether the administration of justice would be brought into
disrepute if the evidence was admitted; (g) there should be no presumption in favour of or
against the reception of the evidence, the question of an onus should not be introduced; (h) it
should not be a direct intention to discipline the law enforcement officials; (i) an untrammelled
search for the truth should be balanced by discretionary measures, for in the words of Knight
Bruce VC, “Truth, like other good things, may be loved unwisely – it may be pursued too
keenly – may cost too much”.’
[11] In the present case the police or prosecuting authorities did not perform
an unlawful act as against the appellant. Insofar as their conduct was
improper it was improper as against the court, the magistrates and the
prosecutors involved. Counsel for the appellant correctly conceded that the
appellant’s rights had not been violated by such improper conduct. In so far as
the appellant was concerned, a misrepresentation was made to him that
Oberholzer had been dealing in uncut diamonds and that misrepresentation
eventually led to him introducing Oberholzer to Esterhuizen as a person who
had elephant tusks for sale. Traps, by their very nature always involve
misrepresentations specifically intended to deceive the suspect. In terms of
s 252A the uncovering of an offence by way of such a misrepresentation is
not improper and if it goes no further than to create an opportunity to commit
an offence does not affect the admissibility of the evidence obtained as a
result. Save for the limited purpose of persuading the appellant that
Oberholzer might be inclined to unlawful acts, the misleading of the court, the
magistrates and the prosecutors had no effect on the trial. The appellant can
therefore not complain that he did not have a fair trial. In these circumstances
the admission of the evidence could not have brought the administration of
justice into disrepute. To the contrary the exclusion of the evidence could
have done so. The appellant is an attorney who was suspected of criminal
activities which the police had great difficulty in exposing. In these
circumstances the evidence against the appellant obtained as aforesaid was
in my view correctly admitted against the appellant.
[12] The appellant did not advance any other basis for upholding the
appeal. The appeal is therefore dismissed.
______________________
L O BOSIELO
ACTING JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
F VAN ZYL SC
Instructed by
ENGELSMAN,
MAGABANE
INC
KIMBERLEY
LOVIUS
BLOCK
ATTORNEYS
BLOEMFONTEIN
FOR RESPONDENT:
J J CLOETE
Instructed by
NATIONAL PROSECUTION AUTHORITY
KIMBERLEY
DIRECTOR
PUBLIC
PROSECUTIONS
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:
22 SEPTEMBER 2009
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
HERMAN ZüRICH v THE STATE
[1] In a judgment delivered on 22 September 2009, the Supreme Court
of Appeal dismissed an appeal against the conviction of Mr Zürich in the
Regional Court Upington on one count of being an accomplice to the
commission of the offence of unlawful dealing in two ivories. The
appellant's conviction was based on the evidence of one Jaco Oberholzer
who was an undercover police agent in a covert operation called
operation Rhino. The necessary authority for this covert operation in
terms of s 252(A) of the Criminal Procedure Act 51 of 1977 (CPA) had
been granted by the office of the Director of Public Prosecutions,
Kimberley (DPP).
[2] On appeal the admissibility of Oberholzer's evidence was
challenged, not in terms of s 252(A)(1) of CPA or 35(5) of the
Constitution of the Republic of South Africa (the Constitution) but on the
basis that the evidence was tainted by an abuse of the legal process when
the police, in order to clothe Oberholzer with a more convincing
credibility, staged a bogus arrest of Oberholzer, which resulted in
Oberholzer appearing in the Magistrate Court, Upington on false charges
of unlawful dealing in diamonds. This bogus arrest afforded Oberholzer
the opportunity of establishing a relationship with the appellant which
culminated in the appellant introducing Oberholzer to the seller of the
two ivories.
[3] On appeal the SCA held that, although the investigative methods
used by the police are unacceptable, such was not unlawful against the
appellant and further that it did not render the trial unfair. The conviction
on one count of being an accomplice to the unlawful dealing in two
ivories was upheld.
|
3760
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 463/2020
In the matter between:
DR HUBERT ADENDORFF N O FIRST APPELLANT
DR HUBERT ADENDORFF
SECOND APPELLANT
and
DANIEL PHUNYULA KUBHEKA FIRST RESPONDENT
DIRECTOR - GENERAL FOR
THE DEPARTMENT OF RURAL
DEVELOPMENT AND LAND AFFAIRS SECOND RESPONDENT
Neutral citation: Adendorff N O and Another v Kubheka and Another (Case
no 463/20) [2022] ZASCA 29 (24 March 2022)
Coram:
PETSE AP, MBHA and CARELSE JJA and PHATSHOANE
and MOLEFE AJJA
Heard:
07 December 2021
Delivered: This judgment was handed down electronically by circulation to
the parties’ representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down of
the judgment is deemed to be 10h00 on 24 March 2022.
Summary: Labour tenant – definition of a labour tenant in s 1 of the Land
Reform (Labour Tenants) Act 3 of 1996 – farmworker – requirements in terms
of s 2(5) of the Labour Tenants Act – application for an award of land in terms
of s16 and 17 of the Labour Tenants Act – the question of compensation in
terms of ss 22 and 23 of the Labour Tenants Act arising only after
determination by a court that the occupier is a labour tenant.
ORDER
On appeal from: Land Claims Court, Randburg (Barnes AJ, sitting as a court
of first instance):
The appeal is dismissed.
The order of the Land Claims Court is supplemented by the addition of
the following:
‘2.1 The second respondent is ordered and directed, within 60 days of
this order, to cause the portion of the farm Cadie awarded to the first
respondent to be evaluated, which evaluation should include the entire
farm Cadie, to determine just and equitable compensation to be paid to
the appellants for the said land.
2.2
The second respondent is directed to cause the evaluation
envisaged in paragraph 2.1 to be conducted and concluded within 60
days and to be made available to the appellants’ attorneys of record
within five (5) days of completion thereof.
2.3
The appellants are authorised to engage an expert valuer of their
choice to evaluate the land described in paragraph 2.1 hereof, such
evaluation to include the entire farm.
2.4
The appellants shall cause to be served on the attorneys of record
of the first and second respondents the said evaluation within five (5)
days of completion thereof.
2.5
The parties are directed to enter into negotiations in good faith
with a view to settling the question of compensation as envisaged in s
23 of the Labour Tenant Act 3 of 1996 read with s 25 of the Constitution.
Such discussions are to be concluded within 60 days of the date of
exchange between the parties of the last valuation report.
2.6
Should no agreement be reached between the appellants and the
second respondent regarding the issue of just and equitable
compensation for the agreed land, either party is granted leave to
approach the Land Claims Court, on notice to the other, for appropriate
relief including the determination of just and equitable compensation.’
There shall be no order as to the costs of the appeal in this Court.
JUDGMENT
Carelse JA (Petse AP, Mbha JA and Phatshoane and Molefe AJJA
concurring):
[1] The primary issue in this appeal is whether the Land Claims Court
(LCC) was correct in finding that the first respondent, Mr Daniel Phunyula
Kubheka, is a labour tenant in terms of s 33(2A) of the Land Reform (Labour
Tenants) Act 3 of 19961 (the Labour Tenants Act). Mr Daniel Kubheka was
the plaintiff in an action brought in the LCC. The second respondent is the
Director-General for the Department of Rural Development and Land Affairs
(the Department) who was the third defendant in the LCC. The registered
1 Section 33 (2A) provides that:
‘At the instance of any interested person, including a person who avers that he or she is a labour tenant,
irrespective as to whether or not such person has lodged an application in terms of section 17, the Court may
determine whether a person is a labour tenant.’
owner of the farm which is the subject of the dispute was Mrs Adendorff (the
first defendant in the LCC). She has since died and her husband, the second
appellant, Dr Adendorff (the second defendant in the LCC) has been
substituted as the first appellant, in his capacity as the Executor of the Estate
of the late Mrs Adendorff.
[2] On 26 April 2019, the LCC, Randburg, per Barnes AJ, declared Mr
Daniel Kubheka a labour tenant in terms of s 33(2A) of the Labour Tenants
Act and, pursuant thereto, awarded him a portion of portion 1 of the farm Cadie
No 12399 (Cadie), Registration Division HS, in the district of Newcastle,
Kwa-Zulu Natal. This land included two grazing camps, which Mr Daniel
Kubheka and his family members were occupying and using as at 2 June 1995
in terms of s 162 of the Labour Tenants Act. Barnes AJ made no order as to
costs. Dissatisfied with the outcome of the trial, the Adendorffs applied for,
and were granted, leave to appeal to this Court after the LCC had refused leave.
2 Section 16 provides that:
‘(1) Subject to the provisions of this Act, a labour tenant or his or her successor may apply for an award of–
(a) the land which he or she is entitled to occupy or use in terms of section 3;
(b) the land which he or she or his or her family occupied or used during a period of five years immediately
prior to the commencement of this Act, and of which he or she or his or her family was deprived contrary
to the terms of an agreement between the parties;
(c) rights in land elsewhere on the farm or in the vicinity which may have been proposed by the owner of
the farm; and
(d) such servitudes of right of access to water, rights of way or other servitudes as are reasonably necessary
or are reasonably consistent with the rights which he or she enjoys or has previously enjoyed as a labour
tenant, or such other compensatory land or rights in land and servitudes as he or she may accept in terms
of section 18 (5): Provided that the right to
apply to be awarded such land, rights in land and servitudes shall lapse if no application is lodged with
the Director-General in terms of section 17 on or before 31 March 2001.
(2) The terms of an agreement whereunder a labour tenant waives the rights conferred on him or her by this
section shall not come into operation unless –
(a) the Director-General has certified that he or she is satisfied that the labour tenant had full knowledge of
the nature and extent of his or her rights as well as the consequences of the waiver of such rights; or
(b) such terms are incorporated in an order of the Court or an arbitrator appointed in terms of section 19.’
[3] Mr Daniel Khubeka, who has resided on Cadie since 1975, instituted
action proceedings against the Adendorffs in the LCC. In addition to seeking a
declaration that he was a labour tenant and that he be awarded the portion of
Cadie that he and his family members were using on the 2nd of June 1995, he
sought an order that monies needed to compensate the Adendorffs for that
portion of land on Cadie be made available by the Department. The LCC did
not order the Department to make funds available to compensate the
Adendorffs for that portion of the land awarded to Mr Daniel Kubheka. The
Department elected not to participate in the trial but instead gave a written
undertaking that it would make money available to compensate the land owner
if an award of the land were made by the LCC.
[4] There are a number of interrelated issues that require determination in
this appeal. These are:
4.1 whether Mr Daniel Kubheka satisfied the requirements set out in
paragraphs (a), (b) and (c), read conjunctively, in terms of the definition of
‘labour tenant’ in s 1 of the Labour Tenants Act. Pertinently, has he complied
with paragraph (b) in s 1 of the Labour Tenants Act. Put differently, has Mr
Daniel Kubheka proved that as at 2 June 1995 he was a labour tenant as defined
in the Labour Tenants Act;
4.2 whether the Adendorffs proved that Mr Daniel Kubheka is a farmworker.3
In order to succeed, it was incumbent upon the Adendorffs to prove that: (i)
Mr Daniel Kubheka was paid predominantly in cash or in some other form of
3 Section 2(5) of the Labour Tenants Act.
remuneration, and not pre-dominantly in the right to occupy and use land, and
(ii) that Mr Daniel Kubheka was obliged to perform his services personally;
4.3 whether Mr Daniel Kubheka had lodged a valid claim before 31 March
2001 in terms of ss 16 and 174 of the Labour Tenants Act;
4.4 whether the LCC should have ordered just and equitable compensation in
terms of s 23 of the Labour Tenants Act, and whether the LCC should have
granted orders in terms of s 225 of the Labour Tenants Act; and,
4 Section 17 of the Labour Tenants Act provides as follows:
‘(1) An application for the acquisition of land and servitudes referred to in section 16 shall be lodged with
the Director-General.
(2) On receiving an application in terms of subsection (1), the Director-General shall –
(a) forthwith give notice of receipt of the application to the owner of the land and to the holder of any other
registered right in the land in question;
(b) in the notice to the owner, draw his or her attention to the contents of this section and section 18;
(c) cause a notice of the application to be published in the Gazette; and
(d) call upon the owner by written request, to furnish him or her within 30 days –
(i) with the names and addresses of the holders of all unregistered rights in the land in question, together
with a copy of any document in which such rights are contained, or if such rights are not contained in
any document, full particulars thereof;
(ii) with any documents or information in respect of the land in question and the rights in such land as the
Director-General may reasonably require.
(3) A notice in terms of subsection (2)(a) or (d), may be given by way of registered mail or through service
in the manner provided for the service of summons in the Rules of Court made in terms of the
Magistrates’ Courts Act, 1944 (Act 32 of 1944), read with section 6(3) of the Rules Board for Courts of
Law Act, 1985 (Act 107 of 1985).
(4) The owner of affected land shall within one calendar month of receipt of the notice referred to in
subsection (2) (a), inform the Director-General in writing –
(a) whether he or she admits or denies that the applicant is a labour tenant within the meaning of this Act;
and
(b) if he or she denies that the applicant is a labour tenant, the grounds on which he or she does so.
(5) If the owner fails to inform the Director-General within the period referred to in subsection (4) that he
or she denies that the applicant is a labour tenant, the applicant shall be presumed to be a labour tenant,
unless the contrary is proved.
(6) If the owner does not inform the Director-General within the period referred to in subsection (4) that he
or she admits that the applicant is a labour tenant, the Director-General shall, at the request of either
party, refer the application to the Court.
(7) Any person whose rights are affected by the application shall have the right to participate in the
proceedings before the arbitrator and the Court, in the manner provided in the rules.
(8) Should the owner, without good reason, fail to give to the Director-General any information or
documents requested in terms of subsection (2)(d) within 30 days of receipt of a written request
(a) the Court may order him or her to do so;
(b) the Court may make an order for costs against him or her; and
(c) he or she shall be liable for any loss which the Director-General or the applicant or any person may
suffer as result of such failure, and the Court may, on application by the affected person concerned, give
judgement against him or her for such loss.’
5 Section 22 of the Labour Tenants Act provides as follows:
4.5 whether the LCC should have awarded costs in the action against the
Department, even though the Adendorffs were unsuccessful? It is unnecessary
to recapitulate all of the facts because the LCC set out a detailed and proper
exposition of the facts. I intend to only set out those facts as are relevant for
present purposes.
[5] As to the first issue, the term ‘labour tenant’ is defined in the Labour
Tenants Act as a person –
‘(a)
who is residing or has the right to reside on a farm;
(b)
who has or has had the right to use cropping or grazing land on the farm, referred to
in paragraph (a), or another farm of the owner, and in consideration of such right
provides or has provided labour to the owner or lessee; and
‘(1) An arbitrator and the Court may dismiss an application referred to in section 16: Provided that the
arbitrator and the Court shall not dismiss an application if it is found by the arbitrator or the Court, or if it is
not in dispute, that the applicant is a labour tenant.
(2) The Court may order that land or a right in land, held by an owner of affected land, be awarded to the
applicant.
(3) The Court may, instead of or in addition to making an order for the award of land or a right in land held
by the owner of affected land, order that land or a right in land held by another person (including the State)
who is willing to have such land or right in land awarded to the applicant, be awarded to such applicant.
(4) The Court may make an order or award, and an arbitrator may make a determination, on the following
matters:
(a) Whether the applicant is a labour tenant, if that is in dispute;
(b) the nature, location and extent of any land or right in land which is to be awarded to an applicant, which
may include undivided shares in grazing land;
(c) such servitudes of access to water or rights of way or other servitudes as are reasonably necessary or are
reasonably consistent with the rights which the applicant or the owner of the affected land enjoys or has
previously enjoyed;
(d) the compensation to be paid by the applicant to the owner or affected land or to a person other than the
owner whose rights are affected by the determination, order or award;
(e) the manner and period of payment of compensation;
(f) compensation which shall be paid to the applicant in lieu of the award of land or a right in land; and
(g) other matters which, in the opinion of the arbitrator or the Court, need to be regulated by an order or award
of the Court, or by a determination of an arbitrator.
(5) In determining the nature of the order which is to be made the Court shall have regard to –
(a) the desirability of assisting labour tenants to establish themselves on farms on a viable and sustainable
basis;
(b) the achievement of the goals of this Act;
(c) the requirements of equity and justice;
(d) the willingness of the owner of affected land and the applicant to make a contribution, which is reasonable
and within their respective capacities, to the settlement of the application in question; and
(e) the report and any determination made by an arbitrator appointed in terms of section 19e(1)(a).’
(c)
whose parent or grandparent resided or resides on a farm and had the use of cropping
or grazing land on such farm or another farm of the owner, and in consideration of
such right provided or provides labour to the owner or lessee of such or such other
farm,
including a person who has been appointed a successor to a labour tenant in accordance
with the provisions of section 3(4) and (5), but excluding a farmworker.’
[6] Paragraphs (a), (b) and (c) of the definition must be read conjunctively;6
a person who satisfied the three jurisdictional requirements on 2 June 19957 is
presumed not to be a farmworker, unless the contrary is proved.8 It is common
cause that paragraph (a) was met. The Adendorffs argued that because Mr
Daniel Kubheka did not work for Mrs Adendorff, the owner of Cadie, on 2
June 1995, paragraph (b) of the definition was not fulfilled. The Adendorffs
also challenged whether paragraph (c) of the definition was fulfilled. There
was nothing to gainsay Mr Daniel Kubheka’s evidence that his parents resided
on the farm Glenbarton (Glenbarton) and had cropping and grazing rights. It
is trite that the onus is on Mr Daniel Kubheka to prove that he has satisfied the
requirements of the Labour Tenants Act, including, in particular, paragraphs
(a), (b) and (c) of the definition of the Labour Tenant Act. Once this has been
6 Mokwena v Marie Appel Beleggings CC and Another [1999] 2 All SA 157 (LCC) at 161E; see also Ngcobo
and Others v Salimba CC; Ngcobo v Van Rensburg [1999] 2 All SA 491 (A); 1999 (2) SA 1057 (SCA) at
1057I-J.
7Section 3(1) of the Labour Tenants Act states:
‘(1) Notwithstanding the provisions of any other law, but subject to the provisions of subsection (2), a person
who was a labour tenant on 2 June 1995 shall have the right with his or her family –
(a) to occupy and use that part of the farm in question which he or he or his or her associate was using and
occupying on that date;
(b) to occupy and use that part of the farm in question the right to occupation and use of which is restored to
him or her in terms of this Act or any other law.’
8 See Section 2(5) of the Labour Tenants Act, which states as follows:
‘(5) If in any proceedings it is proved that a person falls within paragraphs (a), (b) and (c) of the definition
of ‘labour tenant’, that person shall be presumed not to be a farmworker, unless the contrary is proved.’
established, the onus then shifts to the Adendorffs to prove that Mr Daniel
Kubheka is a farmworker.
[7] The Adendorffs contended that Mr Daniel Kubheka is not a labour
tenant but a farmworker. The term ‘farmworker’ is defined in the Labour
Tenants Act as:
‘. . . a person who is employed on a farm in terms of a contract of employment which
provides that –
(a)
in return for the labour which he or she provides to the owner or lessee of the farm,
he or she shall be paid predominantly in cash or in some other form of
remuneration, and not predominantly in the right to occupy and use land; and
(b)
he or she is obliged to perform his or her services personally.’ (My emphasis.)
[8] In 2017 when the trial commenced, Mr Daniel Kubheka was 69 years
old and is currently 73 years old. He still resides with his wife and children at
Cadie. He attended school up to standard 2. Mr Daniel Kubheka was born and
raised on Glenbarton farm, Kwa-Zulu Natal and lived with his parents and 10
siblings on Glenbarton. His parents had nine structures with a few gardens and
grazing fields. They also had cropping and grazing rights. In return for their
labour, Mr Daniel Kubheka’s parents provided labour to the owner of
Glenbarton, the late Mr Wynand Adendorff. According to Mr Daniel Kubheka
his parents were not paid in cash for their labour. In order to survive and earn
a livelihood his parents sold cattle. At the tender age of 11 he started working
at Glenbarton and was occasionally paid R1,00 in cash. His duties at
Glenbarton included mending the fences, tending the chickens, fetching the
cows for milk and working in the fields. Mr Daniel Kubheka’s parents are
deceased and are buried on Glenbarton. In 1975, at the age of 25, Mr Daniel
Kubheka relocated to Cadie. In 1980, he got married. His wife was a resident
at Cadie and together they built their homestead comprising of 8 structures.
Two of his children are deceased and are buried at Cadie.
[9] It is common cause that in 1962, after the death of Mr Wynand
Adendorff, Mr Daniel Kubheka worked for the late Mr Boet Theunissen (also
known as De Villiers) at Glenbarton. He relocated with Mr Boet Theunissen
to Cadie, and from 1975 until 1978 he provided his labour to Mr Boet
Theunissen at Cadie. From 1978 until 1984, Mr Daniel Kubheka worked for
Mr Van der Linde, who leased Cadie. Dr Adendorff leased Cadie from 1984.
During his testimony, and in response to a question relating to Cadie put to
him by his legal representative, Dr Adendorff said:
‘That farm was purchased.
When was that approximately?
I purchased that from the Theunissens.
In 1986?
In 1986. It was registered in 1987.
. . .
And the farm is registered in your wife’s name?
In my wife’s name.
And that is still the position.
. . .
. . . [W]hat did you do with the farm?
After that I rented it out to Mr Paul Oosthuizen.’
From 1995 until 2001, Mr Daniel Kubheka worked for Mr Paul Oosthuizen
who leased Cadie. From 2001 until 2004, Mr Daniel Kubheka provided his
labour to Mr George Lubbe who paid him R750 per month. In 2004, he
stopped working at Cadie.
[10] Barnes AJ accepted the evidence of Mr Daniel Kubheka and his
witnesses. The test for interference with a trial court’s factual findings by a
court of appeal imposes a high threshold. There are a number of principles
which should guide an appellate court when asked to overturn a trial judge’s
findings of fact. It is trite that an appeal court will only (in exceptional and
very limited circumstances) interfere with a trial judge’s findings unless the
appeal court is satisfied that the trial judge was ‘plainly wrong’. It would be
essential to show that fundamental and relevant evidence has not been
considered and that the decision reached by the trial judge is not supportable
on the evidence.9
[11] It is apparent from the record that the versions of Mr Daniel Kubheka
and his witnesses and that of Dr Adendorff and his witnesses are mutually
destructive. In Stellenbosch Farmers Winery Group Ltd and Another v Martell
9 See Rex v Dhlumayo and Another 1948 (2) SA 677 (A) (Dhlumayo) at 705-706 where this Court held that:
‘I summarise the conclusions to which I have come with regard to the principles which should guide an
appellate court in an appeal purely upon fact as follows:
1. An appellant is entitled as of right to a rehearing, but with the limitations imposed by these principles;
this right is a matter of law and must not be made illusory.
2. Those principles are in the main matters of common sense, flexible and such as not to hamper the appellate
court in doing justice in the particular case before it.
3. The trial Judge has advantages – which the appellate court cannot have – in seeing and hearing the
witnesses and in being steeped in the atmosphere of the trial. Not only has he had the opportunity of
observing their demeanour, but also their appearance and whole personality. This should never be
overlooked.
4. Consequently the appellate court is very reluctant to upset the findings of the trial Judge.
5. The mere fact that the trial Judge has not commented on the demeanour of the witnesses can hardly ever
place the appeal court in as good a position as he was.
6. Even in drawing inferences the trial Judge may be in a better position than the appellate court, in that he
may be more able to estimate what is probable or improbable in relation to the particular people whom
he has observed at the trial.
. . .
12. An appellate court should not seek anxiously to discover reasons adverse to the conclusions of the trial
judge. No judgment can ever be perfect and all-embracing, and it does not necessarily follow that, because
something has not been mentioned, therefore it has not been considered.’
& Cie SA 2003 (1) SA 11 (SCA),10 this Court set out guidelines on how to
approach the evaluation of evidence when faced with two mutually destructive
versions.
Was Mr Daniel Kubheka a labour tenant in terms of the Labour Tenants
Act, as at 2 June 1995?
[12] Mr Daniel Kubheka bears the onus to prove that he is a labour tenant as
defined in s 3(1)(a), (b) and (c) of the Labour Tenants Act.
[13] It is common cause that Mr Daniel Kubheka has resided at Cadie since
1975 (and still resides at Cadie), thus paragraph (a) has been met. The findings
of the LCC in respect of paragraph (b) for the period 1975 to 1986 and the
period 1995 to 2001 are not in issue. In issue is the period 1986 to 1995, during
which the Adendorffs allege that Mr Daniel Kubheka did not meet the
requirement in paragraph (b) in that he did not provide his labour to the owner
or the lessee of Cadie11 as at 2 June 1995.
10 At para 5 this Court held:
‘. . . The technique generally employed by courts in resolving factual disputes of this nature may conveniently
be summarised as follows. To come to a conclusion on the disputed issues a court must make findings on (a)
the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities. As to (a), the
court’s finding on the credibility of a particular witness will depend on the impression about the veracity of
the witness. That in turn will depend on a variety of subsidiary factors, not necessarily in order of importance,
such as (i) the witness’s candour and demeanour in the witness-box, (ii) his bias, latent and blatant, (iii)
internal contradictions in his evidence, (iv) external contradictions with what was pleaded or put on his behalf,
or with established fact or with his own extracurial statements or actions, (v) the probability or improbability
of particular aspects of his version, (vi) the calibre and cogency of his performance compared to that of other
witnesses testifying about the same incident or events. As to (b), a witness’s reliability will depend, apart
from the factors mentioned under (a)(ii), (iv) above, on (i) the opportunities he had to experience or observe
the event in question and (ii) the quality, integrity and independence of his recall thereof. As to (c), this
necessitates an analysis and evaluation of the probability or improbability of each party’s version on each of
the disputed issues. In the light of its assessment of (a), (b) and (c) the court will then, as a final step, determine
whether the party burdened with the onus of proof has succeeded in discharging it. The hard case, which will
doubtless be the rare one, occurs when a court’s credibility findings compel it in one direction and its
evaluation of the general probabilities in another. The more convincing the former, the less convincing will
be the latter. But when all factors are equipoised probabilities prevail.’
11 Selsey Farm Trust v Mhlongo [2009] ZASCA 124; [2010] 1 All SA 466 (SCA).
[14] Dealing with this issue, the LCC held that:
‘On his own version, Dr Adendorff, bought the farm and registered it in his wife’s name.
Dr Adendorff ran the farm. Mr Daniel Kubheka quite understandably, in these
circumstances, believed that Dr Adendorff was the owner of the farm. He was certainly the
person in charge. It is arguable that a purposive interpretation of paragraph (b) of the
definition of labour tenants would include “person in charge” within its ambit.’
[15] The LCC held further that:
‘The second difficulty with Mr Du Plessis’s submission is that it fails to adopt a holistic
and continuous approach to the definition of labour tenant. Even if one discounts the labour
provided by Mr Daniel Kubheka to Dr Adendorff, Mr Daniel Kubheka provided labour to
the other owners and lessees of the farm for a cumulative period of 18 years. On a holistic
and continuous interpretation of the labour tenant definition, this clearly, in my view,
constitutes compliance with paragraph (b) thereof.’
For this reason, the LCC found that the first respondent also fulfilled the
requirement set out in paragraph (b).
[16] It is common cause that the late Mrs Adendorff received the requisite
s 17 notice from the Department. In response thereto, she instructed her
attorneys to write to the Department and to, inter alia, say that Mr Daniel
Kubheka is not a labour tenant, but a farmworker. The relevant parts of the
letter read:
‘Both applicants resided on the farm when our client acquired the farm in 1973 but never
had the right to use cropping or grazing land on the farm and in consideration of such right,
provided or has provided labour to the owner. Our instructions are that at all times, both
applicants, whilst our client has been with the owner of the land, worked as labourers for
the owner or her lessee and in consideration for such labour, both applicants were paid
predominantly in cash and not predominantly in the right to occupy and use the land in
question.
After having had a consultation with our client and her husband, Dr Adendorff, we are
respectfully of the opinion that the Extension of Security and Tenure Act, No 62 of 1997
(“ESTA”), apply. In respect of both clients, they were entitled to use approximately 25
hectares of the farm land of our client in addition to their wages and were paid R400,00 and
R300,00 per month respectively. They also received maize on an annual basis and were
allowed to keep stock not exceeding 10 head of cattle, 10 goats and 2 horses.
. . .
With regard to Mr Kubheka, our client has advised that Mr Kubheka is not employed by
her since 2006 and is presently unemployed.
With regard to the information sought by you in respect of your written request in terms of
Section 17(2)(d) of the Land Reform (Labour Tenants) Act no 3 of 1996, we wish to reply
on behalf of our client, as follows . . ..’ (My emphasis.)
[17] During cross-examination, Dr Adendorff was hard pressed to explain
the material contradictions between his evidence and that of his witnesses, in
particular that of Mr Zikalala, one of his employees. What is more, the contents
of the letter contradict Dr Adendorff’s evidence materially. Mr Nel, the late
Mrs Adendorff’s attorney, was never called as a witness to clarify these
contradictions. It is uncertain when the late Mrs Adendorff died. Her
substitution by Dr Adendorff as a party in these proceedings took place at the
appeal stage. There is no explanation as to why the late Mrs Adendorff was
not called to clarify such material discrepancies between her instructions and
her husband’s testimony. The independent and objective documentary
evidence, namely, the letter written on behalf of the late Mrs Adendorff, the
owner of Cadie, is dispositive of the issue, to the extent that the letter
categorically states that Mr Daniel Kubheka worked for Mrs Adendorff, the
owner of Cadie. I am satisfied that Mr Daniel Kubheka provided his labour to
the owner of Cadie during the period 1987-1995. In the result, Mr Daniel
Kubheka has complied with paragraph (b) of the Labour Tenants Act.
[18] Mr Daniel Kubheka’s undisputed evidence is that his parents resided at
Glenbarton and, in exchange for their labour, they were given cropping and
grazing rights by the owner of Glenbarton.
[19] Consequently, Mr Daniel Kubheka has satisfied the requirements in
paragraphs (a), (b) and (c) in s 1 of the Labour Tenants Act and was correctly
declared a labour tenant. This conclusion triggered s 2(5) of the Labour
Tenants Act. Thus, the onus shifted to the Adendorffs to prove that he is a
farmworker.
Is Mr Daniel Kubheka a farmworker?
[20] The definition of a ‘farmworker’ requires an evaluation of cash and
other forms of remuneration earned by a worker on the one hand, and the value
of his rights to occupy and use the land on the other, to ascertain which of the
two is predominant. The question is whether Mr Daniel Kubheka was paid
predominantly in cash or in the right to occupy and use the land. Mr Daniel
Kubheka testified and called his wife as a witness. Dr Adendorff testified and
called Mr Zikalala, Mr Van der Linde, Mr Willem Oosthuizen, Paul
Oosthuizen’s son, and Mr Hubert Adendorff, the Adendorffs’ son (Mr
Adendorff Junior).
[21] To justify interference with the factual findings of the trial court, the
Adendorffs must at least have demonstrated that the trial court misdirected
itself on the facts. No misdirection has been shown to warrant a disturbance of
the trial court’s factual findings, nor have I found any. On the contrary, the
record reflects that on the probabilities, the evidence of Mr Daniel Kubheka
and his wife was correctly preferred over that of Dr Adendorff and his
witnesses.
[22] There are several inherent contradictions and improbabilities between
the evidence of Dr Adendorff and his witnesses. During cross-examination,
Mr van der Linde said that he was surprised that Mr Daniel Kubheka earned
R400 per month during the period 1978 until 1984, when he worked for him.
It came to light that Mr Hubert Adendorff called Mr van der Linde a day before
his testimony to discuss the issue relating to Mr Daniel Kubheka’s earnings
and benefits. I have no doubt that R400 in 1978 was a large sum of money,
which is probably why Mr van der Linde was surprised that Mr Daniel
Kubheka earned that amount of money. Therefore, I find it improbable that Mr
Daniel Kubheka would have earned R400 during the period 1978 until 1983.
Not only did Mr Zikalala materially contradict Dr Adendorffs evidence, but
his evidence is also improbable, to the extent that he remembered what Mr
Daniel Kubheka earned some 35 years ago when he could not even remember
what he earned at the time of giving his evidence. Cadie was run as a business
enterprise. It is improbable that the Adendorffs would not have kept a written
record of what they paid Mr Daniel Kubheka for tax purposes or even keep a
record of the income and expenses of Cadie. If Mr Daniel Kubheka was in fact
a farmworker, it is improbable that the terms and conditions relating to his
employment as a farmworker were not recorded in writing.
[23] Moreover, it is improbable that Mr Adendorff junior, who was only
twelve years’ old at the time, would have remembered what his father paid Mr
Daniel Kubheka. The record demonstrates unequivocally that the LCC’s
findings cannot be faulted. Since no misdirection was shown on the part of the
LCC, this Court is, on the authority of Dhlumayo, precluded from interfering
with the findings of the LCC.
[24] Mr Adendorff junior, who is a chartered accountant, drafted a report
containing various calculations in order to demonstrate that Mr Daniel
Kubekha was paid predominantly in cash and not in the right to occupy and
use the land. According to Mr Adendorff junior, the calculations were based
on an agreement between his father and Mr Daniel Kubheka. It is unclear
whether he meant an oral or a written agreement. The Adendorffs are a
sophisticated and educated family who run several farming enterprises. It is
unlikely that the agreement was not reduced to writing. Although not a legal
requirement it is certainly best business practice. The calculations in the report
were predicated on a number of assumptions, the most significant being that
Mr Daniel Kubheka earned R400 between the period 1975 until 1995 when he
then allegedly earned R680 and received 56 bags of mealie meal per month.
Counsel for the Adendorffs submitted that if the version of Mr Daniel Kubheka
is preferred, that he received R30 per month that the amount increased to R80
per month, the report will serve no purpose because these amounts were not
considered. I am satisfied that the Adendorffs failed to prove that Mr Daniel
Kubheka was paid predominantly in cash and have also failed to establish that
he provided his labour personally. Accordingly, the Adendorffs failed to prove
that Mr Daniel Kubheka is a farmworker in terms of s 2(5) of the Labour
Tenants Act.
Did Mr Daniel Kubheka lodge a valid application in terms of s 17 of the
Labour Tenants Act on or before 31 March 2001?
[25] It is a jurisdictional requirement that a labour tenant must have lodged
an application12 before the 31 March 2001 with the Department for an award
of land, conferring ownership of the portion of land that he or she were
occupying and using for cropping and grazing. The Department must notify
the landowner as soon as the application has been lodged.13 Thereafter the
Department must publish the notice in the Government Gazette.14 If the
landowner opposes the claim and no settlement is reached,15 the Department
must, even if the parties had attempted to mediate,16 refer the claim to the LCC.
[26] Mr Daniel Kubheka was 69 years old when he testified and almost 16
years after the cut-off date for lodging applications in terms of s 17 of the
Labour Tenants Act. The discrepancies in Mr Daniel Kubheka’s evidence on
this issue are understandable. He is an unsophisticated witness who had to rely
on memory some 16 years later. Mr Daniel Kubheka stated that in 1998 he
went to a school in Vryheid to complete certain forms for an award of land.
He was assisted by Nomusa, an official in the Department, to complete the
necessary forms for his application. This is uncontroverted. When he had not
heard from the Department, Mr Daniel Kubheka went back to the Department
in 2007, and there he lodged another application. He did not receive any proof
from the Department that he had lodged an application.
12 Section 17(1) of the Labour Tenants Act.
13 Ibid, s 17(2)(a).
14 Ibid, s 17(2)(c).
15 Ibid, s 18.
16 Section 18(3) of the Labour Tenants Act.
[27] Mr Malibongwe Kubheka testified on behalf of Mr Daniel Kubheka (the
first respondent). Although he shares the same surname with Mr Daniel
Kubheka, they are not related. Mr Malibongwe Kubheka is employed at the
Department. During his testimony he produced a file containing two
incomplete documents. Contained in one of the documents is the identity
number and name of Mr Daniel Kubheka. The date of 23 January 2000 and a
reference number KZN 3/4/126 are also reflected on the document. The second
document is a pro forma letter generated by the law firm, Cheadle, Thompson
and Haysom with a date stamp, 4 May 2009, which served as an instruction to
the law firm to deal with Mr Daniel Kubheka’s application. Under cross-
examination and contradicting himself, Mr Daniel Kubheka said that he
lodged three applications because the Department did not respond to him. Mr
Zungu, a deputy director in the Department, testified that after a thorough
search at the Department’s offices, he located a document which he claimed
was the original application of Mr Daniel Kubheka.
[28] The analysis of the evidence by the LCC on this issue cannot be faulted.
What is also dispositive of this issue is the documentary evidence that was
handed in by the Department’s officials. It bears mentioning that the
Department and its officials are the lawful and authorised custodians of the
documents
[29] It is common cause that the late Mrs Adendorff, the owner of Cadie,
received the s 17 notice at the beginning of March 2008. She responded by
way of a letter dated 27 March 2008, wherein she denied that Mr Daniel
Kubheka was a labour tenant. On the probabilities, the Department would not
have sent out a s 17 notice if an application were not lodged timeously. On this
score the LCC correctly held that:
‘121. In my view this question can be decided solely on the basis of the documentation that
is in existence.
122. Contrary to Mr Du Plessis’s submission, I am of the view that the information sheet
and the documentation presented by Mr Zungu accord with each other in all material
respects. They both reflect Mr Kubheka’s full names and identity number. They both reflect
that date as 23 January 2001. They both reflect the same reference number; KZN 3 4 126.
It seems clear that the 5 page document in the series of document presented by Mr Zungu
constitutes Mr Kubheka’s application form itself.’
[30] The documents that were handed in had the full names and identity
number of Mr Daniel Kubheka. On the probabilities, the Department could
only have obtained this information from Mr Daniel Kubheka when he
attended the Department’s offices. If the application was not lodged timeously
it is improbable that Cheadle Thompson and Haysom would have been
instructed to proceed with Mr Daniel Kubheka’s claim.
[31] The testimony of the officials of the Department demonstrates the
shortcomings, lack of proper record keeping, missing documents and
administrative blunders, where many applications have not been captured on
the Department’s database. Blame cannot be placed at the door of Mr Daniel
Kubheka for any shortcoming or even the failure by the Department to capture
Mr Daniel Kubheka’s application. In Mwelase v Director-General for the
Department of Rural Development and Land Reform (Mwelase),17 Cameron J
writing for the majority said that: ‘the Department admitted that labour tenant
17 Mwelase v Director-General for the Department of Rural Development and Land Reform [2019] ZACC 30
(CC); 2019 (11) BCLR 1358 (CC) para 18.
applications had not been proactively managed for a number of years’. During
the hearing, the Department presented its statistics to the LCC. The
Constitutional Court in Mwelase held that, ‘[i]n April 2015, the Department
estimated that it would need two more years just to capture the details of
thousands of applications still outstanding’.18 When the matter was heard in
the Constitutional Court the collation process was not yet finalised.19 The
Adendorffs’ submission that there is no proof that Mr Daniel Kubheka lodged
his claim has no merit. Data capturing is an administrative function and not a
legal requirement as proof that a claim has been lodged. I have no doubt that
had the application been captured these proceedings would have been
curtailed.
[32] The overwhelming evidence indicates on a balance of probabilities that
Mr Daniel Kubheka lodged his application before the cut-off date, 31 March
2001, for an award of land on Cadie. It is common cause that the Department
had not gazetted the claim. This too, cannot be laid at the door of Mr Daniel
Kubheka. The Adendorffs failed to challenge this failure by way of review and
now seek to raise it in this appeal.
[33] It is common cause that Mr Daniel Kubheka had a homestead with 8
structures on Cadie. The farm Cadie is 598,354 hectares in extent. The extent
of Mr Daniel Kubheka’s use of the land on Cadie is in issue. Mr Daniel
Kubheka consistently stated that he had the use of two grazing camps. Dr
Adendorff estimated that the two grazing camps were, in extent,
approximately 50 hectares. He stated that Mr Daniel Kubheka only had the use
18 Ibid para 20.
19 Ibid, see footnote 46 of Mwelase.
of one camp. Contradicting Dr Adendorff and corroborating Mr Daniel
Kubheka, Mr Zikalala said that he saw Mr Daniel Kubheka’s cattle graze on
two camps at Cadie. Mr Hubert Adendorff admitted that Mr Daniel Kubheka
was permitted to use two camps, but only for a week at a time to wean his
calves. I am satisfied that Mr Daniel Kubheka had the use of two grazing
camps on Cadie.
Whether or not the LCC should have granted just and equitable
compensation under s 23 of the Labour Tenants Act or alternatively an
order under s 22 of the Labour Tenants Act.
[34] In his statement of claim, Mr Daniel Kubheka sought an order20 that the
Department make available monies needed to compensate the Adendorffs for
a portion of land on the farm that the LCC might see fit to award to him. The
Department takes no issue with the relief sought. And indeed, as already
mentioned, the Department indicated at the outset that it would assist Mr
Daniel Kubheka in the event that a portion of the farm is awarded to him. The
powers of a court considering an application to award land or right in land are
provided for in s 22 of the Labour Tenants Act.21 The court has the jurisdiction
and power, inter alia, to order that land or a right in land held by an owner of
the affected land be transferred to the claimant. In this case the LCC made
such an order. Counsel for the Adendorffs correctly submitted that it is open
to a court to make any order under s 22 of the Labour Tenant Act, in particular
an order under s 22(5)(d) thereof.21
20 Paragraph 3 above.
21 See fn 5 above.
[35] The Adendorffs submitted an expert valuation report that was compiled
by Mr Winckler, an expert valuer. Mr Daniel Kubheka had no objection that
the report be handed in as evidence. The expert report dealt with the whole of
the farm Cadie and not only a portion thereof. Mr Winckler determined the
market value of the whole 598.354 hectares of Cadie in the amount of
R8 110 250.
[36] The LCC declared Mr Daniel Kubheka a labour tenant and awarded him
a portion of portion 1 of Cadie, which he and his family had occupied and used
as of 2 June 1995, including the two grazing camps. Section 23(2)22 of the
Labour Tenants Act is triggered if no agreement is reached between the
relevant parties in respect of compensation. In this case the relevant parties are
the Adendorffs and the Department. It is common cause that there was no
agreement between them regarding compensation. Therefore, the LCC did not
have the jurisdiction to deal with the issue of just and equitable compensation.
[37] As pointed out above, the Department undertook to compensate the
Adendorffs if an award of land, in favour of Mr Daniel Kubheka, were made.
There is no evidence that the parties (the Adendorffs and the Department) were
in fact unable to reach an agreement concerning the amount of compensation
to be paid. The valuation on which the Adendorffs rely, is the market value of
the entire farm. Whether the Department wishes to purchase the entire farm or
22 Section 23 of the Labour Tenants Act makes provision for an owner’s right to compensation. It states as
follows:
‘(1) The owner of affected land or any other person whose rights are affected shall be entitled to just and
equitable compensation as prescribed as prescribed by the Constitution for the acquisition by the applicant of
land or a right in land.
(2) The amount of compensation shall, failing agreement, be determined by the arbitrator or the Court.
(3) Compensation shall, failing agreement, be paid in such manner and within such period as the arbitrator of
the Court may determine as just and equitable.’(My emphasis.)
not is a matter for the Department to decide and not this Court or the LCC.
Thus, it is best to allow the process envisaged in the order set out below to run
its course.
Costs
[38] The LCC made no order as to costs, which is the usual order made in
the LCC. It is trite that a trial court has a judicial discretion whether or not to
award costs. The Adendorffs submitted that if the appeal is upheld with costs,
the Department should bear those costs on a punitive scale. The reason for
seeking such an order, so it was argued, is because the Department failed to
oppose the matter and as a result, the Adendorffs incurred additional costs,
causing them to suffer prejudice. It is correct that the Department did not
oppose the proceedings. However, at the outset it undertook to compensate the
Adendorffs if the LCC made an award of land or a right in land. With that
undertaking having been given by the Department, its stance not to enter the
fray is perfectly understandable. I am therefore not persuaded that the
Department should be mulcted with costs, let alone a punitive costs order both
in this Court and the LCC.
[39] At the conclusion of argument the parties were requested to submit their
respective draft orders for our consideration, which they did. Because there is
no merit in the appeal, the appeal falls to be dismissed. The order set out below
is based on the draft order submitted by counsel for Mr Daniel Kubheka, duly
amended as to this Court seemed meet.
[40] In conclusion, it bears mentioning that the order below seeks to promote
a speedy determination of the question of just and equitable compensation. In
the result the following order is made:
The appeal is dismissed.
The order of the Land Claims Court is supplemented by the addition of
the following:
‘2.1 The second respondent is ordered and directed, within 60 days of
this order, to cause the portion of the farm Cadie awarded to the first
respondent to be evaluated, which evaluation should include the entire
farm Cadie, to determine just and equitable compensation to be paid to
the appellants for the said land.
2.2
The second respondent is directed to cause the evaluation
envisaged in paragraph 2. 1 to be conducted and concluded within 60
days and to be made available to the appellants’ attorneys of record
within five (5) days of completion thereof.
2.3
The appellants are authorised to engage an expert valuer of their
choice to evaluate the land described in paragraph 2.1 hereof, such
evaluation to include the entire farm.
2.4
The appellants shall cause to be served on the attorneys of record
of the first and second respondents the said evaluation within five (5)
days of completion thereof.
2.5
The parties are directed to enter into negotiations in good faith
with a view to settling the question of compensation as envisaged in s
23 of the Labour Tenant Act read with s 25 of the Constitution. Such
discussions are to be concluded within 60 days of the date of exchange
between the parties of the last valuation report.
2.6
Should no agreement be reached between the appellants and the
second respondent regarding the issue of just and equitable
compensation for the agreed land, either party is granted leave to
approach the Land Claims Court, on notice to the other, for appropriate
relief including the determination of just and equitable compensation.’
There shall be no order as to the costs of the appeal in this Court.
________________________
Z CARELSE
JUDGE OF APPEAL
APPEARANCES
For appellant:
R du Plessis SC (with him D S Gianni)
Loubser van der Walt Inc, Pretoria
Kramer Weihmann Inc, Bloemfontein
For first respondent:
S H Ngcobo
ZM Zuma & Co Inc, Verulam
MDP 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 March 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does
not form part of the judgments of the Supreme Court of Appeal
Dr Hubert Adendorff and Another v Daniel Phunyula Kubheka and Other (Case no 463/20)
[2022] ZASCA 29 (24 March 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal
against a decision of the Land Claims Court, Randburg (the LCC).
The issues before the SCA were whether the respondent proved that as at 2 June 1995 he was
a labour tenant in terms of the Land Reform (Labour Tenants) Act 3 of 1996 (Labour Tenants
Act), whether the appellants proved that the respondent is a farmworker, whether the
respondent lodged a valid claim before 31 March 2001 in terms of ss 16 and 17 of the Labour
Tenants Act and whether the LCC should have ordered just and equitable compensation in
terms of s 23 of the Labour Tenants Act.
The LCC, per Barnes AJ, declared the respondent a labour tenant in terms of s 33(2A) of the
Labour Tenants Act and awarded him a portion of portion 1 of the farm Cadie No 12399
(Cadie), Registration Division HS, in the district of Newcastle, Kwa-Zulu Natal. This land
included the two grazing camps, which the respondent were using as at 2 June 1995 in terms
of s 16 of the Act. Dissatisfied with the outcome of the trial, the appellants appealed to this
Court.
The respondent has resided on Cadie since 1975 prior to which he worked for the same family
on another farm, Glenbarton, and instituted action proceedings against the appellants in the
LCC. In addition to seeking a declaration that he was a labour tenant and that he be awarded
the relevant portion of Cadie, an order was sought that monies be made available to compensate
the appellants. The LCC did not order the Department of Rural Development and Land Affairs
(the Department) to make available such funds. Rather, the Department elected not to
participate in the trial, but gave an undertaking that it would be ready to facilitate the purchase
of the land if an award of land was so ordered by the LCC.
The SCA found that the respondent’s undisputed evidence was that his parents were, in
exchange for their labour, given cropping and grazing rights by the owner of Glenbarton, the
same arrangement which passed on to him. This Court held that the respondent had
cumulatively complied with the definition of ‘labour tenant’ and was correctly declared a
labour tenant.
In respect of the question of whether the respondent was a farmworker, the SCA held that the
definition of a ‘farmworker’ requires an evaluation of cash and other forms of remuneration
earned by a worker on the one hand, and the value of his rights to occupy and use the land on
the other. The SCA held that the appellants failed to prove that the respondent was a
farmworker in terms of s 2(5) of the Labour Tenants Act.
Furthermore, the SCA also found that the respondent had timeously submitted and lodged a
valid application on or before 31 March 2001. It was common cause that the Department had
failed to gazette the claim, a failure which could not be laid at the door of the respondent.
Lastly, on whether the LCC should have granted just and equitable compensation in terms of s
23 of the Labour Tenants Act, the SCA held that the LCC could only make such an order if the
parties failed to agree on the amount of compensation. The SCA held further that there was no
evidence that the parties were unable to reach an agreement on the amount of compensation.
In the result, the appeal was dismissed.
~ends~
|
232
|
non-electoral
|
2018
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 276/2017
In the matter between:
THE ROAD ACCIDENT FUND
APPELLANT
and
MOGAMAT RIDAA ABRAHAMS
RESPONDENT
Neutral citation:
Road Accident Fund v Abrahams (276/2017) [2018] ZASCA 49
(29 March 2018)
Coram:
Navsa, Lewis and Willis JJA and Makgoka and Hughes AJJA
Heard:
21 February 2018
Delivered:
29 March 2018
Summary:
Road Accident Fund Act 56 of 1996 : section 17: whether a
driver in a single motor vehicle accident is entitled to claim under the provisions of
section 17 of the Road Accident Fund Act.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Salie-
Hlophe J) judgment reported sub nom Abrahams v Road Accident Fund 2016 (6) SA
545 (WCC).
The appeal is dismissed with costs, including costs attendant upon the employment
of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Makgoka AJA (Navsa, Lewis and Willis JJA and Hughes AJA concurring)
[1] The issue in this appeal is whether a driver involved in a single motor vehicle
accident, and who was not an employee of the owner of the insured vehicle, is
entitled to claim compensation from the appellant, the Road Accident Fund, in terms
of the Road Accident Fund Act 56 of 1996 (the Act).
[2] On 5 February 2011 the respondent was involved in a single motor vehicle
accident. The vehicle he was driving (the insured vehicle) was owned by his father’s
employer, Secuco Food Manufacturers (the insured owner). The accident occurred
as a result of a tyre burst which caused the insured vehicle to leave the roadway and
roll-over. The respondent sustained severe bodily injuries as a result of the accident.
He subsequently instituted action in the Western Cape Division of the High Court
against the appellant for damages. He alleged that the accident occurred as a result
of the insured owner failing to maintain the tyres of the insured vehicle in a safe and
roadworthy condition.
[3] Initially the appellant filed a plea to the respondent’s particulars of claim, but it
subsequently added a special plea. The special plea comprised a main and
alternative plea. The main plea is premised on three grounds. First, it asserted that
because there was no employer-employee relationship between the respondent and
the insured owner, the respondent was not entitled to claim any compensation in
terms of the Act. Second, it alleged that the respondent’s use of the insured motor
vehicle was fortuitous and/or unauthorized. Lastly, the appellant contended that no
legal duty could be ascribed to the insured owner in relation to the respondent. In the
alternative special plea, the appellant denied liability on the basis that the collision
involved a single vehicle accident; and the respondent was solely and entirely
negligent in causing the collision.
[4] The special plea came before the court a quo on 12 June 2016.1 The
respondent led the evidence of his father, ostensibly to meet the appellant’s assertion
that his driving of the insured vehicle at the time of the accident was fortuitous and
unauthorized. The essence of the evidence by the respondent’s father is as follows.
His duties included the delivery of baked goods on behalf of the insured owner to
various retailers. He had a standing arrangement with the insured owner in terms of
which he occasionally requested the respondent to make deliveries on his behalf,
when he was unable to do so himself. It was the same on the day of the collision.
The upshot of his evidence is therefore that at the time of the accident, the
respondent was driving the insured vehicle with the consent of the insured owner.
This was uncontested by the appellant. No other witnesses testified.
[5] The court a quo dismissed the appellant’s special plea with costs. This
conclusion rested mainly on the court a quo’s finding that the respondent’s driving of
the insured vehicle was with the consent of the insured owner, and in the capacity of
a sub-contractor. This, according to the court a quo, established a basis for liability.
1 In terms of a determination made earlier by a different judge in a case-management allocation,
liability and the merits were separated in terms of rule 33(4) of the Uniform Rules of Court, and only
the special plea was to be adjudicated. All other issues, including causal negligence and locus standi,
stood over for later determination.
Aggrieved at the dismissal of its special plea, the appellant appeals with leave of this
court.
[6] It is convenient to set out the relevant provisions of the Act, which are
contained in sections 17, 18 and 19. The gateway for compensation under the Act is
s 17(1), which establishes the liability of the appellant. Section 18(2) limits liability in
certain circumstances, while s 19 excludes liability in certain cases. Section 21(1), on
the other hand, abolishes common law claims against the owner.
[7] Section 17(1) reads:
‘The fund or an agent shall-
(a)
….
(b)
….
be obliged to compensate any person (the third party) for any loss or damage which the third
party has suffered as a result of any bodily injury to himself or herself or the death of or any
bodily injury to any other person, caused by or arising from the driving of a motor vehicle by
any person at any place within the Republic, if the injury or death is due to the negligence or
other wrongful act of the driver or of the owner of the motor vehicle or of his or her employee
in the performance of the employee’s duties as employee….’ (my emphasis.)
[8] Section 18(2) reads:
‘Without derogating from any liability of the Fund or an agent to pay costs awarded against it
or such agent in any legal proceedings, where the loss or damage contemplated in section
17 is suffered as a result of bodily injury to or death of any person who, at the time of the
occurrence which caused that injury or death, was being conveyed in or on the motor vehicle
concerned and who was an employee of the driver or owner of that motor vehicle and the
third party is entitled to compensation under the Compensation for Occupational Injuries and
Diseases Act, 1993 (Act No. 130 of 1993), in respect of such injury or death ….’
[9] Section 19 provides that the appellant shall not be obliged to compensate any
person in terms of s 17 for any loss where neither the driver nor the owner of the
motor vehicle concerned would have been liable but for s 21. Section 21(1), in turn,
abolishes certain common law claims. It provides that no compensation in respect of
bodily injury to or the death of any person caused by or arising from the driving of a
motor vehicle shall lie against the owner of a motor vehicle or the employer of the
driver.
[10] In this court, counsel for the appellant submitted that the respondent’s claim is
not covered by the provisions of the Act. Counsel submitted further that the only
instance where a driver involved in a single motor vehicle accident would be entitled
to claim against the appellant is in terms of s 18(2) of the Act. This is where persons
conveyed in or on the insured vehicle are employees of the driver or owner of the
vehicle. Because the respondent was not being conveyed in or on the insured vehicle
as an employee of the insured owner, so went the argument, s 18(2) did not apply to
the respondent.
[11] In this context, so the argument proceeded, a driver in a single motor vehicle
accident, such as the respondent, does not qualify as a ‘third party’ for purposes of
the Act. In the circumstances, it was contended, the respondent’s claim did not fall
within the ambit of the Act, but lies at common law. Moreover, it was submitted that
because such a claim is not excluded by s 21 of the Act, it would be against public
policy to apply an extensive interpretation of the Act to create a remedy for claimants
under such circumstances. In the alternative, it was argued that the bodily injuries
and loss suffered by the respondent were neither caused by nor arose from the
driving of the insured vehicle, but resulted from a tyre burst.
[12] I do not agree with the construction placed on s 18(2) by the appellant’s
counsel. The sub-section does not create a right of action. Its purpose, as is clear
also from the heading of the section, is to limit certain claims under s 17 where the
third party is conveyed in or on the insured vehicle, and who was an employee of the
driver or owner of the insured vehicle. In those instances, the third party’s claim lies
in terms of the Compensation for Occupational Injuries and Diseases Act 130 of 1993
(COIDA) and the Act. The third party’s compensation recovered in terms of COIDA is
to be deducted from the award made in terms of the Act, to avoid double
compensation. It is common cause that the respondent was not an employee of the
insured owner at the time of the accident, and therefore s 18(2) and COIDA are not
applicable to him. But does this mean that he does not have a claim in terms of the
Act? I consider that question below.
[13] A useful starting point is to consider the effect of s 17(1), read with s 21(1). As
stated already, the latter section abolishes the right of an injured claimant to sue the
wrongdoer at common law. Section 17(1), in turn, substitutes the appellant for the
wrongdoer. It does not establish the substantive basis for liability. The liability is
founded in common-law (delictual liability). Differently put, the claim against the
appellant is simply a common-law claim for damages arising from the driving of a
motor vehicle, resulting in injury. Needless to say, the liability only arises if the injury
is due to the negligence or other wrongful act of the driver or owner of the motor
vehicle. See Jansen JA’s explanation in Da Silva and Another v Coutinho 1971 (3)
SA 123 (A) at 139A-H, with regard to the provisions of the Motor Vehicle Insurance
Act 29 of 1942 (one of the predecessors to the Act).
[14] Corbett JA summed up the position in Evins v Shield Insurance Co Ltd 1980
(2) SA 814 (A). Explaining, with reference to ss 21, 23 and 27 of the Compulsory
Motor Vehicle Insurance Act 56 of 1972 (one of the predecessors to the Act) he
stated the following at 841E-G:
‘To a great extent the Act represents an embodiment of the common-law actions to damages
for bodily injury and loss of support where the bodily injury or death is caused by or arises
out of the driving of a motor vehicle insured under the Act and is due to the negligence of the
driver of the vehicle or its owner or his servant. Then in place of, and to the exclusion of, the
common- law liability of such persons is substituted the statutory liability of the authorized
insurer. Sections 21, 23(a) and 27 indicate that the statutory liability of the authorized insurer
is no wider than the common-law liability of the driver or owner would have been but for the
enactment of the Act (indeed in certain instances it is narrower – see ss 22 and 23(b)) and
that this statutory liability is dependent upon the existence of a state of affairs which would
otherwise have given rise to such a common-law liability. [T]he negligence upon which
liability under s 21 hinges is the culpa of the common law and, save in certain specified
instances, the compensation claimable under s 21 is assessed in accordance with the
common-law principles relating to the computation of damages.’
[15] I now consider whether the respondent’s claim falls within the ambit of s 17(1).
There are six elements to the section, which can conveniently be broken down as
follows:
(a)
the liability is towards a ‘third party’;
(b)
who had suffered any loss or damage;
(c)
the loss resulted from bodily injury to himself or herself;
(d)
the loss arose from the driving of a motor vehicle;
(e)
the injury was due to negligence or other wrongful act;
(f)
the negligence or wrongful act must be that of:
(i)
the driver; or
(ii)
the owner of the motor vehicle; or
(iii)
of his or her employee.
[16] That the respondent meets the elements in (b); (c); (e); and (f) is not disputed.
The appellant disputes those in (a) and (d). I consider them in turn.
[17] It was submitted on behalf of the appellant that the respondent was the driver,
and as such, cannot be a ‘third party’ for the purposes of s 17. He could only be a
‘third party’ had he been involved in a multiple vehicle collision arising from the
negligence of the insured driver of another vehicle. I disagree. Section 17 defines a
third party as being ‘any person’. This undoubtedly is wide enough to include a driver
involved in a single motor vehicle accident, such as the respondent, provided the
injury arises from the negligence or wrongfulness of the owner, among others.
[18] The appellant focuses on the fact that the respondent was the driver, who, in
its view, was solely negligent in causing the accident. This explains why the
respondent is described in the appellant’s heads of argument as a ‘delinquent driver’.
But the negligence or otherwise of the respondent does not arise in the present
enquiry. As a consequence of its focus on the respondent, the appellant loses sight
of the pertinent provisions of s 17, that liability arises from, among others,
blameworthy conduct of the owner of the insured vehicle. In some instances, this
may have nothing to do with the actual driving.
[19] As was pointed out by Corbett J in Wells and Another v Shield Insurance Co
Ltd and Others 1965 (2) SA 865 (C) at 867H, the section (the predecessor to s 17)
lays down two prerequisites for liability on the part of a registered insurance company
for damages suffered by a third party as a result of bodily injury. These are (i) that the
injury was caused by or arose out of the driving of the insured motor vehicle and (ii)
that the injury was due to the negligence or other unlawful act of the driver of the
insured vehicle, or the owner or his servant. In Santam Versekeringsmaatskappy Bpk
v Kemp 1971 (3) SA 305 (A) at 332C (albeit in a dissenting judgment) Jansen JA
observed that there are two separate enquiries, a fact which is sometimes lost sight
of because in most cases the injury is caused by the negligent driving of the insured
vehicle.
[20] It is clear that the appellant has fallen into the pitfall which Jansen JA
cautioned against. As correctly submitted by counsel for the respondent, it is the
negligent or wrongful conduct of the owner of the insured vehicle that the respondent
relies upon. As such, the focus of liability is not on the driver, but on the insured
owner. The facts of this case differ from what is usually encountered, where two
vehicles collide. In such instances, the appellant steps into the shoes of the negligent
driver. Here, the appellant steps into the shoes of the insured owner, whose conduct
is alleged to have been negligent. For all the above reasons, I have no difficulty in
concluding that the respondent falls within the definition of a ‘third party.’
[21] I now consider whether the respondent’s injuries were caused by or arose
from the ‘driving’ of a motor vehicle, as required in s 17. The term ‘driving’ is not
defined in the Act and it must therefore be given its ordinary meaning. It was
submitted on behalf of the appellant that the respondent’s injuries were not caused
by the driving, but from the unroadworthy condition of the insured vehicle, namely a
worn tyre that burst. To my mind, there is no merit in this submission. The
respondent’s claim is based on the alleged wrongful and negligent conduct of the
insured owner who failed to maintain the tyres of the insured vehicle in a safe and
roadworthy condition, which resulted in the tyre burst, causing the accident.
[22] In Wells, at 870A-H, Corbett J recognised that the negligence or unlawful
conduct may consist of some antecedent or ancillary act or ommission on the part of
the driver or owner of the vehicle such as failing to maintain the vehicle in a
roadworhty condition. He further stated that ‘[w]hether the causal connection
between the injury and the driving would be found would depend upon the particular
facts of the case and whether, applying ordinary, common-sense standards, it could
be said that the causal connection between the death or injury and the driving was
sufficiently real and close to enable the Court to say that the death or injury did arise
out of the driving’.
[23] Jansen JA explained in Santam at 332D:
‘It can however happen that even in the instance of blameless driving of a motor vehicle,
injury or death may result, for example as a result of a wheel which becomes dislodged. If
the dislodgment, and the resultant death or injury is due to the negligence of the owner (for
example because he did not tighten it properly) then the insurer of the particular vehicle is
liable because death or injury occurred, despite the blameless driving…. (My translation from
Afrikaans.)
See also Barkett v SA Mutual Trust and Assurance Co Ltd 1951 (2) SA 353 (A).
[24] For present purposes it must be assumed that the respondent would prove
his allegations against the insured owner at the trial. It is clear that the insured motor
vehicle was being driven at the time of the accident. The tyre burst was dependent on
this fact. As a result, the causal connection between the injuries suffered by the
respondent and the driving is sufficiently real. In the circumstances there is no merit
in the appellant’s contentions.
[25] In sum, I conclude that respondent’s claim falls within the ambit of s 17 of the
Act. Section 18 of the Act is not applicable in the circumstances of this case. The
court a quo was apparently of the erroneous view that for the respondent’s claim to
be within the ambit of the Act, he had to base his claim on s 18, hence its reasoning
that the respondent was a contractor on behalf of the insured owner at the time of the
accident. That was not necessary. The liability of the appellant for the injuries
sustained by the respondent must be found in the plain wording of s 17, read
together with s 21 of the Act.
[26] Before I conclude, it is regrettable that this court has, once again, to give
guidance on how the procedure set out in rule 33(4) of the Uniform Rules of Court
should be applied.2 The process of dealing with a matter under rule 33(4) was
clarified in Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3:
‘Rule 33(4) of the Uniform Rules ─ which entitles a Court to try issues separately in
appropriate circumstances ─ is aimed at facilitating the convenient and expeditious disposal
of litigation. It should not be assumed that that result is always achieved by separating the
issues. In many cases, once properly considered, the issues will be found to be inextricably
linked, even though, at first sight, they might appear to be discrete. And even where the
issues are discrete, the expeditious disposal of the litigation is often best served by
ventilating all the issues at one hearing, particularly where there is more than one issue that
might be readily dispositive of the matter. It is only after careful thought has been given to the
anticipated course of the litigation as a whole that it will be possible properly to determine
whether it is convenient to try an issue separately. But, where the trial Court is satisfied that it
is proper to make such an order ─ and, in all cases, it must be so satisfied before it does so
─ it is the duty of that Court to ensure that the issues to be tried are clearly circumscribed in
its order so as to avoid confusion.’
See also ABSA Bank Ltd v Bernert 2011 (3) SA 74 (SCA) para 21 where the
following was stated:
‘I[f] for no reason but to clarify matters for itself a court that is asked to separate issues must
necessarily apply its mind to whether it is indeed convenient that they be separated, and if
so, the questions to be determined must be expressed in its order with clarity and precision.’
[27] It is by no means clear that these principles informed the decision to separate
issues in this matter. In my view, the issue raised in the special plea is inextricably
linked with the separated issues of locus standi, negligence, and causation. They
could have been ventilated in one hearing. This should have been clear to the court a
2 See for example, Firstrand Bank v Clear Creek Trading [2015] ZASCA 6 paras 9-10; Feedpro Animal
Nutrition v Nienaber [2016] ZASCA 32 para 15; Cilliers & others v Ellis & another [2017] ZASCA 13
paras 12-14; and Transalloys v Mineral-Loy [2017] ZASCA 95 para 6.
quo at the commencement of the trial. I appreciate that the decision was made in a
pre-trial hearing by a different judge. In my view, there was nothing that precluded the
court a quo from re-visiting the earlier determination by another judge, if it was of the
view that the special plea should be heard in one hearing with the other issues.
[28] For the reasons set out above, the appeal is dismissed with costs, including
costs attendant upon the employment of two counsel.
____________________
T M Makgoka
Acting Judge of Appeal
APPEARANCES
For Appellant:
D Potgieter SC (with him C Bisschoff)
Instructed by:
Z Abdurahman Attorneys, Cape Town
Maduba Attorneys, Bloemfontein
For Respondent:
JW Olivier SC (with him WS Coughlan)
Instructed by:
DSC Attorneys, Cape Town
Rosendorff, Reitz, Barry Attorneys, Bloemfontein
|
SUPREME COURT OF APPEAL SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 March 2018
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Road Accident Fund v Abrahams (276/2017) [2018] ZASCA 49 (29 March 2018)
Today, the Supreme Court of Appeal (SCA) dismissed an appeal brought by the appellant,
the Road Accident Fund, against a judgment of the Western Cape Division of the High
Court, Cape Town. The issue on appeal concerned the question whether a driver involved in
a single motor vehicle accident, and who was not an employee of the owner of the insured
vehicle, is entitled to claim compensation from the appellant, in terms of the Road Accident
Fund Act 56 of 1996 (the Act).
The respondent, Mr Mogamat Ridaa Abrahams was involved in an accident wherein the tyre
of the vehicle burst and as a result, the vehicle rolled-over. He sustained certain bodily
injuries. The vehicle he was driving (the insured vehicle) belonged to and was owned by his
father’s employer, Suceco Food Manufactures (the insured owner). The respondent then
launched proceedings in the court a quo for a claim of damages, alleging that the accident
occurred as a result of the insured owner failing to maintain the tyres of the insured vehicle
in a safe and roadworthy condition. Initially the appellant filed a plea to the respondent’s
particulars of claim, but it subsequently added a special plea. The special plea comprised of
a main and an alternative plea. In the main, the appellant based his claim on three grounds:
first that the respondent did not have an employee-employer relationship with the insured
owner, second that the respondent’s use of the insured motor vehicle was fortuitous and
unauthorized and third that no legal duty could be ascribed to the insured owner in relation to
the respondent and other road users. In the alternative plea, the appellants alleged that the
respondent was solely and entirely negligent in causing the accident and denied liability on
the basis that the collision was a single motor vehicle accident.
The court a quo took the decision to adjudicate over the special plea only, and the rest of the
matters to be determined later.
The special plea was heard by the court a quo in which the respondent led the evidence of
his father. The crux of his fathers’ evidence was that as an employee of Suceco Food
Manufactures, his duties were to deliver baked goods to various retailers and he had a long
standing agreement with the insured owner that when he is unable to make the deliveries,
the respondent will assist. Therefore, on the day of the accident, the respondent was making
deliveries using the insured vehicle with the insured owners consent. This evidence was not
contested and no other witnesses were called.
The court a quo subsequently dismissed the appellant’s special plea with costs. This
conclusion rested mainly on the court a quo’s finding that the respondent’s driving of the
insured vehicle was with the consent of the insured owner, and in the capacity of a sub-
contractor. This, according to the court a quo, established the necessary nexus between the
respondent and the insured owner.
On appeal, the SCA made a determination giving due regard to ss 17, 18(2) and 19 the Act.
Counsel for the appellants submitted that the only way the respondent would be covered by
the Act, as a single motor vehicle accident driver is under s 18(2), and this fell away because
the respondent is not an employee of the insured owner. It was further submitted that the
respondent does not qualify as a third party for purposes of the Act and that his claim should
be under common law and as such not excluded by s 21 of the Act.
The Court held that the respondents claim does not fall within the ambit of s 18(2) because
indeed so, the respondent at the time of the collision was not conveyed in or on the insured
vehicle as an employee of the driver or owner of the vehicle. The Court further held, in
regards to counsel’s submission that respondent is not a third party, that s 17 defines a third
party as being ‘any person’. This definition, it held, is wide enough to include a driver
involved in a single motor vehicle accident, such as the respondent, provided the injury
arises from the negligence or wrongfulness of the owner, among others.
The Court also considered whether the respondent’s injuries were caused by or arose from
the ‘driving’ of a motor vehicle, as required in s 17. It held that, at the time of the accident,
the insured motor vehicle was being driven and the tyre burst was dependent on this fact. As
a result, the causal connection between the injuries suffered by the respondent and the
driving is sufficiently real.
In the circumstances, the Court (per Makgoka AJA with Navsa, Lewis and Willis JJA and
Hughes AJA concurring) dismissed the appeal with costs, including costs attendant upon the
employment of two counsel
|
1845
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 38/10
In the matter between:
RASHIED STAGGIE
First Appellant
RANDALL BOSCH
Second Appellant
and
THE STATE
Respondent
Neutral citation: Staggie v The State (38/10) [2011] ZASCA 88 (27 May 2011)
Coram:
Harms DP, Malan and Theron JJA
Heard:
24 May 2011
Delivered:
27 May 2011
Summary:
Criminal appeal ─ failure to prosecute ─ effect ─ failure of criminal
process – special entries.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape High Court (Cape Town) (Sarkin AJ sitting as court
of first instance):
The appeal is struck from the roll.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
HARMS DP (MALAN and THERON JJA concurring)
[1] The appellant, Mr R Staggie, seeks to appeal his conviction on 28 January
2003 by Sarkin AJ (sitting with assessors) in the High Court, Cape Town. The case
is unfortunately a sad indictment of the criminal process in this country. It is not an
instance where the accused’s rights have been affected but one where the rights of
the victim and the public were ignored or disregarded in an appalling manner.
[2] Staggie and one Randall Bosch were found guilty on a count of kidnapping
and of rape. The events took place during August 2001. The two accused were
involved in gang related activities and the complainant was suspected of being a
police informant. For her punishment she was kidnapped and gang raped. The other
rapists were not identified or caught.
[3] The complainant was a single witness to the event. There was some
corroboration evidence from other witnesses. She and some of them were in a
witness protection programme and the state sought leave for her (and others) to give
evidence in camera and by means of a video link. This gave rise to a number of
interlocutory applications, and lots of evidence and argument. After 24 court days
(this does not mean that the court used those 24 days) and 1500 pages of record,
the state closed its case.
[4] Staggie, whose defence was an alibi, chose not to testify but called witnesses
in support of his alibi. Bosch, though, testified in his own defence. And the case
carried on relentlessly – for another 20 days. Even the court called a number of
witnesses – most of the evidence proved to be of no assistance. In the end we were
faced with a record of more than 4000 pages.
[5] Sarkin AJ delivered a judgment of some 90 pages in which he found the two
accused guilty as charged. Staggie was also found guilty of the unlawful possession
of a firearm but nothing turns on this. They were eventually sentenced to an effective
15 years’ imprisonment.
[6] On 28 February 2003, Sarkin AJ granted the appellants leave to appeal to
this court. The first ground related to the veracity of the complainant’s evidence and
the second concerned the judgment the court had given during the course of the
hearing (on 12 November 2002) when it dealt with the interpretation of sections 153
(which deals with the court’s discretion to hold an in camera hearing in the case of
an indecent offence) and 158 (which deals with the use of video evidence) of the
Criminal Procedure Act 55 of 1977. Why he thought that the case deserved the
attention of this court is unclear.
[7] What astounds is that the acting judge, in the light of the conviction and
sentence, found it appropriate to release the appellants on bail pending the appeal:
Staggie at R10 000 and Bosch at R1000. And this is where the wheels that were left
fell off the wagon. The appellants did not prosecute the appeal with any intention to
bring it to a conclusion. An incomplete record was filed some 18 months after grant
of leave, but it was rejected as being incomplete. The present record was filed on 21
January 2010 – just short of seven years late. Bosch in the meantime roamed the
streets as a free man until he was shot dead during February or March 2010.
Staggie after a while, was found guilty of another offence and is apparently still in
prison. He is said to have some problems with obtaining parole because of the
sentence imposed in this case.
[8] We were informed from the bar that the state sought to set the bail conditions
aside in the high court and also sought warrants of arrest in the magistrates’ courts –
all to no avail. Why the state did not approach this court, where the matter was
supposed to be, for an order that the appeal had lapsed was not explained.
[9] This brings me to the present proceedings. Staggie’s counsel wrote a letter to
the registrar of this court on 30 April 2010 in which he mentioned that Staggie was in
prison because of another conviction; he would not have been had it not been for
this case; he ought to be entitled to a preferential date; and that counsel was briefed
by the Legal Aid Board only on 3 March 2010. He had also not yet been told by the
Board that he would be paid for reading 4000 pages but said that the appeal would
nevertheless proceed. (Why counsel had to read 4000 pages in the light of his
personal involvement in the case and the nature of the appeal is another matter.)
[10] The state filed its heads of argument on 27 May 2010. At the outset it raised
the question whether an explanation had been proffered by Staggie for the delay in
prosecuting the appeal. In addition, the submission was made that the delay was in
itself evidence of an intention to abandon the appeal.
[11] The next inexcusable delay took place in the office of the registrar of this
court. In spite of a directive form the judiciary that proper track be kept of cases
ready for hearing, the registry apparently misfiled the case because it was only
brought to the attention of the judge responsible for the roll during March 2011
instead of during May 2010. It is not the only case that has been misfiled in recent
times.
[12] Counsel for the appellant had a year’s time to respond to the state’s
mentioned submissions but he did nothing. No application for condonation was filed.
We have no explanation from Staggie. We have, in fact, nothing that can be used in
his favour.
[13] Apart from this, counsel did not file heads of argument although he did file a
document that purports to be such. The document states that the argument was
contained in the grounds of appeal (some 140 pages). That document does not
contain any argument. It simply lists alleged errors by the court without any
reference to the record or explanation. The only references to the record deal with
the peripheral circumstances relating to a witness protection programme without any
indication of how that impacts on the correctness or otherwise of the judgment. The
sum total of the argument in the ‘heads’ consists of three sentences: the state did
not prove the case beyond reasonable doubt; the appellant did not have a fair trial;
and that the conviction ought to be set aside. That is not even good enough for a
notice of appeal from a magistrates’ court.
[14] In fairness to counsel, he blamed me for the form of his heads because I had
written an article on heads of argument in The Advocate which, he said, he dutifully
followed. In self-defence, he is the first lawyer to interpret the article in this manner.
Other lawyers keep filing exhaustive and exhausting heads in spite of the article
(assuming that others have read it). And one is, I imagine, entitled to ponder why
counsel brought the article along to court unless he expected that the sufficiency of
the heads would become an issue during the hearing.
[15] The unfair trial argument appears to be based on what counsel called special
entries in terms of s 317 of the Act. The appellant did indeed file an application for
special entries on 27 February 2003 and they were, we are told, fully argued. We are
also told from the bar that the acting judge intimated that he would make the entries.
However, counsel could not show us where on the record the entries were made.
Confronted with this, counsel’s response was an accused is helpless if a judge fails
to make the entries requested. The answer is that in those circumstances the
accused is entitled to approach this court within 21 days in terms of s 317(5). No
such approach was made. In any event, to appeal on a special entry an accused has
to file a notice of appeal in terms of s 318(1) within 21 days because the appeal is an
automatic one and does not require leave – something still not done after more than
eight years.
[16] Special entries are an anachronism dating from the time when the right to
appeal in a criminal case was severely restricted. In spite of what was said in a time
frame not far removed from the extension of the right to appeal by Schreiner ACJ in
R v Nzimande & others 1957 (3) SA 772 (A) at 773H-774D, the only purpose it
serves today is to record irregularities that affect the trial that do not appear from the
record. Examples given by Hiemstra1 relate to the removal of an assessor by the
presiding judge for reasons that were not debated in open court (S v Malindi &
others 1990 (1) SA 962 (A)); the failure of the prosecutor to disclose discrepancies in
a witness’s statement (S v Xaba 1983 (3) SA 717 (A)); and where the was a breach
of the attorney-client relationship and the evidence so obtained was used against the
1 Suid-Afrikaanse Strafproses (Kriegler and Kruger 6 ed) p 888.
accused (S v Mushimba 1977 (2) SA 829 (A). Not one of the entries on which
Staggie sought to rely qualifies because they all concerned an attack on rulings
made by the court during the proceedings.
[17] As mentioned, the court below granted leave to appeal against its decision on
the interpretation and application of sections 153 and 158 of the Act. Section 153(3)
gives a court a discretion in criminal proceedings relating to a charge that the
accused committed an indecent act towards another to hold the proceedings behind
closed doors. The court below, in a fully reasoned judgment, exercised its discretion
in favour of in camera proceedings. Such discretionary judgment may be impugned
on appeal on very limited grounds. Counsel did not refer us to a single passage in
the judgment, reported as S v Staggie & another 2003 (1) SACR 232 (C), which can
be assailed on this basis.
[18] This reported judgment also dealt with the interpretation of s 158(3) of the Act
and its interpretation was subsequently accepted as correct in S v Domingo 2005 (1)
SACR 193 (C).2 Both judgments overruled S v F 1999 SACR 571 (C). When asked,
counsel was unable to submit that the court below had erred. What S v F held was
that if one has a list ‘a, b, c, or d’ it means ‘a and b and c or d’. That is linguistically
and contextually unsustainable. In context, a court may order video evidence if the
facilities are available and any one of the five requirements spelt out in subsec (3)
are present. And should a court err, s 322(1) of the Act would apply.
[19] Counsel also took the court below to task because it had reference to
‘academic’ works relating to the lack of police training in relation to rape
investigations and the post-traumatic rape syndrome without expert evidence
2 Section 158:
‘(2)
(a)
A court may, subject to section 153, on its own initiative or on application by the
public prosecutor, order that a witness or an accused, if the witness or accused consents thereto,
may give evidence by means of closed circuit television or similar electronic media.
(b)
A court may make a similar order on the application of an accused or a witness.
(3)
A court may make an order contemplated in subsection (2) only if facilities therefore are
readily available or obtainable and if it appears to the court that to do so would ─
(a)
prevent unreasonable delay;
(b)
save costs;
(c)
be convenient;
(d)
be in the interest of the security of the State or of public safety or in the interest of
justice or the public; or
(e)
prevent the likelihood that prejudice or harm might result to any
person if he or she testifies or is present at such proceedings.’
confirming those views. Although the judgment smacked of academic learning there
is not one reference that does not conform to that which is generally known and
accepted. In addition, to succeed the appellant had to show that these references
led to a miscarriage of justice. See R v Harris 1965 (2) SA 340 (A) read with the
proviso to s 322(1) of the Act. No attempt was made to do so.
[20] That leaves, in the words of the acting judge, ‘the question of the
complainant’s testimony’ on which, he said ‘we have spent a lot of time dealing with
that.’ It is correct that the court below did spend much time on the matter. We are
bound by its factual findings unless it is shown that they were wrong. Counsel was
invited to point to any finding in the judgment that was unsustainable but apart from
submitting in most general terms that the court had erred did not accept the
invitation.
[21] To conclude this sad tale, Staggie’s appeal is not properly before us and
Bosch’s lapsed in any event because of his death. And even if we accept the
lackadaisical submissions made in court as an application for condonation and
reinstatement of the appeal, they did not satisfy us that the delay was excusable or
that Staggie has reasonable prospects of success.
[22] Something has to be said about the state’s conduct. The Directors of Public
Prosecutions and even the Ministry of Justice have on an administrative level been
requested by this court over many years to keep proper track of the process of
criminal appeals – to no or little avail. No proper track is kept of whether persons
convicted apply for leave within the prescribed period; whether appeals are
prosecuted in time by the filing of records or of heads of argument; and whether
appeals are enrolled in due course and do not lie waiting for doomsday somewhere
in the offices of registrars, whether in this court or the high courts.
[23] Then there is the question of due compliance by the state of its obligation to
comply with the practice directives of this court. The state’s written argument was as
could be expected in the light of the appellant’s non-argument quite brief. The only
references to the record were to the judgment of the court below. In spite of this the
state said that we had to read all 4000 pages of the record. This is unacceptable.
The state has a duty towards the court to ease its workload and not to bog it down.
The appeal is accordingly struck from the roll.
____________________
L T C Harms
Deputy President
APPEARANCES
APPELLANTS:
J Mihálik
Instructed by Justice Centre, Cape Town
RESPONDENT:
H Booysen
Instructed by The Director of Public Prosecution, Cape
Town
The Director of Public Prosecution, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 May 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.
* * *
STAGGIE V THE STATE
The Supreme Court of Appeal (SCA) today struck from the roll an appeal by Mr Rashied
Staggie (the appellant) against a decision of the Western Cape High Court (Cape Town)
finding him, together with a co-accused who had since died at the time of the hearing of the
appeal and whose appeal had lapsed as a result, guilty on one count of kidnapping and one
count of rape, and sentencing him to an effective 15 years’ imprisonment.
On 28 February 2003, the high court granted the appellants leave to appeal to the SCA. The
appellants filed an incomplete record some 18 months after grant of leave, but it was
rejected as being incomplete. The record in the present appeal was filed on 21 January
2010, approximately seven years after the appellants had been granted leave to appeal.
Nothing was done in relation to the appeal until 30 April 2010 when counsel for Mr Staggie
wrote a letter to the registrar of the SCA in which he mentioned, among other things, that
he was briefed only on 3 March 2010. The state also filed its heads of argument late, on 27
May 2010. In addition to the delays occasioned by the parties, the office of the registrar of
the SCA misfiled the case. It was only brought to the attention of the judge responsible for
the roll during March 2011 instead of during May 2010. During the period between May
2010 and March 2011, counsel for Mr Staggie did nothing to respond to the state’s
submissions in its heads of argument regarding the delay by Mr Staggie in prosecuting the
appeal. There was also no application by Mr Staggie for condonation of the late prosecution
of the appeal.
In striking the appeal from the roll, the SCA held that the appeal was not properly before it
and that even if it were to accept the lackadaisical submissions made in court as an
application for condonation and reinstatement of the appeal, they did not satisfy it that the
delay was excusable or that Mr Staggie had reasonable prospects of success.
|
4031
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 022/2022
In the matter between:
MAKWENA DELINA MASHOLA
APPLICANT
and
TSIETSI PHILEMON MASHOLA
RESPONDENT
Neutral Citation:
Mashola v Mashola (022/2022) [2023] ZASCA 75 (26 May 2023)
Coram:
Molemela JA, Mbatha JA, Meyer JA, Matojane JA and Siwendu
AJA
Heard:
14 March 2023
Delivered:
26 May 2023
Summary:
Family Law – divorce – partial forfeiture of benefits – misconduct –
whether s 9(1) principles properly considered by the full court – whether condonation
and waiver ground raised by full court mero motu sustainable – s 9(1) of the Divorce
Act 70 of 1979, as amended, principles restated.
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Kganyago J, Muller
J and Naude AJ sitting as court of appeal):
Condonation for the late filing of the application for special leave to appeal the
order of the full court dated 23 March 2021 is hereby granted.
2 Special leave to appeal the judgment and order of the full court, Limpopo
Division of the High Court, Polokwane, dated 23 March 2021 is granted.
3 The appeal is upheld with costs and the order of the abovementioned full court
is set aside and substituted as follows:
‘4.1 The appeal is upheld with costs.’
4.2 Paragraphs (c) and (d) of the order of the High Court (MG Phatudi J) are set
aside and substituted as follows:
‘(c) The defendant’s counterclaim succeeds.
(d) The patrimonial benefits of the parties’ marriage in community of property in
respect of the defendant’s pension benefits and interest held in the Government
Employee Pension Fund are forfeited by the plaintiff in favour of the defendant.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mbatha JA (Molemela, Meyer and Matojane JJA and Siwendu AJA concurring)
[1] Mr Tsietsi Philemon Mashola (the respondent) and Mrs Makwena Delina
Mashola (the applicant) were married to each other on 1 October 1985 in community
of property and profit and loss. On 17 October 2016 the respondent instituted an action
for divorce and ancillary relief thereto in the Limpopo Division of the High Court,
Polokwane (the high court), against the applicant. On 19 November 2020, the high
court, (per MG Phatudi J) dismissed the applicant’s counterclaim for a partial forfeiture
order in respect of the applicant’s pension benefits and granted the following orders:
‘(a) a decree of divorce; (b) the joint estate shall be divided equally between the parties as
stipulated in the signed Deed of Settlement marked [Annexure “A”] which is made an order
of Court; (c) the defendant’s counter claim is dismissed; (d) the Government Employee
Pension Fund ( G.E.P.F) is ordered to pay to the plaintiff 50% of the defendant’s pension
fund’s nett benefit/interest, out of its G.E.P.F calculations from the date of divorce and payable
in terms of the provisions of s 3 of the Government Employees Pension Law Amendment Act
19 of 2011; (G.E.P.F. Law Amendment Act) and (e) that each party to pay own costs.’
[2] Aggrieved by the decision of the high court, the applicant on 27 January 2021
sought leave to appeal from this Court against the judgment and order (save for the
order dissolving the marriage) and the condonation for the late filing of the application
for leave to appeal. On 12 March 2021 this Court granted the applicant leave to appeal
to the full court, Limpopo Division of the High Court, Polokwane (the full court). Her
appeal to the full court failed.
[3] On further application, the applicant sought special leave to appeal to this
Court. On 26 February 2022 this Court ordered that the application for leave to appeal
be referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of
2013 (the Superior Courts Act). The parties were directed to be prepared, if called
upon to do so, to address this Court on the merits of the appeal. In order to obtain
leave from this Court, the applicant needs to establish that the appeal would have a
reasonable prospect of success as contemplated in s 17(1)(a)(i) of the Superior Courts
Act on both appealability and on the partial forfeiture of benefits sought.1
[4] Furthermore, the applicant applied in terms of rule 12 of the Rules of this Court
for condonation for the late filing of the record and the heads of argument. The
applications were not opposed by the respondent. Accordingly, the applicant’s non-
compliance is condoned. In addition, as is apparent from the record, the respondent
abides by the decision of this Court as was the case when the appeal served before
the full court.
Background
[5] In the particulars of claim the respondent attributed the failure of the marriage
to the grounds that:
1 Van Wyk v The State, Galela v The State [2014] ZASCA 152; [2014] 4 All SA 708 (SCA); 2015 (1)
SACR 584 (SCA).
‘the parties are no longer compatible and no longer share common interests; the Defendant
[the applicant] has through her conduct as mentioned earlier humiliated and hurt the Plaintiff
[respondent]; the Plaintiff has lost his love and affection for the Defendant and is no longer
interested in the continuation of the marriage relationship; the Defendant denies the Plaintiff
with his conjugal rights.’
The respondent’s core claim with regard to the division of the joint estate was a specific
claim for a half share in the applicant’s pension interest held by GEPF. This claim was
based on the provisions of s 7(7) of the Divorce Act 70 of 1979 (Divorce Act), as
amended, which deems the pension benefits or interest of a spouse to form part of the
joint estate.
[6] In her plea and counterclaim, the applicant did not resist the claim for a decree
of divorce. She admitted that the marriage relationship had irretrievably broken down,
although she disputed that she was the cause of the breakdown as set out in the
respondent’s particulars of claim. In her counterclaim, she claimed that the reasons
for the breakdown of the marriage were that:
‘the Plaintiff ( the respondent) formed an adulterous relationship which relationship he refused
to end notwithstanding numerous requests by the defendant; the Plaintiff has a five-year-old
child with his mistress; the Plaintiff failed to contribute pro-rata according to his means toward
the running of the household and the maintenance of the parties’ children; the Plaintiff was
financially irresponsible in that he would among other things spend his money on his mistress;
the Plaintiff has ruined the Defendant financially in the amount of approximately R1 500
000.00; the Plaintiff has humiliated and degraded the Defendant throughout the marriage
relationship; there is a total lack of communication between the parties [and] the parties are
living separate lives and are no longer interested in the continuation of a marriage relationship.’
Consequently, the applicant sought an order that the respondent partially forfeits the
right to share in her pension interest in GEPF with membership number 97917510, as
he would be unduly benefitted. This issue was central during the hearing of the divorce
action.
The appellant’s evidence presented during the trial
[7] The applicant’s testimony of what led to the breakdown of the marriage
relationship was the prolonged extramarital affair by the respondent with one Mapula
Eva Leshiba (Eva), an erstwhile employee of their Financial Services business. The
applicant became aware of the respondent’s extramarital affair with Eva through an
anonymous call in July 2007. She confronted Eva, who admitted in a derogatory
manner that she was involved in a love relationship with the respondent. The
respondent, however, denied the existence of the affair. The applicant described this
incident as a turning point in her life, as the affair was conducted in the public domain.
Furthermore Eva bore the respondent a child, who was five years old at the time of
the divorce. These incidents brought her pain and humiliation.
[8] The applicant testified that she tried professional counselling with her husband
immediately after learning about the respondent’s extramarital affair with Eva, which
bore no fruit. During the second session of counselling with one Dr Mabeba, the
respondent informed Dr Mabeba that ‘this thing of marital affair, [was] something that
[was] in him. A man who did not have an extramarital affair was a fool’. Consequently,
nothing would stop him from having mistresses in his life. The applicant testified that
she realised that her efforts at reconciliation with the respondent were futile. She
expressed her disillusionment in this manner: ‘. . . from there I could see that we were
heading nowhere with this session. That is when I told my husband that because I can
see that you are still adamant that there is no way that things can change then I think
that even though we may stay as a man and a wife then it will be better for us to stay
that way but . . . we will not have sexual intercourse up until he stops having this
extramarital affairs. . . .’ When the applicant was asked to clarify to the court what she
meant by that, her response was ‘because I was afraid that I may be infected with HIV
Aids . . .’. Be that as it may, she still left the door open for him as she informed him
that only when he was tired of having mistresses, they could discuss the way forward.
Her evidence was that: ‘we will talk about the conjugal rights. Maybe go and do some
check-ups if there are some illnesses’. And explained further: ‘So that he also can be
satisfied that I do not have a love affair’.
[9] The applicant testified that on 25 March 2008, she took the bull by its horns and
dismissed Eva from their employment, which did not settle well with the respondent.
In retaliation, the respondent informed her that he was in love with Eva, will marry her,
build her a house and start a business with her. This was the beginning of her financial
woes as the respondent stopped depositing money into her account, as he had
previously done. This occurred at a time when their cash loan business was
flourishing. At this stage, the family business was making between R20 000 and R40
000 per month. By 2007 the parties had already invested over R500 000 with Absa
Bank. The applicant was told in no uncertain terms by the respondent to stop
interfering in the family business.
[10] In support of her claim for a partial forfeiture of benefits, the applicant testified
of a grand scale fleecing of the joint estate. The respondent gave money to Eva to
start a cash loan business called Mokgatlou Cash Loans (Mokgatlou), which business
was operating in direct competition with the family business. The respondent
financially and physically assisted Eva in her cash business to the detriment of the
family business and the joint estate. The Mokgatlou cash loan business was followed
by Malele Funeral City Parlour (Malele) established by the respondent with Eva, in
which Eva acquired a 50% interest, the respondent holding a 20% interest and 30%
was warehoused for other partners. Unabatedly, the respondent and Eva established
other businesses including El-Eshe Trading CC and El-Eshe Funeral Undertakers CC
where each of them held a 50% interest respectively.
[11] The applicant testified that Eva, whilst in their employment, had purchased a
stand close to their matrimonial home. The respondent built a double-storey house for
Eva on that stand, partially completed around November 2012. During this period, the
respondent sold nine head of cattle out of their 73 head of cattle kept in Dendron to a
local chief. The proceeds of the sale of cattle totalling R34 000, were deposited into
the El-Eshe banking account. Coincidentally, the sale of livestock happened at the
time when the roof of Eva’s house was constructed. Eva was given access to their
motor vehicles at that stage, without the applicant’s consent. The relationship between
the respondent and Eva was at all times conducted in the public domain.
[12] The applicant testified that the respondent was building a business empire with
Eva, whilst she was struggling to make ends meet. Finally, the applicant took the
gauntlet and approached the Maintenance Court in respect of their minor daughter’s
educational needs. During the hearing of the maintenance case, the respondent
informed the court that he had six other children born out of wedlock whom he was
maintaining at R300.00 per month per child. He proposed to pay the same amount for
his daughter. The court, however, awarded the applicant a maintenance order of R750
per month in respect of their daughter with effect from 30 April 2013. That was not the
end of the matter. In 2015 the respondent was again ordered by the Maintenance
Court to pay for their daughter’s university fees from the funds invested with Absa
Bank, which he prior to that had refused to do. The applicant testified that she was
solely responsible for their children’s education from primary school up to grade 12
and that when it was the respondent’s turn to take over in respect of their tertiary
education, he failed to do so.
[13] It was also the applicant’s testimony that she contributed 80% towards the
building of the matrimonial home and made provision for her family members,
including the respondent, to be a member of her medical aid scheme. The respondent
did not contribute proportionately towards the running of the household and the
maintenance of the children. During the time when the respondent was involved in
Eva’s business interests, the applicant had no access to their cash loan business and
unbeknown to her, their cash loan business had been deregistered on 23 November
2015 at the instance of the respondent.
[14] The applicant was cross-examined about Mogasehla, a business allegedly run
by her in competition to the family business. She testified that the alleged competing
business was registered in the name of her nephew in 2006, long before she and the
respondent had marital problems. A fact which was known to the respondent. She
testified that she was not involved in that business, save that its employees, after they
had collected money from her nephew’s clients, handed the money over to her at the
request of her nephew who lived in Johannesburg. The money was used for the
welfare of her nephew’s children who lived with her, and the balance was given to him.
She vehemently denied that she was a sleeping partner in that business.
[15] Under cross-examination, it was suggested to the applicant that the respondent
paid for the university fees of their oldest son. The applicant’s response was that the
respondent paid only for the first two years of his tertiary education, from 2009 to 2010.
And that when their son insisted on following his chosen career path in Information
Technology rather than medical studies as proposed by the respondent, he stopped
paying for his university fees. Consequently, the applicant had to take over the
payment of his university fees and all related expenses from the end of the first
semester in 2011.
[16] When the applicant was asked about the financial status of their family business
when both parties were still involved in its operation, she testified that their business
was thriving and they had no losses. The surplus profits from the business enabled
them to invest funds with ABSA bank and buy Christmas gifts for employees,
customers and relatives. And since the dismissal of Eva, she was disconcerted to learn
that Eva, who was running her cash loan business alongside theirs, was also entrusted
by the respondent with the collection of cash from their clients. She confirmed the
allegation in her pleadings that the respondent had ruined her to the tune of R1.5
million, which represented the money collected by the respondent from the family
business from 2008 to the date of divorce that was not accounted to her. When it was
suggested that she had free access to groceries in their shop, she stated that, that
was the case before Eva joined the respondent in that business.
The respondent’s evidence
[17] The respondent denied having an extramarital affair with Eva. He averred that
they were only friends. He visited her, assisted her in collecting money from clients
and assisted her in her other business interests. He denied having business interests
with Eva at all and alluded only to being involved in the family business. It was only
under cross-examination when he was confronted with documentary evidence that he
conceded to have established businesses with Eva. The concession was also contrary
to his plea to the counterclaim where he averred as follows: ‘I am not the owner of El-
Eshe Funeral Undertakers, it belongs to one Eva Lesheba (sic), and I am the employee
thereof’. He struggled to explain the discrepancy in his plea to the counterclaim and in
his evidence in chief regarding the ownership of business interests with Eva.
[18] The respondent who had testified to the existence of the family business was
confronted under cross-examination with proof of the deregistration of the family
business at his instance. He misled the high court when he claimed to be working at
the family business, when he had knowledge that it had been deregistered. He
admitted that he was working at Eva’s businesses, whilst in the same breadth he
claimed to have deregistered the family business due to it causing him stress. The
documentary evidence that was used to confront the respondent also showed that he
left El-Eshe Funeral Undertakers in 2013. He confirmed this fact but stated that he
was not compensated for his member’s interest in that business. Instead, Eva gave
him a credit card to use whenever he needed to purchase anything. The respondent
did not disclose the credit limit on the credit card. The respondent, surprisingly,
claimed to be working for free for Eva, as he testified that he was not paid a salary but
claimed to draw a salary of between R3 000 and R4 000 from the family business.
Later, he claimed to have received a basic salary of between R2 000 and R3 000 from
Eva.
[19] The respondent gave a glowing testimony of Eva’s business acumen,
leadership qualities and competency in business. He attributed the demise of the
family business to her expulsion by the applicant. He confirmed that Mokgatlou, owned
by Eva, operated where the family business operated and that he was assisting Eva
in that business. He testified that he would collect money from Eva’s business clients
on her behalf. At the same time, he alluded to the competition at the instance of the
applicant posed by Mogasehla, which stopped him from doing business at pension
points due to Mogasehla undercutting interest rates in competition with the family
business.
[20] The respondent confirmed that they had a profitable business in 2007, which
had yielded an investment of over R500 000. He also confirmed that the family had
various business interests, including a cell phone depot, a poultry business and a
spaza shop. The respondent claimed to have provided for his children’s education
from the proceeds of various business interests. He denied building Eva a house or of
using the proceeds of the sale of cattle for the benefit of Eva. Upon being questioned
whether he had children with Eva he gave an evasive answer. He did not deny the
existence of the maintenance orders sought by the applicant for the educational needs
of their children.
The judgment of the full court
[21] The full court, per Kganyago, Muller JJ and Naude AJ, dismissed the appeal by
the applicant for an order for partial forfeiture of benefits. In dismissing the appeal, it
found that the applicant, of her own accord, had given the respondent permission to
continue having extramarital affairs until he got tired of them. In that regard, so it was
held, she condoned the alleged extramarital affair with Eva for the past nine years.
The full court held that as a consequence of such a condonation, she waived her right
to rely on the long enduring extramarital affair of the respondent with Eva as a ground
for the irretrievable breakdown of the marriage since she was content with it. The full
court concluded that the applicant’s reliance on the long enduring extramarital affair
did not suffice to support her claim for an order for forfeiture of benefits.
[22] Additionally, the full court held that the applicant was conducting Mogasehla in
competition with the family business, Mokgatshehla, hence the wanting financial state
of Mokgatshehla. As a result the conduct of the applicant in contributing to the demise
of Mokgatshehla amounted to substantial misconduct on her part.
[23] The full court also accepted the respondent’s evidence though it was not
substantiated. In conclusion, it held that taking into consideration the duration of the
marriage of the parties, the circumstances that led to the breakdown of their marriage
and that both parties have committed substantial misconduct, an undue benefit will not
accrue to one party in relation to the other if an order for forfeiture was not granted.
The issues before this Court
[24] The legal questions before this Court are as follows: (a) whether the applicant
was entitled to a partial forfeiture order in respect of her pension interest/benefit held
in GEPF; (b) whether the respondent’s long enduring extramarital affair with Eva, the
abuse and misappropriation of the funds from the various family business interests for
the benefit of Eva and the failure to contribute meaningfully to the joint estate by
the respondent translated into substantial misconduct on the part of the respondent;
(c) in that regard, whether the respondent would be unduly benefitted if the order for
partial forfeiture of benefits was not granted; (d) whether the full court was correct in
finding that the appellant condoned the extramarital affair of the respondent with Eva
and waived her right to rely on that ground of misconduct in pursuit of her claim for a
partial forfeiture of benefits; (e) lastly, whether the full court was entitled to mero motu
raise the issues of condonation and waiver.
The legal principles applicable
[25] Section 9(1) of the Divorce Act provides that:
‘When a decree of divorce is granted on the ground of the irretrievable break-down of a
marriage the court may make an order that the patrimonial benefits of the marriage be forfeited
by one party in favour of the other, either wholly or in part, if the court, having regard to the
duration of the marriage, the circumstances which gave rise to the breakdown thereof and any
substantial misconduct on the part of either of the parties, is satisfied that, if the order for
forfeiture is not made, the one party will in relation to the other be unduly benefitted.’
[26] The entitlement to a half share in the pension interest of the other spouse is
governed by ss 7(7) and 7(8) of the Divorce Act; which provide as follows:
‘7(a)
In the determination of the patrimonial benefits to which the parties to any divorce
action may be entitled; the pension interest of a party shall, subject to paragraphs (b) and (c),
be deemed to be part of his assets.
[27] The Divorce Act did away with the fault element as a ground for divorce.
However, a consideration of whether there was substantial misconduct on the part of
one of the parties, is one of the factors that may be taken into account. It is not a stand-
alone factor but has to be considered with the other factors mentioned in s 9(1).
[28] There are several seminal judgments which have clarified the legal principles
in relation to the application of s 9(1). The principles stated by the Appellate Division
in Wijker v Wijker2 (Wijker) are as follows:
(a)
The party seeking an order for forfeiture of benefits does not have to prove the
existence of all three factors in s 9(1) cumulatively.3 The court needs to ask itself
whether one party will be unduly benefitted if an order of forfeiture was not made, and
in order to answer that question, regard should be had to the factors mentioned in s
9(1).
(b)
Wijker advocates that when dealing with s 9(1) the following approach should
be adopted: ‘the first step is purely a factual issue. Once that has been established the
trial court must determine, having regard to the factors mentioned in the section,
whether or not that party will in relation to the other be unduly benefited if a forfeiture
order is not made. Although the second determination is a value judgment, it is made
by the trial court after having considered the facts falling within the compass of the
three factors mentioned in the section.’4 It further advocated the approach adopted in
an unfair labour practice dispute, where the word discretion is used in a wider sense.
A court will not be exercising a discretion in the narrower sense. Therefore there will
be no choice between permissible alternatives involved.
(c)
The court emphasised that when making a value judgment, applying the
principles of fairness is not justified, as s 9(1) contains no provision for the application
of such principle. Not only is it contrary to the basic concept of community of property
2 Wijker v Wijker 1993 (4) SA 720 (A).
3 Ibid at 721F.
4 Ibid at 727D-F.
but there is no provision in s 9 for the application of such a principle. It held further that
in considering the appeal the court is therefore not limited by the principles set out in
Ex parte Neethling and Others 1951 (4) SA 331 (A) and it may differ from the court a
quo on the merits. It is only after the court has concluded that a party would be unduly
benefited that it is empowered to order a forfeiture of benefits, and in making this
decision it exercises a discretion in the narrower sense.
(d)
Furthermore, the Wijker judgment states that notwithstanding the introduction
of the no fault principle in divorce, a party’s misconduct may be taken into account in
considering, in terms of s 9(1), the circumstances which gave rise to the breakdown
of the marriage. Additionally, ‘substantial misconduct may include conduct which has
nothing to do with the breakdown of the marriage and may for that and other reasons
have been included as a separate factor. Too much importance should, however, not
be attached to misconduct which is not of a serious nature.’5 It must be found that it is
so obvious and gross that it would be repugnant to justice to let the ‘guilty’ spouse get
away with the spoils of the marriage.
(e)
In Engelbrecht v Engelbrecht 1989 (1) SA 597 (C) the court held that it could
never have been the intention of the legislature that a wife, who had for 20 years
assisted her husband faithfully should, because of her adultery, forfeit the benefits of
the marriage in community of property. This confirmed the principle that the finding of
substantial misconduct does not on its own justify a forfeiture order.
[29] The principles in Wijker were endorsed by this Court in Botha v Botha 2006 (4)
SA 144 (SCA) where it confirmed that only the factors in s 9(1) should be accorded
consideration. This Court in Botha pointed out that the-catch-all phrase, permitting the
court, in addition to the factors listed, to have regard to ‘any other factor’ was
conspicuously absent from s 9. It further held that s 9(1) should be construed within
the context of the evidence tendered by the parties in court.
[30] In Badenhorst v Badenhorst [2005] ZASCA 116; 2006 (2) SA 255 (SCA),
though dealing with the provisions of s 7(3) of the Divorce Act, this Court also endorsed
the principle that the factual consideration of issues raised in s 7(3) cannot be a matter
of a discretion. It restated the principle that one party to the marriage cannot control
and abuse the assets of a joint estate as if he has marital power in the case where
5 Ibid at 721G-H.
assets were beyond the reach of the other party. This principle should equally apply
to the consideration of the forfeiture order sought by spouses married in community of
property and profit and loss as they hold undivided shares in the joint estate. The
Matrimonial Amendment Act has long abolished marital power in South Africa.
[31] In BS v PS [2018] ZASCA 37; 2018 (4) SA 400 (SCA) para 10-11 (BS v PS),
this Court in considering an appeal from the Eastern Cape Division of the High Court,
Grahamstown, found that the court below should not have focussed on an isolated
incident of adultery by one of the spouses instead of considering the duration of the
marriage and circumstances which gave rise to the breakdown of the marriage.
Analysis and Evaluation
[32] The applicant submits that the findings of the full court were out of kilter with
the oral evidence and legal submissions made before the high court. One such
finding is that the applicant condoned the adulterous relationship between Eva and the
respondent and thereby waived her rights to rely on that ground in her quest for an
order for a partial forfeiture of benefits. It is common cause that condonation had not
been raised in the pleadings nor ventilated during the trial before the high court. The
full court raised it mero motu. The full court impermissibly canvassed a different case
than that which was before the high court. It acted outside the context of the appeal.
It was impermissible as it had an adverse effect on the rights of the applicant and the
case made out before the High Court.
[33] It is trite that a court should not pronounce upon a claim or defence not raised
in the pleadings. In Member of the Executive Council, Department of Education,
Eastern Cape v Komani School and Office Suppliers CC t/a Komani Stationers [2022]
ZASCA 13; 2022 (3) SA 361 (SCA) para 53, the court emphasised, with reference to
Fischer, that:
‘One of the enduring tenets of judicial adjudication is that courts are enjoined to decide only
the issues placed before them by the litigants. And that it is not open to court to change the
factual issues presented by the parties or introduce new issues.’
This was a misdirection on the part of the court. It failed to appreciate the trite principles
laid out in Wijker, which advocate a two-step process.
[34] It misunderstood the concept of a value judgment. First, it found that the
applicant’s conduct in running a cash loan business known as Mogasehla led to the
demise of the family business, Mokgatshehla, and that that amounted to substantial
misconduct on the part of the applicant. Second, it found that the respondent
contributed to the educational needs of the children. Finally, in concluding that by
‘taking into consideration the duration of the marriage of the appellant and the
respondent, the circumstances that led to the breakdown of their marriage and that
both parties have committed substantial misconduct, an undue benefit will not accrue
to one party in relation to the other if an order for forfeiture is not granted’, the full court
misdirected itself. These were factually incorrect conclusions as the full court failed to
apply the two pronged approach advocated in the Wijker judgment.
[35] The full court failed to take cognisance of the evidence of the applicant in that
she could not accord the respondent conjugal rights due to fear of contracting the
HIV/Aids virus, with its deadly consequences. When considering her testimony in its
context, it is clear that the applicant never gave the respondent permission to continue
with extramarital affairs. In fact, the applicant’s evidence was that when she took the
respondent for counselling on 29 November 2007, he told the psychotherapist that he
would never stop having extramarital relationships. Furthermore, it was not the
respondent’s case that the applicant condoned his extramarital relationships. The
applicant became aware of the respondent’s relationship with Eva only in July 2007.
To show disdain for the relationship, she had dismissed Eva from their employment.
On every possible interpretation or evaluation, I cannot subscribe to the conclusion
that the applicant condoned the respondent’s extramarital relationship with Eva.
[36] The trite principle is as follows ‘an appellate court can only interfere in the
exercise of such discretion in limited circumstances; for example, if it is shown that the
court a quo has misdirected itself by taking irrelevant considerations into account; that
it has exercised its discretion for no substantial reason; that the discretion was not
exercised judicially or was exercised based on a wrong appreciation of the facts or
wrong principles of law’. (See Gaffoor NO and Another v Vangates Investments (Pty)
Ltd and Others [2012] ZASCA 52; 2012 (4) SA 281 (SCA) para 38).
[37] Furthermore, the judgment in Wijker empowers the appeal court to reconsider
the facts where the trial court failed to do so. I now consider the evidence which was
presented before the high court in making a finding whether the respondent will be
unduly benefitted as the applicant contends. The respondent’s prolonged extramarital
affair with Eva was not an isolated incident, but a prolonged relationship which existed
up to the time when the respondent filed for divorce. It was gross, repugnant and
humiliating as it was unashamedly flaunted in the public domain to the prejudice of the
applicant. At the time of the dissolution of the marriage it had run for over nine years.
The respondent only filed for divorce once nothing was left in the joint estate, save for
the applicant’s pension interest and a few assets. The respondent bankrolled Eva at
the expense of his family, in that he set up various business interests with Eva. The
applicant had to approach the maintenance court for the education of her children,
where she also learned for the first time about the existence of other children of the
respondent born out of wedlock. The respondent made very minimal contributions for
the benefit of the joint estate, though he had established several businesses with Eva.
The applicant solely depended on her salary as an educator.
[38] On the other hand, the respondent made no allegation of extramarital
relationships against the applicant. He divorced her on the grounds of her failure to
accord him conjugal rights, which cannot be regarded as a misconduct given the
reasons she advanced for her refusal. The respondent’s evidence, which the court
below failed to appreciate, was riddled with contradictions and inconsistencies. He
pleaded that he did not own any business interests with Eva, only to be confronted
with documentary evidence to the contrary. This was incontrovertible evidence which
had led to the demise of the family business interests.
[39] The fact that he channelled assets of the joint estate to set up business
enterprises with Eva undoubtedly constitutes misconduct. Furthermore, he withdrew
from one of the close corporations but failed to take the value of his member’s interest,
thereby depriving the joint estate of an asset. Notably, there is no evidence of him
having made any contribution towards the applicant’s pension. Eva was an employee
at the family business, but was able to open a string of business shortly after being
dismissed from her employment. I am satisfied that the evidence presented before the
trial court showed substantial misconduct on the part of the respondent.
[40] In sum, there can be no question that the applicant satisfied the requirements
of s 9(1), particularly that the respondent would be unduly benefited if the order for
partial forfeiture is not granted. The applicant made direct financial contributions to the
joint estate, as opposed to the respondent who used almost all his financial resources
for the benefit of Eva. The uncontroverted evidence of the applicant, in fact, shows
that the respondent’s outside interests far more exceeded what he contributed to the
joint estate, the long-existing relationship with Eva conducted in a brazen and
humiliating fashion to the applicant and the duration of the marriage. The duration of
the marriage indicates the burden of the joint estate on the applicant. The respondent
considerably eroded the value of the joint estate, and used the assets of the joint estate
as if he had the marital power to do so, contrary to the proprietary regime of the
marriage in community of property.
[41] The applicant led sufficient and corroborated evidence in support of her claim
for an order for partial forfeiture of benefits. The respondent’s evidence fell short in
various ways, including that it was inconsistent, contradictory and did not support his
claim for a half share in the applicant’s pension interest. The claim by the respondent
of 50% of the pension benefits which has accrued to the applicant is not sustainable.
I have also taken into consideration that he abused the joint estate resources for years
for the benefit of Eva, he failed to adequately provide for the joint estate and the
duration of the marriage.
[42] The authorities cited above justify the granting of an order of forfeiture of the
half share of pension benefits against the respondent. Accordingly, I make the
following order:
Condonation for the late filing of the application for special leave to appeal the
order of the full court dated 23 March 2021 is hereby granted.
2 Special leave to appeal the judgment and order of the full court, Limpopo
Division of the High Court, Polokwane, dated 23 March 2021 is granted.
3 The appeal is upheld with costs and the order of the abovementioned full court
is set aside and substituted as follows:
‘4.1
The appeal is upheld with costs.’
4.2
Paragraphs (c) and (d) of the order of the High Court (MG Phatudi J) are set
aside and substituted as follows:
‘(c)
The defendant’s counterclaim succeeds.
(d)
The patrimonial benefits of the parties’ marriage in community of property in
respect of the defendant’s pension benefits and interest held in the Government
Employee Pension Fund are forfeited by the plaintiff in favour of the defendant.’
_______________________
Y T MBATHA
JUDGE OF APPEAL
APPEARANCES
For First to Fifth Appellant:
M G Haskins (with him I Ossin)
Instructed by:
DDKK Attorneys Inc., Polokwane
Phatshoane Henney Attorneys, Bloemfontein
For Respondents:
No Appearance
Instructed by:
Mulisa Mahafha Attorneys, Polokwane
|
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:
26 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
Mashola v Mashola (022/2022) [2023] ZASCA 75 (26 May 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with costs, an appeal
against the decision of the Limpopo Division of the High Court, Polokwane (the full court).
Mr Tsietsi Philemon Mashola (the respondent) and Mrs Makwena Delina Mashola (the applicant) were
married to each other on 1 October 1985 in community of property and profit and loss. On 17 October
2016 the respondent instituted an action for divorce and ancillary relief thereto in the high court against
the applicant. On 19 November 2020, the high court, dismissed the applicant’s counterclaim for a partial
forfeiture order in respect of the applicant’s pension benefits. Instead it ordered that the respondent was
entitled to 50% of the applicant’s pension fund. Aggrieved by this order, the applicant on 27 January
2021 sought leave to appeal from this Court against the judgment and order (except for the order
dissolving the marriage.) On 12 March 2021 this Court granted the applicant leave to appeal to the full
court, Limpopo Division of the High Court, Polokwane (the full court). Her appeal to the full court was
also unsuccessful. Further aggrieved by the full court’s decision, the applicant petitioned this Court for
an appeal which was subsequently granted.
The crux of the matter before this Court was whether the respondent would unduly benefit if the order
for partial forfeiture of benefits was not granted in terms of s 9(1) of the Divorce Act 70 of 1979?
To substantiate her application, the applicant testified that the reason that led to the breakdown of the
marriage relationship was the prolonged extra-marital affair by the respondent with one Eva Leshiba
(Eva), who was an employee of the parties’ Financial Services business. The applicant described that
incident as a turning point in her life, as the affair was conducted in the public domain. Furthermore the
applicant found out that the respondent had six other children outside the marriage, Eva’s child being
one them. The applicant further testified that she tried professional counselling with the respondent
immediately after learning about the affair, however, it bore no fruit .The applicant also testified that she
suffered financial difficulty since the respondent had abandoned his financial obligations towards her
and their children, leaving her to pick up the burden. He instead directed his attention to building an
empire with Eva by establishing numerous businesses to the financial detriment of their joint estate.
The SCA held that the applicant had successfully satisfied the requirements of the forfeiture clause in
s 9(1) of the Divorce Act, and found that the respondent would be unduly benefited if the order for partial
forfeiture was not granted. The SCA further held that the applicant made direct financial contributions
to the joint estate, as opposed to the respondent who used almost all his financial resources for the
benefit of Eva. Furthermore, the uncontroverted evidence of the applicant showed that the respondent’s
outside interests far more exceeded what he contributed to the joint estate. The Court went on further
and held that the long-existing relationship with Eva conducted in a brazen and humiliating fashion
towards the applicant and the duration of the marriage indicated the burden of the joint estate on the
applicant. The SCA also held that the respondent considerably eroded the value of the joint estate, and
used the assets of the joint estate as if he had the marital power to do so, contrary to the proprietary
regime of the marriage in community of property. The applicant led sufficient and corroborated evidence
in support of her claim for an order for partial forfeiture of benefits. The respondent’s evidence fell short
in various ways, including that it was inconsistent, contradictory and did not support his claim for a half
share in the applicant’s pension interest. The claim by the respondent of 50% of the pension benefits
which has accrued to the applicant was not sustainable. The Court also took into consideration that the
respondent used the joint estate for years for the benefit of Eva, failing to adequately provide for the
joint estate and the duration of the marriage. As a result the granting of an order of forfeiture of the half
share of pension benefits against the respondent was justified.
~~~~ends~~~~
|
437
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 20760/14
In the matter between:
DINES CHANDRA MANILAL GIHWALA FIRST APPELLANT
LANCELOT LENONO MANALA
SECOND APPELLANT
DINES CHANDRA MANILAL
GIHWALA NO THIRD APPELLANT
SHANTI GIHWALA NO
FOURTH APPELLANT
KANTIELAL JERAM PATEL NO
FIFTH APPELLANT
NARENDRA GIHWALA NO
SIXTH APPELLANT
KIRAN GIHWALA NO
SEVENTH APPELLANT
and
GRANCY PROPERTY LTD
FIRST RESPONDENT
MONTAGUE GOLDSMITH AG
(in liquidation) SECOND RESPONDENT
MINISTER OF TRADE AND
INDUSTRY THIRD RESPONDENT
Neutral citation: Gihwala v Grancy Property Ltd (20760/2014) [2016]
ZASCA 35 (24 March 2016)
Coram:
LEWIS, LEACH, SERITI and WALLIS JJA and TSOKA
AJA.
Heard:
22 and 23 February 2016
Delivered: 24 March 2016
Summary: Investment agreement – express and tacit terms – breach –
damages – heads of damage – claims not excluded by rule in Foss v
Harbottle – declaration of delinquency in terms of section 162(5)(c) of
the Companies Act 71 of 2008 – section applies in cases of substantial
misconduct by directors – not retrospective in its operation – section a
rational response to the problem of delinquency by directors – not
unconstitutional – circumstances justifying the making of a declaration of
delinquency.
ORDER
On appeal from: Western Cape Division of the High Court (Fourie J
sitting as court of first instance):
The appeal succeeds to the extent that:
(a)
Paragraphs 1(b) and (e) of the first paragraph 1, and
paragraphs 3 and 5 of the order in the High Court are set aside;
(b)
The amount in paragraph 1(c) is reduced to R41 763.20;
(c)
Paragraph 2 of the order in the High Court is varied to read
as follows:
‗The First, Second and Third Defendants are to make available to
the First Plaintiff for inspection and, if desired, the making of
copies of all books of account and accounting records, including all
supporting vouchers and documents, in their possession relating to
the transactions undertaken by and the financial position of the
business of the Third Defendant.‘
The cross-appeal succeeds to the following extent:
(a)
Paragraph 1(g) is inserted into the order of the High Court
reading as follows:
‗The amount of R465 000 plus interest calculated at 15.5 per cent
from 3 March 2009 to date of payment.‘
(b)
The Dines Gihwala Family Trust is declared to be jointly
and severally liable, the one paying the others to be absolved, with
the first and second defendants, for payment of the amounts
referred to in paragraphs 1(a), (b), (c) and (f) and 2(a) to (c) of the
order of the High Court.
The order of the High Court is accordingly amended to read as
follows:
‗IT IS ORDERED THAT:
1.
First and Second Defendants are declared liable, jointly and
severally with each other and, in the case of paragraphs (a), (b), (c)
and (f), jointly and severally with the Dines Gihwala Family Trust,
to pay the following to First Plaintiff:
(a)
The amount of R2 051 833,34, together with interest thereon
at the rate of 15,5% per annum, calculated from 20 March 2007 to
date of final payment.
(b)
The amount of R41 763,20 together with interest thereon at
the rate of 15,5% per annum, calculated from 28 February 2009 to
date of final payment.
(c)
The amount of R620 000,00 together with interest thereon at
the rate of 15,5% per annum, calculated from 15 June 2009 to date
of final payment.
(d)
The amount of R213 789,57, together with interest thereon
at the rate of 15,5% per annum, calculated from 19 August 2009 to
date of final payment.
(e)
The amount of R326 740,00, together with interest thereon
at the rate of 15,5% per annum, calculated from 19 August 2009 to
date of final payment.
(f)
The amount of R165, 660,60, together with interest thereon
at the rate of 15,5% per annum, calculated from 6 January 2010 to
date of final payment.
(g)
The amount of R465 000 plus interest calculated at 15.5 per
cent from 3 March 2009 to date of final payment.
2.
That the First and Second Defendants and the Dines Gihwala
Family Trust are declared liable, jointly and severally, to pay the
following to First Plaintiff:
(a)
The amount of R852 500,00, together with interest at the rate
of 15,5% per annum on the amount of R1 705 000,00 calculated
from 8 April 2009 to 23 November 2010 and on the amount of
R852 500,00, calculated from 23 November 2010 to date of final
payment.
(b)
The amount of R345 507,09, together with interest at the rate
of 15,5% per annum on the amount of R691 014,18, calculated
from 1 March 2008 to 23 November 2010, and on the amount of
R345 507,09, calculated from 23 November 2010 to date of final
payment.
(c)
The amount of R612 722,24, together with interest thereon,
at the rate of 15,5% per annum, calculated from 24 June 2009 to
date of final payment.
3.
The First, Second and Third Defendants are to make available to
the First Plaintiff for inspection and, if desired, the making of
copies of all books of account and accounting records, including all
supporting vouchers and documents, in their possession relating to
the transactions undertaken by and the financial position of the
business of the Third Defendant.
4.
The First and Second Defendants are declared delinquent directors
as contemplated in section 162(5)(c) of the Companies Act 71 of
2008.
5.
No order as to costs is made in respect of the constitutional
challenge.
6.
The First Plaintiff is declared liable for the costs of the application
for amendment, which were reserved on 6 February 2014,
including the costs incurred by Second Defendant in opposing
same.
7.
Save for paragraphs 6 and 7 above, the First and Second
Defendants and the Dines Gihwala Family Trust, represented by
the Fourth to Eighth Defendants, are declared liable, jointly and
severally, for the payment of First Plaintiff's costs of suit on the
scale as between attorney and client, which costs are to include the
following:
(a)
The costs of two counsel, where employed;
(b)
The attendance fees and qualifying expenses of the expert
witness, Mr H J Greenbaum;
(c)
The reasonable costs and disbursements, as followed on
taxation incurred by First Plaintiff in respect of Mr KI Mawji, who
is declared a necessary witness.‘
The amended paragraph 3 of the order of the High Court is to be
complied with within 30 days of the date of this judgment and the
obligation to comply therewith will not be suspended or postponed
pending the outcome of any further application for leave to appeal
in this or any other case.
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel, but to
exclude
all
costs
occasioned
by
the
challenge
to
the
constitutionality of s 162(5) of the Companies Act 71 of 2008, in
respect of which each party will pay its or their own costs.
The first and second appellants and the Dines Gihwala Family
Trust are to pay the costs of the cross-appeal, such costs to include
those consequent upon the employment of two counsel.
JUDGMENT
Wallis JA (Lewis, Leach and Seriti JJA and Tsoka AJA concurring)
Introduction
[1] In about 2001 Mr Dines Gihwala, the first appellant and an
attorney and businessman, met Mr Karim Mawji, an English
businessman, while playing golf in Portugal. Their acquaintance ripened
into friendship and in February 2005, together with Mr Lancelot Manala,
the second appellant and a friend and business associate of Mr Gihwala‘s,
they entered into a business venture. That went awry and has precipitated
a flood of litigation and two prior appeals to this Court,1 as well as the
present proceedings.
[2] This appeal follows upon a lengthy trial before Fourie J in the
Western Cape Division of the High Court, Cape Town. It involved the
consolidated hearing of two actions2 brought by Grancy Property Limited
(Grancy), the first respondent, and Montague Goldsmith AG,
(Montague), the second respondent, both corporate entities controlled by
Mr Mawji, principally against Messrs Gihwala and Manala. Other
defendants were Seena Marena Investments (Pty) Ltd (SMI), the
company through which the business transaction was conducted, and the
Dines Gihwala Family Trust (the Trust). SMI initially defended the
actions and lodged a claim in reconvention in the 2010 action. At the
commencement of the trial it withdrew the claim in reconvention and
indicated that it abided the decision of the court. The Trust originally
defended the actions jointly with Mr Gihwala, but at the trial and in this
1 Grancy Properties Ltd v Manala and Others [2013] ZASCA 57; 2015 (3) SA 313 (SCA); Grancy
Property v Seena Marena [2014] ZASCA 50; [2014] 3 All SA 123 (SCA).
2 Where it is necessary to distinguish between them they will be referred to as the 2010 action and the
2011 action respectively.
Court they were separately represented.3 Fourie J upheld most of
Grancy‘s claims. He gave judgment against Mr Gihwala and Mr Manala
for payment of certain amounts. In addition he ordered Messrs Gihwala
and Manala, as well as SMI, to disclose books of account and financial
records relating to SMI‘s affairs, and ordered that the three of them and
the Trust render a statement of account to Grancy in regard to the
business venture.
[3] Lastly, in terms of s 162(5)(c) of the Companies Act 71 of 2008
(the 2008 Act), Fourie J declared both Mr Gihwala and Mr Manala to be
delinquent directors. As he added no conditions qualifying that order, its
effect was that the two men were barred from acting as directors for any
company for seven years,4 subject to their right after three years to apply
for the suspension of the order and its substitution with an order for
probation.5 Fourie J rejected a constitutional challenge to s 162 of the
2008 Act. The Minister of Trade and Industry (the Minister) had been
joined, as a party to the proceedings, to argue that s 162 was not
unconstitutional.
3 Although represented by separate counsel they continued to conduct the litigation on pleadings
common to both Mr Gihwala and the Trust and the instructing attorneys remained the same.
4 Section 162(6)(b)(ii) of the Act.
5 Section 162(11) of the Act.
[4] No one, bar the Minister, was satisfied with the outcome of the
trial. Messrs Gihwala and Manala, and the Trust, contended that none of
the orders made by Fourie J were justified. Grancy and Montague, for
their part, were dissatisfied with Fourie J‘s refusal to grant certain
declaratory orders as well as his dismissal of two monetary claims and his
failure to hold the Trust jointly and severally liable on some of the
successful monetary claims. They also challenged his rejection of claims
under s 424 of the Companies Act 61 of 1973 (the 1973 Act),
alternatively s 77(3) of the 2008 Act. When Messrs Gihwala and Manala
and the Trust sought leave to appeal, Grancy applied for leave to cross-
appeal against the judgment in relation to their rejected claims. Fourie J
granted leave to appeal and cross-appeal to this Court. The Minister is
also a party to the appeal.
Background
[5] Spearhead Property Holdings Ltd (Spearhead) was a property loan
stock company listed on the Johannesburg Stock Exchange (JSE).6 Its
business was to hold and invest in immovable commercial, industrial and
retail properties, primarily in the Western Cape, and to derive its income
from rentals. Provided its business was successful, as it appears to have
6 Many of these have since converted to Real Estate Investment Trusts (REITs).
been, it would generate a steady and reasonably predictable flow of
income. The capital structure of the company, as with others of this type,
consisted of linked ordinary units with varying rate linked debentures.
After deducting operating expenses the net revenue would be distributed
to shareholders. Because of the capital structure of the company the
distributions made to unit holders were deductible from gross income in
its hands before the assessment of tax, and were taxable as income in the
hands of shareholders. Such investments are seen as comparable to
interest-bearing investments such as bonds. Their attraction to investors
lies in the fact that they provide a reasonably consistent return, which
tends to grow at least in line with inflation as rentals increase.
[6] At the end of 2004 and early 2005 Spearhead, like many other
companies, wished to engage in a Black Economic Empowerment (BEE)
transaction to expand its shareholder base in the Black community. To
that end it was prepared to make available 3,5 million linked units to a
special purpose vehicle (SPV), the shares in which would predominantly
held by Black shareholders or organisations or companies that
predominantly represented the interests of Black people. The SPV would
subscribe for the shares at R15.50 per unit, a price significantly below the
then current price of Spearhead shares on the JSE, of around R20 per
unit.
[7] Ngatana
Property
Investments
(Pty)
Ltd
(Ngatana)
was
incorporated as the SPV through which the BEE transaction would be
implemented. Messrs Gihwala and Manala, were offered a 40 per cent
stake in Ngatana, which they proposed to take up thorough SMI, an
existing company in which the Trust and Mr Manala held equal shares.
Prescient Real Estate Ltd (Prescient) and certain other minor investors
would take a total of 42 per cent. Bonitas Medical Aid Fund (Bonitas)
was offered an 18 per cent share, but withdrew at a late stage in the
implementation of the proposal. This is what gave rise to the involvement
of Mr Mawji.
[8] Apart from his friendship with Mr Mawji, Mr Gihwala was also a
close friend of Mr Anil Narotam, who was at the time the chief operating
officer of Montague, a company that administered investments on behalf
of Grancy. Mr Gihwala and Mr Manala had been afforded the opportunity
of taking up the 18 per cent stake in Ngatana that Bonitas had decided to
forego. They in turn, for reasons that do not emerge fully from the record,
but appear to have included the fact that Mr Mawji would be in a position
to help finance the transaction, decided to involve Mr Mawji in the
investment in Ngatana. Initially Mr Gihwala approached Mr Narotam. He
did not have authority on behalf of Mr Mawji to make any final decision
on such matters, but conveyed the gist of the proposal to Mr Mawji. He in
turn found it sufficiently interesting to come to South Africa and meet
with Mr Gihwala.
[9] That meeting took place on 3 February 2005 at a hotel in
Johannesburg. Present were Mr Gihwala, Mr Mawji and Mr Narotam.
According to several later statements by Mr Gihwala he represented
himself, and also Mr Manala, the Trust and SMI, at the meeting. The only
oral evidence of what transpired at the meeting was that of Mr Mawji,
because neither Mr Gihwala, nor Mr Narotam, gave evidence, although at
the stage of the pre-trial conference such evidence had been
foreshadowed. Fourie J found that Mr Mawji was a credible witness and
that finding was not challenged before us. Some documents dealing with
what was agreed are also important, as contemporaneous documents
emanating from Mr Gihwala.
[10] The meeting was conducted against the backdrop of the Spearhead
BEE transaction and the availability through Ngatana of an interest in
3.5 million units at a price of R15.50. Standard Bank had agreed to
provide finance in an amount equivalent to R12.75 per linked unit. The
investors in Ngatana needed to provide the balance of R2.75 per unit, as
well as to fund the implementation costs to be incurred in implementing
the transaction. With the withdrawal of Bonitas as an interested party an
opportunity existed for SMI to obtain an effective 58 per cent stake in the
3,5 million Spearhead units. This would be done by subscribing for 58
per cent of the shares of Ngatana and lending to Ngatana that proportion
of the funds needed to pay the balance of the subscription price for the
Spearhead units and the anticipated implementation costs. Prescient and
the other investors would subscribe for the remaining shares in Ngatana
and provide the balance of the funding.
[11] It was explained to Mr Mawji that SMI would be used as the
vehicle for the investment. The proposal put to him was fairly simple. In
return for a shareholding in SMI he would provide a portion of the funds,
estimated as being approximately R3.5 million, needed for SMI to obtain
the 58 per cent stake in Ngatana. In addition, as Mr Manala lacked the
resources to make his contribution to SMI as a one-third shareholder, Mr
Mawji (through Grancy) and Mr Gihwala would each fund one half of Mr
Manala‘s share. These loans would attract interest at a commercial rate
and, if and when Mr Manala realised his interests at a profit, Mr Gihwala
and Mr Mawji (or their corporate doppelgängers) would share in a
proportion of that profit.
[12] Mr Mawji insisted on a one-third shareholding in SMI and Mr
Gihwala agreed to this. There was some urgency about the matter and Mr
Mawji was told that it was essential for him to make a decision that day.
The cause of the urgency is not entirely clear, but it matters not because
Mr Mawji agreed at the meeting to participate in the investment on the
basis outlined above. In this Court all parties accepted that an agreement
was concluded at the meeting on that day.
[13] The business relationship appeared to proceed without problems
for a few months. In August 2005 Mr Narotam raised the possibility of
Grancy exiting the investment, but nothing came of this and it does not
appear to have occasioned any problems. Thereafter the relationship
between the parties deteriorated. On 6 October 2005 Mr Narotam wrote
asking Mr Gihwala to finalise the shareholders‘ agreement for SMI and
the loan agreement in relation to the loan to Mr Manala. A loan
agreement was forthcoming in December 2005 at which stage it became
clear that Grancy would hold the investment in SMI.
[14] In November 2005 Spearhead undertook a rights issue. It does not
appear that either Mr Mawji or Mr Narotam was aware of this. The effect
of the rights issue, which was funded entirely by Standard Bank, was that
Ngatana acquired an additional 2 million linked units in Spearhead. Its
existing loan from the bank was discharged and a fresh loan agreement
concluded for R93.6 million. Additional security was furnished by way of
a pledge of a further 630 000 linked units and by additional suretyships
from inter alia Messrs Gihwala and Manala.
[15] In the early stages of 2006 information sought by Mr Mawji
concerning the Spearhead investment was not forthcoming and the
business relationship with Mr Gihwala, which included another venture
referred to as ‗Scharrig‘, soured. By the middle of 2006 Mr Mawji was
clearly regretting the investment and sought to withdraw from it. On
28 June 2006 Mr Narotam sent an email to Mr Gihwala informing him
that a decision had been made to exit the Spearhead investment. He
added:
‗As the initiators and co-investors we would like to offer to you the opportunity to
make a proposal to take over our investment or bring in a new investor of your choice
to buy us out. Alternatively if you also wish to exit now to arrange the full disposal.‘
This provoked an angry response from Mr Gihwala. Within an hour he
replied noting the decision and saying:
‗You are NOT and were NOT initiators of this transaction. You invested in this deal
through Lance who you lent money.
Please let me have an exit proposal for consideration.
Strictly speaking your investment was with Lance …‘
[16] Despite the tone of this communication Mr Narotam appears to
have set to work preparing a proposal. While he was so engaged another
event occurred. On 26 July 2006 Redefine Income Fund Ltd (Redefine),
also a property investment trust, announced its intention to make an offer
to unit holders in Spearhead to acquire their units on the basis that they
would receive either 6.18 Redefine linked units or R31 in cash for each
unit.
[17] Mr Narotam was aware of this offer and the calculations in the
proposal he prepared valued the Spearhead units at R30 per unit. He
submitted the proposal to Mr Gihwala on 3 August 2006 suggesting that
Grancy‘s interest could be acquired for about R11 million. Less than two
hours later Mr Gihwala rejected this figure out of hand saying that
Ngatana wished to become a significant investor in Redefine and did not
want to exit the investment. He said that but for Redefine‘s offer the
Spearhead price would be nearer R26 per unit. In addition, although the
calculations were based on an equal division of the indirect interest of
SMI in the Spearhead units originally acquired, resulting in each investor
having an interest in 676 666 units,7 Mr Gihwala claimed that Grancy‘s
interest was limited to 630 000 units. After dealing with costs and some
7 SMI‘s stake in Ngatana was 58 per cent and the original acquisition was of 3.5 million Spearhead
units. A 58 per cent share in those units amounted to 2 030 000. One third of that would be 676 666
units, with two remaining.
other issues he suggested that the calculations be redone ‗on the basis of
630k units at a realistic price‘.
[18] On 3 September 2006 Mr Narotam sent an email to Mr Gihwala,
that was copied to Mr Manala and Mr Mawji.8 As it, and the response to
it, set the stage for the disputes that followed it is desirable to set out its
terms relatively fully:
‗We refer to our investment in Spearhead through Seena Marena Investments (Pty)
Ltd which was made in accordance with your e-mail dated 21 February 2005.
The main terms of the investment as clearly indicated in the aforementioned e-mail
are as follows:
1.
Seena Marena Investments (Pty) Ltd acquired 58% of the 3 500 000 units in
Spearhead at R15.50 each of which R12.75 was funded by Standard Bank.
2.
For our one third investment (equivalent to 676 666 Spearhead units) we paid
to you as requested an amount of R1 976 833.33 plus R75 000.00 for costs.
3.
In addition Montague Goldsmith and you equally and jointly, advanced as a
loan to Lance Manala an amount of R1 976 833.33 …
Although you proposed drafting an agreement acknowledging our one third share in
Seena Marena Investments (Pty) Ltd, such agreement has not as yet been concluded
or executed. We request that agreements in the form of a shareholders agreement
together with loan agreements between Lance Manala, Montague Goldsmith and you
be executed as soon as possible.
8 In an affidavit filed in earlier proceedings Mr Narotam claimed that the email was drafted by Mr
Mawji and sent on his instructions, but this was denied by Mr Mawji.
As you are aware, our investment was made at very short notice on good faith and on
the understanding that the formal agreements containing the terms and basis of our
investment (such terms being as per your e-mail of 21 February 2005) would be
executed shortly thereafter. This has not been done to date and needs to be regularised
immediately.
We are concerned that you have indicated that our entitlement is for 630 000
Spearhead units and not the 676 666 units indicated in correspondence at the time the
investment was made. At no time were we subsequently informed of any rights issue
etcetera that could lead to a dilution or reduction in our entitlement to Spearhead
units. We therefore maintain that we are entitled to 676 666 units.
We are aware that an offer has been made by Redefine and Apex-Hi to the
shareholders of Spearhead. As an equal shareholder in Seena Marena Investments
(Pty) Ltd we should be consulted on the decision to be made by Ngatana. Please let us
have full details of the offer so that we may provide our input.‘
Ten minutes after sending this email a further email was sent attaching a
copy of Mr Gihwala's email of 21 February 2005.
[19] One week later, on 11 September 2006 Mr Gihwala responded in
an email to Mr Narotam, which was also sent to Mr Mawji and Mr
Manala. It read:
‗I told you and now repeat hopefully for the final time that any reference to any
number of units other than 630k is wrong and a mistake. 630k units became available
after another participant elected not to proceed with the investment. By this time
Lance and I had already secured 1.4m units. I could therefore not offer any more than
was available at the time.
You were never to be a shareholder in our company. You came in behind us for 630k
units. It was always so that you would be subject to the decisions of SMI. You were
certainly not an independent party as you now try to suggest. When you make
investments you expect priority interest on your capital. Why should I bind my credit
and take risk for no reward? The position is unnecessarily complicated by your
unilateral decision to realise this investment and above all on your terms and
conditions. I'm afraid it will not happen in this instance.
I shall conduct the affairs of SMI as I deem fit. You have no say in its affairs. You are
NOT a shareholder. You were never intended to be one. You will never be one. Your
interest is limited to the 630k units. There is no risk of any dilution; regardless of
what we choose to do in SMI we have to account to you for your interest in 630k
units. This will only happen once SMI is liquidated for us (Lance & I) to realise our
investment. The earlier correspondence you refer to is premised on this grand plan of
creating SM Capital. You know what happened and the least said about that the better.
Could you perhaps explain why I would want to introduce you to the opportunity the
630k units presented at its cost to us at a time when it was trading at a premium of
more than 35% above the price we paid for the units; why would I assume the risk of
personal liability to the bank without any indemnity or upside; and why are these
issues raised only now and not before even though I told you explicitly I would be
charging for my ―credit‖? I drafted an agreement some time ago and asked my
secretary to forward it to you. If she has not done so I can only assume that she
wanted me to check it before dispatching same. I will ask her to send it off
immediately even though I have not had a chance to check it. The idea of a
shareholders agreement is a little disingenuous and a ploy to obtain a position of
advantage you are not entitled to. Do you think I could not have personally funded the
amount of money you put in or raise it from family and friends etc? …
As far as the Redefine offer is concerned, which is a matter of public knowledge … It
is not our intention to take any cash but to take up all the RDF units we are entitled to.
Even if we did take some cash it will be used to pay down the debt; in short there will
be no cash surplus. Even if there were cash we shall deal therewith in the best interest
of SMI and no other party, least of all an opportunistic and expedient one.
I have no intention of dealing with your letter under reply in any more detail. I reserve
the right to do so if and when it may become necessary. My failure to do so now
should therefore not be interpreted as an acknowledgement of the correctness or
otherwise thereof. You should soon be in possession of the agreement I drafted some
time ago. You are at liberty to sign such agreement or not. I shall nevertheless act in
accordance with that agreement. I can assure you that the realisation of the SMI
investment in Ngatana is not imminent unless something dramatic or spectacular
happens. Rest assured you will receive a proper accounting for the 630k units or its
equivalent in RDF if the offer succeeds when the time to do so arrives. I reserve the
right to charge a fee for my services I have rendered and continue to render for SMI.
You are liable for a portion of those and other operating expenses based on your 630k
units. If and when I need your share I shall call for it and expect you to make payment
promptly.
This matter is now closed as far as I am concerned.
Finally, I was the one to arrange this transaction. Lance does not know of any detail of
the transaction except that he may be able to confirm that there were only 630k units
available. Accordingly, I am the one to deal with.‘
[20] There can be little surprise that shortly afterwards Mr Mawji, on
behalf of Grancy, consulted attorneys and various letters of demand were
sent to Mr Gihwala, Mr Manala and SMI. It is unnecessary to go into any
detail regarding this correspondence, save to say that if anything it served
to harden the parties‘ opposing positions. A full account of the funds
deposited in the trust account of Mr Gihwala's law firm for the purposes
of the Spearhead investment was demanded. In addition a demand was
made for full details of the Redefine takeover of Spearhead, including any
monetary benefits offered to Spearhead unit holders, the number of
Redefine units to be acquired, the nature and extent of SMI‘s and
Ngatana‘s stake in Redefine and the date on which the takeover became
effective.
[21] In November 2007 Grancy launched an application in the Western
Cape Division of the High Court claiming against Messrs Gihwala and
Manala, SMI and the Trust delivery of a 31 per cent shareholding in SMI.
Although this was less than the one-third share originally agreed upon Mr
Mawji explained in his founding affidavit that this was being accepted on
the basis of a concession by Messrs Gihwala and Manala, whilst
reserving Grancy‘s position to make further claims after receiving a
proper account of its investment. In addition to the registration of that
shareholding in its name it sought an accounting in respect of its original
investment in SMI.
[22] Messrs Gihwala and Manala, as well as the Trust and SMI,
opposed the application. Mr Gihwala deposed to the principal answering
affidavit on behalf of himself, SMI and the Trust. The opposition was
vigorous, and aspersions were cast on Mr Mawji‘s personality, integrity
and business methods. In essence Mr Gihwala claimed that it had been
discovered that Grancy could not be a participant in a BEE transaction
and that its interest was now being exercised indirectly through Mr
Manala. There was also a considerable excursus in relation to the failure
of an attempt to establish a venture capital fund. But the opposition to the
application collapsed shortly before the hearing when an offer of
settlement was made that in substance conceded all the relief sought by
Grancy. Pursuant to the settlement on 9 March 2009 an order9 was made
9 The order read:
‗1.
The First Applicant is entitled to a 31% direct equity shareholding in the First Respondent.
2.
The First to Third and Fifth to Ninth Respondents shall do all things (including but not limited
to passing resolutions, allotting, issuing or transferring the shares, registering the transfer thereof and
delivering to the First Applicant share certificates and all other documents which establish and
evidence its 31% equity stake in the First Respondent) and such other things as are necessary to
transfer 31% of the shares in the First Respondent to the First Applicant and to effect the registration of
the First Applicant as a member of the First Respondent in its register of members.
3.
The Second, Third and Fifth Respondents shall, within fourteen days of this order, render a
full and proper account to the Second Applicant in respect of the First Applicant's investment in
Spearhead Property Holdings Limited linked units ("the Spearhead Investment") and ("the
Spearhead units") and shall provide a statement of account, duly supported by all relevant vouchers,
dealing with at least, but not limited to, how, when, by whom and for what purposes the First,
alternatively the Second Applicant's fund of R4 040 250.00 deposited into the Fourth Respondent's
directing that Grancy be registered as a 31 per cent shareholder in SMI. It
further directed Mr Gihwala, in both his personal capacity and as a trustee
of the Trust, and Mr Manala to render a full and proper account to Grancy
in respect of its investment in the Spearhead investment and the
Spearhead units. Pursuant to this order Grancy was registered as a 31 per
cent shareholder in SMI on 25 March 2009.
[23] In the interim, while this dispute was raging and even before the
litigation was underway, events moved on. The Redefine offer was
accepted and the 5.5 million Spearhead units held by Ngatana were
replaced by 33.99 million Redefine units. On 7 March 2007 the directors
of Ngatana resolved to repay the amounts lent to it by its various
shareholders to enable it to conclude the original BEE transaction. This
involved the repayment of R6 657 673 to SMI on 15 March 2007.
First National Bank trust account number 51331425227 between February and June 2005, were utilised
by any of the said Respondents or any other party.
4.
The First to Third and Fifth to Ninth Respondents after rendering the aforesaid account shall:
4.1
debate the aforesaid account;
4.2
pay to the First and Second Applicant, such amount, if any, as may be due to them upon such
debatement.
5.
The Third Respondent shall pay to the First Applicant the sum of R988 416.66 plus interest
thereon calculated monthly from 11 February 2005 to date of payment at the rate equal to the greater of
the interest rate on the Quant Plus Call Account of Prescient Investment Management (Pty) Ltd or the
dividend yield rate of the Spearhead units, from time to time.
6.
The Third Respondent shall pay to the First Applicant, upon the realisation and unwinding of
the Spearhead investment and payment of the proceeds thereof to the First Respondent, an amount
equivalent to 25 per cent of the amount by which the price of the 700 000 Spearhead units held
indirectly by the Third Respondent, upon realisation thereof, exceeds R18.00 per Spearhead unit.
7.
The First to Third and Fifth to Ninth Respondents, jointly and severally, the one paying the
others to be absolved, shall pay the Applicants' costs in the above proceedings on the High court scale
as between party and party, as taxed or agreed, to 5 February 2009, which costs will include the costs
of two counsel.‘
Thereafter amounts totalling R4 million were paid to the Trust, and
shared between Messrs Gihwala and Manala. Nothing was paid to
Grancy. Instead, on 2 April 2007 an amount of R2 million was invested
in Scarlet Ibis Investments 52 (Pty) Ltd (Scarlet Ibis), a property
development company. Later correspondence between Mr Manala and
Mr Gihwala showed that Mr Manala had initially suggested that Grancy
be repaid its loan to SMI, but at Mr Gihwala‘s instigation the investment
in Scarlet Ibis had been made instead. This may not have been
unconnected to the fact that Mr Gihwala‘s wife and the Trust had an
interest in the development.10 Mr Gihwala apparently believed that there
would be a 50 per cent return on the investment within 24 months, but
those prognostications proved incorrect and, when the company was
liquidated, it is likely that it was lost.
[24] Also on 7 March 2007, Ngatana had resolved to pay an amount of
R3 million to Prescient and SMI in equal shares, ostensibly as
compensation for their efforts in setting up the BEE transaction.
However, at that stage it lacked the necessary funds to make this
payment. Needless to say Grancy was not informed of this decision. But
in March 2009 Ngatana‘s board of directors resolved to pay R1.5 million
10 When Scarlet Ibis was liquidated they were the sole shareholders.
to Prescient for setting up the transaction and R750 000 each to Messrs
Gihwala and Manala as ‗directors‘ fees‘. Again Grancy was not aware of
this decision or these payments. The resolution noted, ‗… this matter has
already been verbally discussed with many of the shareholders and they
will be asked to confirm their consent by signing this resolution.‘ This
recognised that the payments were sufficiently unusual that they
necessitated consulting the shareholders before they could be made.
[25] From May 2008 Ngatana started to dispose of the Redefine units
that it had received in place of the Spearhead units. This was not
discussed with Grancy and it was not informed that it was happening. By
April 2009, shortly after the court order, all the Redefine units obtained in
the acquisition of Spearhead had been sold. The Standard Bank loan was
repaid and substantial dividends were paid from the proceeds. (In the
2008 financial year Ngatana purchased a further 20 million Redefine
units as a participant in a BEE transaction by Redefine. It funded this by
incurring fresh liabilities to Standard Bank of some R25 Million and to
RMB Securities (Pty) Ltd of R116 million.) In October 2008 Ngatana
declared a dividend and SMI received R5 572 727.27. This was paid, by
way of dividend, in equal shares to the Trust and Mr Manala.
Accordingly, while the Trust and Mr Manala had been repaid the money
they had lent to SMI to fund the original investment – in Mr Manala‘s
case, money that he had been lent by Grancy and Mr Gihwala – and had
received a substantial dividend, Grancy had received nothing and indeed
was unaware that these payments had been made.
[26] After the grant of the order and the registration of Grancy as a
shareholder Mr Gihwala continued, as he had said in his email of
11 September 2006 to ‗conduct the affairs of SMI as I deem fit‘.
Demands for access to the company records were rebuffed. And on
15 June 2009 the directors of SMI, by way apparently of a telephone
conversation between Mr Gihwala and Mr Manala, agreed to lend the
latter R2 million. Another loan of slightly less than R2 million was made
at the same time. Overall his ledger account reveals that between 2007
and 2009 Mr Manala withdrew over R9 million from SMI. He had
himself provided only R77 000 to SMI so he benefited handsomely from
his participation.
[27] A one page account was furnished to Grancy by Messrs Gihwala
and Manala and the Trust in purported compliance with the order referred
to in para 22. A demand by Grancy for full accounting records was
rejected on the footing that the account was adequate. This prompted a
further opposed application in June 2009 regarding its adequacy. In the
meantime Annual Financial Statements for SMI for 2007, 2008 and 2009
were supplied to Grancy, which objected to them. In September 2009
revised Annual Financial Statements for SMI for 2009 were presented at
the AGM and adopted over Grancy‘s objections. Attempts by Grancy to
obtain further information from Mr Gihwala were rejected on the grounds
that it was not entitled to this information. In January 2010 Grancy
launched the first action.
[28] In April 2010 Binns-Ward J handed down judgment holding that
the account tendered in response to the consent order was ‗woefully
inadequate‘ and ordering that an improved account be furnished. The
further account tendered pursuant to this order and supplemented after its
rejection by Grancy, was said by Grancy to be inadequate. After further
litigation this Court granted an order holding that it also was inadequate
and directing a hearing on that topic.11 That hearing took place before
Traverso DJP who delivered judgment on 29 February 2016, holding the
account to be inadequate and making consequential orders. Meanwhile in
June 2011 Grancy had brought the 2011 action.
11 Grancy Property Limited and Another v Seena Marena Investment (Pty) Ltd and Others [2014]
ZASCA 50; [2014] 3 All SA 123 (SCA).
The issues
[29] Grancy‘s case in both the 2010 and the 2011 action was that in
various respects Messrs Gihwala and Manala, as well as the Trust and
SMI, breached the February 2005 agreement. It alleged that these
breaches gave rise to a number of claims to recover compensation for
financial loss that it had suffered in consequence of such breaches. In
addition to the contractual basis for such claims it also advanced a claim,
in respect of some items, under s 424 of the 1973 Act and in the
alternative under s 77(3) of the 2008 Act. Apart from these monetary
claims it sought orders for the disclosure of financial records and books
of account and an accounting against both Messrs Gihwala and Manala
and the Trust and SMI. Finally it sought an order that Messrs Gihwala
and Manala be declared delinquent directors in terms of s 162(5)(c) of the
2008 Act.
[30] A fundamental dispute emerged in regard to the identity of the
parties to the February 2005 agreement and also as to its nature and
contents. However, in the course of argument in the appeal, counsel for
Mr Gihwala made certain important concessions that narrowed the field
of dispute. The Trust contended that it was not a party to the agreement at
all and accordingly, as the claims were based on an alleged breach of
contract, no relief could be claimed against it.
[31] In regard to the monetary claims the respondents contended that
they were in truth claims by SMI against its directors, Messrs Gihwala
and Manala, and therefore could not be pursued by Grancy in its own
right in accordance with the well-established principle of company law
known as the rule in Foss v Harbottle.12 Over and above that it was
submitted that one of the claims amounted to a duplication and others
were not well-founded on the facts.
[32] It was conceded in argument on behalf of Mr Gihwala that he and
Mr Manala owed Grancy an obligation to provide information and render
an account in regard to its investment, but the scope of those obligations
was disputed. It was submitted that the accounting sought related to
claims that would be disposed of by the monetary judgments. It was also
said that such an accounting overlapped with the accounting ordered in
the March 2009 order.13 Traverso DJP has now held that the accounting
pursuant to that order was inadequate, so that is an issue that remains
unresolved. Consistent with its attitude that it was not a party to the
agreement, the Trust denied any obligation to render an account.
12 Foss v Harbottle (1843) 2 Hare 461; (1843) 67 ER 189.
13 See fn 9 above.
[33] The final substantial point of dispute related to the orders made
declaring Mr Gihwala and Mr Manala delinquent directors. They both
contended that s 162 of the 2008 Act, under which the orders were made,
was unconstitutional. Although they did not formally ask for an order to
that effect it would necessarily follow from any determination of
unconstitutionality.
[34] Flowing from this the following are the issues to be determined in
this appeal:
(a) Who were the parties to the agreement concluded on 3 February
2005 and what were its material terms?
(b) Was that agreement breached and, if so, in what respects?
(c) Did Grancy have financial claims arising out of the breach of the
agreement?
(d) Were those claims precluded by the rule in Foss v Harbottle?
(e) Was Grancy entitled to orders against Mr Gihwala and Mr Manala
in terms of s 424 of the 1973 Act or s 77(3) of the 2008 Act?
(f) Was Grancy entitled to an order for access to the books and
accounting records of SMI and for the rendering of an account in
relation to its investment?
(g) Is s 162 of the 2008 Act unconstitutional and, if not, was Fourie J
correct to make orders of delinquency in relation to Mr Gihwala and
Mr Manala?
(h) The disposal of the cross-appeal.
(i) What order should be made in regard to costs?
The agreement
Parties
[35] Grancy, Mr Gihwala and Mr Manala were indisputably parties to
the agreement. Grancy alleged, and contended before us, that SMI and the
Trust were also parties. It is not entirely clear what finding the High
Court made in this regard. It accepted that SMI and the Trust might, in
the event of specific obligations having been undertaken by them, be
regarded as separate contracting parties to the agreement. However, it
held that they were not to be regarded as contracting parties to the
‗primary overarching joint venture agreement‘. In reaching that
conclusion the trial judge relied particularly upon a passage in the
evidence under cross-examination of Mr Mawji, in which he described
SMI as being ‗the vehicle that was used by the three partners to carry the
investment‘ and went on to identify Grancy, Mr Gihwala and Mr Manala
as the three partners. He also emphasised that in response to a question by
counsel for the Trust, Mr Mawji accepted that the Trust had no greater
responsibilities or obligations to Grancy than those contained in the
memorandum or articles of SMI.
[36] It is unclear whether the High Court held that there was a primary
agreement concluded between Grancy and Messrs Gihwala and Manala
and subsidiary agreements to which SMI and the Trust may have been
parties, or whether it accepted that SMI and the Trust were parties to a
single agreement, but only undertook limited obligations thereunder, not
extending as far as the obligations undertaken by Messrs Gihwala and
Manala. It is important that this be resolved at the outset. If SMI and the
Trust were as much parties to the agreement as Grancy and Messrs
Gihwala and Manala, then prima facie their obligations would have been
the same as those of Mr Gihwala and Mr Manala. Even if they did not
owe specific obligations to Grancy, because only others could perform
those obligations, they would nonetheless have incurred the ordinary
obligation of all contracting parties not to act in a way, or permit others to
act in a way that would stultify the performance of the contract in
accordance with its terms.14
14 As to the duty of co-operation in contracts see A McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration 1974 (3) SA 506 (A) at 533H-534E.
[37] Mr Mawji said that there were three partners involved in the
investment and that these were Grancy and Messrs Gihwala and Manala.
Undue weight should not be attached to that. The description of someone
as a ‗partner‘ may carry various different connotations. It may, in some
contexts, carry a strict legal meaning as a member of a partnership. But
business people frequently use it to describe the individuals involved in a
business venture, without any technical connotation being attached to it.
For example, where a business is conducted through a corporate vehicle,
the natural persons interested in it are frequently referred to, and refer to
themselves, as partners in that business. That is how Mr Mawji used it
when he said ‗the partners agreed to use SMI as a corporate vehicle for
their common interest on this 3rd of February‘. It is also the sense in
which Mr Narotam used it when writing to Mr Mawji on 3 March 2005
after Bonitas again expressed interest in participating in the Spearhead
BEE transaction. Mr Mawji was a chartered accountant and an
experienced and successful businessman, but that does not mean that he
was familiar with the niceties of the law concerning partnership. Indeed,
elsewhere in his cross-examination, he disavowed such knowledge,
beyond a vague and uncertain understanding.
[38] It seems to me preferable to look at the conduct of the parties
present at the meeting in order to identify the parties to the agreement that
resulted from that meeting. Mr Mawji and Mr Narotam represented
Montague, which is accepted as having represented Grancy. Mr Gihwala
was plainly representing Mr Manala and his interests. There is no other
basis on which he could have negotiated for Mr Manala to forego one
third of his interest in SMI to Grancy, or for the latter to provide a loan to
Mr Manala upon the terms for repayment of that loan agreed by him. That
leaves SMI and the Trust.
[39] When the meeting commenced the Trust and Mr Manala held equal
shareholdings in SMI, that is, each held a 50 per cent stake in SMI. The
agreement involved each of them sacrificing one third of their interest in
order for Grancy to acquire a one third stake in SMI. That was not
something to which Mr Gihwala could commit the Trust in his own right.
He could only do so as a representative of the Trust with the authority of
his co-trustees.
[40] Not once, in all the litigation that has ensued since February 2005,
have his co-trustees questioned his authority to represent them and agree
to forgo a one third share of the Trust‘s interest in SMI. On the contrary,
when Grancy brought proceedings to compel delivery of these shares, Mr
Gihwala deposed to an answering affidavit in his own right and on behalf
of the Trust. In response to a statement in the founding affidavit by Mr
Mawji that:
‗… It was never clear whether he [Gihwala] was acting in his personal capacity … or
as an authorised trustee of the [Trust]‘
Mr Gihwala responded:
‗… the deponent was at all times aware that I was acting in my personal capacity and
on behalf of the Trust in relation to the Spearhead investment.‘
That statement has never been withdrawn or rebutted. It was confirmed in
another statement made by Mr Gihwala, this time in response to a
complaint about his conduct lodged with the Cape of Good Hope Law
Society. Then he said:
‗The entities in which I have an interest which were involved in these transactions
included the Dines Gihwala Family Trust (―the Trust‖) and Seena Marena
Investments (Pty) Ltd (―SMI‖). SMI is a company in which Lance Manala (―Manala‖)
and the Trust each initially had a 50 per cent interest. Grancy now has a 31 per cent
equity interest in SMI. The directors of SMI are Manala and myself.‘
[41] There was an endeavour by Mr Kirk-Cohen SC, who appeared for
the Trust at the trial and in this Court, to suggest that no reliance could be
placed on these documents. However, in a pre-trial minute dated February
2012, at a stage when Mr Gihwala and the Trust were represented by the
same counsel and attorneys, it was agreed that all documents included in
the trial bundle would, without further proof, serve as evidence of what
they purported to be. In the case of these two documents they are
respectively an affidavit and a statement by Mr Gihwala in regard to the
identities of the parties who he was representing at the meeting. Insofar as
he now seeks to challenge the fact that the Trust was a party to the
agreement they are admissible as statements against interest made by a
representative of the Trust.
[42] In addition, we were informed from the bar, without objection, that
a notice had been given in respect of these documents in terms of the
provisions of rule 35(10) of the Uniform Rules of Court. That rule
permits any party to give to any other party a notice to produce at the
hearing the original of any document referred to in the notice and, once
produced, it entitles the party giving the notice ‗without calling any
witness, to hand in the said document, which shall be receivable in
evidence to the same extent as if it had been produced in evidence by the
party to whom notice is given‘. Friedman J said in Knouwds,15 that the
rule provides an exception to the general requirement that a document can
only be admitted in evidence by a witness who is in a position to identify
the document. Mr Kirk-Cohen submitted that nonetheless the contents of
the document remain hearsay against the Trust and inadmissible as proof
15 Knouwds v Administrateur, Kaap 1981 (1) SA 544 (C) at 551G-552B.
of their contents. Friedman J disposed of this by drawing attention to16 an
exception in the case of a statement made by a third party, where there
existed a privity or identity of interest between the person making the
statement and the party that was the subject of the statement. In this case
there is a clear identity of interest between Mr Gihwala in his personal
capacity and the Trust of which he is a trustee. The objection to the
admissibility of these statements was accordingly unfounded.
[43] Mr Kirk-Cohen SC also posed the rhetorical question whether after
the meeting Mr Gihwala could, without objection, have caused his
interest in SMI to be held by an entity other than the Trust, and answered
it in the affirmative. This he said demonstrated that the Trust could not
have been a party to the agreement. The problem is that the question is
hypothetical and the answer by no means certain. Such a change could
only have taken place if the incoming shareholder undertook the same
obligations as rested on the Trust in consequence of the agreement. That
they could only do by concluding a contract with the other contracting
parties. Absent such an agreement it is difficult to see on what basis Mr
Gihwala could have substituted some other entity for the Trust. In my
view the Trust was clearly a party to the agreement.
16 At 552B-G.
[44] I need spend less time on the position of SMI. Under the agreement
it would be required to issue the shares that were to be taken up by
Grancy. Mr Gihwala and Mr Manala were the directors of SMI and Mr
Gihwala was there representing both Mr Manala and SMI. Furthermore
loans in substantial sums would have to be made to SMI to enable it in its
turn to subscribe for shares in Ngatana and make loans to Ngatana. In
those circumstances to suggest that SMI was not a party to the agreement
is in my view unjustified. I accordingly agree with the contention on
behalf of Grancy that the parties to the agreement were Messrs Gihwala
and Manala, the Trust, SMI and Grancy.
Terms of the agreement
[45] Apart from the evidence of Mr Mawji that has been summarised
earlier, there were documents that conclusively supported his evidence
and dealt with the terms of the agreement. After the meeting Mr Mawji
and Mr Narotam remained in South Africa for a short period to attend to
other business and to tie up the loose ends of the deal. On 12 February Mr
Narotam met Mr Gihwala at the airport in Johannesburg. He prepared a
note of that meeting in diagrammatic form showing the structure of the
deal. It reflected each of Messrs Gihwala and Manala and Montague as
having a one-third interest in SMI. In turn SMI would hold 58 per cent of
the shares in Ngatana, which would hold approximately 13 per cent of
Spearhead. The note reflected the details of the loan to Mr Manala and
indicated that the cost to Grancy would be R3.5 million. Grancy had
already arranged to pay this amount to the trust account of Mr Gihwala‘s
legal firm.
[46] On 21 February 2005 Mr Gihwala sent an email to Mr Narotam
saying that the Spearhead deal had been announced and had been
favourably received. Ngatana had purchased at R15.50 per unit while the
current market price was R20 per unit. He went on to say that he needed
‗to regularise our relationship‘. Ngatana was acquiring 3.5 million
Spearhead units at R15.50 per unit and Standard Bank had agreed to
provide finance for 75 per cent of the cost of that number of units at R17
per unit. Accordingly the participants in Ngatana needed to fund R2.75
per unit plus all costs, which he estimated to be approximately R600 000.
As SMI‘s interest related to 58 per cent of the units it, needed to provide
R5 830 500. In the result he calculated that each of the three investors had
to contribute R1 976 833.33. The loans that he and Mr Mawji were to
make to Mr Manala were half of that, or slightly less than R1 million
each. When this email was sent, two and a half weeks after the meeting
where the agreement was concluded, Mr Gihwala calculated that Mr
Mawji had contributed a little over R450 000 more than was required to
effect the investment and asked what should be done with this.
[47] Other than on one aspect that is irrelevant to this case, Mr Narotam
confirmed the accuracy of this email in his response on the same day. His
approach was that ‗the structure of the Spearhead deal was done with
Karim and I at the hotel when we met‘. All that remained was for Mr
Gihwala to do what he had undertaken to do in his email, namely draft an
agreement in which he and Mr Manala would acknowledge Mr Mawji‘s
one third share in the company that was to be the vehicle for the
investment, which he identified as SMI.
[48] For reasons that are immaterial a portion of the R3.5 million
remitted to Mr Gihwala‘s law firm was used for the purposes of another
transaction. This resulted in a further exchange of emails between Mr
Narotam and Mr Gihwala concluding with one from Mr Gihwala on
10 May in which he again confirmed the terms of the agreement with
reference to his earlier email of 21 February. An additional amount was
transferred to Mr Gihwala‘s firm to bring the total lent to SMI up to
slightly more than R3 million.
[49] The documents are entirely supportive of Mr Mawji‘s description
of the agreement. In addition, Mr Mawji testified that they discussed the
question of directorships and it was agreed that Messrs Gihwala and
Manala would remain as the sole directors of SMI and would be the
directors representing SMI‘s interests on the board of Ngatana. He was
perfectly willing to accept this in the light of his friendship with Mr
Gihwala and his faith in him. The entire relationship was based upon
mutual trust and confidence. It therefore demanded the utmost good faith
from Mr Gihwala and Mr Manala.
[50] On behalf of Mr Gihwala it was contended that the agreement
merely involved Grancy taking up a shareholding in a private company,
SMI, and enjoying the ordinary rights and incurring the ordinary
obligations that attach to being a shareholder. In other words that
Grancy‘s rights would be no different from those of a person who
purchased shares in a company on the Johannesburg Stock Exchange. I
am unable to accept that characterization. Mr Mawji was approached
through Mr Narotam on the basis of ties of friendship that he had formed
with Mr Gihwala. The investment in Spearhead was presented as an
opportunity for them to do business together and it is plain from other
correspondence that at the time it was contemplated that this would be
one of a number of business ventures that they might undertake jointly.
The nature of the transaction; the fact that Mr Mawji‘s business
operations were conducted from a base in Switzerland; and the fact that
Messrs Gihwala and Manala were to be responsible for administering and
overseeing the investment, meant that Mr Mawji, and therefore Grancy,
were entirely dependent upon them for information regarding the
investment and upon their probity and good faith in dealing with it. In
those circumstances it was too narrow a view of the nature of the
transaction to suggest that Grancy‘s rights would be delineated solely by
the memorandum and articles of SMI and Ngatana.
[51] The factors that I have mentioned all point in the direction of the
agreement being subject to a number of important tacit terms, necessary
in order to give it business efficacy.17 The issues that gave rise to this
litigation posed the following questions:
Was SMI to be used as a vehicle solely for the purposes of
investing through Ngatana in Spearhead?
If Ngatana wanted to make investments other than the acquisition
of the Spearhead units, or if SMI wished to make an investment
other than its shareholding in Ngatana, did this require the consent
of Grancy?
17 Wilkins NO v Voges [1994] ZASCA 53; 1994 (3) SA 130 (A) at 136H-137B.
Was Grancy entitled to access to all the books and financial records
of SMI?
Were Mr Gihwala, Mr Manala and the Trust obliged to account to
Grancy for the money invested in SMI and the proceeds thereof?
Did Mr Gihwala, Mr Manala, SMI and the Trust owe duties of
good faith and fair dealing to Grancy?
Were Mr Gihwala and Mr Manala, as directors of SMI, precluded
from enriching themselves at the expense of Grancy by charging
SMI with fees to which Grancy had not consented?
Were the investors to be treated equally in regard to the receipt of
benefits from SMI?
[52] There is no doubt in my mind that had an interfering bystander
posed those questions to Messrs Mawji and Gihwala at the meeting the
answer in each case would have been an emphatic affirmative. That
satisfies the ordinary test for a court to infer the existence of a tacit term.
There was some muted argument before us whether these terms operated
to limit the powers vested in either SMI or its directors in terms of the
memorandum and articles of association of SMI, and it was submitted
that to the extent they did they could not be accepted as tacit terms.
Reliance was placed upon the principle that a tacit term cannot be
inferred where it is contrary to the express terms of the contract. Before a
court can infer the existence of a tacit term there must be room for
importing it in the light of the express terms of the agreement.18
[53] I see no conflict between the suggested tacit terms and the
memorandum and articles of association of SMI. They do not alter those
provisions in any way. By agreement de hors the company‘s founding
documents, the parties agree as to the manner in which the company and
its directors will exercise those powers. Such an agreement is
commonplace in the commercial world and one was concluded by the
Ngatana shareholders. It is the means whereby parties who intend to
conduct a business venture through the vehicle of a company arrange
their rights and obligations inter se. In the oft-quoted words of Lord
Wilberforce19 ‗… there is room in Company Law for recognition of the
fact that behind it, or amongst it, there are individuals with rights,
expectations and obligations inter se which are not necessarily submerged
in the company structure‘. Typical examples of provisions in such
agreements are those that provide that the investors, or some of them, will
be, or will appoint, the directors of the company; provisions relating to
18 Pan American World Airways Inc. v SA Fire and Accident Insurance Co Limited 1965 (3) SA 150
(A) at 175C.
19 Ebrahimi v Westbourne Galleries Limited [1973] AC 360 (HL) at 379b-380b; [1972] 2 All ER 492 at
500a-h. The passage has been quoted with approval by this Court. APCO Africa (Pty) Ltd and Another
v APCO Worldwide Inc [2008] ZASCA 64; 2008 (5) SA 615 (SCA) para 17. See also Bellairs v
Hodnett and Another 1978 (1) SA 1109 (A) at 1130D-F; Hulett and Others v Hulett 1992 (4) SA 291
(A) at 307E-308F.
decisions that will require the consent of the investors; provisions relating
to the incurring of credit or the sale of assets of the business; and
provisions relating to decisions critical to the strategic direction of the
company.20
[54] A shareholders‘ agreement of this type, dealing with the right to be
appointed as a director and operating to nullify a provision in the 1926
Companies Act that provided for the removal of directors, was enforced
in Stewart v Schwab.21 That judgment has been cited on a number of
occasions in provincial divisions. Its correctness was assumed by Trollip
JA in Desai.22 Such agreements are frequently entered into in cases where
investors wish to regulate their relationship inter se when the investment
is to be made through the medium of a company. Mr Narotam and Mr
Mawji expected that Mr Gihwala would cause such an agreement to be
prepared. The email of 21 February contemplated such an agreement and
one was prepared in Mr Gihwala‘s legal office but never signed. Until
such an agreement was prepared and signed, the parties were bound by
the express terms of the agreement and any tacit terms that formed part of
20 The shareholders‘ agreement concluded in relation to Ngatana provided in clause 10 that a range of
what were termed ‗material decisions‘ would only be taken by means of a resolution supported by both
Prescient and SMI.
21 Stewart v Schwab and Others 1956 (4) SA 791 (T) at 793D-H.
22 Desai and Others v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) at 518G -H.
it.23 Such an agreement does not alter or vary the company‘s founding
documents. It is an agreement between the parties thereto in terms of
which they agree as to the manner in which, and the purpose for which,
the powers of the company and its directors will be exercised. There is
no reason why such an agreement should not ordinarily be given effect
and no reason why it should not be given effect in this case. Section 15(7)
of the 2008 Act expressly provides that this is to be the situation. The
qualification that the shareholders‘ agreement may not be inconsistent
with the Act and the Memorandum of Incorporation deals with situations
where there is a direct conflict between them, not with a qualification in
the shareholders‘ agreement on the manner in which general powers are
to be exercised, which may constrain the exercise of those powers.
[55] The last issue to be considered relates to the manner in which the
anticipated returns on the investment were to be dealt with. The nature of
Spearhead‘s business was described in paragraph 5. It was not such as to
require any active management on the part of either Ngatana or SMI. The
practical day to day business of acquiring properties and securing tenants
would be managed by Spearhead. Ngatana, as a 13 per cent shareholder,
would keep abreast of the operations of Spearhead so as to be aware if it
23 CGEE Alsthom Equipments et Enterprises Electriques, South African Division v GKN Sankey (Pty)
Ltd 1987 (1) SA 81 (A) at 92A-C. In Wilkins NO v Voges supra, at 144B-D Nienaber JA pointed out
that tacit terms are as much part of the agreement as express terms.
appeared to be running into difficulties. They would be alive to, and if
necessary respond to, major business decisions by Spearhead and
possibly suggest business opportunities if they encountered them. But
beyond that oversight role Ngatana‘s affairs would require little by way
of active management and the same was true of SMI. Their accounting
records would be straightforward and the costs of administration limited.
Neither company would need to have any full-time employees. Nor
would they need office premises or any of the administrative
infrastructure that characterises other businesses. The annual financial
statements of both Ngatana and SMI bear this out, whatever their other
defects.
[56] It could accordingly be anticipated that Ngatana would use the
revenue it would receive half-yearly from Spearhead to service the loan
from Standard Bank, pay its own limited expenses and distribute the
remainder to its shareholders, initially by repaying their loans and then by
way of dividends. If it realised any of the units – and there was a three
year lock-up period applicable to the BEE transaction that would preclude
it from doing so immediately – the proceeds would be used for the same
purposes. As far as SMI was concerned its position was even simpler. It
would receive loan repayments and dividends from Ngatana, pay its
extremely limited administrative expenses and distribute the balance by
way of repayment of the initial shareholder loans and dividends to its
shareholders.
[57] Did these factors give rise to any terms of the agreement? In my
opinion they did. Parties entering into this type of investment anticipate
that they will receive a flow of income in accordance with the nature of
the investment. Put simply, when funds were available they would be
distributed by Ngatana and SMI. Both Ngatana and SMI were presented
to Mr Mawji as passive investors, created as SPV‘s for the purpose of
holding linked units in Spearhead. As such, once the loan from Standard
Bank was repaid, he would have anticipated that the investment in SMI
would generate a regular flow of dividend income to Grancy and this is
precisely what he said he expected. There was no reason for either
Ngatana or SMI to accumulate income. If either wished to expand the
range of their investing activities Grancy would have to be consulted. The
fact that it stood at one remove from Ngatana was neither here nor there.
SMI held a majority share in Ngatana and in terms of the shareholders‘
agreement concluded in relation to Ngatana any decision of that character
required the consent of both Prescient and SMI. Unless and until there
was agreement on a change in the investment the position would remain
as described above. In the circumstances, and once again applying the test
of the interfering bystander, it seems to me that a question as to what
would happen to the income earned by Ngatana and SMI would have
provoked the response, ‗Why, it will be distributed to shareholders, of
course. What else could we do with it?‘
[58] In summary therefore the material terms of the agreement
concluded between the parties on 3 February 2005 were the following:
(a)
Mr Gihwala (through the vehicle of the Trust), Mr Manala and
Grancy would participate in the Spearhead BEE transaction and thereby
invest indirectly in Spearhead linked units.
(b)
The investment would be undertaken using SMI as a corporate
vehicle with each participant (Grancy, the Trust and Mr Manala) holding
one-third of the shares in SMI.
(c)
The parties would make their investment contributions by way of
subscription for shares in and the making of loans to SMI on the basis set
out in Mr Gihwala‘s email of 21 February 2005, which included the
making of loans to Mr Manala to enable him to lend his share of the
amount required by SMI.
(d)
SMI would use the funds so acquired to subscribe for 58 per cent
of the shares in Ngatana, which was the corporate vehicle that would hold
the 3.5 million Spearhead linked units acquired in terms of the BEE
transaction, and lend money to Ngatana to enable it to take up these
Spearhead units.
(e)
The investment would be directly managed by Messrs Gihwala and
Manala, who would be the directors of SMI and SMI‘s nominees as
directors of Ngatana.
(f)
Unless otherwise agreed by the investing parties the investment by
Ngatana would be restricted to an investment in the 3.5 million Spearhead
units and SMI‘s investment would be restricted to its investment in 58 per
cent of the shares of Ngatana.
(g)
In the management of the investment Messrs Gihwala and Manala,
the Trust and SMI owed Grancy a duty to exercise good faith and to
account fully for their stewardship of Grancy‘s investment. Their
relationship with Grancy was a fiduciary one.
(h)
Grancy would be entitled on request to be given access to all books
and records of SMI relating to its affairs and Grancy‘s investment in it.
(i)
The two directors would procure that the net income accruing to
Ngatana from the investment, after servicing the Standard Bank loan and
paying its administrative expenses, would be distributed to shareholders,
first by repaying shareholder loans and then as dividends.
(j)
The net income accruing to SMI after paying its administrative
expenses would be distributed to shareholders, first by repaying
shareholder loans and then by way of dividends.
(k)
The investors would be treated equally so that in the allocation of
benefits arising from the investment no investor would be treated less
favourably than another and no investor would secure for himself or itself
a benefit that was not afforded to the other investors. I refer to this as the
principle of parity of treatment.
Nature of the agreement
[59] In its particulars of claim in both actions Grancy characterised the
agreement as one of partnership, alternatively one of agency. Fourie J did
not accept either characterisation and held that it was rather something
akin to a joint venture. But in any event he refused to make declaratory
orders dealing with this issue on the basis that they would be academic. In
its cross-appeal Grancy sought such declaratory orders, although it
addressed no substantive argument in support of the contention that the
agreement was one of agency. Its enthusiasm for the argument that it was
a partnership waned somewhat after it was suggested that this might
mean that its claims could only properly be pursued by way of the actio
pro socio.24
[60] Fourie J correctly said that this was not a partnership. Among the
essential elements of a partnership are that the business is carried on for
24 Morar NO v Akoo & another [2011] ZASCA 130; 2011 (6) SA 311 (SCA) paras 10-11.
the joint benefit of the partners and the intention is to make a profit.25 One
cannot separate the latter of these from the former. The intention must be
to make a profit jointly, that is, a profit that enures to the benefit of the
partnership. Its distribution thereafter to the individual partners is another
matter. Here there was no such intention. The parties intended that
dividends would flow from Spearhead to Ngatana, or that Ngatana would
have the proceeds of realisation of the investment, and that these funds
would then flow to Ngatana‘s shareholders. Once received from SMI they
would be distributed to SMI‘s shareholders. At no stage would the
participants in the venture hold the profits for their joint benefit. The aim
of the parties was to receive in their own right the dividends that would
be paid by SMI. That precluded the agreement from being a partnership.26
[61] The agreement could be described as a joint venture, a convenient
expression commonly used to describe a business agreement bearing
some resemblance to a partnership, but lacking one or more of its
essential elements. It does not convey any specific legal meaning, as
every joint venture is dependent on the specific terms on which the
parties agree. Sometime the distinction between a joint venture and a
partnership is blurred completely, and sometimes what is referred to as a
25 Bester v Van Niekerk 1960 (2) SA 779 (A) at 783H-784A; Purdon v Miller 1961 (2) SA 211 (A) at
218B-D; Pezzuto v Dreyer and Others 1992 (3) SA 379 (A) at 390.
26 Novick v Benjamin 1972 (2) SA 842 (A) at 851A-H.
joint venture is in fact a partnership.27 In this case the parties agreed to
invest in Spearhead units. They did so through corporate vehicles so that
elements of company law would necessarily affect their relationship.
They agreed on the terms of their relationship inter se, something that
bears a resemblance to a shareholders‘ agreement. Their relationship was
governed by mutual trust and imposed fiduciary obligations on Messrs
Gihwala and Manala as well as the Trust. In that it had some of the
characteristics of partnership. In regard to SMI they agreed to subscribe
for shares and make loans to SMI as well as the personal loans that Mr
Gihwala and Grancy were to make to Mr Manala. It can best be described
as an investment agreement with a range of terms drawn from differing
areas of law. There was no need to fit it into the jurisprudential
pigeonhole of either partnership or agency. It follows that, to the extent
that Grancy sought to do so, that part of the cross-appeal must fail.
Breaches of the agreement
[62] From the very start there were wholesale breaches of the
investment agreement by Messrs Gihwala and Manala, as well as by the
Trust and SMI acting through Mr Gihwala, who was throughout the
27 United Dominions Corporation Ltd v Brian Pty Ltd and Others (1985) 60 ALR 741 (HCA) at 746.
R C I Banks Lindley and Banks on Partnership (8 ed, 2002) para 5-07 where the author expresses the
view that every partnership is a joint venture, but not every joint venture is a partnership. B Bamford
The Law of Partnership and Voluntary Associations 3 ed (1982) 11-12.
driving force in dealing with Grancy and the alter ego of the Trust. As he
said in his email of 11 September 2006 he had put the investment
agreement together and he was accordingly ‗the one to deal with‘. In
what follows I highlight the principal breaches.
[63] The first and primary breach, which coloured all the others, was
the refusal from some stage in 2005 or 2006 – the date is unclear but the
breach was made manifest in the 11 September 2006 email – to accept
that Grancy had a right to a one third shareholding in SMI. This persisted
until March 2009 when Mr Gihwala and the other respondents in the
proceedings brought by Grancy capitulated and submitted to a court order
that it was entitled to a 31 per cent share in SMI. But the breach had more
far-reaching effects than merely an obdurate refusal to recognise and
implement the investment agreement. It was accompanied by an equally
obdurate refusal to afford Grancy access to books and records in SMI that
would have enabled it to ascertain what had occurred with the money it
had invested and a similar refusal to provide a proper account in relation
to that investment. Mr Gihwala and Mr Manala divided the benefits
accruing from the investment in Ngatana between themselves to the
exclusion of Grancy. The refusal to account has persisted from the
beginning until the present day. It is exemplified by the recent judgment
by Traverso DJP and the need for her to give a detailed order, declaring
the respects in which the account was inadequate and directing what
needed to be done to rectify the position
[64] Another area where there were significant breaches of the
agreement related to the investments by Ngatana. In October 2005 they
were altered by the acquisition of a further 2 million Spearhead units,
which of itself might not be thought to be relevant, had it not been
accompanied by Ngatana increasing its indebtedness to Standard Bank
from the original R38.5 million to R93.6 million. That was clearly a
significant increase in the potential risks inherent in the investment and
hence in the risks attaching to Grancy‘s investment. But Grancy was not
consulted over this. Nor was it consulted, notwithstanding its explicit
request, over the attitude that Ngatana should adopt to the offer by
Redefine to acquire all the linked units in Spearhead. It was not consulted
over the disposal of all the Redefine units obtained as a result of this
transaction or over the further acquisition of 20 million Redefine units.
Fortunately it does not appear as if this caused any financial loss to
Grancy, but it was nonetheless a most egregious breach of the investment
agreement. In effect, Grancy found itself engaged, entirely without its
knowledge and certainly without its consent, in a different investment to
the one in which it had agreed to become involved. That was a
fundamental breach of the principles of trust and good faith on which the
investment agreement rested as well as of a tacit term of the agreement.
[65] But these breaches were accompanied by several other breaches
that did have a detrimental financial impact on Grancy. From the very
outset Messrs Gihwala and Manala used SMI to provide themselves with
financial benefits to the prejudice of SMI‘s only other shareholder,
Grancy. This started in 2005 when Grancy made its initial payment of
R3.5 million to the firm of attorneys of which Mr Gihwala was a partner.
In terms of the email of 21 February 2005 the amount allocated to the
Spearhead transaction was R3 040 250. That was money that Grancy had
lent to SMI. It should have been reflected as such in Grancy‘s ledgers.
But it was not. It was credited to a loan account for Mr Manala. Had that
not been done that loan account would have been in debit from the time
of the first payment to Mr Manala in May 2007. In fact the account was
only maintained in credit by crediting it with ‗promotion fees‘, surety fees
and directors‘ fees improperly raised. None of these fees were
permissible but, as explained in more detail below, their improper
crediting to Mr Manala‘s loan account enabled him to withdraw over
R9 million from SMI between 2007 and 2009.
[66] An equally serious breach occurred in March 2007 when Ngatana
repaid the original loan it had received from SMI to enable it to conclude
the Spearhead transaction. Mr Gihwala and Mr Manala arranged for the
loan portions of their own contributions to be paid to them, but
deliberately did not repay Grancy the money it had lent to SMI. Not only
did SMI not do so, but it used those funds to invest in Scarlet Ibis,
without informing Grancy and without its consent. This was a flagrant
breach of the investment agreement, which was confined to an investment
in a relatively safe property investment trust. Fourie J described it as
misappropriating funds that should have been paid to Grancy and I can
only endorse that description. Grancy was now exposed to the risks
inherent in any property development, while its co-investors had secured
the repayment of the money they had invested in SMI, including in Mr
Gihwala‘s case the repayment of part of the money lent to Mr Manala.
[67] Although Grancy suffered no immediate financial detriment, the
simultaneous decision by Ngatana to pay an amount of R3 million to
Prescient and SMI in equal shares for their contribution to setting up the
BEE transaction, was a breach of the investment agreement. No plausible
justification was advanced for the board of Ngatana agreeing to do this,
and it was plainly directed at prejudicing the minority shareholders in
Ngatana, and Grancy as the minority shareholder in SMI. Restricting
myself to Grancy there is no question that it was not intended that it
would benefit from this, had it been paid. The attitude evinced by Mr
Gihwala and accepted by Mr Manala was that Grancy had only an
indirect interest in 630 000 Spearhead units and until that overall
investment was realised it was not entitled to anything at all. Only Mr
Manala and the Trust were intended to benefit from this payment.
[68] This general attitude manifested itself when Ngatana paid a
dividend to SMI of R5 272 727 in October 2008. This was immediately
declared as a dividend and paid in equal shares to the Trust and Mr
Manala. After this payment the Trust and Mr Manala had been repaid
their loans to SMI (insofar as they ever made those loans, which may be
doubted) and received a substantial dividend, exceeding the amount of
those loans. Grancy, however, had received nothing. On what basis Mr
Gihwala, as the moving spirit behind these transactions, could have
thought that this was permissible in terms of the agreement he had
concluded with Mr Mawji, is a mystery. Grancy and Mr Gihwala, via the
Trust, were making exactly the same financial investment in money
terms, yet they were receiving different returns on their investment. No
sensible businessperson would ever have agreed to that and there is no
evidence to suggest that Mr Mawji did so. One is led inevitably to the
conclusion that Mr Gihwala was simply exploiting his position as the
person in control of the affairs of SMI in order to prefer himself and Mr
Manala over Grancy.
[69] There were other equally untenable payments. On 24 June 2009
SMI lent R2 million to Mr Manala. The heads of argument on behalf of
Mr Gihwala said that Fourie J erred in finding that ‗the R2 million
payment to Manala was in breach of the agreement, the payment
constituted a loan to Manala, [and] that this payment resulted in the
depletion of SMI‘s assets by R2 million‘, but no argument was advanced
in support of these contentions. Nor did Mr Manala, who was separately
represented, attempt to justify the loan. The inescapable conclusion is that
with the connivance of Mr Gihwala he was permitted to treat SMI as a
personal piggy bank.
[70] Matters did not end there. On 8 April 2009, shortly after the grant
of the original order that Grancy be registered as a shareholder of SMI,
Messrs Gihwala and Manala, in a telephone conversation, agreed to pay
themselves directors‘ fees in SMI of R2.75 million each. As if that was
not enough they had in March 2008 agreed to pay themselves a further
R1 114 539 as ‗surety fees‘, that is, as compensation for the suretyships
they had given to Standard Bank. In 2009 these amounts were credited to
the loan accounts of the Trust and Mr Manala with SMI, and subsequent
withdrawals were made against the resulting credit balances. The fees
were utterly unjustifiable. The attempt to justify them when they were
previously considered by this Court28 met with this response:
‗… not only is the respondents‘ evidence on this score untenable but its shortcomings
are exacerbated by the absence of a cogent explanation as to why each payment was
made in the first place.‘
Neither Mr Gihwala, nor Mr Manala, made any attempt on this occasion
to justify these fees. In fact, Mr Gihwala‘s recognition that they were
untenable was evidenced by the fact that he repaid the money to SMI on
23 November 2010.
[71] The last payment to which I must refer as illustrative of a gross
breach of the investment agreement arose on 3 March 2009. It will be
recalled that two years earlier, when resolving to repay to shareholders
their initial loans, Ngatana also resolved to pay each of Prescient and SMI
an amount of R1.5 million, but at the time it lacked the funds to put this
into effect. On 3 March 2009, a month after the offer to settle the
litigation in which Grancy claimed its share in SMI, Ngatana passed a
fresh resolution. It provided for the payment to Prescient of a
‗management fee‘ of R1.5 million and for the payment to each of Mr
Gihwala and Mr Manala of R750 000 as ‗directors‘ fees‘. The earlier
28 Grancy Property Ltd v Manala supra para 35.
resolution would have paid this amount, that is, R1.5 million to SMI,
where it would have been available to the Trust and Mr Manala, on the
basis then being contended for that they were the only shareholders in
SMI. No explanation was advanced for this resolution, nor any
explanation of what had happened to the earlier resolution. The inference
is that it was simply a different way of giving effect to the original
intention. Mr Gihwala and Mr Manala would be enriched at the expense
of Grancy.
Grancy’s monetary claims
[72] The prime mover in committing these breaches of the investment
agreement appears to have been Mr Gihwala. But Mr Manala and the
Trust, as his collaborators in resisting Grancy‘s claims for recognition as
a shareholder in SMI as well as his claims for access to information and a
proper accounting in relation to its investment, were parties to those
breaches. Furthermore, one or other or both of them were the
beneficiaries of all the payments made in breach of the agreement.
Grancy‘s monetary claims must be considered against that background.
[73] The principle underpinning the claims was straightforward. Grancy
contended that, had there been no breach of the investment agreement,
funds that were diverted to other purposes in either Ngatana or SMI
would have flowed through to SMI‘s shareholders by way of dividends.29
As they were diverted the shareholders did not receive what they would
otherwise have received by way of a return on their investment. Grancy‘s
own loss was calculated on the basis that, if these funds had been
available for distribution by SMI and had been distributed, it would have
received 31 per cent of them. The amount that it did not receive
represented its monetary loss arising from the various breaches of the
agreement. The propriety of this mode of calculation was not in issue.
[74] Mr Gihwala and Mr Manala attacked the judgment in respect of
most of the monetary claims on the ground that, if valid, they were claims
in the hands of SMI and could not be pursued by Grancy in the light of
the rule in Foss v Harbottle. That is something to which I shall return.
First it is necessary to consider whether the claims were established on
the basis on which they were advanced. Although we received oral
argument on only three claims, they were all dealt with in the heads of
argument of Mr Gihwala and I shall likewise deal with each one
separately. In doing so I draw no distinction between the monetary claims
advanced in the 2010 action and those advanced in the 2011 action. Once
I have dealt with the merits of each claim and who is liable in respect of
29 In other words the investment agreement placed Grancy and the other shareholders in SMI in a
position to insist on the payment of dividends from available funds, which is a more extensive right
than a shareholder would ordinarily enjoy.
them I shall turn to consider whether any of them are excluded by the
application of the rule in Foss v Harbottle.
The repaid amount
[75] The largest monetary claim related to what was described as the
‗repaid amount‘. This was the amount of R6 657 673 paid by Ngatana to
SMI on 15 March 2007 as repayment of the initial loan by SMI to
Ngatana enabling it to acquire the Spearhead units in terms of
Spearhead‘s BEE transaction. These funds were used by SMI to refund
the loans made by the Trust and Mr Manala, with an adjustment to allow
for the fact that Mr Manala had borrowed money from Mr Gihwala in
order to contribute his share. The balance was used to make the
investment in Scarlet Ibis. Grancy received nothing in respect of its
contribution of R2 051 833.34.
[76] There were some minor quibbles over the trial judge‘s description
of the source of the R6 657 673, but any misdescription did not affect his
conclusion. The attack on the claim was based on the contention that the
loan by Grancy was only repayable when the Spearhead investment was
finally unwound and that the loan included an amount of R75 000 in
respect of SMI‘s costs, which was not repayable. Neither contention was
justified. It was irrelevant whether it was originally anticipated that the
initial loan would only be repaid when the Spearhead transaction was
unwound. The reality was that Ngatana repaid the entire loan before that.
When the decision was made to repay the Trust and Mr Manala, the
principle of parity of treatment of the investors dictated that Grancy
should also have been repaid. As regards the fact that the original loan
included an amount in respect of SMI‘s costs in setting up the transaction,
this was neither here nor there. The costs were funded by way of the loan
and the loan had to be repaid. Fourie J was correct to uphold this claim.
The Scarlet Ibis investment
[77] Fourie J made a separate award of damages in respect of the
investment in Scarlet Ibis. He held that this amount would have been
available to fund further dividends in SMI and had been irrevocably lost.
In the result he awarded Grancy damages of R620 000, equivalent to 31
per cent of the R2 million investment. He rejected the submission that
this was a duplication of his award in respect of the failure to repay
Grancy‘s loan. In my respectful view he was wrong to do so. The source
of the funds used to make the investment was Ngatana‘s repayment of
SMI‘s original loan to it. Had those funds been dealt with in accordance
with the investment agreement they would have been used to repay
Grancy‘s loan to SMI. Instead they were invested in Scarlet Ibis and lost.
But Grancy‘s loss as a result cannot exceed the amount that it would have
received had it been repaid in compliance with the investment agreement.
In that event there would have been no funds available to invest in Scarlet
Ibis and no loss arising from such investment. The appeal against this
award of damages must succeed.
Promotion fees
[78] There was considerable confusion in regard to this claim. In his
email of 21 February 2005, Mr Gihwala said that SMI had incurred costs
of R225 000 in setting up the transaction. He included in the amount
Grancy was to invest an amount of R75 000 in respect of these costs. But
that amount was part of the overall loan made by Grancy and was
included in the claim in respect of the repaid amount.30 It could not form
part of another claim.
[79] It is unclear whether any costs were incurred as alleged by Mr
Gihwala. In his opening address at the trial counsel for Grancy said that
none were, and he added that the accounting treatment of these amounts
was inappropriate. Mr Greenbaum, Grancy‘s expert witness, confirmed
this. He drew attention to the fact that in SMI‘s ledgers the Trust‘s and
Mr Manala‘s loan accounts had each been debited with R75 000 as
30 The Grancy loan to SMI was R1 976 833.33. With the addition of the R75 000 in respect of the
alleged costs that amounted to R2 051 833.33, which was the amount for which Grancy obtained
judgment on the repaid amount claim.
promoter‘s fees for Mr Manala. Then Mr Manala‘s loan account had been
credited with R150 000 as promoter‘s fees. The net effect of this, as the
loan accounts show, is that the credit balance in Mr Manala‘s loan
account was increased by R75 000 at the cost of the Trust. It had no
impact on Grancy at all.
[80] In para 29 of the particulars of claim it was alleged that in the
financial year ending in February 2006, Mr Manala and either the Trust
or Mr Gihwala had impermissibly credited themselves with promotion
fees in an amount of R75 000. In para 47.7 it was alleged that these
promotion fees had been credited in an amount of R225 000 and
judgment was sought in favour of Grancy for R75 000. The discrepancy
between the two figures was apparent and made no sense.
[81] The judgment proceeded on the footing that a total amount of
R225 000 was credited to Mr Manala, Mr Gihwala and/or the Trust and
reflected in SMI‘s detailed income statement as at 28 February 2006. It
held that there should have been an equal distribution of this amount
among the investors in accordance with the principle of parity and
awarded damages equivalent to 31 per cent of that amount. But that
involved a misconception. This amount appeared in the income
statement, but as an expense item under the heading ‗legal fees‘. Mr
Greenbaum explained that this was incorrect because no legal fees had
been incurred. But he then characterised it as having been ‗designed
nominally to enrich Gihwala and/or Manala‘. What the basis was for that
statement he did not explain. When he came to give evidence on the topic
he drew attention to the entries in the loan accounts of the Trust and Mr
Manala and said that there was no invoice for the legal fees shown in the
trial balance and the annual financial statements. The R225 000 in the
income statement under the heading ‗legal expenses‘ was a red herring.
Its characterisation in the particulars of claim as promotion fees merely
added to the confusion.
[82] The correct position on the material before this Court is that the
R75 000 contributed by Grancy for costs of establishing SMI is included
in the amount for which judgment was given in respect of its loan to SMI
under the rubric of the repaid amount. Upholding that claim reverses the
effects of crediting Mr Manala‘s loan account with money obtained from
Grancy. There was no credit or payment to Mr Manala or anyone else of
R225 000. Instead Mr Manala‘s loan account was credited with a net
R75 000 at the expense of the Trust. This did not prejudice Grancy in any
way. Accordingly the appeal in respect of the damages awarded under
this head must succeed. On the evidence in this case that award should
not have been made. I note that Traverso DJP dealt with this in para 11.31
of her judgment and justifiably found the entries in respect of the amount
of R225 000 mystifying. The fact that the award of damages under this
head is set aside does not amount to a decision that once there has been a
proper explanation of these entries Grancy may not have a claim. All that
this judgment does is to hold that the claim pleaded in the 2010
particulars of claim was not proved.
Legal fees
[83] The foundation for this claim was a provision for legal fees in an
amount of R300 000 in the annual financial statements of SMI for the
year ended 28 February 2009. In the following year this provision was
reduced by R75 000. However, there is no mention in the evidence of any
accounts having been discovered that reflected these fees having been
charged and paid. Mr Gihwala argued that accordingly there was no proof
that any such fees had been paid. I agree that the mere fact of the
provision appearing in accounts, the correctness of which was highly
debatable, did not prove that SMI had paid any amounts in respect of
legal expenses, much less paid bills for which any of Mr Gihwala, the
Trust or Mr Manala, were responsible.
[84] But a number of fee notes were produced showing that SMI had
been charged various amounts by the firm of attorneys representing Mr
Manala and SMI in the litigation. The fee notes related, with two
exceptions, to fees charged during 2009 and 2010 by counsel representing
Mr Gihwala and the Trust. No explanation was proffered that would
justify Mr Gihwala‘s and the Trust‘s legal bills being paid by SMI. As
these on their face amounted to more than R300 000 that might have
provided a justification for this award of damages, but for what follows.
[85] The claim was dependent upon an analysis presented by Grancy‘s
counsel and annexed to its heads of argument. That analysis was
defective, as emerged when investigating a passing and unsubstantiated
submission on behalf of Mr Gihwala that a claim arising from a loan to
Mr Manala for the purposes of repaying Grancy‘s loan duplicated the
claim in respect of the repaid amount. On investigation it became
apparent that there was an overlap between the claim for legal expenses
and the claim in respect of that loan. The outcome must be that the
amount of the claim arising from the payment of legal expenses should be
reduced.
[86] The attorneys‘ ledger account annexed to Grancy‘s heads of
argument included six invoices from the attorneys in respect of the fees of
counsel appearing for Mr Gihwala and the Trust. They totalled
R241 303.78. These invoices were debited to SMI‘s ledger account with
the attorneys. However, the ledger reflected only R134 720 as paid by
SMI in respect of these fees. An amount of R58 140 was transferred from
another account and Mr Gihwala paid the balance personally. So, on the
face of it, the only improper charging of fees to SMI related to the
R134 720. The remaining fee accounts annexed to Grancy‘s heads of
argument were debited to a different ledger account in the name of Mr
Manala. The transfer of R58 140 also came from that account. The funds
used to pay these accounts came from the second loan made to Mr
Manala dealt with in the following section of this judgment. As that is
subject to a separate claim, the claim for legal expenses based on these
accounts involved a duplication of claims. Accordingly Fourie J correctly
upheld this claim, but the amount must be reduced to take account of this
duplication. The correct figure is R41 763.20, being 31 per cent of
R134 720.
Loans to Mr Manala31
[87] On 24 June 2009 pursuant to a resolution of the directors of SMI,
that is, Mr Gihwala and Mr Manala, dated 15 June 2009, SMI advanced
what was referred to as a loan of R2 million to Mr Manala. In fact the
resolution said that it was a payment in reduction of his loan account, but
31 The first of the two payments to Mr Manala dealt with under this heading was claimed in the 2010
action and the second in the 2011 action.
that could not be correct because it would have resulted in his loan
account reflecting a debit balance. Mr Gihwala told the auditors that it
was a payment made in error. It was reflected as an ‗overpayment‘ in Mr
Manala‘s loan account in the general ledger of SMI. What is certain is
that this sum was paid to Mr Manala on 24 June 2009. However the
payment was characterised it was plainly made in breach of a number of
the provisions of the investment agreement, as well as the provisions of
s 226 of the 1973 Act, and it was not suggested otherwise in argument
before us. Instead it was argued that in 2011, when a dividend of
R3 450 000 was due to Mr Manala, it was credited to his loan account
less the amount of the loan and interest. It was submitted that this ‗set off,
with interest, the payment previously (and erroneously) paid to Manala,
resulting in a repayment of the loan‘. For the purposes of considering this
argument I assume that it was open to Mr Manala to appropriate the
dividend credited to his loan account to the repayment of the loan.
[88] The difficulty is that in cash terms SMI was no better off after the
crediting of Mr Manala‘s loan account. When the loan was advanced Mr
Manala received R2 million in cash. Had the loan not been made SMI
would have had that R2 million at its disposal. In accordance with the
terms of the investment agreement those funds, being surplus to its needs,
could and should have been distributed to the shareholders. In that event
Grancy would have received R620 000. It has received nothing as a result
of the repayment of this loan and no attempt was made to show that SMI
was thereby placed in a position where it could distribute R2 million (or
anything at all) to shareholders. This highlights the fact that the question
whether Grancy suffered losses is not to be determined by book entries,
but by having regard to the actual flow of money in consequence of the
disputed transactions. That is why the appeal in respect of the award of
damages arising from the Scarlet Ibis investment must succeed and why
the appeal against the award in respect of the loan to Mr Manala must
fail.
[89] Also on 24 June 2009, a further amount of R1 976 523.34 was paid
to Mr Manala as a loan. The ostensible reason was to enable him to repay
Grancy its original loan to SMI, less the R75 000 in respect of the alleged
costs of establishment. Doing this reflected the contention advanced by
Mr Gihwala in the email of 28 June 2006 quoted in para 16 above, that
Grancy came in ‗behind‘ Mr Manala and that strictly speaking its
investment ‗was with Lance‘. From this flowed the attitude that it was the
latter who was responsible for repaying the loan made by Grancy to SMI.
Of course, in the light of the concession that Grancy was entitled to a
shareholding in SMI this was palpable nonsense. Mr Manala tendered to
pay this amount to Grancy but the tender was justifiably refused. The
money was then used by Mr Manala to fund his legal expenses and for
other personal purposes. It has not been repaid.
[90] This loan was as unjustifiable and unlawful as the payment to Mr
Manala of R2 million made at the same time. It has not been repaid and
SMI‘s resources for the purpose of making distributions to investors were
diminished thereby. Mr Gihwala submitted that only Mr Manala had an
obligation to repay it, which may be correct insofar as SMI is concerned,
but that does not bear upon his liability for breaches of the investment
agreement. He also submitted that the claim in this respect was a
duplication of Grancy‘s claim to the Repaid Amount. That is incorrect. In
relation to the Repaid Amount there was money available to repay
Grancy‘s loan, which was diverted to the Scarlet Ibis investment and lost.
Here a further amount was diverted to Mr Manala and not repaid. Had
that not occurred it would have been available for distribution to investors
and hence, in part, to Grancy. This claim was properly upheld.
Ngatana directors’ fees
[91] The train of events in this regard was dealt with in paras 67 and 71.
In 2007 Ngatana resolved to pay SMI and Prescient R3 million in equal
shares. Had the payment been made it would have enured to the detriment
of the minority shareholders in Ngatana and, for so long as Grancy was
excluded as a shareholder in SMI, it too would have been excluded from
the benefit of SMI‘s receiving this amount. In March 2009, after the offer
to settle the proceedings in which Grancy sought to be registered as a 31
per cent shareholder in SMI, Ngatana passed a new resolution agreeing to
distribute R3 million, by way of a payment of R1.5 million to Prescient
and by way of the payment of directors‘ fees of R750 000 to each of Mr
Manala and Mr Gihwala.
[92] Fourie J held that there was no evidence linking the two
resolutions. I disagree. The identity of the total amount involved –
R3 million – and the peculiar structure of the resolution in March 2009,
where the two SMI directors received directors‘ fees and the two
Prescient directors did not, cried out for an explanation, which was not
forthcoming. The earlier resolution had not been rescinded and it revealed
a clear intention to appropriate R3 million of funds in Ngatana for the
benefit of Prescient and SMI, which, at the time, meant for the benefit of
Messrs Gihwala and Manala. Then, out of the blue in 2009, a fresh
resolution appropriating the same sum for the benefit of the same parties
was passed by Ngatana. This occurred at precisely the time when Messrs
Gihwala and Manala were reluctantly conceding that Grancy was entitled
to a shareholding in SMI. Furthermore, when Messrs Gihwala and
Manala agreed to this resolution, that involved a breach of the provisions
of the investment agreement set out in paras 58 (g), (i) and (k).
[93] It follows that, subject to the argument in relation to the
application of the rule in Foss v Harbottle, the cross-appeal in respect of
this item should succeed. Messrs Gihwala and Manala received in total
R1.5 million that should have been available to SMI for distribution.
Grancy was thereby deprived of its 31 per cent interest in that amount. Its
claim for payment of R465 000 plus interest at 15.5 per cent per annum
from 3 March 2009 to date of payment should have been upheld by the
trial court.
Late payment of dividends
[94] In October 2008 SMI received a dividend of R5 272 727 from
Ngatana. It promptly declared a dividend in that amount and paid it in
equal shares to the Trust and Mr Manala. But for their breaches of the
investment agreement, Grancy would have received a dividend at that
time of R1 634 545.37. Instead that amount was only paid to it on 29 June
2009. It claimed the loss of interest of R213 789.57 from Messrs Gihwala
and Manala.
[95] One other dividend received by SMI from Ngatana was in due
course distributed to SMI‘s shareholders in proportion to their respective
shareholdings. But those distributions took place substantially after SMI
received the dividend from Ngatana in March 2009. The claim was for
the lost interest on the basis that a dividend should have been paid to the
investors by 26 March 2009. Instead it was paid in two tranches on
19 August 2009 and 6 January 2010. Grancy‘s claims were for interest on
the amount of each dividend paid to it from 26 March 2009 to the two
payment dates.
[96] The judgment proceeded on the footing that Messrs Gihwala and
Manala had been paid their share of this latter dividend before Grancy.
That was incorrect. But no excuse was advanced for the delay in making
payment. SMI had no reason to delay the payment of dividends once the
money was received from Ngatana. That was evidenced by the celerity
with which the October 2008 dividend was paid to Messrs Gihwala and
Manala. The fiduciary duty owed to Grancy, combined with the
obligation to distribute funds received from Ngatana referred to in para
58(j) above, required prompt distribution of dividends. There was
therefore a breach of their obligations under the investment agreement.
The calculation of Grancy‘s resultant loss on the basis of a loss of interest
was not challenged. These claims were correctly held to be good claims.
Directors’ remuneration and surety fees
[97] It is convenient to deal with these together. I have already
described in para 70 how these amounts were credited to the loan
accounts of the Trust and Mr Manala, enabling withdrawals to be made
against those accounts at a later stage. Mr Manala did not deal with these
credits. Mr Gihwala advanced no argument to justify the directors‘
remuneration as not being in breach of the agreement. There was some
attempt to justify the surety fees, but it was without merit. He argued that
because he had repaid these amounts to SMI his liability was discharged
and that Mr Manala was separately liable for his share. I will need to
revert to the issue of joint and several liability when I deal with the
liability of the Trust, so content myself, at this stage, with saying that the
claim in respect of the amounts credited to Mr Manala under this head
was sound.
Share of the Residue
[98] Under this heading Grancy sought an order in the 2010 action for
payment of what it termed its portion of the share of the residue. It asked
for an order that this be paid to it together with interest from 26 March
2009. The pleaded basis for this claim was that Grancy‘s investment in
Spearhead units was realised fully when by 12 March 2009 Ngatana had
disposed of all the Redefine units obtained in return for the Spearhead
units. It claimed that the amount of its share of the residue could be
calculated in accordance with a formula.
[99] I have considerable difficulties with this claim. Its underlying
premise is that Grancy invested in a defined number of Spearhead units
and that this investment came to an end in March 2009, so that it was
entitled to be paid whatever remained of that investment as at that date.
This effectively disregarded the corporate identity of both SMI and
Ngatana and treated the investment as one in Spearhead units. But that
was impermissible. Although both Ngatana and SMI were SPV‘s
established for the purpose of implementing and participating in the
Spearhead BEE transaction, Grancy‘s interest was not directly in the units
but in SMI, subject to the terms of the investment agreement.
[100] Another problem is that the claim ignored the fact that the original
Spearhead investment by Ngatana had been transformed. The initial
acquisition of 3.5 million units with a loan facility of R38.5 million had
become an investment in 5.5 million units with a loan facility of R93.6
million. Those units had become 33.99 million Redefine units in 2006.
Prior to the implementation of the order recognising Grancy as a
shareholder in SMI, the original block of Redefine units had been sold
and a further 20 million acquired through fresh loans. The investment in
SMI remained the same, as did SMI‘s stake in Ngatana, but the
underlying investment had altered, initially in extent and subsequently in
substance. This cannot be ignored. The moving finger had writ and
moved on and, as the poet instructs us, it is not possible to disregard that
or overlook it.32
[101] There is a further objection. After Grancy secured its stake in SMI
it received substantial payments by way of dividends totalling in all about
R14.5 million. These payments were generated from the disposal of the
original holding of Redefine units. Grancy has been happy to accept these
payments from that source, but they were not paid on the basis of the
original investment in Spearhead. They were the product of the
transformed investment. The first and second loans from Standard Bank
have been repaid and Grancy retained an interest in SMI, which in turn
had an interest in Ngatana. As at the most recent set of annual financial
statements Ngatana held 20 million Redefine shares. Assuming that is
still the position, and we were not told otherwise, it is a substantial
32 Edward Fitzgerald The Rubáiyát of Omar Khayyám quatrain 51:
‗The Moving Finger writes; and, having writ,
Moves on: nor all thy Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all thy Tears wash out a Word of it.‘
investment.33 But even if it is no longer in existence, bearing in mind that
the loan facilities granted to purchase the 20 million shares were both due
for repayment prior to the trial, that does not affect the matter. To uphold
this claim would involve Grancy receiving and retaining benefits from the
changes in investment by Ngatana, while seeking to be paid on the basis
of the original investment by that company. That is not in my view
permissible. Accordingly Fourie J was correct to dismiss this claim and
the cross-appeal relating to it must fail.
Liability for the monetary claims
[102] Fourie J held Mr Gihwala and Mr Manala liable to pay the
monetary claims jointly and severally. The cross-appeal seeks to add the
Trust as liable jointly and severally with them in relation to certain of
those claims.34 By contrast the appeal challenges the finding that the
liability of the contracting parties was joint and several. I will address
each point in turn.
[103] I have already held that the Trust was a party to the investment
agreement. As such it owed the same fiduciary duties to Grancy as did Mr
33 In recent times Redefine shares have traded on the JSE at a price between R9 and R11 per share
giving a total value for the investment of between R180 and R220 million. It paid dividends in the last
year of about 80 cents per share.
34 The relevant claims are those relating to the repaid amount, the legal expenses, both loans to Mr
Manala and the claims in respect of directors‘ fees and surety fees.
Gihwala and Mr Manala. It is so that the monetary claims arise from the
actions and decisions of Mr Gihwala and Mr Manala. Were the Trust
represented by someone other than Mr Gihwala, so that it could claim
ignorance of their actions, the position might have been different. But
when Mr Gihwala, in his capacity as a party to the investment agreement
and as a director of SMI and Ngatana, took the decisions that gave rise to
these claims, he was obliged in his capacity as trustee of the Trust not to
do so. That would have been the obligation of an independent trustee and
it is unaltered by the fact that Mr Gihwala was acting in two capacities.
He could not discard his trustee hat when acting as a director.
Accordingly I am of the view that the Trust was as much a party to the
breaches of the investment agreement as were Messrs Gihwala and
Manala. Grancy‘s damages claims arising from those breaches therefore
lie against the Trust as well.
[104] We were referred to the passage in Christie35 where the authors say
that there is a presumption that obligations entered into jointly are joint
and not joint and several and that the presumption is a strong one. But the
same authors say36 that where the contract by express words or necessary
implication imposes liability in solidum that liability is joint and several.
35 RH Christie and GB Bradfield Christie’s The Law of Contract in South Africa 6ed (2011) at 262.
36 At 263.
The issue must be determined by having regard to the terms of the
contract and the nature of the relationship thereby created among the
parties to that contract.
[105] The duty of good faith that formed an integral part of the terms of
this contract could in this case only be breached by the joint conduct of
Messrs Gihwala and Manala (because they were the directors and acted
jointly) and, through Mr Gihwala, the Trust. The obligations they
undertook to Grancy were indivisible. They carried with them fiduciary
duties of good faith that are characteristic of partnership, where liability is
joint and several. In Langermann v Carper37 Solomon J said that whether
a transaction among businesspeople was described as a joint venture or a
partnership ‗the same consideration must apply to the dealings of the
several parties among themselves as would be applied in the case of an
ordinary partnership‘. Grosskopf AJ cited that passage with approval in
Koornklip Beleggings,38 a case bearing some similarity to the present one.
It involved an agreement among various parties to make an investment by
way of subscription for shares in a company formed to exploit a diamond
concession. Grosskopf AJ described the relationship as analogous to a
partnership. The same is true here. In my view, the closer the relationship
37 Langermann v Carper 1905 TH 251 at 261.
38 Koornklip Beleggings (Edms) Bpk v Allied Minerals Ltd 1970 (1) SA 674 (C) at 677H.
between the parties to that which one expects to exist between partners,
the more likely it is that any liability will be joint and several.
[106] A helpful explanation of when liability in solidum arises appears in
Wessels.39 Liability as debtors in solidum exists if the debtors have
promised the same thing to the creditor in such a way that the creditor can
demand from each debtor performance of the entire obligation. Two
essentials must be present. The first is that each debtor must be separately
liable as completely as if they were the sole debtor. The second is that
each debtor should be debtor of the same thing or the same amount of
money, not merely a similar thing or a similar amount of money. In my
view that is the case here. Grancy was entitled to demand the same thing
from each of Mr Gihwala, the Trust and Mr Manala. They each had to
discharge the same duty of good faith in the same way. They are each
liable in this case for the same thing, namely the same breach of
obligation and the same damages. In my view their liability was joint and
several and Fourie J was correct in holding that.
39 A A Roberts (ed) Wessels’ The Law of Contract in South Africa 2 ed (1951) Vol 1 paras 1496 to
1502.
Foss v Harbottle
[107] It is a curious feature of this case that we are asked to apply a rule,
or more accurately a combination of rules, of ancient origin that has been
abolished in the country of its birth.40 The rule has two components. The
first recognises that a company is a separate legal entity from its
shareholders and accordingly, in the ordinary course, any loss caused to
the company must be recovered by the company, and not by its
shareholders on the basis of the diminution in the value of their shares or
the loss of dividends they had anticipated. The second recognises the
need for exceptions to this principle in order to avoid oppression and
permits a shareholder to recover loss caused to the company by way of
what is termed a derivative action. In certain circumstances it also permits
recovery of the shareholder‘s own loss.
[108] A helpful summary of the rule and its different elements is to be
found in the following passage from the leading case of Prudential
Assurance Co Ltd v Newman Industries Ltd and Others (No 2)
(Prudential Assurance):41
40 See Part 11 of the United Kingdom Companies Act 2006, which provides a detailed structure for the
bringing of derivative claims.
41 Prudential Assurance Co Ltd v Newman Industries Ltd and Others (No 2) [1982] 1 All ER 354 (CA)
at 357j - 358b. The principles enunciated in this case were approved and applied by the House of Lords
in Johnson v Gore Wood & Co (a firm) [2001] 1 All ER 481 (HL) (Gore Wood).
‗The classic definition of the rule in Foss v Harbottle is stated in the judgment of
Jenkins LJ in Edwards v Halliwell [1950] 2 All ER 1064 at 1066 - 7 as follows. (1)
The proper plaintiff in an action in respect of a wrong alleged to be done to a
corporation is, prima facie, the corporation. (2) Where the alleged wrong is a
transaction which might be made binding on the corporation and on all its members
by a simple majority of the members, no individual member of the corporation is
allowed to maintain an action in respect of that matter because, if the majority
confirms the transaction, cadit quaestio; or, if the majority challenges the transaction,
there is no valid reason why the company should not sue. (3) There is no room for the
operation of the rule if the alleged wrong is ultra vires the corporation, because the
majority of members cannot confirm the transaction. (4) There is also no room for the
operation of the rule if the transaction complained of could be validly done or
sanctioned only by a special resolution or the like, because a simple majority cannot
confirm a transaction which requires the concurrence of a greater majority. (5) There
is an exception to the rule where what has been done amounts to fraud and the
wrongdoers are themselves in control of the company. In this case the rule is relaxed
in favour of the aggrieved minority, who are allowed to bring a minority shareholders'
action on behalf of themselves and all others. The reason for this is that, if they were
denied that right, their grievance could never reach the court because the wrongdoers
themselves, being in control, would not allow the company to sue.‘
[109] The parameters of the rule are apparent from this passage. It
precludes shareholders from suing in their own right where the claim is
one in respect of a wrong done to the company causing it to suffer loss.
That is so even where the result is to diminish the value of the
shareholder‘s shares or deprive them of a dividend and the company has
declined or failed to take steps to recover the loss. On the other hand,
where there is no wrong to the company, but only one to the shareholder,
there is no reason to bar the shareholder from suing. That is so even if the
measure of the shareholder‘s loss is the diminution in value of their
shareholding. Those two propositions appear clearly from the speeches of
Lord Bingham of Cornhill42 and Lord Millett43 in Gore Wood.
[110] There is a third case described by Lord Bingham44 in Gore Wood
in the following terms:
‗Where a company suffers loss caused by a breach of duty to it, and a shareholder
suffers loss separate and distinct from that suffered by the company caused by a
breach of 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.‘
[111] It was unclear under which leg of the rule it was contended that
Grancy‘s claims were precluded. Grancy‘s claims were undoubtedly
claims arising from breaches of obligation separate and distinct from any
claim that SMI may have had. They arose from obligations owed to
42 At 503a-f.
43 At 528b-h.
44 At 503f-g.
Grancy by Mr Gihwala, the Trust and Mr Manala under the investment
agreement. As such they appeared to fall in the third category referred to
in para 110. It is true that in respect of all of them, save that for loss of
interest on the late payment of dividends, the measure of Grancy‘s loss
was the pecuniary loss arising from SMI‘s failure either to repay its loan
account or distribute surplus funds to its shareholders by way of
dividends. But the fact that SMI did not have the funds available for this
purpose because they had been diverted elsewhere does not mean that
SMI had a claim to recover those amounts. A brief examination of the
different claims is called for.
[112] The claim for the repaid amount cannot, as I have held, be
separated from the decision to invest in Scarlet Ibis. The funds that
should have been used for the former purpose were used for the latter.
That is why Fourie J said that this was a ‗wilful misappropriation of
Grancy‘s funds‘. But the investment in Scarlet Ibis was an investment
that SMI was entitled to make. The impropriety arose not because it
exceeded the permissible limits of SMI‘s investment powers, but because
the investment agreement imposed an obligation not to engage in such an
investment without Grancy‘s consent and an obligation to use these funds
to repay Grancy‘s loan. No basis was suggested for saying that SMI could
recover the money invested in Scarlet Ibis from anyone. Nor could it
recover from the Trust and Mr Manala the money used to refund their
initial loans to SMI. It follows that this claim is not affected by the Foss v
Harbottle rule.
[113] Under the investment agreement SMI should not have paid legal
fees on behalf of Mr Gihwala and the Trust. That does not mean that it
would have a claim to recover those fees from the attorneys. If they
agreed to pay the fees, as seems to have been the case, the attorneys were
entitled to receive and keep them. There is nothing wrong in principle
with a person paying another‘s debt. Nor was there evidence explaining
on what basis this was done as between SMI and Mr Gihwala. Not
surprisingly it was not argued on his behalf that he breached his fiduciary
duties to SMI in making that arrangement. So we are in the dark in regard
to the basis for any claim by SMI against anyone to recover the amount of
the fees.
[114] The directors‘ fees and surety fees may have been irregular in that
they were not approved as required by article 107 at a general meeting of
shareholders. But it was not suggested that, if divorced from the
investment agreement, SMI could not have decided to make these
payments. They seem grossly extravagant in relation to the actual
contribution of the directors – a common plaint by shareholders – but that
alone does not mean that the company would have been entitled to
recover them if properly sanctioned by a general meeting. And at a
general meeting Grancy would have been outvoted. Grancy‘s claim is not
an altruistic claim to recover these amounts for the benefit of SMI. Its
claim is that as a result of breaches of the investment agreement it has
suffered financial loss. That is not precluded by the rule.
[115] That leaves the two loans to Mr Manala. Apart from breaching the
investment agreement they were unlawful in terms of s 226 of the 1973
Act. This rendered them void ab initio and incapable of ex post facto
ratification.45 In Prudential Assurance it was said that the rule in Foss v
Harbottle did not apply when the matter was ultra vires the company or
required a special resolution in order to authorise the act in question. The
reason for these exceptions, which must apply equally to conduct that is
prohibited by statute, is that the minority shareholder has no means of
compelling the errant majority to take steps to remedy the conduct in
question, in this case to sue Mr Manala to recover the amount of the
loans. Absent an exception to the rule it would be possible for the
majority to perpetuate conduct that was contrary to law or the articles of
the company, by the simple expedient of doing nothing. Under s 226 an
45 See the majority judgment in Neugarten and Others v Standard Bank of South Africa Ltd [1988]
ZASCA 140; 1989 (1) SA 797 (A) at 808F-J.
unauthorised loan to a director could not be authorised after it had been
made. So both loans fell within the exception to the rule. That conclusion
renders it unnecessary to consider whether they also fell within the fraud
exception referred to in that case or the interests of justice exception
referred to in Foss v Harbottle itself and applied in McLelland v Hulett.46
[116] For those reasons it seems to me that the reliance on the rule in
Foss v Harbottle was misplaced in relation to all of the monetary claims
advanced by Grancy. They must succeed or fail in accordance with paras
75 to 101.
Section 424 liability
[117] In the particulars of claim in the 2010 action Grancy invoked s 424
of the 1973 Act as a ground of liability in relation to three claims. They
were the claim in respect of the repaid amount and those in respect of
promotion fees and legal expenses. In the 2011 action it sought to found
liability for all the monetary claims it advanced in either s 424 or
alternatively s 77(3) of the 2008 Act. Fourie J rejected all these claims,
save that in relation to the repaid amount, but Grancy pursued them by
way of its cross-appeal. Indeed it went further by seeking to extend the
46 McLelland v Hulett and Others 1992 (1) SA 456 (D) at 467C-I.
application of s 424 to all the monetary claims in the 2010 action, both
those that had been upheld by Fourie J and those that were the subject of
the cross-appeal.
[118] It was throughout unclear why Grancy should continue to pursue
s 424 relief if it was successful in its contractual claims. A declaration
under s 424 would add nothing to the liability of Mr Gihwala, Mr Manala
and the Trust to pay the damages awarded. The proposition in the heads
of argument that it would ‗impose statutory and unlimited personal
liability‘ on them does not identify on what basis this was any greater
liability than a judgment ordering them to pay the damages that were
claimed. But this need not detain us because I am satisfied that the claims
based on s 424 must fail.
[119] In at least three relatively recent decisions of this Court it has been
held that s 424 is only available to a claimant where the company is
unable to pay its debts and therefore recovery of the claimant‘s claim is
imperilled.47 Not only did Grancy not plead a case based on SMI‘s
inability to pay any of the claims it was advancing, but it led no evidence
47 L & P Plant Hire BK en andere v Bosch en andere [2001] ZASCA 147; 2002 (2) SA 662 (SCA)
paras 39-40; Saincic and Others v Industro-Clean (Pty) Ltd An [2006] ZASCA 83; 2009 (1) SA 538
(SCA); and Fourie v Firstrand Bank Ltd and Another NO [2012] ZASCA 119; 2013 (1) SA 204 (SCA)
paras 28-29.
in support thereof. Instead it relied in argument on the contents of some
emails sent by independent directors of SMI when seeking funds to
conduct an investigation into the affairs of SMI. Even that evidence did
not emerge in the course of presenting Grancy‘s case. It emerged when
counsel for the Trust was cross-examining Mr Mawji on a completely
different issue. I agree with Mr Gihwala‘s counsel that to permit reliance
on them for the purpose of showing that SMI was unable to pay its debts
would be unfair and amount to trial by ambush.
[120] We were also urged to hold that the three cases I have mentioned
were wrongly decided because they overlooked the use of the words ‗or
otherwise‘ in s 424 and also because, so it was said, the judgments
overlooked s 219(1)(d) of the 1973 Act. The circumstances in which this
Court will overrule one of its own decisions, much less three, particularly
when they are of recent origin, are limited. It suffices for me to say that I
am not satisfied that these decisions were clearly wrong. Accordingly the
cross-appeal insofar as it relates to s 424 must fail, whether that related to
claims in the 2010 action or claims in the 2011 action. In relation to the
latter the claim was advanced in the alternative under s 77(3) of the 2008
Act. That section, in this departing from s 424, does not involve a
declaration by the court, but creates a statutory claim in favour of the
company against a director, imposing liability on the latter for any loss,
damages or costs incurred by the company in certain circumstances,
including where the director acquiesces in the company engaging in
reckless trading. It is not a provision that can be invoked to secure
payment to a creditor or shareholder in respect of their claim against the
company or a director. So the attempt to rely on s 77(3) must also fail.
Right to an account and access to accounting records
[121] At the outset of his argument counsel for Mr Gihwala accepted
that the investment agreement gave rise to a relationship of trust and good
faith as between Grancy, Mr Gihwala and Mr Manala. This implied that
Mr Gihwala and Mr Manala owed Grancy a duty to account for their
stewardship of its investment in SMI and indirectly in Ngatana. It also
included an obligation to provide Grancy with access to the books and
accounting records of SMI. Counsel for Mr Manala and counsel for the
Trust did not question the correctness of these concessions. Once it is
held, as I have done, that the Trust and SMI were also parties to the
investment agreement, they owed the same obligations.
[122] Details of the gross deficiencies in the books of account and
records of SMI were canvassed in the evidence and are summarised in the
judgment of the High Court. The accounting records were plainly in a
deplorable state. Fourie J ordered SMI, Mr Gihwala and Mr Manala to
deliver to Grancy, within 30 days, proper and full books of account and
such accounting records as would be necessary fairly to present the state
of affairs and business of third defendant, and to explain the transactions
and financial position of the business of third defendant for the period
January 2005 to date of his judgment.
[123] My concern with this order is two-fold. First, the requirement that
proper and full books be produced as well as explanations for the
transactions and financial position of the business overlaps to a
substantial degree with the existing order to render an account that has
been the subject of the various orders referred to above, most recently
that of Traverso DJP. The detail that she has ordered to be produced will
inevitably clarify the uncertain picture that emerged at the trial. Second,
and more importantly, if such books of account and records did not exist
or existed only in an imperfect form and had to be reconstructed, albeit
unsuccessfully, for the purposes of the trial, the order made in this case
relates to books and records that did not exist. An entitlement to access to
books and records is not a right to a meticulous set of books properly kept
and accurately reflecting the affairs of the business. It is a right to have
access to whatever books and records the business has kept. But the terms
of the order granted by Fourie J would oblige SMI to create a ‗full and
proper‘ set of books of account and accounting records and provide
explanations that would be part of an accounting.
[124] It is not disputed that Grancy has been denied access to the books
of account and accounting records of SMI. It is accordingly entitled to an
order, but the terms of that order must be limited to the books of account
and accounting records that exist. The order granted by Fourie J must be
varied accordingly.
[125] Turning then to the accounting that was ordered, the scope for
argument was narrowed by the concessions referred to in para 121. It was
confined to two issues. First that the orders in relation to an accounting
related to monetary claims disposed of by the judgment, and those orders
rendered further accounting unnecessary. Second that the account ordered
by Fourie J overlapped with the account ordered by the High Court in
2009. Traverso DJP dealt with the accuracy of that account and a detailed
order as to the requirements for a satisfactory account has been made. A
further order would necessarily cover the same ground and be oppressive
to the parties required to render the account.
[126] The contents order granted by Fourie J in regard to the provision of
an account was set out in prayers 6 and 7 in the 2010 action and prayers
12 and 13 in the 2011 action. Those prayers detailed in multiple sub-
paragraphs the scope of the accounting being called for. On analysis,
however, they covered all the matters giving rise to Grancy‘s monetary
claims including the use to which the repaid amount was put; the payment
of dividends by SMI; the payment of fees to Mr Gihwala and Mr Manala
and an item described as ‗any transactions pursued with funds which
were unlawfully paid to Gihwala, [the Trust] and/or Manala‘ or
unlawfully retained by them. The prayers in the 2011 action extended this
to all payments made by SMI to Mr Gihwala, the Trust, Mr Manala, the
Auditors and ‗any third party‘ and ‗any and all transactions pursued by
them with the said amounts‘. The sweep of the final prayer was
breathtaking. It required an account from Mr Gihwala, the Trust, SMI and
Mr Manala of:
‗… any profits or losses which Gihwala, Manala and/or [the Trust] made in
connection with or arising from the breaches set forth in paragraphs 24C to 43F of the
plaintiffs‘ particulars of claim‘.
How any sense was to be made of that order, much less how anyone
could be expected to comply with it, escapes me. It is hopelessly vague
and overbroad. I mention only one example by way of illustration.
Paragraphs 40A and 40B of the particulars of claim in the 2011 action
dealt with the failure of Mr Gihwala and Mr Manala to discharge their
statutory obligations in regard to the preparation of annual financial
statements for SMI. There was no evidence that suggested that this
caused anyone to make a profit or that any account could be rendered in
that regard.
[127] There is no doubt that these orders overlapped with the existing
order for the rendering of an account. In addition they were formulated
when the two actions commenced and do not appear to have been
reconsidered by Grancy at the end of the trial, having regard to the
possible implications of the monetary claims succeeding. They are
couched in extremely general language so that it is impossible to
ascertain with any degree of certainty what must be done to comply with
them. They cover matters that are irrelevant to Grancy, such as the fate of
the Scarlet Ibis investment. The evidence in that regard shows that SMI
invested R2 million in that venture that should have been used to repay
Grancy‘s loan. The development failed with the company being placed in
liquidation. Grancy sued for and obtained an award of damages arising
from the misuse of funds that should have accrued to it. No basis has
been advanced for a further account in this regard.
[128] The order also covered matters on which Grancy was already fully
informed if its representatives simply read the documents already in their
possession. An area covered by the order in the 2010 action was the
conversion of Spearhead units into Redefine units. The details of this
appeared
from the circular to
unitholders that preceded the
implementation of the scheme of arrangement under which the
conversion was effected.48 The number of Spearhead units exchanged for
Redefine units was set out quite clearly in Ngatana‘s audited annual
financial statements that formed part of the record. What more Grancy
needed by way of an account was unclear. It was common cause that all
of these Redefine units were disposed of in 2008 and 2009. The brokers‘
notes in respect of those disposals were also part of the record and the
core bundle prepared for the hearing of the appeal. What then was the
basis for making an order that an account be rendered to Grancy
concerning those disposals?
[129] It is incumbent on a party, seeking an order for an account to be
rendered to it in relation to a business relationship or a particular
transaction or particular transactions, to define with precision the
accounting that it is seeking. It is inappropriate for it to set out a broad
and general list of questions to which it would like to have answers and
incorporate them in an order. That is especially the case where the order
is sought at the end of lengthy litigation in which there has been extensive
48 The allegation in the 2010 particulars of claim that there had been a non-disclosure in regard to the
terms of this transaction is extraordinary bearing in mind that Mr Narotam was aware of the transaction
and the details of the scheme were contained in public documents.
discovery. The order should then be reformulated to require an account in
relation to outstanding matters, not in relation to matters that have been
clarified in the course of the litigation, much less matters that may be, and
as it happened were, resolved by way of awards of damages. An order to
produce an account is a precursor to a debatement of that account and an
award of what is owing consequent upon that debatement. Where
potential monetary claims have been dealt with by judgment there is no
room for a further account.
[130] For those reasons the order to render an account granted in this
case was inappropriate. Its deficiencies are so manifest that it is incapable
of being remedied by way of a variation of its terms. I reach that
conclusion reluctantly as it is apparent that Mr Gihwala and Mr Manala
have adopted every possible stratagem to avoid discharging their
fiduciary obligation to account properly to Grancy for its investment in
SMI. But that did not justify the grant of an award that was vague,
overbroad, dealt with matters already disposed of by judgment and
overlapped an existing order that was in the course of being enforced by
the Western Cape Division of the High Court. The appeal against these
orders must succeed. It follows that the further order relating to the
appointment of independent directors is unnecessary and must also fall
away.
Delinquency declarations
[131] Mr Gihwala and Mr Manala were both declared delinquent
directors in terms of s 162(5)(c) of the Act, which reads:
‗A court must make an order declaring a person to be a delinquent director if the
person—
…
(c)
while a director—
(i)
grossly abused the position of director;
(ii)
took personal advantage of information or an opportunity, contrary to
section 76 (2) (a);
(iii)
intentionally, or by gross negligence, inflicted harm upon the company
or a subsidiary of the company, contrary to section 76 (2) (a);
(iv)
acted in a manner—
(aa)
that amounted to gross negligence, wilful misconduct or breach of trust
in relation to the performance of the director‘s functions within, and duties to,
the company; or
(bb)
contemplated in section 77 (3) (a), (b) or (c) … ‘
[132] Mr Gihwala challenged the delinquency order made against him,
contending that it was based on an incorrect appreciation of the evidence,
without specifying in what respects Fourie J erred. This argument was
without merit and counsel did not deal with it in oral argument. For my
part I agree with and endorse Fourie J‘s findings in regard to the conduct
of Mr Gihwala and Mr Manala and this judgment should not be read as in
any way detracting from those findings.
[133] In what follows I propose to refer to Mr Gihwala as the main actor
because that appears to have been the situation in fact. That does not
excuse Mr Manala from responsibility for the misconduct that will be
catalogued. He owed the same fiduciary duty to SMI and to Grancy and
was aware of what was being done in his name. He was also a director of
Ngatana and party to those matters concerning Ngatana. He was equally
responsible for what happened and must bear the same consequences.
[134] The directors of SMI were under an obligation in the performance
of their duties to ensure that the share register of the company properly
reflected the persons who were entitled to be registered as shareholders.
For four years from 2005 to 2009 they breached that duty by refusing to
register Grancy as a shareholder and resisting its attempts to secure that.
They failed to ensure that SMI kept proper accounting records as required
in terms of the 1973 Act and the 2008 Act. That failure was compounded
because it led directly to their failure to cause annual financial statements
to be prepared fairly reflecting the financial position of the company. On
the pretext that Grancy was not a shareholder in the company they
refused to provide even the statutory information to which Grancy was
entitled. After it was registered as a shareholder they produced hopelessly
inaccurate and incomplete annual financial statements and represented
them as fairly reflecting the financial position of the company.
[135] One of the more egregious defects in SMI‘s accounting records
involved the loan made by Grancy to the company as its contribution
towards the cost of acquiring the 58 per cent interest in Ngatana. This was
reflected in the company‘s ledger account as a loan made by Mr Manala.
That can only have occurred as a result of information given by Mr
Gihwala. It was, to his knowledge, false as the money was being lent by
Grancy pursuant to the investment agreement. The credit thereby created
in Mr Manala‘s loan account, in conjunction with other improper credits
to which I will revert, was then used to enable Mr Manala to be paid over
R9 million by SMI, to none of which was he entitled. Part of this sum
included the two loans totalling slightly less than R4 million made in June
2009. The one was given on the pretext that Grancy‘s loan was to him
personally and that he had on-lent that amount to SMI and could
withdraw his loan to repay Grancy. Had there been any bona fides about
that version of matters one would have expected him to repay the money
as soon as Grancy refused his tender. But he did not do so. He used some
of it to pay his legal fees and the bulk of it he caused to be paid to
himself. He has never explained what happened to that money.
[136] The two loans contravened the provisions of s 226 of the 1973 Act.
They caused loss to SMI because it has not been able to recover them
from Mr Manala. At best that loss was undoubtedly due to gross
negligence on the part of both Mr Gihwala and Mr Manala. As I
mentioned in the opening paragraph of this judgment Mr Gihwala is a
businessman and attorney. He was at the material time the chairman of
one of South Africa‘s largest firms of attorneys and the chairman of
Redefine, one of the largest property loan stock companies listed on the
JSE. His failure to observe the requirements of s 226 was inexcusable.
[137] Earlier in this judgment the many respects in which the investment
agreement was breached to the detriment of Grancy and the personal
advantage of Messrs Gihwala and Manala have been summarised. All of
those constituted breaches of fiduciary duty on their part as directors of
SMI, which was a party to the investment agreement and bound by it. The
directors of SMI owed a fiduciary duty to SMI to ensure that it complied
with its obligations under that agreement. They consistently breached that
duty. Furthermore they involved SMI in litigation when Grancy sought to
enforce its rights. That resulted, when they were forced to capitulate
shortly before the hearing, in an adverse order for costs, leaving aside
SMI‘s obligation to pay its own legal costs.
[138] This conduct falls squarely within s 162(5)(c) of the 2008 Act. It
involved gross abuses of the position of a director. Grancy was excluded
from the benefits of an investment, which it had substantially financed,
while Mr Gihwala and Mr Manala took those benefits for themselves. In
four instances they sought their own personal enrichment:
The use of the repaid amount to repay themselves and to invest in
Scarlet Ibis in an attempt to secure a 50 per cent profit in 24
months.
The payment to themselves of the full amount of the first dividend
received from Ngatana in an amount in excess of R5 million.
The taking of director‘s fees of R750 000 each from Ngatana to the
detriment of SMI.
The taking of director‘s fees of R2.75 million from SMI together
with surety fees in excess of R1 million.
To that I would add the loans to Mr Manala.
[139] These actions caused harm to SMI. It was in my view wilful
misconduct on the part of Mr Gihwala and Mr Manala because it was
entirely intentional and with knowledge of the obligations owed to
Grancy under the investment agreement. But at the very least it was gross
negligence akin to recklessness. It involved a breach of trust in relation to
their performance of their duties as directors. It was entirely inexcusable
and ongoing as evidenced by their endeavours to avoid complying with
their obligation to provide a proper accounting to Grancy in regard to its
investment. A declaration of delinquency was entirely justified.
[140] Realising that this was the case the argument on this issue centred
on the challenge to the constitutionality of s 162(5). This had two legs.
The first was that the entire section was unconstitutional because it was
alleged to be retrospective in its operation. The argument was based upon
the fact that the events relied upon to justify the order occurred before the
commencement of the Act on 1 May 2011. By then Mr Gihwala had
resigned as a director of SMI49 and Mr Manala did so soon afterwards.50
The second argument, while expressed in general terms, effectively
attacked s 162(5)(c), as read with s 162(6)(b)(ii), alone. It focused on the
fact that there was no discretion vested in the court either to refuse to
make a delinquency order if the requirements of s 162(5)(c) were
satisfied, or to moderate the period of such order to a period of less than
seven years. No argument was addressed to the consequences of the
absence of discretion in relation to the other sub-sections of s 162(5).
49 He resigned on 28 February 2011.
50 He resigned on 18 September 2011.
Whether they may be subject to constitutional attack is a matter that must
await another day.
[141] The first of these arguments fell away when counsel‘s attention
was drawn to the established principle of our law that a statute is not
retrospective merely ‗because a part of the requisites for its action is
drawn from time antecedent to its passing‘.51 The argument was then
confined to the proposition that the absence of flexibility in regard to the
imposition of delinquency had the potential to infringe the constitutional
rights to dignity,52 the right to choose a trade occupation or profession53
and the right of access to courts.54 In argument the focus fell on the right
to dignity.
[142] In order to assess these arguments it is appropriate first to examine
the purpose of s 162(5). Contrary to the submissions on behalf of Mr
Gihwala and Mr Manala it is not a penal provision. Its purpose is to
protect the investing public, whether sophisticated or unsophisticated,
against the type of conduct that leads to an order of delinquency, and to
protect those who deal with companies against the misconduct of
51 R v St Mary, Whitechapel (Inhabitants) 116 ER 811 ((1848) 12 QB 120) at 814; Krok and Another
Commissioner, South African Revenue Service [2015] ZASCA 107; 2015 (6) SA 317 (SCA) para 40.
This is all that item 7(7) in Schedule 5 to the 2008 Act provides.
52 Section 10 of the Constitution.
53 Section 22 of the Constitution.
54 Section 34 of the Constitution.
delinquent directors.55 What is that conduct? It is helpful to examine
some of the other provisions of the section. Under subsec 5(a) consenting
to serve as a director, or acting in that capacity or in a prescribed office,
while ineligible or disqualified from doing so attracts delinquency. Under
subsec 5(b) acting as a director while under a probation order in terms of
s 162, or the corresponding provision dealing with close corporations,
results in delinquency as both orders are directed at preventing that very
conduct.
[143] Turning to subsec 5(c) one starts with a person who grossly abuses
the position of director, conduct of which I have found Mr Gihwala and
Mr Manala guilty. We are not talking about a trivial misdemeanour or an
unfortunate fall from grace. Only gross abuses of the position of director
qualify. Next is taking personal advantage of information or opportunity
available because of the person‘s position as a director. This hits two
types of conduct. The first, in one of its common forms, is insider trading,
whereby a director makes use of information, known only because of
their position as a director, for personal advantage or the advantage of
others. The second is where a director appropriates a business opportunity
that should have accrued to the company. Our law has deprecated that for
55 Re Gold Coast Holdings Pty Ltd (In Liq); Australian Securities & Investments Commission v Papotto
[2000] WASC 201 para 22
over a century.56 The third case is where the director has intentionally or
by gross negligence inflicted harm upon the company or its subsidiary.57
The fourth is where the director has been guilty of gross negligence,
wilful misconduct or breach of trust in relation to the performance of the
functions of director or acted in breach of s 77(3)(a) to (c). That section
makes a director liable for loss or damage sustained by the company in
consequence of the director having:
‗(a)
acted in the name of the company, signed anything on behalf of the company,
or purported to bind the company or authorise the taking of any action by or on behalf
of the company, despite knowing that the director lacked the authority to do so;
(b)
acquiesced in the carrying on of the company‘s business despite knowing that
it was being conducted in a manner prohibited by section 22 (1);
(c)
been a party to an act or omission by the company despite knowing that the act
or omission was calculated to defraud a creditor, employee or shareholder of the
company, or had another fraudulent purpose …‘
[144] All of these involve serious misconduct on the part of a director. In
the affidavits raising the constitutional issue there was a complaint that
56 Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168; Phillips v Fieldstone Africa
(Pty) Ltd and Another [2003] ZASCA 137; 2004 (3) SA 465 (SCA).
57 The section qualifies this by reference to s 76(2)(a) of the Act but that section does not limit its
scope. It reads:
‗(2) A director of a company must—
(a)
not use the position of director, or any information obtained while acting in the capacity of a
director—
(i)
to gain an advantage for the director, or for another person other than the company or
a wholly-owned subsidiary of the company; or
(ii)
to knowingly cause harm to the company or a subsidiary of the company …‘
gross negligence could trigger a delinquency order. There is no merit in
this complaint. There is a long history of courts treating gross negligence
as the equivalent of recklessness, when dealing with the conduct of those
responsible for the administration of companies,58 and recklessness is
plainly serious misconduct. It was urged upon us that there might be
circumstances of extenuation, or perhaps that, notwithstanding the
seriousness of the conduct, the company might not have suffered any
loss. But neither of those is relevant to the protective purpose of the
section. Its aim is to ensure that those who invest in companies, big or
small, are protected against directors who engage in serious misconduct
of the type described in these sections. That is conduct that breaches the
bond of trust that shareholders have in the people they appoint to the
board of directors. Directors who show themselves unworthy of that trust
are declared delinquent and excluded from the office of director. It
protects those who deal with companies by seeking to ensure that the
management of those companies is in fit hands. And it is required in the
public interest that those who enjoy the benefits of incorporation and
limited liability should not abuse their position. The exclusion is for a
58 Philotex (Pty) Ltd and Others v Snyman and Others; Braitex (Pty) Ltd and Others v Snyman and
Others [1997] ZASCA 92; 1998 (2) SA 138 (SCA) at 143C-144A; Ebrahim and Another Airport Cold
Storage (Pty) Ltd [2008] ZASCA 113; 2008 (6) SA 585 (SCA) para 13; Tsung v Industrial
Development Corporation of South Africa [2013] ZASCA 26; 2013 (3) SA 468 (SCA) paras 29 to 31..
minimum period of seven years,59 but the court has the power to relax
that after three years and instead place the person under probation in
terms of the section.60 So there is power to relax the full effect of a
declaration of delinquency once the delinquent has demonstrated that this
is appropriate. In addition the court may restrict the operation of the
declaration of delinquency to one or more particular categories of
company. A director declared delinquent in relation to a financial services
company may be permitted to be a director of an engineering firm.
[145] It is noteworthy that the section was not attacked on the ground
that it was irrational. It is a requirement of our Constitution that all
legislation must serve a rational purpose.61 There must be a rational
connection between the purpose of the legislation and the provision under
consideration. Section 162 passes that test. Patently it is an appropriate
and proportionate response by the legislature to the problem of delinquent
directors and the harm they may cause to the public who place their trust
in them. We were referred to legislation in other countries where their
legislatures have seen fit to vest their courts with a wider discretion in
this regard. But I fail to see why that should render the response of our
59 Section 162(6)(b)(ii) of the Act.
60 Section 162(11)(a).
61 New National Party of South Africa v Government of the Republic of South Africa and Others
[1999] ZACC 5; 1999 (3) SA 191 (CC) para 24.
legislature constitutionally problematic. Rationality is the touchstone of
legislative validity and s 162(5)(c), read with s 162(6)(b)(ii), is rational.
[146] Section 22 of the Constitution provides:
‗Every citizen has the right to choose their trade, occupation or profession freely. The
practice of a trade, occupation or profession may be regulated by law.‘
The background to the section was explained by the Constitutional Court
in Affordable Medicines Trust.62 In para 60 Ngcobo J said:
‗Limitations on the right to freely choose a profession are not to be lightly tolerated.
But we live in a modern and industrial world of human interdependence and mutual
responsibility. Indeed we are caught in an inescapable network of mutuality. Provided
it is in the public interest and not arbitrary or capricious, regulation of vocational
activity for the protection both of the persons involved in it and of the community at
large affected by it is to be both expected and welcomed.‘
Even if it is assumed in favour of Mr Gihwala and Mr Manala that being
a director of companies is an occupation, trade or profession, a
proposition the correctness of which is by no means obvious, they did not
suggest that s 162(5) is either capricious or arbitrary. On that ground
alone the constitutional challenge under this head must fail.
62 Affordable Medicines Trust and Others v Minister of Health and Others [2005] ZACC 3; 2006 (3)
SA 247 (CC) paras 57-60.
[147] The challenge under s 34 was misconceived. The court is involved
at every stage of an enquiry under s 162(5). It is the court that makes the
findings on which a delinquency order rests. It is the court that decides
whether the period of delinquency should be greater than seven years or
should be limited to particular categories of company and whether
conditions should be attached to a delinquency order and, if so, their
terms. It is to the court that a delinquent director turns if they believe that
the period of delinquency should be converted into one of probation. The
fact that a delinquency order of a specific duration follows upon the
factual finding by a court that the director is delinquent is no different
from any other provision that provides for a statutory consequence to
follow upon a finding in judicial proceedings. It is apparent therefore that
before a declaration of delinquency is made the errant director has an
entirely fair hearing before a court. It is not the absence of a fair hearing
that is in issue but the consequences of an adverse decision. That
consequence cannot be challenged under s 34 on the basis that the
delinquent director has been deprived of a right of access to court. It can
only be challenged on the basis that it is an irrational legislative response
to the particular problem, in this case that of directors‘ delinquency. It
stands on the same footing as any statutory provision that disqualifies a
person from pursuing a trade, occupation or profession in consequence of
their
disability
or
misconduct.
Countless
examples
of
such
disqualifications such as minority, insanity, insolvency, criminal conduct,
other misconduct or absence of qualification are to be found in
legislation.63
[148] That leaves the challenge based on the right to dignity. Central
though that is in our constitutional dispensation,64 it is difficult to see on
what basis it is engaged in this case. I stress that unlike Makwanyane and
Dodo65 this case is not concerned with a sentence in criminal proceedings
or a sanction for misconduct. Makwanyane engaged the right to life in
s 12 of the Constitution and Dodo the doctrine of the separation of
powers, the right to be free from cruel, unusual or degrading punishment
and the rights conferred on a criminal accused under s 35 of the
Constitution. None of those are relevant in this case. It does not involve
questions of the individualisation of punishment, but the appropriateness
of the protective measures the legislature has prescribed to deal with
delinquent directors.
63 The constitutionality of citizenship as a requirement for registration as a security guard was upheld in
Union of Refugee Women and Others v Director: Private Security Industry Regulatory Authority and
Others [2006] ZACC 23; 2007 (4) SA 395 (CC).
64 See eg S v Makwanyane and Another [1995] ZACC 3; 1995 (3) SA 391 (CC) para 144; Bhe and
Others v Magistrate, Khayelitsha and Others (Commission For Gender Equality as Amicus Curiae);
Shibi v Sithole and Others; South African Human Rights Commission and Another v President of the
Republic of South Africa and Another [2004] ZACC 17; 2005 (1) SA 580 (CC).
65 S v Dodo [2001] ZACC 16; 2001 (3) SA 382 (CC).
[149] It must be borne in mind that a delinquency order can only be made
in consequence of serious misconduct on the part of a director. It is that
conduct that results in delinquency. In the same way if an attorney is
guilty of serious misconduct they will lose their right to practice as an
attorney. I find the suggestion surprising that the grant of a striking off
order or an order suspending an attorney from practice infringes their
right to dignity. That ignores the fact that the commission of the
misconduct is what leads to that result. And it is the director or the
attorney who is guilty of that misconduct. The court investigates the
conduct and if it is established by evidence the striking off or suspension
or delinquency order is the necessary consequence.
[150] At the end of the day the argument under this head was reduced to
saying that the terms of the statute do not permit the court to take into
account the individual director‘s circumstances and degree of
blameworthiness. But that is merely an attack on the legislative decision
that a delinquency order in particular terms must follow from conduct of
the type specified. Such an attack can only be pursued by attacking the
rationality of that legislative decision, and that case was not made. It
follows that Fourie J correctly rejected the attacks on the constitutionality
of s 162 as a whole and that on s 162(5)(c), read with s 162(6)(b)(ii),
separately. The appeal against the delinquency orders must fail.
The cross-appeal
[151] The Trust was a party to the investment agreement and Mr Gihwala
was its alter ego. Grancy was a co-investor with the Trust in SMI. In
those circumstances the Trust was bound in the same way and by the
same duties as were Mr Gihwala and Mr Manala in their personal
capacities. In those circumstances Grancy sought an order that the Trust
be jointly and severally liable with Mr Gihwala and Mr Manala for
certain of its monetary claims. The relevant claims were those in respect
of the repaid amount, the legal expenses, the loans to Mr Manala and the
claims in respect of directors‘ fees and surety fees. In my view this part of
the cross-appeal must succeed. So must the cross-appeal against the
dismissal of the claim against Mr Gihwala and Mr Manala in relation to
the Ngatana directors‘ fees.
[152] The cross-appeal in respect of alleged liability under s 424 of the
1973 Act and s 77 of the 2008 Act must be dismissed. In addition there
was a cross-appeal against the trial court‘s refusal to grant a declaratory
order that the investment agreement constituted a partnership and an
order appointing a liquidator to the alleged partnership. That too must be
dismissed, as must the cross-appeal in regard to the share of residue
claim. There was initially a cross-appeal against its refusal to make
declaratory orders spelling out details of specific breaches, but wisely that
was not pursued.
Costs
[153] Mr Gihwala and Mr Manala have enjoyed some success in their
appeal in that their appeals in relation to the Scarlet Ibis claim and the
claim for promotional expenses must succeed in full and the amount of
the award in regard to legal expenses must be reduced. In addition the
appeal in relation to the order to render an account has succeeded,
although that is something of a Pyrrhic victory given the proceedings in
regard to an account at present underway in Cape Town. They have also
successfully resisted some of the relief claimed in the cross-appeal. The
Trust has succeeded in having the order to render an account set aside but
on grounds other than those it advanced. Its primary contention that it
was not a party to the investment agreement failed. As a result it is now to
be held liable in respect of the bulk of Grancy‘s monetary claims.
[154] From a monetary perspective the successful appeals in relation to
the Scarlet Ibis claim, the promotional fees claim and the partial success
of the legal expenses claim are largely offset by Grancy‘s successful
cross-appeal in relation to the Ngatana directors‘ fees and in holding the
Trust liable for the bulk of the monetary claims. The setting aside of the
order to account is not a major triumph for the appellants.
[155] The major arguments on behalf of the appellants related to the
nature of the investment agreement and the obligations arising
thereunder; the application of the rule in Foss v Harbottle; and the
delinquency orders. On all those issues the appellants have been
unsuccessful. In my view they must pay the costs of the appeal and
Grancy is entitled to the costs of the cross-appeal. In both instances those
costs must include the costs of two counsel. Grancy sought an order that
its costs be paid on an attorney and client scale, but the arguments
advanced in the appeal were not without merit and enjoyed some success.
It cannot be said that there was any impropriety in seeking to challenge
the findings of the trial court. Costs must be on the ordinary scale. In
regard to the costs occasioned by the constitutional challenge the parties
were agreed that the ordinary rule applies that no adverse costs order
should be made in that regard.
The order
[156] The order that I make is as follows:
The appeal succeeds to the following extent:
(a)
Paragraphs 1(b) and (e) of the first paragraph 1, and paragraphs 3
and 5 of the order in the High Court are set aside;
(b)
The amount in paragraph 1(c) is reduced to R41 763.20;
(c)
Paragraph 2 of the order in the High Court is varied to read as
follows:
‗The First, Second and Third Defendants are to make available to
the First Plaintiff for inspection and, if desired, the making of
copies of all books of account and accounting records, including all
supporting vouchers and documents, in their possession relating to
the transactions undertaken by and the financial position of the
business of the Third Defendant.‘
The cross-appeal succeeds to the following extent:
(a)
Paragraph 1(g) is inserted into the order of the High Court reading
as follows:
‗The amount of R465 000 plus interest calculated at 15.5 per cent
from 3 March 2009 to date of payment.‘
(b)
The Dines Gihwala Family Trust is declared to be jointly and
severally liable, the one paying the others to be absolved, with the
first and second defendants, for payment of the amounts referred to
in paragraphs 1(a), (b), (c) and (f) and 2(a) to (c) of the order of the
High Court.
The order of the High Court is accordingly amended to read as
follows:
‗IT IS ORDERED THAT:
1.
First and Second Defendants are declared liable, jointly and
severally with each other and, in the case of paragraphs (a), (b), (c)
and (f), jointly and severally with the Dines Gihwala Family Trust,
to pay the following to First Plaintiff:
(a)
The amount of R2 051 833,34, together with interest thereon at the
rate of 15,5% per annum, calculated from 20 March 2007 to date of
final payment.
(b)
The amount of R41 763,20 together with interest thereon at the rate
of 15,5% per annum, calculated from 28 February 2009 to date of
final payment.
(c)
The amount of R620 000,00 together with interest thereon at the
rate of 15,5% per annum, calculated from 15 June 2009 to date of
final payment.
(d)
The amount of R213 789,57, together with interest thereon at the
rate of 15,5% per annum, calculated from 19 August 2009 to date
of final payment.
(e)
The amount of R326 740,00, together with interest thereon at the
rate of 15,5% per annum, calculated from 19 August 2009 to date
of final payment.
(f)
The amount of R165, 660,60, together with interest thereon at the
rate of 15,5% per annum, calculated from 6 January 2010 to date of
final payment.
(g)
The amount of R465 000 plus interest calculated at 15.5 per cent
from 3 March 2009 to date of final payment.
2.
That the First and Second Defendants and the Dines Gihwala
Family Trust are declared liable, jointly and severally, to pay the
following to First Plaintiff:
(a)
The amount of R852 500,00, together with interest at the rate of
15,5% per annum on the amount of R1 705 000,00 calculated from
8 April 2009 to 23 November 2010 and on the amount of R852
500,00, calculated from 23 November 2010 to date of final
payment.
(b)
The amount of R345 507,09, together with interest at the rate of
15,5% per annum on the amount of R691 014,18, calculated from 1
March 2008 to 23 November 2010, and on the amount of R345
507,09, calculated from 23 November 2010 to date of final
payment.
(c)
The amount of R612 722,24, together with interest thereon, at the
rate of 15,5% per annum, calculated from 24 June 2009 to date of
final payment.
3.
The First, Second and Third Defendants are to make available to
the First Plaintiff for inspection and, if desired, the making of
copies of all books of account and accounting records, including all
supporting vouchers and documents, in their possession relating to
the transactions undertaken by and the financial position of the
business of the Third Defendant.
4.
The First and Second Defendants are declared delinquent directors
as contemplated in section 162(5)(c) of the Companies Act 71 of
2008.
5.
No order as to costs is made in respect of the constitutional
challenge.
6.
The First Plaintiff is declared liable for the costs of the application
for amendment, which were reserved on 6 February 2014,
including the costs incurred by Second Defendant in opposing
same.
7.
Save for paragraphs 6 and 7 above, the First and Second
Defendants and the Dines Gihwala Family Trust, represented by
the Fourth to Eighth Defendants, are declared liable, jointly and
severally, for the payment of First Plaintiff's costs of suit on the
scale as between attorney and client, which costs are to include the
following:
(a)
The costs of two counsel, where employed;
(b)
The attendance fees and qualifying expenses of the expert witness,
Mr H J Greenbaum;
(c)
The reasonable costs and disbursements, as followed on taxation
incurred by First Plaintiff in respect of Mr KI Mawji, who is
declared a necessary witness.‘
The amended paragraph 3 of the order of the High Court is to be
complied with within 30 days of the date of this judgment and the
obligation to comply therewith will not be suspended or postponed
pending the outcome of any further application for leave to appeal
in this or any other case.
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel, but to
exclude
all
costs
occasioned
by
the
challenge
to
the
constitutionality of section 162(5) of the Companies Act 71 of
2008, in respect of which each party will pay its or their own costs.
The first and second appellants and the Dines Gihwala Family
Trust are to pay the costs of the cross-appeal, such costs to include
those consequent upon the employment of two counsel.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For first appellant:
L A Rose-Innes SC (with him G G M Quixley)
Instructed by:
Adriaans Attorneys, Cape Town
Honey Attorneys, Bloemfontein.
For second appellant: J Blou SC (heads of argument prepared by J Blou
SC and I Goodman)
Instructed by:
Edward Nathan Sonnenbergs Inc, Sandton
Webbers, Bloemfontein.
For third to seventh appellants (the Trust): S C Kirk-Cohen SC
Instructed by:
Adriaans Attorneys, Cape Town
Honey Attorneys, Bloemfontein
For first and second respondents: P B Hodes SC (with him J P V
McNally SC)
Instructed by:
Webber Wentzel Attorneys, Johannesburg
Symington & De Kok, Bloemfontein.
For third respondent: H J de Waal (with him S Mahomed)
Instructed by:
The State Attorney, Cape Town and Bloemfontein
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
24 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.
Gihwala v Grancy Property Ltd
The SCA today handed down judgment in a commercial dispute
between, on the one hand, Mr Dines Gihwala and Mr Lance Manala and
Grancy Property Ltd (Grancy). The dispute arose from a BEE transaction
in which Spearhead Property Holdings Ltd made available 3.5 million
units at a favourable price below the then current market value of the
units. A company called Seena Marena Investments (Pty) Ltd (SMI),
owned jointly by Mr Gihwala’s family trust and Mr Manala, was given
the opportunity to acquire a 40% interest in a company specially
established to acquire the BEE units. When a further 18% interest became
available they involved a British businessman and friend of theirs, Mr
Karim Mawji. The agreement concluded with him led to this dispute.
On 3 February 2005 the parties concluded an agreement in terms of
which Mr Mawji, through Grancy, would acquire a one-third share in
SMI, which would in turn acquire a 58% stake in the company owning
the Spearhead units. To that end Grancy provided funding of around
R3.5 million. Disputes arose when Mr Gihwala and Mr Manala refused to
recognise that Grancy was entitled to a shareholding in SMI or any
information about its business or how its money had been invested. This
has led to extensive litigation both in the Western Cape Division of the
High Court and in the SCA.
In the trial the High Court granted judgment in favour of Grancy
on a number of monetary claims arising from the breach of the
3 February agreement. It also ordered that books of account be produced
and made available to Grancy and that there be a debatement of account
between the parties. Lastly it declared Mr Gihwala and Mr Manala to be
delinquent directors, an order that had the effect of precluding both of
them from being directors of companies for a period of seven years.
The SCA upheld the majority of the monetary claims and a cross-
appeal in regard to one claim, as well as a cross-appeal that Mr Gihwala’s
family trust should be jointly and severally liable with him and Mr
Manala for most of those claims. It set aside the judgment in regard to
two claims and reduced the amount payable in terms of a third. It also
varied the order in regard to the provision of access to books and records
of SMI and set aside the order to furnish an account, in part on the basis
that this was a matter already being dealt with by the High Court in the
Western Cape.
A constitutional challenge to section 162(5)(c) of the Companies
Act 71 of 2008 was rejected. The SCA held that the disqualification of
delinquent directors was a proportionate response by the legislature to the
problem of delinquent directors. It upheld the orders of delinquency in
relation to both Mr Gihwala and Mr Manala, holding that they had been
guilty of gross abuses of their positions as directors of SMI, to which they
owed a fiduciary duty to ensure that it complied with the terms of the
agreement concluded with Grancy. They had grossly misconducted
themselves as directors of SMI and conducted themselves in a fashion
that amounted to recklessness. All of this justified the orders declaring
them to be delinquent directors.
|
3803
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 475/2021
In the matter between:
TSHIOMA MATAMELA
APPELLANT
and
DAVID MASILO MULAUDZI
RESPONDENT
Neutral citation:
Matamela v Mulaudzi (475/2021) [2022] ZASCA 71 (23 May 2022)
Coram:
ZONDI, CARELSE and HUGHES JJA and TSOKA and SAVAGE AJJA
Heard:
16 May 2022
Delivered: 23 May 2022
Summary: Appeal – Section 16(1)(b) of the Superior Courts Act 10 of 2013 – appeal
of the decision of the high court sitting as an appeal court – leave to appeal wrongly
granted by the full court - special leave of the Supreme Court of Appeal is required –
absence of jurisdiction – appeal is struck from the roll.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Division, Thohoyandou (AML Phatudi J and Makhafola J)
sitting as full court of appeal:
The appeal is struck from the roll with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Hughes JA (Zondi and Carelse JJA and Tsoka and Savage AJJA concurring)
[1] On 16 May 2022 we granted an order striking the matter off the roll with costs
and indicated that the reasons would follow. These are the reasons. The crisp question
to be determined in the appeal is whether this Court has jurisdiction to hear this appeal,
leave having been granted to this Court by the full court, Limpopo Division,
Thohoyandou (the high court).
[2] The origin of the appeal before us emanates from a judgment of the
Thohoyandou Magistrate’s Court which ordered the eviction of the appellant from the
immovable property of the respondent. The appeal against that order served before
the high court on 18 September 2020. The high court removed the matter from the roll.
On the very same day, following the order of the high court, the appellant filed an
application for leave to appeal to this Court. The high court entertained the application
for leave to appeal and accordingly granted the appellant leave to appeal to this Court.
The appeal before us is thus with the leave of the high court.
[3] Briefly, on the day in question the events evolved as follows before the high
court, AML Phatudi J and Makhafola J presiding. At the commencement of the appeal
hearing, the court remarked as follows:
‘COURT: I see. I see. Thank you very much. Thank you very much. Right. This is what I am
just going to place on record as of now. On the 30th of July 2020 the judge president of this
division minuted in a meeting that there is a complaint that the judges of this division have
been captured by among others Ramaano Attorneys Incorporated. The complaint is still under
investigation. Due to such serious and vicious allegations against the judges of this division
this appeal court is still unable to deal with this appeal. In that Anton Ramaano Incorporated,
being attorneys of record representing the appellant. Thus we are left with no option but to
remove this matter from the roll. The order. The matter is removed from the roll. Pending Anton
Ramaano Attorneys attending to this hurdle and there shall be no order as to costs.’
[4] On 25 September 2020, the appellant requested reasons for the order in terms
of rule 49(1)(b) of the Uniform Rules of Court and launched an application for leave to
appeal the high court’s order. To date no reasons were forthcoming and the application
for leave to appeal was heard on 16 March 2021. On 18 March 2021, the high court
handed down its judgment granting the appellant leave to appeal its order to this Court.
[5] The judgment of the high court on leave to appeal records that the meeting
between the Judge President of the Limpopo Division of the High Court and the judges
of Thohoyandou Division, on 30 July 2020, is the catalyst for the situation in which the
presiding officers found themselves. In this meeting the Judge President stated that
the judicial officers of that court ‘have been captured by Netshipale Attorneys,
Advocate Kevin Maluleka, Anton Ramaano Attorneys and SO Ravele Attorneys.’ In
light of this statement the presiding judges were of the view that their independence as
judges had apparently been placed in question. They acknowledged that by refusing
the litigant the right to be represented by an attorney of their own choice, in fact,
infringes on the litigant’s right of access to the courts as set out in s 34 of the
Constitution of the Republic of South Africa. Thus, in the interest of justice leave to this
Court was granted.
[6] I now turn to the proceedings before this Court. On 20 April 2022 and prior to
the hearing of this appeal the Registrar of this Court was directed to write the following
to the parties:
‘This is an appeal against a ruling made by Phatudi and Makhafola JJ, sitting as a court of
appeal of the Limpopo Local Division, Thohoyandou against the judgment of the Magistrate's
Court in terms of which it granted an order evicting the appellant from certain premises.
Thereafter leave to appeal to this Court was sought from, and, granted by Phatudi and
Makhafola JJ. In terms of s 16(b) of the Superior Courts Act 10 of 2013 special leave to appeal
should have been sought and obtained from this Court against the judgment of the Limpopo
Local Division sitting as a full court. In the circumstances, is this appeal properly before this
Court? The parties are called upon to furnish an answer by no later than Tuesday, 19 April
2022.’
[7] In compliance with the aforesaid directive, the appellant filed supplementary
submissions whilst the respondent filed a letter tendering his response. Apparent from
the appellant’s supplementary submissions was a request that we exercise our
‘inherent jurisdiction’ to regulate the proceedings and entertain the appeal in the
interest of justice. The respondent, on the other hand, contended that the order of the
high court is not appealable. Unfortunately for the appellant, this Court does not have
the authority to do so, as is demonstrated below.
[8] In addressing this Court’s jurisdiction, it is now trite that this Court does not have
inherent jurisdiction to regulate its own proceedings and is circumscribed to exercise
such within the limitations of statute. As was aptly pointed out in Tadvest Industrial
(Pty) Ltd v Anthea Hanekom & others (Tadvest Industrial) at paragraph 8:
‘As it was put in Snyders v De Jager [2015] ZASCA 137; 2016 (5) SA 218 (SCA) para 8:
“First, this court does not have original jurisdiction. Its jurisdiction is determined by the
Constitution and by statute. Its inherent power to protect and regulate its own process does
not extend to the assumption of jurisdiction not conferred upon it by statute.”’1
1 Tadvest Industrial (Pty) Ltd v Anthea Hanekom & others [2019] ZASCA 19; 2019 (5) SA 125. Tonkin
v The State (938/12) [2013] ZASCA 179; 2014 (1) SACR 583 at para 6(c):
‘As to this court’s inherent jurisdiction to regulate its own proceedings, it goes without saying that it is
to be exercised within the confines of statutory limitations. With regard to appeals against judgments
and orders by the high court, the procedure is dictated by s 20(4)(b).’
[9] The relevant section of the Superior Courts Act 10 of 2013 (the Act) which deals
with the jurisdiction of this Court to preside over and regulate appeals is s 16 read with
s 19 of the Act. This was alluded to by this Court in Van Wyk v The State and Galela v
The State:
‘The jurisdiction of this court to hear appeals from the high court whether as a court of first
instance, or an appeal court is derived from this section [s 16 of the Superior Courts Act 10 of
2013] and s 19 of the Act. Whereas under s 20(4) of the [the Supreme Court Act 59 of 1959],
the special leave of this court was only required in respect of an appeal from a decision of the
full court (three judges) given on appeal to it, the special leave of this court is now also required
where leave to appeal is sought in respect of a decision of two judges, given on appeal to it.’2
[10] In this instance, s 19, which deals with the powers of the court when hearing
appeals, is not relevant. The relevant section is s 16 of the Act which, in its relevant
part, provides as follows:
‘(1) Subject to section 15(1), the Constitution and any other law-
(a) …
(b) an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of
Appeal upon special leave having been granted by the Supreme Court of Appeal; and
(c) …
[11] It is clear from s 16(1)(b), that an appeal against a decision of a high court on
appeal to it, lies with this Court, upon special leave having been granted. Put differently,
a high court which sits as an appeal court, lacks the authority to grant leave to this
Court. The jurisdictional fact is that this Court requires that special leave be sought by
the litigants for it to entertain such appeal. That much was expressed by this Court in
Tadvest Industrial where Swain JA said:
‘Consequently, because the high court sitting as an appeal court lacks power to grant leave to
appeal to the SCA, as special leave of the SCA is required in terms of s 16(1)(b) of the Act…’3
[12] Unfortunately, in these circumstances, the high court lacked the jurisdictional
power to grant leave to appeal to this Court, and as such, the order of the high court is
2 Van Wyk v The State and Galela v The State [2014] ZASCA 152; [2014] 4 All SA 708 (SCA) para 19.
3 Tadvest Industrial para 11.
a nullity.4 In the result, the high court sitting as a court of appeal could not have granted
the order that it did and this Court therefore has no jurisdiction to entertain the appeal.
[13] In argument before us counsel for the appellant was constrained to concede
that in the absence of special leave, this Court, does not have jurisdiction to hear this
matter. An application for special leave to appeal is necessary because leave is a
jurisdictional requirement. With regards to the issue of costs, I am of the view that the
respondent is entitled to costs. The respondent was constrained to oppose the appeal
in light of the appellant’s insistence that leave granted by the high court conferred
jurisdiction on this Court to hear the appeal. The respondent is, however, not entitled
to costs of two counsel. The matter did not warrant the employment of two counsel.
[13] Accordingly, the appeal is struck from the roll with costs.
___________________
W Hughes
Judge of Appeal
4 Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd [2015] ZASCA 25; 2015 (4) SA 34
(SCA) para 13; Snyders v De Jager [2015] ZASCA 137; 2016 (5) SA 218 (SCA) para 18.
APPEARANCES
For the Appellant:
Adv. M S Ramaite SC
Instructed by:
Anton Ramaano Inc, Thohoyandou
Matsepes Inc, Bloemfontein.
For the Respondent:
Adv. P M Van Ryneveld
Adv. J H F Le Roux
Instructed by:
Danie Van Ryneveld Attorneys, Thohoyandou
Symington & De Kok 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:
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
Matamela v Mulaudzi (475/2021) [2022] ZASCA 71 (23 May 2022)
Today the Supreme Court of Appeal (SCA) struck an appeal from the Limpopo Division of the
High Court, Thohoyandou (high court) from the roll.
The appeal originated from an order of the Thohoyandou Magistrate’s Court. The matter had
progressed to the high court on appeal and, subsequent to the order removing the matter from
the roll, an application for leave to appeal was filed. The high court granted the application and
granted leave to appeal to the SCA.
In the high court’s judgment granting leave to appeal to this Court, it was recorded that a
meeting between the Judge President of the high court and the judges of the high court revealed
that allegations were levelled against a number of legal firms in the high court’s jurisdiction.
These allegations were that the judges of the high court were captured by these firms. One of
the firms represented the litigant in the matter before the high court. The high court refused to
hear the matter, hence the removal thereof. It reasoned, that the firm ought to rectify ‘the
capture’ allegations before that firms presences at the high court would be entertained. In
granting the litigant leave to appeal to the SCA, the high court acknowledged that by refusing
the litigant the right to be represented by an attorney of their own choice infringed on the
litigant’s right of access to the courts as set out in s 34 of the Constitution of the Republic of
South Africa. Thus, in the interest of justice, leave to this Court was granted.
Prior to the hearing of this appeal, the Registrar of the SCA had written to the parties and
inquired whether the matter was properly brought before this Court, as s 16(b) of the Superior
Courts Act 10 of 2013 required that leave to appeal could only have been granted by this Court.
The appellant contended that the SCA should exercise its ‘inherent jurisdiction’ and entertain
the appeal in the interests of justice. However, the SCA did not have inherent jurisdiction to
regulate its own proceedings and was circumscribed to perform its duties within the ambit of
statute. This Court found that a high court which sat as an appeal court, lacked the authority to
grant leave to this Court. The jurisdictional fact was that this Court required that special leave
should have been sought by the litigant in order to have entertained such an appeal.
Accordingly, the high court lacked the jurisdictional power required to have granted leave to
appeal to this Court, and the order was therefore a nullity. In the result the high court could not
have granted the order and this Court did not have the jurisdiction to entertain the appeal.
In the result, the appeal was struck from the roll with costs.
--------oOo--------
|
1827
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 590/10
No precedential significance
In the matter between:
DANIEL JOSEPH ZWARTS
APPELLANT
and
JACOBUS HENDRIKUS JANSE VAN RENSBURG N.O.
1ST RESPONDENT
PHILIP FOURIE N.O.
2ND RESPONDENT
JACOB LUCIEN LUBISI N.O.
3RD RESPONDENT
MAMPINA MALATSI-TEFFO N.O.
4TH RESPONDENT
ENVER MOHAMMED MOTALA N.O.
5TH RESPONDENT
RABOJANE MOSES KGOSANA N.O.
6TH RESPONDENT
(in their capacities as joint-liquidators of
MP FINANCE GROUP CC [IN LIQUIDATION])
Neutral citation: Zwarts v Janse van Rensburg (590/10) [2011] ZASCA 70 (25 May
2011)
Coram:
NAVSA, HEHER, SNYDERS, SHONGWE JJA and MEER AJA
Heard:
3 May 2011
Delivered:
25 May 2011
Updated:
Summary:
Company – liquidation – consolidation of corporate entities for purpose of
liquidating pyramid scheme – voidable disposition – s 29 of Insolvency Act
24 of 1936 – identification of debtor.
___________________________________________________________________________________
_
ORDER
On appeal from: Free State High Court (Bloemfontein) (Cillié J sitting as court of first
instance):
The appeal is dismissed with costs.
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (NAVSA, SNYDERS, SHONGWE JJA AND MEER AJA concurring):
[1] The liquidators issued summons against Mr Zwarts in July 2005 claiming an order in
terms of s 29 of the Insolvency Act 24 of 1936 setting aside payments allegedly made to
him by the Krion Scheme and payment of R266 425-00 as an alleged undue preference
together with mora interest on that sum.
[2] The action was defended and proceeded to trial before Cillié J in the Free State
High Court. The liquidators adduced the expert evidence of Mr Harcourt-Cooke and the
first appellant testified as well as two former employees of Ms Prinsloo, on his behalf.
Counsel for the defendant had conceded the locus standi of the liquidators. Before this
Court he sought to withdraw that concession. As the issue has been disposed of in the
Steyn judgment delivered today, which is of equal application to the present appeal, there
is no need to take that matter further.
[3] It is unnecessary to repeat my reasoning in relation to the aspects dealt with in the
Steyn and Botha1 appeals the judgments in which will be handed down with this judgment.
Suffice to say that other than in regard to the evidence of the respective defendants in the
actions what I have said there applies with equal force in this appeal.
[4] The remaining issue at the trial was the identity of the person or entity with whom
Mr Zwarts contracted and by whom he was paid the ‘dividends’ on his investment. Cillié J
said in this regard:
‘Ten aansien van paragraaf 1.2 is deurgaans deur Mnr Mills namens die verweerder tydens die
eiser se saak voorgehou dat die verweerder eintlik by ene Marietjie Prinsloo sy belegging gedoen
het en nooit met enige van die maatskappye wat individueel die saamgevoegde gelikwideerde
boedel daarstel gekontrakteer het nie.
Die verweerder het egter sommer in hoofgetuienis reeds getuig dat hy sy belegging by die
maatskappy gedoen het. Dit is later uitdruklik deur hom toegegee in kruisverhoor dat hy dit nooit
verstaan het dat Marietjie Prinsloo persoonlik sy mede kontraktant was nie. Ook is pertinent deur
hom getuig dat hy die maatskappy aanspreeklik sou hou om sy fondse terug te betaal indien ooit
nodig. Mnr Du Toit, namens die eiser, het hierop op sy betoog gesuggereer dat hierdie ‘n
teoretiese verweer is wat deur ‘n regsverteenwoordiger uitgedink is en wat nie gefundeer is in
enige werklikheid nie. Ek stem hiermee saam.’
He accordingly made the order as prayed and subsequently refused leave to appeal. The
matter is now before us with leave of this Court.
[5] Substantially the same question must be answered in the appeal: Does the
evidence prove that Mr Zwarts was an investor in the Krion Scheme? If it does, there is an
end of the matter since, for the reasons given in the Steyn judgment he is bound by the
order made by Harzenberg J.
[6] Mr Harcourt-Cooke a chartered accountant who after liquidation conducted a
forensic investigation into the affairs of the Scheme, produced the defendant’s investor file
which had apparently been recovered from the premises from which the scheme’s
activities were carried on in Vanderbylpark. Among the documents in the file were:
1.
A membership certificate in MP Finance Sacco reflecting one share in that entity for
an investment of R40 000 for a period of 12 months dated 11 October 2000.
2.
An agreement, apparently in relation to the same share, signed by Mr Zwarts and M
J Pelser as ‘Eienaar’ on 11 October 2000.
3.
A share certificate for one share in Madikor Twintig (Edms) Bpk dated 11 October
2000 at a recorded price of R40 000,00.
4.
An agreement dated 11 October 2000 in which Martburt Finansiële Dienste Bpk
acknowledges receipt of R40 000 and undertakes to pay to Mr Zwarts monthly dividends
totalling R37 611.41.
5.
An agreement, apparently in relation to the same share, signed by Mr Zwarts and M
J Pelser (Ms Prinsloo) as ‘Besturende Direkteur’ on 11 October 2000.
1 ZASCA 71 and 72 respectively.
6.
A ‘Pro Forma’ certificate for one share in Madikor Twintig (Edms) Bpk dated 8
June 2001 for an investment of R40 000,00 for a period of 12 months. (This is on the
letterhead of Martburt Finansiële Dienste Bpk and is signed by M J Pelser without further
description, although six directors are named at the foot including M J Pelser and I
Engelbrecht.)
7.
A membership certificate in favour of D J Zwarts dated 8 June 2001 in which H H
Prinsloo on behalf of M & B Koöperasie Bpk grants one share in that entity in return for
payment of R115 000 for 12 months at a return of 10 per cent per month.
8.
A membership agreement dated 29 October 2001 between Mr Zwarts and M & B
Koöperasie Bpk acknowledging receipt of R450 000 and undertaking to pay dividends
totalling R1 412 292.77 to Zwarts.
9.
A receipt issued to the defendant by I Engelbrecht as agent for M & B Korporasie
Bpk for R115 000 on 2 November 2001 for shares purchased in that entity.
10.
A notice of withdrawal ‘van my geld by die maatskappy’ (unspecified) dated 29
Maart 2002 for an amount of R194 035-70, signed by Mr Zwarts and an unidentified
member on behalf of the (unspecified) company.
11.
An undated acknowledgement of receipt in which Mr Zwarts states that he confirms
having invested the sum of R1 171 035.20 in Madikor Twintig (Edms) Bpk, M & B
Koöperasie and Martburt Finansiële Dienste Bpk and having received that amount from
the three entities as full and final payment on 1 April 2002.
12.
An application for 977 shares in Krion Financial Services Ltd in the name of the
defendant dated 1 April 2002.
[7] The evidence of Ms E V Denyssschen did not assist the appellant. While insisting
that Ms Prinsloo merely used the companies as a front, when driven into a corner she
protested,
‘Wel om eerlik te wees ons het ook nie geweet wat haar metode van haar werk was tot op die
einde nie. Ons het maar net gedink ons doen ‘n eerlike werk vir haar.’
She conceded that ‘die besigheid was alles maar een besigheid’ irrespective of the
succession of companies.
[8] When Mr Zwarts enquired about the changing parade of companies he simply
accepted the assurance of Ms Engelbrecht, one of Prinsloo’s cohorts in the scheme, that
he was investing in a new company. As he admitted, he was ‘onkundig’. His evidence
added nothing to suggest that Ms Prinsloo was operating the scheme in person or that she
gave undertakings or incurred obligations in her own name.
[9] In my view Cillié J was correct to find that in contracting with the agents
representing the scheme Mr Zwarts was contracting with the corporate entities operating
its business as from time to time and not with Ms Prinsloo personally. The debtor that
made the disposition is in the circumstances deemed to be the consolidated estate into
which each of those entities has been subsumed and the creditor entitled to claim
repayment is likewise the consolidated estate in the hands of its liquidators.
[10] The appeal has no merit. It is dismissed with costs.
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANT:
G P Mills
Mills & Groenewald Attorneys, Vereeniging
Naudes Attorneys, Bloemfontein
RESPONDENTS:
F du Toit SC
Thys Cronje Inc, Pretoria
C/o Van der Merwe & Sorour, Bloemfontein
|
Supreme Court of Appeal of South Africa
MEDIA STATEMENT
From:
The Registrar, Supreme Court of Appeal
Date:
25 May 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.
On 25 May 2011 the Supreme Court of Appeal delivered judgment in three appeals
that had their origin in the liquidation of the fraudulent Krion pyramid scheme, viz
Van Rensburg & Others NNO v Steyn, Appeal No 66/2010, Van Rensburg & Others v
Botha, Appeal No 758/2010 and Zwarts v Van Rensburg & Others, Appeal No
590/2010.
The appeals arose out of conflicting judgments in the High Courts. The issues in the
appeals were, broadly:
1)
the validity of the appointment of the liquidators to administer the consolidated
insolvent estate of the scheme;
2)
the validity of the order (made by the High Court in 2003) that consolidated the
various entities under which the scheme was operated into one insolvent estate;
3)
whether the order was binding on Messrs Steyn, Botha and Zwarts in actions
brought by the liquidators under s 29 of the Insolvency Act to recover voidable
dispositions;
4)
whether the liquidators in the actions had alleged and proved that the defendants
were debtors of the consolidated estate.
The SCA decided all the issues in favour of the liquidators. Because the defendants, as
investors in the scheme, had been given proper notice of the relief claimed in the 2003
proceedings, the orders made were binding upon them; the insolvent estate of the
consolidated entities in the scheme was a creditor entitled to claim under s 29 and the
investor defendants were its debtors; each of the investors had invested with with an
entity afterwards consolidated into the scheme and not with Ms Prinsloo, its guiding
mind, personally.
--ends--
|
2720
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 507/11
Reportable
OCEANA GROUP LIMITED
1st Appellant
BLUE CONTINENT PRODUCTS (PTY) LTD
2nd Appellant
and
THE MINISTER OF WATER AND ENVIRONMENTAL AFFAIRS
1st Respondent
THE DEPUTY DIRECTOR-GENERAL: MARINE AND
COASTAL MANAGEMENT, DEPARTMENT OF WATER
AND ENVIRONMENTAL AFFAIRS
2nd Respondent
THE MINISTER OF TRADE AND INDUSTRY
3rd Respondent
THE MINISTER OF AGRICULTURE, FISHERIES AND FORESTRY
4th Respondent
Neutral citation:
Oceana Group Ltd v Minister of Water & Environmental Affairs
(507/11) [2012] ZASCA 35 (29 March 2012)
Bench
NAVSA, VAN HEERDEN, MHLANTLA, LEACH and WALLIS JJA
Heard:
1 MARCH 2012
Delivered:
29 MARCH 2012
Corrected:
Summary:
Challenge to policy to be applied in the assessment of applications for
the transfer of commercial fishing rights in terms of s 21 of the Marine Living Resources
Act 18 of 1998 (MLRA) – contention that the policy was unlawful because it failed strictly
to apply the Broad-Based Black Economic Empowerment Act 53 of 2003 (BBBEE)
rejected – held that there was no relevant code of good practice issued in terms of the
BBBEE Act to be applied – held further that policy not in conflict with objectives of the
MLRA – held that impugned parts of policy not ultra vires the MLRA.
_______________________________________________________________________
ORDER
_______________________________________________________________________
On appeal from:
Western Cape High Court, Cape Town (Cleaver J sitting as
court of first instance):
The appeal is dismissed with costs including the costs attendant on the employment of
two counsel.
_______________________________________________________________________
JUDGMENT
_______________________________________________________________________
NAVSA JA (VAN HEERDEN, MHLANTLA, LEACH and WALLIS JJA concurring):
[1] This is an appeal against a judgment of the Western Cape High Court (Cleaver J),
in terms of which an application by the first and second appellants, Oceana Group Limited
(Oceana) and Blue Continent Products (Pty) Ltd (BCP), challenging the legality of a policy
presently administered by the fourth respondent, the Minister of Agriculture, Fisheries and
Forestry, was dismissed with costs, including the costs of two counsel. The appeal is
before us with the leave of that court and was heard on the same day as a case in which
the legality of the same policy was challenged on similar grounds.1 The one difference is
that in the present appeal, an additional ground, based on the provisions of the Broad-
Based Black Economic Empowerment Act 53 of 2003 (the BBBEE Act), was added to the
attack on the policy. Where necessary, I will refer to the judgment in that case as
Foodcorp.
1 New Foodcorp Holdings (Pty) Ltd v Minister of Agriculture, Forestry and Fisheries (82/11) [2012] ZASCA
30 (28 March 2012).
[2] The policy in question is entitled ‘Policy for the Transfer of Commercial Fishing
Rights’ (the TP) and was published on 31 July 20092 by the Minister previously
responsible for the fishing industry, namely the first respondent, the Minister of Water and
Environmental Affairs. Because of governmental re-organisation the TP is now
administered by the fourth respondent. The Minister of Trade and Industry was cited in the
court below because he is the responsible minister in terms of the BBBEE Act, but he took
no active part in the litigation.
[3] The fourth respondent (the Minister) and the second respondent, the Deputy
Director-General of Water and Environmental Affairs: Marine and Coastal Management,
defended the TP, both in the court below and before us. Thus, they and the appellants are
the contesting parties.
The background
[4] Oceana is a public company listed on the Johannesburg Securities Exchange and
the Namibian Stock Exchange and is a leading role player in the South African fishing
industry. Oceana catches, processes and markets a variety of fish species through a
number of its operating subsidiaries.
[5] BCP is a wholly-owned subsidiary of Oceana and is the holder of commercial
fishing rights, authorizing it to catch fish in the hake and deep sea trawl, horse mackerel,
squid and hake longline fisheries. Other subsidiaries of Oceana were also granted
commercial fishing rights in various fisheries. All of these rights were ‘long-term’ rights
allocated in terms of s 18 of the Marine Living Resources Act 18 of 1998 (MLRA). The
long-term fishing rights allocation process followed on earlier annual and thereafter
medium-term rights allocation processes.
[6] Following the granting of long-term fishing rights, various parties made application
to transfer commercial fishing rights, including BCP. In the application in the court below
2 In Government Notice 789 in Government Gazette 32449.
Oceana and BCP complained that, from January 2006, applications for the transfer of
commercial fishing rights have not been processed or finalised by the Department under
the control of the Minister. According to Oceana and BCP this failure on the part of the
Department has had a damaging impact on its ability optimally to conduct its business.
Oceana and BCP surmised that the failure to process applications for the transfer of
commercial rights was due mainly to the fact that the TP had not yet been finalised.
[7] As stated above, the TP was published on 31 July 2009. Oceana and BCP took the
view that the TP was unlawful and should be reviewed and set aside. Hence the
application in the court below for an order in those terms, notwithstanding that decisions in
several applications by BCP for the transfer of commercial fishing rights were still pending.
An application for the transfer of commercial fishing rights is required to be submitted to
the Minister in terms of s 21 of the MLRA, the provisions of which will be dealt with in due
course. The TP sets out the Minister’s and her Department’s policy to be applied when
applications are made for the transfer of fishing rights.
[8] The principal line of attack on the TP was that it fails to properly apply the strategy
and codes provided for by the BBBEE Act. In short, the complaint was that the TP defines
transformation on a narrow basis, taking into account only ownership and management
control of entities under consideration. It was contended that the elements of employment
equity, skills development, preferential procurement, enterprise development and socio-
economic development initiatives, catered for in the BBBEE Act and codes, were wrongly
excluded from the Department’s assessment of transformation in applying the TP. It was
submitted that the application of the BBBEE codes was obligatory and that the TP was
consequently unlawful for failure to apply the codes.
[9] Furthermore, Oceana and BCP took the view that the TP was unlawful in that it
failed to take proper account of the broad principles and objectives of the MLRA. It was
contended that the TP misconstrued transformation. It was submitted that in terms of para
4.1 of the TP, the focus, was, once again, wrongly on the degree of black ownership and
management. Those criteria were too narrow and neither consonant with the
developmental objectives of the MLRA, nor in line with its other purpose, namely, to create
employment opportunities. Other paragraphs of the TP were similarly criticised.
[10] Additionally, it was submitted, as in Foodcorp, that paras 6.2 and 6.3 of the TP,
requiring approval for the sale of shares resulting in a change of control of entities, or
resulting in entities not being as transformed as at the date of allocation of long-term
fishing rights, were ultra vires the provisions of the MLRA. It was contended that
ministerial approval was required only in the circumscribed situation referred to in s 21(2)
which provides:
‘(2) An application to transfer a commercial fishing right or a part thereof shall be submitted to
the Minister in the manner that the Minister may determine, and subject to the provisions of this
Act and any applicable regulation, the Minister may, in writing, approve the transfer of the right or
a part thereof.’
[11] Oceana and BCP took the view that there was no basis upon which a change in the
transformation status of a holder of long-term fishing rights could properly be regarded as
a transfer of a fishing right within the meaning of s 21(2). It was submitted that, in effect,
the Minister and her Department were seeking to impose new conditions on rights holders.
The judgment of the High Court
[12] The court below had regard to the specific provisions of the BBBEE Act. It
considered s 9 of that Act, the relevant parts of which provide:
‘9
Codes of good practice
(1)
In order to promote the purposes of the Act, the Minister may by notice in the Gazette issue
codes of good practice on black economic empowerment that may include–
(a)
the further interpretation and definition of broad-based black economic empowerment and
the interpretation and definition of different categories of black empowerment entities;
(b)
qualification criteria for preferential purposes for procurement and other economic
activities;
(c)
indicators to measure broad-based black economic empowerment;
(d)
the weighting to be attached to broad-based black economic empowerment indicators
referred to in paragraph (c);
(e)
guidelines for stakeholders in the relevant sectors of the economy to draw up
transformation charters for their sector; and
(f)
any other matter necessary to achieve the objectives of this Act.
(2)
A strategy issued by the Minister in terms of section 11 must be taken into account in
preparing any code of good practice.
(3)
A code of good practice issued in terms of subsection (1) may specify –
(a)
targets consistent with the objectives of this Act; and
(b)
the period within which those targets must be achieved.
(4)
In order to promote the achievement of equality of women, as provided for in section 9(2)
of the Constitution, a code of good practice issued in terms of subsection (1) and any targets
specified in a code of good practice in terms of subsection (3), may distinguish between black men
and black women.’
[13] Section 11 of the BBBEE Act obliges the responsible Minister to issue a strategy for
broad-based black economic empowerment. Section 11(2) states that the strategy must
provide an integrated, coordinated and uniform approach to broad-based black economic
empowerment by all organs of state, public entities, the private sector, non-governmental
organisations, local communities and other stakeholders. Such strategy was published by
the Minister in March 2003. In terms of the strategy, government is committed to using a
‘balanced scorecard’ to measure progress made in achieving black economic
empowerment. The core components are listed as being, first, direct empowerment
through ownership and control of enterprises and assets; second, human resource
development and employment equity, indirect empowerment through preferential
procurement and enterprise development. Oceana and BCP complain that the strategy is
being thwarted by the application of the TP because of the narrow focus on ownership and
management control. It is common cause that codes of good practice have been
promulgated in terms of s 9 of the BBBEE Act. The primary questions facing the court
below were whether the codes apply in the present circumstances and whether Oceana
and BCP’s reliance on the BBBEE Act is justified.
[14] Cleaver J considered s 10(a) of BBBEE Act, which was the focal point of Oceana
and BCP’s case, and which reads as follows:
‘10
Status of codes of good practice
Every organ of state and public entity must take into account and, as far as is reasonably
possible, apply any relevant code of good practice issued in terms of this Act in –
(a)
determining qualification criteria for the issuing of licences, concessions or other
authorisations in terms of any law’. (Emphasis added.)
[15] The court below then turned its attention to para 3 of the Codes of Good Practice
(the Codes):
‘3
Application of the Codes
3.1
The following entities are measurable under the Codes:
3.1.1 all public entities listed in schedule 2 or schedule 3 (Parts A and C) of the Public Finance
Management Act;
3.1.2 any public entity listed in schedule 3 (Parts B and D) which are trading entities which
undertake any business with any organ of state, public entity or any other Enterprise, and
3.1.3 any enterprise that undertakes any business with any organ of state or public entity;
3.1.4 any other enterprise that undertakes any business, whether direct or indirect, with any
entity that is subject to measurement under paragraph 3.1.1 to 3.1.3 and which is seeking
to establish its own B-BBEE compliance.’ (Emphasis added.)
[16] Cleaver J concluded that Oceana and BCP were measurable entities in terms of
para 3.1 and fell within the category set out in 3.1.3 of the Codes. His reason for doing so
is set out in para 19 of the judgment:
‘In my view it would be wrong to adopt a narrow interpretation of the phrase in question and that
the word “business” should be given a wide and general import. The applicants undertake
commercial fishing which is controlled and regulated by the Minister by means of the MLRA. They
do so in terms of permits issued to them which contain conditions determined by the Minister and
for which fees are extracted. In a broader sense they are, I consider, conducting business with an
organ of the state in that the particular organ controls their commercial activities by means of
granting them a right to do so. Clearly the Minister and the Department held the same view when
the Transfer Policy was published.’
[17] The court below dealt with the criticism by Oceana and BCP, that the TP does not
make provision for the proper application of the Codes. Cleaver J went on to note that
clause 2.10 of the Transfer Policy expressly provides that the Department will also employ
the Codes and that s 10 of the BBBEE Act provides that the Codes are to be applied
‘where reasonably possible’. Notwithstanding the conclusion referred to in the preceding
paragraph, the court below accepted the reasons provided by the Minister and the
Department as to why the strict application of the Codes to the exclusion of any other
criteria in assessing the transfer of rights would lead to serious practical problems. He
went on to list the reasons supplied by the Minister for not strictly applying the Codes in
the fishing industry. These appear in para 30 of the judgment of the court below. For
present purposes it is not necessary to repeat them. On this point Cleaver J concluded as
follows:
‘Since the Transfer Policy gave effect to the need to transform the fishing industry as emphasised
in Bato Star and since the policy is being applied for the limited life of the licences granted, I am of
the view that the reasons advanced by the respondent for not applying the codes to the exclusion
of ownership and management control establish that it would not be reasonably possible for the
codes to be applied. To hold otherwise would in all probability undermine the [long-term rights
allocation and management] process and the progress made to date with transformation and
create new and difficult practical problems. It may be that when new licences come to be issued
again in due course, the fishing industry will have been sufficiently transformed to allow the codes
to take pride of place, but time will tell.’
[18] Turning to the contention on behalf of Oceana and BCP that the TP is inconsistent
with the MLRA because it has a much narrower focus, the court below concluded that the
TP did not preclude the decision–maker from taking into consideration factors such as
employment and sustainable development. Cleaver J held that Oceana and BCP failed to
establish that the TP is inconsistent with the MLRA. The court below rejected the
submission on behalf of Oceana and BCP that the TP constituted administrative action. It
held that the TP was national policy formulated by the Minister acting on behalf of the
government and that it was thus excluded from the ambit of Promotion of Administrative
Justice Act 3 of 2000 (PAJA). The court below dealt very briefly with the contention that
particularly paras 6.2 and 6.3 were ultra vires the MLRA. Cleaver J took the view that the
applications by BCP for the transfer of commercial fishing rights had not been decided, but
in any event that the TP had to be applied flexibly and that the application had been
brought prematurely and on abstract basis. As stated above the application was refused
with costs including the costs of two counsel.
[19] It is against the aforesaid conclusions and order that Oceana and BCP presently
appeal.
Conclusions
[20] Section 2 of the MLRA reads as follows:
‘2
Objectives and principles
The Minister and any organ of state shall in exercising any power under this Act, have regard to
the following objectives and principles:
(a)
The need to achieve optimum utilisation and ecologically sustainable development of
marine living resources;
(b)
the need to conserve marine living resources for both present and future generations;
(c)
the need to apply precautionary approaches in respect of the management and
development of marine living resources;
(d)
the need to utilise marine living resources to achieve economic growth, human resource
development, capacity building within fisheries and mariculture branches, employment
creation and a sound ecological balance consistent with the development objectives of the
national government;
(e)
the need to protect the ecosystem as a whole, including species which are not targeted for
exploitation;
(f)
the need to preserve marine biodiversity;
(g)
the need to minimise marine pollution;
(h)
the need to achieve to the extent practicable a broad and accountable participation in the
decision-making processes provided for in this Act;
(i)
any relevant obligation of the national government or the Republic in terms of any
international agreement or applicable rule of international law; and
(j)
the need to restructure the fishing industry to address historical imbalances and to achieve
equity within all branches of the fishing industry.’
[21] In their founding affidavit in the court below, Oceana and BCP rightly point out that
the commencement of the MLRA was a watershed moment in the South African fishing
industry. As stated by the Constitutional Court in Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs and Tourism & others 2004 (4) SA 490 (CC),3 the MLRA was
founded on the need both to preserve marine resources and to transform the fishing
industry so as to ensure equal access to economic opportunities. On the first aspect, the
MLRA enables the Minister, in order to guard against over-exploitation of fish stocks, to
determine annually the total allowable catch (TAC) – the maximum quantity of fish
available during each fishing season to be allocated to recreational, subsistence,
commercial and foreign fishing. The TAC is determined following a scientific assessment
of the strength of marine resources and is based on sustainable levels of exploitation. On
the second aspect, s 2(j) of the MLRA, set out in the preceding paragraph, is significant.
[22] One of the main uses of marine living resources covered by the MLRA, which was
the focus of the application in the court below and the present appeal, is commercial
fishing. Section 18(1) of the MLRA provides that no person shall undertake commercial
fishing unless a right to do so has been granted. Section 18(2) of the MLRA dictates that
applications for the grant of commercial fishing rights are to be submitted to the Minister or
a delegated authority in the prescribed form. Section 18(5) is important and reinforces
what is set out in s 2(j) of the MLRA. It reads as follows:
‘(5) In granting any right referred to in subsection (1), the Minister shall, in order to achieve
the objectives contemplated in section 2, have particular regard to the need to permit new
entrants, particularly those from historically disadvantaged sectors of society.’
Section 18(6) provides that fishing rights shall be valid for a period determined by the
Minister which shall not exceed 15 years.
[23] Section 13(1) of the MLRA provides that no person shall exercise a right granted in
terms of s 18 of the MLRA unless an annual permit has been issued to that person by the
Minister.
[24] Section 21(1) and (2) provide:
‘(1) Subject to the provisions of this Act, a commercial fishing right may be leased, divided or
otherwise transferred.
3 Paras 32 and 35.
(2)
An application to transfer a commercial fishing right or a part thereof shall be submitted to
the Minister in the manner that the Minister may determine, and subject to the provisions of this
Act and any applicable regulation, the Minister may, in writing, approve the transfer of the right or
a part thereof.’
[25] Section 21(3)(b) reads as follows:
‘(3) The Minister may, after consultation with the Forum, make regulations regarding –
(a)
…
(b)
guidelines or criteria concerning the transfer of any right of access, including determining
limits on the transfer of rights between holders of such rights on a temporary basis’.
It is common cause that no such regulations have been made. Instead, the TP has been
employed to deal with the transfer of fishing rights and related matters.
[26] The following are the relevant paragraphs of the TP:
Paragraph 1.4:
‘The transfer of fishing rights is dealt with in terms of section 21(2) of the MLRA, which provides
that fishing rights may be transferred, if an application therefor has been made to the Minister, and
is subject to the approval and conditions that the Minister (or his/her delegate) may determine.
This policy sets out the principles that will govern the transfer of fishing rights.’
Paragraph 2.9:
‘For the purposes of a transfer of a commercial fishing right the level of transformation will be
assessed on the basis of ownership and management control.’
Paragraph 4.1:
‘There are two broad principles that will be considered in the assessment of applications for the
transfer of fishing rights. First, whether the transfer will lead to a consolidation of Right Holders
and effort in the sector. Second, the degree to which the transformation of the transferee and the
black ownership of the total allowable catch (TAC) and total allowable effort (TAE) will change
should the transfer be approved. Consideration should also be given to policy regarding multi-
sector involvement and monopolies.’
Paragraph 5.1:
‘An application for a transfer of a commercial fishing right to a current Right Holder in the same
sector of the fishing industry as the transferor, will be favourably considered if:
the transferee is at least as transformed as the transferor;
has access to a suitable fishing vessel that is already in the fishing sector;
has invested in the fishing industry;
the transferee, its controlling shareholders or members have not been convicted of an
offence under the MLRA, the Prevention of Corruption Act, 1992 (Act No 94 of 1992), the
Prevention and Combating of Corrupt Activities Act, 2004 (Act No 12 of 2004), the
Prevention of Organised Crime Act, 1998 (Act No 121 of 1998) or any offence involving
dishonesty;
has a valid tax clearance certificate;
is not in arrears with any levies, licence fees or other payments, catch returns or other
documentation required by the Department in terms of the applicable permit conditions.’
Paragraphs 6.1, 6.2 and 6.3:
‘6.1
The alienation of shares/member’s interest in right holding entities for purposes of the
MLRA may require a transfer of a right.
6.2
Approval for transfer of a right is not required if the sale of shares/member’s interest does
not result in change in control of the company or close corporation and the company/close
corporation remains at least as transformed as at allocation of the long-term right. The
Right Holder (except in the case of a public company) will still be required to complete a
form informing the Department so that the change in shareholding/member’s interest can
be recorded.
6.3
If the sale of shares/member’s interest results in change of control of the company/close
corporation or results in the company/close corporation not being as transformed as at
date of allocation of the long-term right an application for transfer of the right is required
and the following will be considered:
The change in shareholding/member’s interest relating to race and gender in the right
holding entity;
The number (percentage) of share/member’s interest to be sold;
Whether the entity or person acquiring the shares/member’s interest is an existing Right
Holder in the fishing industry and if so, in which sector;
The investment of the transferee entity or person acquiring the shares/member’s interest in
the fishing industry;
The fishing performance of the entity or person acquiring the shares/member’s interest;
Whether the proposed transfer of shares/member’s interest will lead to a consolidation of
either Right Holders, or of effort;
There is evidence that the transferee will be a “paper quota” and not become directly
involved in the catching or processing of the fish caught.’
[27] As was noted in Foodcorp, the fishing rights allocation process was guided by a
document entitled ‘General Policy for the Allocation and Management of Long-Term
Commercial Fishing Rights: 2005’ (the GP), issued by the then Department of
Environmental Affairs and Tourism. The GP records that the MLRA requires restructuring
of the fishing industry in order to address historical imbalances and to achieve equity
within all the branches of the fishing industry. It recognises that transformation is a
constitutional imperative. It goes on to state that the GP has as an objective an
improvement on the levels of transformation already achieved The GP emphasises that
‘only quality transformation will be recognised, that is, transformation which results in real
benefits to historically disadvantaged persons’. According to the GP, beneficial ownership
by black people, in the form of unrestricted voting rights and economic interest associated
with equity ownership, will be assessed and taken into consideration. The management
structure of an applying entity will be taken into account and, in particular, senior executive
management positions will be scrutinised. Gender, employment equity, skills
development, affirmative procurement and corporate social investment are all factors to be
taken into account when commercial fishing rights are allocated in terms of the GP. These
factors are largely similar to those provided for in s 1,4 s 2 and s 9 of the BBBEE Act.
[28] That then is the background against which the present appeal has to be
adjudicated. I turn to deal with the first point raised on behalf of Oceana and BCP, namely,
whether the TP is inconsistent with the Codes published in terms of the BBBEE Act.
4 ‘“broad-based black economic empowerment” means the economic empowerment of all black people
including women, workers, youth, people with disabilities and people living in rural areas through diverse but
integrated socio-economic strategies that include, but are not limited to –
(a)
increasing the number of black people that manage, own and control enterprises and productive
assets;
(b)
facilitating ownership and management of enterprises and productive assets by communities,
workers, cooperatives and other collective enterprises;
(c)
human resource and skills development;
(d)
achieving equitable representation in all occupational categories and levels in the workforce;
(e)
preferential procurement; and
(f)
investment in enterprises that are owned or managed by black people.’
[29] At the outset I agree with the conclusion of the court below that the TP formulated
by the Minister is national policy and is thus excluded from the ambit of PAJA. However,
because the challenge to the TP is essentially based on legality and rationality, that
conclusion does not preclude it from being subjected to judicial scrutiny. In any event the
application of the TP and decisions on matters related thereto might very well be within
the ambit of PAJA. However, as is clear from what is set out above, nothing turns on this
point.
[30] It will be recalled that the court below had held that Oceana and BCP were
‘measurable entities’ to which the Codes applied. In this regard Cleaver J considered the
paragraph of the Codes which sets out its ambit of applicability. The court below
concluded that Oceana and BCP fell within the category set out in para 3.1.3.5
[31] The Codes were published by the Minister of Trade and Industry in the Government
Gazette on 9 February 2007,6 after the long-term rights allocation process, but before the
adoption of the TP. In terms of s 10(a) of the BBBEE Act, the provisions of which appear
in para 14 above, every state and public entity is obliged to take into account as far as is
reasonably possible ‘any relevant code of good practice’ issued in terms of that Act. The
immediate question that arises is whether a relevant code of good practice exists which
the Minister and her department are obliged to apply.
[32] It is clear from a reading of para 3 of the Codes that what was intended by paras
3.1.2 to 3.1.4 is that specified public entities and enterprises that ‘undertake business’ with
inter alia any organ of state or public entity should be measurable entities to which the
Codes apply. It is understandable that government would be intent on ensuring that those
with whom it engaged in commercial activity would meet government’s transformation
objectives. The reward for complying with government’s transformation targets would be
eligibility for government contracts. Paragraph 3.1.2 applies to public entities that are
trading entities. When they ‘undertake any business’ with any other ‘enterprise’ in
accordance with para 3.1.2, it must be taken to mean commercial interaction between the
5 Paragraph 3 dealing with the applicability of the Codes appears in its entirety in para 15 above.
6 Government Gazette No. 29617 Government Notice 112.
two entities. Where the same or essentially similar words or phrases or expressions are
used in various places throughout a legislative instrument, they are presumed to bear the
same meaning throughout.7 In my view a purposive interpretation leads ineluctably to the
conclusion that the entities considered measurable in terms of paras 3.1.3 to 3.1.4 are
enterprises that engage in commercial activity with inter alia any organ of state or public
entity.
[33] Moreover, if the Codes had been intended to apply to the issuing of licences,
concessions or other statutory authorisations, such as the granting of fishing rights and
the concomitant annual permits, they could have said so in the terms embodied in s 10(a)
of the BBBEE Act. There are no specific codes that apply in this regard and it might well
be due to the fact that there is a myriad of regulatory statutory criteria that apply to the
issuing of licences, concessions or other statutory authorisations in relation to specific
areas of endeavour. Settling uniformity across the board as aimed for by the BBBEE Act
in relation to different fields of endeavour is likely to prove difficult. It might explain why the
court below readily accepted the explanation proffered by the Minister for not slavishly
applying the BBBEE Act. The Minister explained why it was impractical in particular areas
of the fishing industry to wholly adopt and apply the Codes. In the GP it is expressly stated
that given the nature of the fishing industry the Minister has deliberately not encouraged
the adoption of charters for the sector and has not adopted the weighting and benchmarks
in relation to ownership and management set out in the available draft codes.
[34] Section 10(a) of the BBBEE Act obliges state departments to apply any ‘relevant’
code of good practice. Since there is no code that can be identified in relation to the
granting of statutory authorisations to catch fish, the obligation does not arise in the
present circumstances. Considering the submissions on behalf of Oceana and BCP,
referred to in para 8 above, as to the application of the BBBEE Act in the present
circumstances, the apposite words of Wilson CJ in Richardson v Austin (1911) 12 CLR
463 at 470 come to mind:
7See Principal Immigration Officer v Hawabu & another 1936 AD 26; Minister of the Interior v Machadodorp
Investments (Pty) Ltd & another 1957 (2) SA 395 (A) at 404D-E; Ndluli v Wilken NO 1991 1 SA 297 (A) at
306B; Lourens du Plessis Re-Interpretation of Statutes 2002 194.
‘ … As to the argument from the assumed intention of the legislature, there is nothing more
dangerous and fallacious in interpreting a statute than first of all to assume that the legislature had
a particular intention, and then, having made up one’s mind what that intention was, to conclude
that that intention must necessarily be expressed in a statute, and proceed to find it.’
[35] It follows that the court below erred in concluding that para 3.1.3 is applicable. As
stated earlier, the GP ensures that in the allocation of fishing rights process a variety of
factors similar to those catered for by the BBBEE Act are taken into account. The TP has
to be read as building upon the GP to ensure that the objectives of the MLRA are met.
The TP itself proclaims that it will ‘employ’ the BBBEE Act but it does refer to the difficulty
of a strict application of that Act within the fishing industry.8 The Minister and her
Department can hardly be criticised for attempting to do more than is legally required.
Thus, the first point is decided against Oceana and BCP.
[36] I now turn to deal with Oceana and BCP’s challenge to the validity of the TP. It will
be recalled that it was contended on their behalf that the provisions of the TP were at odds
with the provisions of the MLRA and, as was submitted in Foodcorp, that certain of its
provisions were ultra vires the MLRA. More particularly, it was contended that the Minister
was not empowered to regulate bona fides share sales transactions as she purported to
do by resorting to paras 6.2 and 6.3 of the TP.
[37] In Foodcorp this Court undertook a thorough analysis of the relevant provisions of
the MLRA. It had regard to the long title, s 2, s 13, s 18, s 21 and s 28 and took into
consideration a number of paragraphs of Bato Star which highlighted the importance of
transformation in the fishing industry.9 In Bato Star the Constitutional Court regarded
transformation of the fishing industry as being central to the process of granting fishing
rights.10 The Constitutional Court approved of the GP as being consonant with the
transformation objectives of the MLRA. Similarly, in Foodcorp, this Court viewed the GP
as being consonant with the provisions of the MLRA and considered those parts of the TP
challenged in that case as being harmonious with both the MLRA and the GP. In my view,
8 Paragraphs 2.6 to 2.10.
9 See Foodcorp paras 27 and 28.
10 See Bato Star paras 40, 41 and 92.
the paragraphs of the TP criticised by Oceana and BCP, set out in para 26 above, are in
line with the twin objectives of the MLRA recognised in Bato Star, namely, the need to
preserve marine resources and the need to transform the fishing industry. As stated in an
earlier paragraph the TP cannot be delinked from the GP. Far from the narrow focus
contended for by Oceana and BCP, the MLRA, the GP and the TP collectively allow for a
flexible approach. In exercising her discretion in dealing with matters provided for in the
TP, the Minister would be astute to have regard to the dictum in Dawood, Shalabi and
Thomas v Minister of Home Affairs & others 2000 (3) SA 936 (CC):11
‘Discretion plays a crucial role in any legal system. It permits abstract and general rules to be
applied to specific and particular circumstances in a fair manner. The scope of discretionary
powers may vary. At times they will be broad, particularly where the factors relevant to a decision
are so numerous and varied that it is inappropriate or impossible for the Legislature to identify
them in advance. Discretionary powers may also be broadly formulated where the factors relevant
to the exercise of the discretionary power are indisputably clear. A further situation may arise
where the decision-maker is possessed of expertise relevant to the decisions to be made.’
[38] In respect of the specific challenge to paras 6.2 and 6.3 of the TP, this Court held in
Foodcorp that these are not ultra vires the provisions of the MLRA. It did so on the basis
that the Minister has an obligation to ensure that the objectives and principles set out in
s 2 of the MLRA are met and complied with. It took into account that fishing rights were
granted in terms of s 18, which obliges the Minister to have regard to transformation
imperatives. It rejected the submission that, since the adjudication of applications for
permits involves a process different from the process relating to changes in control of
entities and the transfer of permits, the processes should each be viewed in isolation. It
also held that, throughout the various processes, transformation of the fishing industry to
address historical imbalances and to achieve equity is a constant imperative.12
[39] Of course, in Foodcorp, the permits in question were stated to be subject to the
provisions of the MLRA and the GP. In the present case we have no idea of the conditions
attaching to the permits issued to Oceana and BCP since the permits do not form part of
11 Para 53.
12 Paragraph 33.
the documents constituting the record in the court below. This does not mean that the
conclusions arrived at in Foodcorp in relation to paras 6.2 and 6.3 have any less force.
[40] I agree with the statement by the court below that Oceana and BCP were
misguided in bringing the application on an abstract basis and that it was premature. If a
well-founded basis arises for challenging the Minister’s decisions on the pending transfer
applications, Oceana and BCP can approach the appropriate court for relief. Instead, they
launched a pre-emptive strike which, for all the reasons set out above, rightly failed in the
court below. Lastly, it should be stated that in their founding affidavit Oceana and BCP
rightly laud the Minister and her Department for facilitating significant transformation of the
fishing industry. They state that today the fishing industry is recognised as one of the most
transformed sectors of the South African economy. Granting Oceana and BCP the relief
they sought would have been a regressive step.
[41] The following order is made:
The appeal is dismissed with costs including the costs attendant on the
employment of two counsel.
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For 1st Appellants:
J A Newdigate SC
N Mayosi (Ms)
Instructed by:
Webber Wentzel
Cape Town
Matsepes Inc
Bloemfontein
For Respondents:
G Budlender SC
K Pillay
H J de Waal
Instructed by:
The State Attorney
Cape Town
The State Attorney
Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 March 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Oceana Group Ltd v Minister of Water & Environmental Affairs
(507/11) [2012] ZASCA 35 (29 March 2012)
Media Statement
Today the Supreme Court of Appeal (SCA) delivered judgment dismissing the appeal, with
costs, against an order of the Western Cape High Court in terms of which an application by
the first and second appellants, Oceana Group Limited (Oceana) and Blue Continent
Products (Pty) Ltd (BCP), challenging the legality of the ‘Policy for the Transfer of
Commercial Fishing Rights’ (TP) presently administered by the fourth respondent, the
Minister of Agriculture, Fisheries and Forestry, was dismissed with costs.
The facts and history of this matter can be summarised as follows:
Oceana, a public company, is a leading role player in the South African fishing industry.
Oceana catches, processes and markets a variety of fish species through a number of its
operating subsidiaries. BCP is a wholly-owned subsidiary of Oceana and is the holder of
commercial fishing rights. Other subsidiaries of Oceana were also granted commercial fishing
rights in various fisheries. All of these rights were ‘long-term’ rights allocated in terms of the
Marine Living Resources Act 18 of 1998 (MLRA). The long-term fishing rights allocation
process followed on earlier annual and thereafter medium-term rights allocation processes.
Following the granting of long-term fishing rights, various parties made application to transfer
commercial fishing rights, including BCP. Oceana and BCP complained that applications for
the transfer of commercial fishing rights had not been processed or finalised by the
Department. According to Oceana and BCP this failure on the part of the Department had had
a damaging impact on its ability optimally to conduct its business. Oceana and BCP took the
view that the TP was unlawful and should be reviewed and set aside.
The TP sets out the principal by the appellants when applications are made for the transfer of
fishing rights. In short, the complaint was that the TP defines transformation on a narrow
basis, taking into account only ownership and management control of entities under
consideration. It was contended that the elements of employment equity, skills development,
preferential procurement, enterprise development and socio-economic development
initiatives, catered for by the Broad-Based Black Economic Empowerment Act 53 of 2003 (the
BBBEE Act) and codes, were wrongly excluded from the Department’s assessment of
transformation in applying the TP. It was submitted that the application of the BBBEE codes
was obligatory and that the TP was consequently unlawful for failure to apply the codes.
It was further argued that the TP was unlawful in that it failed to take proper account of the
broad principles and objectives of the MLRA. It was contended that the TP misconstrued
transformation in that the focus, was, once again, wrongly on the degree of black ownership
and management. Those criteria were too narrow and neither consonant with the
developmental objectives of the MLRA, nor in line with its other purpose, namely, to create
employment opportunities. It was argued that sections of the TP, requiring approval for the
sale of shares resulting in a change of control of entities, or resulting in entities not being as
transformed as at the date of allocation of long-term fishing rights, were ultra vires the
provisions of the MLRA.
The SCA, in reaching its decision, had regard to the fact that the fishing rights allocation
process was guided by a document entitled ‘General Policy for the Allocation and
Management of Long-Term Commercial Fishing Rights: 2005’ (the GP). The GP records that
the MLRA requires restructuring of the fishing industry in order to address historical
imbalances and to achieve equity within all the branches of the fishing industry and
recognises that transformation is a constitutional imperative. It has as an objective an
improvement on the levels of transformation already achieved with emphasis on the fact that
only quality transformation will be recognised, ie transformation which results in real benefits
to historically disadvantaged persons’. According to the GP, beneficial ownership by black
people, in the form of unrestricted voting rights and economic interest associated with equity
ownership, will be assessed and taken into consideration. The management structure of an
applying entity will be taken into account and, in particular, senior executive management
positions will be scrutinised. Gender, employment equity, skills development, affirmative
procurement and corporate social investment are all factors to be taken into account when
commercial fishing rights are allocated in terms of the GP. These factors are largely similar to
those provided for in the BBBEE Act. However, the SCA concluded that there were no codes
in existence that applied to the fishing industry. It held that if the codes had been intended to
apply to the issuing of licences, concessions or other statutory authorisations, such as the
granting of fishing rights the legislature could have said so in the terms embodied in s 10(a) of
the BBBEE Act.
The SCA held that it was understandable that government would be intent on ensuring by
way of the application of the BBBEE codes that those with whom it engaged in commercial
activity would meet government’s transformation objectives. The reward for complying with
government’s transformation targets would be eligibility for government contracts. The GP
ensured that in the allocation of fishing rights process a variety of factors similar to those
catered for by the BBBEE Act are taken into account. The TP has to be read as building upon
the GP to ensure that the objectives of the MLRA are met. The TP itself proclaims that it will
‘employ’ the BBBEE Act but it does refer to the difficulty of a strict application of that Act
within the fishing industry. The SCA noted that the Minister and her Department could hardly
be criticised for attempting to do more than is legally required. Thus, the first point was
decided against Oceana and BCP.
The SCA viewed the GP as being consonant with the provisions of the MLRA and considered
those parts of the TP challenged as being harmonious with both the MLRA and the GP. The
paragraphs of the TP criticised by Oceana and BCP are in line with the twin objectives of the
MLRA namely, the need to preserve marine resources and the need to transform the fishing
industry. The TP cannot be delinked from the GP. Far from the narrow focus contended for by
Oceana and BCP the SCA held that the MLRA, the GP and the TP collectively allow for a
flexible approach and that the paragraphs in the TPare not ultra vires the provisions of the
MLRA. The SCA did so on the basis that the Minister has an obligation to ensure that the
objectives and principles set out in the MLRA are met and complied with.
Lastly, the SCA noted that in their founding affidavit Oceana and BCP rightly lauded the
Minister and her Department for facilitating significant transformation of the fishing industry
and that South Africa’s fishing industry was recognised as one of the most transformed
sectors of the South African economy. It held that the granting of the relief sought by Oceana
and BCP would have been a regressive step.
The appeal was subsequently dismissed with costs.
--- ends ---
|
3093
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 221/2015
In the matter between:
TELLUMAT (PTY) LTD
Appellant
and
APPEAL BOARD OF THE FINANCIAL
SERVICES BOARD
First Respondent
C T HOWIE, D L BROOKING and
G O MADLANGA NNO
Second Respondent
ALAN HUNTER ROY
Third Respondent
REGISTRAR OF PENSION FUNDS
Fourth Respondent
TELLUMAT PENSION FUND
Fifth Respondent
Neutral citation: Tellumat (Pty) Ltd v Appeal Board of the Financial
Services Board (221/2015) [2015] ZASCA 202 (2
December 2015)
Coram:
MPATI P, LEACH, WALLIS and MATHOPO JJA and
BAARTMAN AJA
Heard:
24 November 2015
Delivered: 2 December 2015
Summary: Pension fund – apportionment of surplus in terms of s 15C of
Pension Funds Act 24 of 1956 – apportionment by trustees undertaken as
part of an overall scheme for the outsourcing of pensions and
enhancement of pension benefits – implementation of distribution scheme
involving transfer in terms of s 14 of the Pension Funds Act – scheme to
be viewed as a whole and elements not to be treated as discrete from the
whole – scheme approved by the Registrar of Pension Funds – appeal to
the Appeal Board for the Financial Services Board – Appeal Board
deciding appeal without regard for the scheme as a whole or the impact of
its decision on the agreed apportionment of surplus – such a reviewable
error in terms of s 6(2)(e)(iii) of PAJA – decision of Appeal Board set
aside.
ORDER
On appeal from: Gauteng Division, Pretoria (Mavundla J, sitting as
court of first instance):
The appeal is upheld.
The decision by the Gauteng Division, Pretoria is set aside and
altered to read as follows:
‘(a) The decision by the Appeal Board of the Financial Services
Board in the appeal by Mr Roy, the third respondent, against the
decision by the Registrar of Pension Funds to approve, in terms of
section 14 of the Pensions Act 24 of 1956, the application by
Tellumat Pension Fund under reference S14-092-11, is hereby set
aside.
(b) The decision by the Appeal Board is replaced by the following:
‘The appeal is dismissed.’
JUDGMENT
Wallis JA (Mpati P, Leach and Mathopo JJA and Baartman AJA
concurring)
Introduction
[1] The administration of pension funds in South Africa occurs within
the framework established by the Pension Funds Act 24 of 1956 (the
Act). The case of Tek Corporation1 exposed a lamentable gap in the
legislative framework when it came to dealing with actuarial surpluses in
defined benefit pension funds. That gap was filled by the enactment of
what is commonly referred to as the ‘surplus legislation’ by way of the
Pension Funds Second Amendment Act 39 of 2001. It incorporated into
the Act sections 15A to 15K, which governed and, subject to some
subsequent amendment, continue to govern the use to which such
surpluses may be put.
[2] The fund in issue here, the Tellumat Pension Fund (the Fund), is,
by a curious turn of fate, the self same fund as the fund at the heart of the
dispute in Tek Corporation, but under a different name and much
transformed. Like many other defined benefit funds it was closed to new
members some years before the events with which we are concerned. As
a result it no longer has any active members, but only pensioners to
whom it owed obligations under its rules.2 Its triennial statutory actuarial
valuation as at 31 December 2003 revealed a nil surplus. The following
triennial valuation as at 31 December 2006 reflected a dramatically
improved position. Not only was there now a solvency reserve of some
R68 million, but there was an actuarial surplus of some R174 million.
Together this amounted to a surplus of a little more than R242 million.
This appeal arises from the steps taken thereafter to deal with that
surplus.
1 Tek Corporation Provident Fund &others v Lorenz [1999] ZASCA 54; 1999 (4) SA 884 (SCA).
2 References in this judgment to members is therefore to be understood as a reference to those
pensioners and references to pensioners encompass the entire body of people interested in receiving
benefits from the Fund. There are 14 deferred and suspended pensioners but their involvement does not
affect the matter in any way.
[3] It will be necessary to describe more fully in due course the
decisions taken in relation to the surplus, but a summary suffices here.
First the assets in which the Fund was invested were realised and placed
in money market investments in order to ‘lock in’ the surplus. A debate
then ensued among the trustees of the Fund as to how to deal with the
surplus. They concluded an agreement to divide the surplus equally
between the employer, Tellumat (Pty) Ltd (Tellumat), the appellant, and
the members of the Fund, after affording the latter an increase in their
pensions. They agreed that the portion of the surplus allocated to the
members would be used first to enhance existing pensions. Thereafter it
would be used, together with the members’ individual actuarial accounts,
to purchase annuities for the members from a major insurance company.
[4] The intention was that these annuities would provide the members
with pensions equivalent to or better than those they were entitled to
under the rules of the Fund. This was referred to as ‘outsourcing’ the
obligations of the Fund. Once this had been done and the annuities were
transferred to the pensioners and the liabilities of the Fund to the
members had been transferred to the chosen insurer, the only assets
remaining in the Fund would be those representing the employer’s
surplus account. The Fund would then be wound up and those assets
transferred to Tellumat. I will refer to these arrangements collectively as
the distribution scheme.
[5] Although the board of trustees, representing both employer and
employees, agreed upon the distribution scheme, it did not satisfy a group
of pensioner members of the Fund who regarded the division of the
surplus of the Fund between the employer and the members as unduly
favourable to the employer. At every stage of the implementation of the
distribution scheme they have sought to block it. Their purpose was to
secure for members a greater proportion of the surplus. Despite their
resistance their attempts to block the scheme failed at every stage, until
they came before the Board of Appeal (the Appeal Board) established in
terms of s 26 of the Financial Services Board Act 97 of 1990 (the FSB
Act). The attempts included an arbitration on a complaint lodged with the
Pension Funds Adjudicator (the PFA), two adverse determinations by the
PFA, and the decision by the Registrar of Pension Funds that gave rise to
the appeal before the Appeal Board and the present proceedings.
[6] The Registrar’s impugned decision was to authorise, in terms of
s 14 of the Act, the transfer to the pensioners of individual annuity
policies issued by an insurance company in place of annuity policies in
the name of the Fund held with that insurer. The effect of such transfer
would be to transfer to the pensioners those assets of the Fund and to the
insurer all the liabilities of the Fund towards the members. It would leave
the Fund with the assets constituting the employer surplus account and
nothing more. The transfer of the annuities in this fashion would
complete the process of outsourcing pensions proposed in terms of the
distribution scheme. As he was entitled to do in terms of s 26(1) of the
FSB Act,3 Mr Roy, a pensioner and the third respondent in this appeal,
appealed against that decision to the Appeal Board. His appeal was
successful and the Board set aside the Registrar’s decision to approve the
transfer.
[7] Tellumat had taken no active part in the proceedings before the
Appeal Board, but it then instituted proceedings by way of judicial review
3 Financial Services Board Act 97 of 1990.
to challenge the decision of the Appeal Board. The application was
dismissed by Mavundla J in the Gauteng Division, Pretoria. This appeal
is with his leave.
The legal framework
[8] All actuarial surplus in a fund belongs to the fund.4 Any such
surplus may be apportioned to either a member surplus account or an
employer surplus account. Any credit balance in the member surplus
account must be used for the benefit of members. The only portion of any
surplus that may be used for the benefit of the employer is the surplus in
the employer surplus account.5 The legislation provided for an initial
surplus apportionment date, being the date of the first statutory actuarial
valuation of a fund after the commencement of the surplus legislation.6 In
the case of the Fund the valuation on that date showed a nil value for
surplus so that it was unnecessary for the Fund to undertake an
apportionment exercise.
[9] When a surplus arose at the time of the following statutory
valuation, it had to be apportioned in terms of s 15C of the Act. That
provides:
‘(1)
The rules may determine any apportionment of actuarial service arising in the
fund after the surplus apportionment date between the members surplus account, the
employer surplus account or directly for the benefit of the members and former
members subject to the uses specified in section 15D(1).
(2)
If the rules are silent on the apportionment of actuarial surplus arising after the
surplus apportionment date, any apportionment between the members surplus
account, the employer surplus account or directly for the benefit of members and
4 Section 15A (1) of the Act.
5 Section 15D of the Act.
6 Section 15B of the Act.
former members, subject to the uses specified in section 15D(1), shall be determined
by the board taking into account the interests of all the stakeholders in the fund:
Provided that, notwithstanding anything to the contrary in the rules, neither the
employer nor the members may veto such apportionment.’
[10] The rules of the Fund contained no provision dealing with the
apportionment of surplus arising after the initial surplus apportionment
date. Accordingly it was for the board of trustees of the Fund to
determine how the surplus was to be apportioned. The board was
constituted of equal numbers of trustees appointed by the members and
the employer, Tellumat. They engaged in debate and eventually arrived at
the result reflected in the distribution scheme. It is to the terms of that
scheme that I now turn.
The distribution scheme
[11] The identification of the actuarial surplus occurred in June 2007
when the statutory valuation for the three year period ending on
31 December 2006 was signed and submitted by the Fund’s actuary.
Thereafter a lengthy debate occurred among the trustees. They
approached the issue from diametrically opposed standpoints. The
trustees representing the members and pensioners demanded that 90% of
the surplus be apportioned to the members. It could then be used to
enhance their pensions. Not surprisingly the trustees representing
Tellumat took precisely the opposite stance. They proposed that Tellumat
should receive 90% of the surplus.
[12] At the end of the debate between the two groups of trustees, after
making allowance for an immediate enhancement of pensions, they
agreed to apportion the remaining surplus equally. In practical terms this
amounted overall to an apportionment of approximately 56% to the
members and 44% to Tellumat. As part of this process the trustees also
agreed on what would happen to the Fund after apportionment.
[13] The details of the apportionment and what was to be done with the
member and employer surplus accounts were set out in a circular letter
addressed to pensioners on 12 October 2007. By that date the trustees had
resolved to ‘lock-in’ the surplus by transferring the Fund’s assets from
the equity portfolio, in which they had been invested and which had
generated the surplus, to what were effectively money market funds.
Whilst the returns on these funds would be more modest the capital
would be preserved.
[14] The letter of 12 October 2007 was written on behalf of the trustees
by the chair of the board. It was sent to all the pensioners of the Fund.
The letter gave details of the surplus and said that as a result it was
possible to make material improvements in their pensions. It explained
that accordingly the trustees had decided, with the agreement of Tellumat,
to make a number of changes to the structure of the Fund. These were
summarised as follows:
‘In summary the Trustees and the Employer have agreed to a special increase, a
special bonus, outsourcing of the pensions, upliftment, sharing of surpluses and to the
winding down of the Fund.’
[15] Under the general heading ‘Sharing of surplus’ the letter
proceeded to explain how these changes were to be effected. There would
be a special pension increase of 8% funded from the overall surplus. The
balance of surplus remaining would be split equally between a member
surplus account and an employer surplus account. R5.3 million would be
allocated from the member surplus account to give additional increases to
the lower bands of pensioners. All profits or losses accruing on the Fund
after 1 January 2007 would be for the benefit or account of the member
surplus account. Any liabilities of the employer towards the Fund would
be paid from the employer surplus account.
[16] According to Tellumat the proposal that pensions be outsourced
emanated from the member trustees. Apparently they thought that if a
large insurer provided the pensions there was a greater likelihood of their
being secure. They took this view because of the financial strength of
large insurers when compared to that of a single, relatively small, pension
fund catering only for pensioners. The letter explained this proposal to
pensioners in the following way:
‘The Trustees have decided, as part of this agreement, to undertake a pension
outsource exercise. This means that your pension currently being paid from the
Tellumat Pension Fund will in future be underwritten by an insurer and no longer by
the Fund. The main reason for this decision is to provide pensioners with the added
security of being part of a substantially larger pool of pensioners underwritten and
protected by the financial muscle of a major insurer as opposed to the benefits being
underwritten by Tellumat which does not have the same financial resources as a large
insurance company. It is envisaged that the entire outsourcing process will be
completed by mid-2008, thereafter the Fund will [be] closed.’
[17] The financial implications of the surplus apportionment exercise
for pensioners were summarised as follows:
‘As a result of the allocation of the surplus, it is envisaged that all pensioners will
receive the following:
(i)
A cash "bonus" equal to 4 months pension to be paid on 1 December 2007.
(ii)
A special increase of 8% to be effected from 1 January 2008.
(iii)
The normal annual increase to be effected from 1 January 2008 (percentage still to be
decided).
(iv)
An additional enhancement on your pension at date of outsourcing of up to
25%, depending on which outsourcing option you decide to take and the final terms
offered by the insurers.’
[18] The reference to outsourcing options appeared because it was
envisaged that three options would be made available to pensioners. The
first would be the purchase of an annuity providing a pension mirroring
exactly what they were currently entitled to in terms of the rules of the
Fund, including the spouses and children’s pensions, and any pension
increase guarantee. The second would be the purchase of annuities that
would provide the various pensions provided in the rules of the Fund on a
stronger valuation basis, but without any guaranteed minimum increases
that pensioners might have enjoyed under the rules. Based on past
experience it was said that in this way pensioners would be likely to
receive increases equal to or exceeding the increases to be expected from
the Fund. The third option would be to permit pensioners to uplift their
pension and purchase an annuity of their choice.
[19] Following upon the decision by the trustees, the rules of the Fund
were amended to provide for the outsourcing of pensioners. This was
done by amendment 11 dated 6 December 2007. The Registrar duly
registered the amendment on 21 February 2008. It has not been
challenged. Rule 7.1 provided that at a date referred to as the ‘pension
outsource date’ the trustees would be entitled to purchase from a
registered insurer an annuity approved by the trustees that would cover
the pension entitlement of the pensioners. Under rule 7.2 the terms and
conditions of the annuities would include options elected by the
pensioners. Under rule 7.3 the trustees were appointed as the agent of the
pensioners to purchase the annuities.
[20] On 23 January 2008 Mr Roy, on his own behalf and on behalf of
40 other pensioners, lodged a complaint with the PFA against the
decision by the trustees in regard to the apportionment of the surplus. His
contention was that all surplus should have been allocated to the
pensioners and used to secure inflationary increases for them. He said that
it was inappropriate for the amount credited to the employer surplus
account to accrue to Tellumat on termination of the Fund.
[21] The Fund opposed the complaint. It claimed that the benefit
enhancements secured to pensioners through the apportionment exercise
exceeded their legitimate expectations. It said that, in arriving at the
apportionment, it had been obliged to act reasonably and equitably
towards both pensioners and employer and the decision it had reached
struck an appropriate balance between the two.
[22] The complaint by the pensioners was, by agreement, referred to
arbitration before Mr J F Myburgh SC. In the meantime the Fund was
unable to pursue the distribution scheme in case the apportionment of
surplus was set aside. On 19 November 2009 the arbitrator handed down
his award and dismissed the complaint. He rejected all the grounds of
complaint advanced by the pensioners. He held that it was for the
trustees, who represented both the pensioners and the employer, to
determine how the surplus was to be apportioned and they had done so.
[23] After the arbitration award was handed down the trustees again
communicated with the pensioners in a letter addressed to them in March
2010. The letter said that they were pleased to inform them that the
arbitration award had decided the disputes in favour of the Fund and that
they intended to proceed with the outsourcing initiative immediately. The
letter proceeded to explain the options that faced pensioners. It
highlighted the fact that there were two groups of pensioners. The first
group had come to the Fund from the Plessey South Africa Pension Fund
(the PSA pensioners) and the other group from the Plessey Corporation
Pension Fund, as the Fund had previously been known. The PSA
pensioners had brought with them to the Fund a guarantee of a minimum
3% annual pension increase. Historically there had been little need for
them to rely on this because the Fund’s pension increase policy was to
increase pensions by at least 75% of inflation and more if that were
affordable. A table provided to the Appeal Board showed that there had
only been two years in the previous eleven years when the pension
increase for ex-Plessey Corporation Pension Fund members had been less
than 3%, and that was made up in the following year when they received
a 10% increase. Throughout the aim of the trustees had been to ensure as
far as possible that the two groups of pensioner were treated equally.
[24] The letter set out the three options being offered to the pensioners
pursuant to the outsourcing scheme. The first was a pension with no
minimum increase guarantee. The basis would be that the member’s
interest would be invested on a ‘with profits’ basis with an insurer. The
trustees said that this had, on an historical basis, provided similar pension
increases to those that had been enjoyed through membership of the
Fund. If a pensioner chose this option they would be given a once off
enhancement of their existing pension of 32%. The second option was
that the member’s interest would be invested on the same basis, but with
a guarantee of an annual 3% increase in the pension. In this case the once
off enhancement of the pension would be 26%. The differential
represented the cost of obtaining the guarantee. The third option was the
purchase of an inflation-linked pension. In this instance the once off
enhancement would be substantially less – 10.47% - because the cost of
securing the guarantee was considerably higher.
[25] Each letter was accompanied by a form in which the pensioner was
required to elect which of these three options they were choosing. They
were encouraged to respond quickly and in any event by 11 June 2010. If
the form was not returned by that date they would automatically be given
the default option and an annuity best approximating their current pension
entitlement would be purchased on their behalf. Mr Roy and two other
pensioners who feature in this case, Mr Barnes and Mr Myles, elected
option 1. Under that option an annuity would be purchased in their names
on a with profits basis, but without any guaranteed annual increase.
Before purchasing the annuity their existing pension would be enhanced
by the 32% uplift.
[26] The further implementation of the distribution scheme and the
outsourcing of pensions was checked by Mr Barnes lodging a complaint
with the Pension Funds Adjudicator. He said that he had selected option 1
and his pension had been outsourced by the purchase of an annuity from
Old Mutual. The annuity had been purchased with his pro rata share of
the Fund and a once off enhancement funded from the member surplus
account. Mr Barnes complained that he had always received an annual
increase in his pension sufficient to keep pace with inflation. He argued
that this had become a settled practice and accordingly his reasonable
expectation from the Fund was that he would receive an annuity
providing a pension that would increase each year by at least the rate of
inflation. He also argued that as the eventual result of the outsourcing of
pensions would be the dissolution of the Fund it was necessary to have
regard, in the funding of benefits, to the position that would pertain if
those benefits were to be funded on the liquidation of the Fund. In other
words he sought to rely, as had Mr Roy before the arbitrator, on the
provisions of section 15I of the Act.
[27] The general body of pensioners did not share the opposition to the
outsourcing scheme and the apportionment of surplus of Mr Roy, Mr
Barnes and their supporters. They wanted to receive immediately the
enhanced benefits they had been promised. They had already had the
initial pension uplift, but now wanted the further pension enhancement
flowing from the elections they had made in the period up to 11 June
2010. In order to satisfy this demand, during the period from April to
August 2010, the Fund purchased annuities in its own name according to
the election of each pensioner. It then used those annuities to afford to
each pensioner the pension benefits they had elected to receive, including
the uplift.
[28] Mr Barnes’ complaint was dismissed by the Pension Funds
Adjudicator on 28 September 2011. The Adjudicator held that his
reasonable benefit expectations had been satisfied and that he was not
entitled to claim the benefit of section 15I of the Act dealing with the
dissolution of the Fund as no steps had yet been taken to dissolve it.
[29] While awaiting the outcome of the complaint by Mr Barnes, on
24 May 2011 the Fund submitted an application to the Registrar for the
approval in terms of s 14 of the Act of the transfer of business from the
Fund to various insurers and the cession of annuity policies owned by the
Fund to the pensioners. In other words the assets of the Fund in the form
of annuity policies in respect of each pensioner were to be transferred to
the pensioners and the liabilities the Fund owed to those pensioners
would henceforth rest on the insurers who issued the annuities. The
business of the Fund would be severely attenuated by this as it would be
left (apart from the 14 pensioners mentioned above) with no liabilities
and the assets constituting the employer surplus account.
[30] The application prompted an objection from Mr Roy, representing
himself and nine other pensioners, including Mr Barnes. The basis for the
objection was that the section 14 transfer was not reasonable and
equitable because it failed to secure members’ reasonable benefit
expectations and it ignored the fact that the process on which the Fund
had embarked would inevitably lead to its dissolution. That being so, Mr
Roy contended that the proper approach to the apportionment of the
surplus would have been to pursue it in terms of s 15I of the Act. He said
that the benefit enhancements that pensioners had enjoyed should have
been funded from both the member surplus account and the employer
surplus account and not, as had occurred with the major portion of the
pension enhancements, from the member surplus account alone.
[31] After the complaint by Mr Barnes had been dismissed by the PFA
the Registrar considered the Fund’s application in terms of s 14 of the Act
and, notwithstanding the objection by Mr Roy, approved it on
9 May 2012.7 This prompted Mr Roy to appeal to the Appeal Board on
18 May 2012. It is that appeal that was upheld and led to the review
proceedings before the High Court.
7 On 26 May 2012 another complaint was lodged with the PFA, this time by Mr Myles, but it does not
appear to have affected subsequent events. It was dismissed on 20 February 2013.
The Appeal Board’s decision
[32] When authorising the transfer of the annuities in terms of
s 14(1)(c)(i) of the Act the Registrar had to be satisfied that:
‘… the scheme … is reasonable and equitable and accords full recognition-
(i) to the rights and reasonable benefit expectations of the members transferring in
terms of the rules of a fund where such rights and reasonable benefit expectations
relate to service prior to the date of transfer.’
There are further requirements in ss 14(1)(c)(ii) and (iii) but they are not
relevant to this case.
[33] The Appeal Board viewed this section as creating two separate and
distinct requirements in regard to which the Registrar had to be satisfied.
The first was that the scheme under consideration had to give full
recognition to the rights and reasonable benefit expectations of the
members whose business was the subject of the transfer. The second was
that the scheme had to be reasonable and equitable.
[34] I am less than certain that these requirements are in truth distinct. If
the scheme gives full recognition to the rights and reasonable benefit
expectations of members it will ordinarily be reasonable and equitable.
Save in an unusual situation – and this does not strike me as being in any
way unusual – it is difficult to see why it will not be reasonable and
equitable to implement it. After all the principal purpose of a pension
fund is to provide the members of the fund with the benefits embodied in
its rules. Section 14(1)(c) is designed to ensure that when considering
whether to authorise a scheme the members’ and pensioners’ rights are
protected as well as their reasonable benefit expectations.
[35] The notion of reasonable benefit expectations arises in two
contexts, namely surplus in the fund and practices and promises of the
fund in regard to future benefits. The surplus legislation is designed to
allocate surplus fairly and equitably between members and the employer.
That is the matter in issue here. In regard to future benefits, where the
pension fund has over some years established practices, say in regard to
pension increases, those practices will give rise to reasonable
expectations that they will be continued in the future. Similarly, where it
has given undertakings to members about their future treatment, those
undertakings will give rise to a reasonable expectation that the
undertaking will be fulfilled. The interests arising from this are
encompassed by the expression ‘reasonable benefit expectations’. The
word ‘reasonable’ is important. The Registrar is obliged when
considering a scheme to assess whether the members and pensioners will
receive everything that they could reasonably expect to receive from the
Fund. But that is all.
[36] The Appeal Board upheld Mr Roy’s appeal on two grounds. Firstly
it said that he and the other former PSA pensioners were entitled as of
right to an annual 3% pension increase. As two of the three options made
available to pensioners did not provide for such a right (including the one
elected by Mr Roy and his colleagues) the scheme did not give effect to
their rights. The first requirement identified by the Appeal Board was
accordingly not satisfied. Secondly, it held that the transfer of business
would ultimately lead to the winding-up of the Fund in terms of s 28 of
the Act. That being so, it held that in determining whether the scheme
was reasonable and equitable s 15I(a) of the Act needed to be taken into
account. This provided that any enhancement in the benefits of
pensioners on liquidation should be funded pro rata from the members
surplus account and the employer surplus account. Apart from the initial
8% increase in pensions, which had been funded from the general
surplus, thereby reducing the balance available for apportionment, this
had not occurred when the annuities were purchased and each member’s
benefits were enhanced in 2010. All of the enhancement came from the
member surplus account. For this reason the Appeal Board held that the
scheme was not reasonable and equitable and the second requirement was
not satisfied. It accordingly upheld the appeal and set aside the
Registrar’s decision to approve the s 14 transfer.
The review
[37] Tellumat had not played any role in the proceedings before the
Appeal Board even though it had been given the opportunity to intervene
and make submissions. Its reasons for adopting this approach were
understandable. The Fund was appearing in order to support the
application that it had made and that had been approved by the Registrar.
In addition the Registrar appeared to explain and support the decision. It
was legitimate for Tellumat to take the view that it could add little to the
debate in those circumstances and that its own interests were protected.
[38] All that has changed subsequently because, in the light of the
Appeal Board’s decision, the board of trustees of the Fund has become a
house divided against itself. The member trustees understandably wish to
support the Appeal Board’s conclusion, the effect of which would be that
a substantial portion of the employer surplus account will become
available to enhance pensioner benefits. The employer trustees, although
themselves pensioners, continue to support the original arrangement. This
division of views was the subject of an arbitration and the arbitrator
concluded that the appropriate course for the trustees to take was to abide
the outcome of any proceedings directed at challenging the Appeal
Board’s decision. That left Tellumat’s interests potentially unprotected. In
those circumstances it has a sufficient direct and substantial interest in the
validity of that decision to give it the necessary locus standi to bring these
proceedings by way of judicial review.8
[39] The parties assumed with some justification, as it had also been
assumed in several decisions in this court involving reviews of decisions
of the Appeal Board,9 that the review is one in terms of PAJA.10
However, it was not immediately apparent that a decision of the Appeal
Board was a decision of an administrative nature as required by the
definition of administrative action in PAJA,11 so Tellumat was asked to
furnish supplementary argument in that regard.
[40] The determination of whether something constitutes administrative
action requires a detailed analysis of the nature of the public power or
public function in question in order to determine its true character.12
Tellumat’s argument correctly proceeded from the premise that the
Registrar’s decision in terms of s 14 is administrative action. As the
function of the Appeal Board is to ‘confirm, set aside, or vary’ that
8 Section 38(a) of the Constitution. See Giant Concerts CC v Rinaldo Investments (Pty) Ltd [2012]
ZACC 28; 2013 (3) BCLR 251 (CC) paras 41 and 43; Tulip Diamonds FZE v Minister of Justice and
Constitutional Development and Others [2013] ZACC 19; 2013 (10) BCLR 1180 (CC) para 31. Its
situation is similar to that of COSATU in Sidumo and Another v Rustenburg Platinum Mines Ltd and
Others [2007] ZACC 22; 2008 (2) SA 24 (CC) (Sidumo) para 52.
9 National Tertiary Retirement Fund v Registrar of Pension Funds [2009] ZASCA 41; 2009 (5) SA 366
(SCA) para 26; Registrar of Pension Funds v ICS Pension Fund [2010] ZASCA 63; 2010 (4) SA 488
(SCA) para 10.
10 The Promotion of Administrative Justice Act 3 of 2000.
11 Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005]
ZASCA 43; 2005 (6) SA 313 (SCA) para 21; Minister of Defence and Military Veterans v Motau and
Others [2014] ZACC 18; 2014 (5) SA 69 (CC) (Motau) para 33.
12 Sokhela & others v MEC for Agricultural and Environmental Affairs (KwaZulu-Natal) and Others
[2009] ZAKZPHC 30; 2010 (5) SA 574 (KZP) para 60 quoted with approval in Motau para 34 and
Minister of Home Affairs & others v Scalabrini Centre, Cape Town C2013 (6) SA 421 (SCA) para 52.
decision and to order that the decision of the Appeal Board be given
effect to,13 the Appeal Board’s decision either reaffirms the Registrar’s
decision or substitutes it with a varied or different decision. But the
character of the decision does not change as a result. It remains a decision
in terms of s 14 of the Act. The fact that the decision is made in
proceedings that, under our former administrative law dispensation,
would have been described as quasi-judicial does not affect the matter.14
In the circumstances I am satisfied that the decision by the Appeal Board
constitutes administrative action and is reviewable in terms of PAJA.
[41] The only ground for review to which we need have regard in this
case, is that set out in s 6(2)(e)(iii) of PAJA. That provides that a court
may review administrative action if it was taken because irrelevant
considerations were taken into account or relevant considerations were
not considered. This encapsulates a principle that was part of our
administrative law prior to s 33 of the Constitution or the enactment of
PAJA, namely that a functionary who ‘took into account irrelevant
considerations or ignored relevant ones’15 was liable to have their
decision overturned on review.
[42] In approaching this question a court must be careful not to overturn
a decision on review merely because it disagrees with it. It must be alive
to the fact that it was primarily for the decision maker to determine which
facts are relevant and which not. But, once the court is satisfied that the
decision could only properly be taken if certain facts, overlooked by the
13 Section 26B(15)(a)
14 Sidumo paras 81 to 85 and 125-6.
15 Johannesburg Stock Exchange and Another v Witwatersrand Nigel Ltd and Another [1988] ZASCA
18; 1988 (3) SA 132 (A) at 152 C-D; [1988] 2 All SA 308 (A).
decision maker, were taken into account, it is entitled to interfere.
Similarly once it is satisfied that in taking the decision certain facts that
were taken into account should not have been, it may interfere.16 Even
when all relevant facts were considered the court will have to consider the
weight attached to the facts. The precise point at which a court is entitled
to interfere may not be entirely clear, but as Henning J said many years
ago,17 ‘where a factor which is obviously of paramount importance is
relegated to one of insignificance, and another factor, though relevant is
given weight far in excess of its true value’ interference is warranted. I
would suggest that it is essential.
[43] With the utmost respect to the Appeal Board in the present case it
seems to me that it failed to give sufficient consideration to the fact that
the s 14 application was part of a broader scheme of distribution agreed
upon by the trustees in 2007 when they were dealing with the
apportionment of the surplus. Instead it dealt with the two issues of the
guaranteed 3% annual pension increase and the impact of the possible
dissolution of the fund as if they were discrete issues divorced from the
entire distribution scheme. Nowhere in the Appeal Board’s decision is
there any consideration of the fact that the transfer under consideration
was part of a larger arrangement having its origins in the decision of the
trustees in regard to the apportionment of the surplus. Nor is there any
consideration of the fact that the impact of its decision would necessarily
be that the entire apportionment exercise, held by the arbitrator to have
16 Jacobs en ‘n Ander v Waks en Andere [1991] ZASCA 152; 1992 (1) SA 521 (A) at 550D-H.
17 Bangtoo Bros and Others v National Transport Commission and Others 1973 (4) SA 667 (N) at
685C-D.
been valid and lawful in proceedings by Mr Roy against the Fund, would
be thrown into disarray and have to be revisited.18
[44] After the trustees’ decision in regard to apportionment of the
surplus in 2007, the pensioners had been given an 8% increase in their
pensions. The lowest band of pensioners had received a special increase
in 2008 at a cost of some R5.3 million. The rules of the Fund had been
amended to permit the outsourcing of pensions by way of the purchase of
annuities from an insurer. The members had made their election as to the
nature of the annuities they wanted and the Fund had purchased those
annuities in its own name, at the same time enhancing the actuarial value
attributable to each pensioner. The enhanced pensions payable in terms of
the annuities had been paid. The process would have been quicker, but for
the challenges by Mr Roy and Mr Barnes. And those challenges had
delayed matters for the very reason that the relief that each of them
sought was directed at undoing the distribution scheme and, in particular,
undoing the decision of the trustees in regard to the apportionment of the
surplus. Yet there is no mention of all of this in the Appeal Board’s
decision.
[45] Why was this important? The answer is that if it had been
necessary for the outsourced pensions of all the PSA pensioners to
include a guarantee of a 3% annual increase, different annuities would
have had to be purchased. They would have generated very different
pensions from those that the pensioners, including Mr Roy and Mr Barnes
18 The Appeal Board held that it was not bound by this decision. I am not sure what it meant by that.
Mr Roy and the Fund were certainly bound by it and, apart from the 41 pensioners who were parties to
that arbitration, no other pensioners had any complaint about the apportionment. In those circumstances
I have grave doubts as to the correctness of this statement by the Appeal Board. If it was wrong that
provides a further reason why it was not open to the Appeal Board to make an order having the effect
of overturning that award.
and Mr Myles, obtained as a result of their electing option 1. Those who
elected options 2 or 3 either received a guarantee of a 3% increase or a
guarantee of an inflation linked increase, so they would have had no
grounds for complaint. Only the PSA pensioners who elected option 1,
giving them a considerably enhanced pension without a guaranteed
annual increase, could have advanced this objection. So the people who
were complaining were those who by their own election had decided to
forego a guaranteed 3% increase. They then sought to obtain what they
had foregone, by resisting the transfer to them of the annuities purchased
at their instance, the benefits of which they were reaping on a monthly
basis. The old saying about wanting to have your cake and eat it springs
to mind.
[46] I stress that the amendment of the rules to permit outsourcing of
pensions was not challenged and the proposal of outsourcing emanated
from the trustees elected to represent pensioners. There was likewise no
challenge to the process by which the pensioners made their election and
chose the form of annuity that they wanted. In fact Mr Roy made it clear
that he and those for whom he spoke had no objection to their pensions
being outsourced. But he objected to there being a cost attached to having
a guaranteed annual increase to his pension. But inevitably such
guarantees would come at a cost. To have provided a guarantee to all the
PSA pensioners, would have disadvantaged all pensioners, because the
amount by which their pensions could be enhanced would have
diminished.
[47] One could more readily understand a complaint by Mr Roy and his
colleagues had they elected option 2, in order to preserve their guarantee,
and objected to the fact that the cost of the guarantee was funded by them
by receiving a smaller increase in their current pensions. But instead they
took option 1 and then demanded the guaranteed increase over and above
that.
[48] Unfortunately the Appeal Board did not have regard to any of these
matters. Its approach was that the rules of the Fund, as they related to the
PSA members, provided for the guaranteed increase and only one of the
options offered to the members did so. The Appeal Board held that this
meant that the annuities did not give full recognition to the pensioners’
rights. The fact that they had been given and had exercised an option was
irrelevant. Its view was summed up in a single sentence from its decision:
‘The trustees could not foist on members choices that were not in accordance with
their liabilities.’
[49] But the three choices offered to members were precisely in
accordance with the rules. Under rule 7.1 the trustees were entitled to
purchase annuities for members in a form approved by them. Clearly that
gave them an option as to the form of the annuities and, as one would
expect, they gave the members a choice. If they could only offer members
annuities that mirrored their existing pension rights there would have
been no point in providing in rule 7.2 for the terms of the annuity to be
agreed between the pensioner and the insurer on terms approved by the
trustees. And, once an annuity had been purchased in accordance with the
member’s choice, their rights and reasonable benefit expectations were
those embodied in that annuity and not in provisions of the rules that they
had elected to forego.
[50] As the Appeal Board did not take account of any of these matters
in arriving at its conclusion its decision falls to be reviewed under
s 6(2)(e)(iii) of PAJA. Whether the decision should be set aside depends
on whether it similarly erred in relation to the other ground for its
decision.
[51] Turning to the second ground the Appeal Board’s approach was
that a dissolution or liquidation of the Fund was inevitable and therefore
the question whether the scheme was reasonable and equitable should be
measured against the provisions of the Act dealing with the application of
surplus accounts on liquidation of a fund. Its view was that it was of
primary importance that s 15I(a) provided that on liquidation all credit
balances in both the member and the employer surplus accounts might be
drawn upon proportionately to secure the rights and benefit expectations
of the members participating in the distribution. Only after that had been
done would the employer be entitled to any benefit from what remained
in the employer surplus account.
[52] Unlike its approach to the guaranteed increase the Appeal Board on
this issue did look at the distribution scheme, but only at a single aspect
of it, namely the Fund’s dissolution on completion of the scheme. That
was the basis for its view that s 15I needed to be taken account of in
determining whether the scheme before it was reasonable and equitable.
In my view this entirely overlooked the fact that, assuming there was to
be a dissolution, this was only contemplated after the implementation of
the specific terms of the distribution scheme as agreed to by the trustees
and communicated to the members in 2007. That was not a scheme
involving the enhancement of pension benefits funded from the overall
surplus. It was one that contemplated the apportionment of the surplus
and the provision of enhanced benefits funded largely from the member
surplus account.
[53] The approach of the Appeal Board appears to have been that the
enhanced benefits would have been provided in any event and that it
would not make any difference, save as to the manner in which those
benefits would have been funded, to deal with them as benefits arising on
liquidation. That ignored the fact that the apportionment of surplus agreed
in 2007 was not in any way distinct from the distribution scheme that
accompanied it. In fact all the correspondence with the members was
based on the scheme as a totality. When it was held up by the initial
complaint by Mr Roy forming the subject of the arbitration it was not
abandoned. Instead, once the award was handed down in favour of the
Fund, the chair informed members that they would proceed immediately
with the outsourcing initiative. In communications from the Fund’s
attorneys in 2010 and 2011 it was made plain that the Fund was still in
the process of implementing the original distribution scheme agreed upon
by the trustees.
[54] It could not be assumed by the Appeal Board that the
enhancements to pensions, both initially and when the annuities were
taken out, would have been the same if the funding had to be taken from
the overall surplus. That would have diminished the employer surplus
account and the ultimate benefit the employer would receive from that
account. Would Tellumat have agreed to that? It seems unlikely in the
extreme that it would. The trustees knew what surplus had to be
apportioned. They started negotiating from opposite poles. If it had been
said that any pension enhancements, beyond the original 8% increase,
would have to be funded proportionally by both the member and the
employer surplus account, it is inconceivable that the trustees would have
arrived at the same agreement in regard to the apportionment of the
surplus. The reason is the obvious one that it would have involved a
significant increase in the benefit to be derived from the surplus by
members and a significant decrease in the benefit flowing to Tellumat
from that source. In all likelihood the outcome of the negotiations would
have been substantially different.
[55] In this regard as well, in my view, the Appeal Board, by failing to
reach and locate its decision squarely within the context of the entire
distribution agreement, failed to have regard to the most relevant
consideration in the task confronting it. That constituted reviewable error
in terms of s 6(2)(e)(iii) of PAJA.
[56] That conclusion dictates that we set aside the Appeal Board’s
decision. The question then is whether we should remit the matter to the
Appeal Board, or make a substitution order in terms of s 8(1)(c)(ii)(aa) of
PAJA. Fortunately there has recently been guidance from the
Constitutional Court on the correct approach to making such an order.19
Following the approach explained in that judgment the most relevant
factors seem to me to be these. The surplus apportionment was
undertaken in 2007, when the distribution scheme was implemented. The
validity of that apportionment was upheld by the arbitration award in
November 2009. The three subsequent attempts to derail the process have
all, directly or indirectly, been directed at the same goal, namely setting
aside the apportionment. All of them have failed. In the meantime the
Fund has in good faith and at the instance of the majority of pensioners
proceeded to implement the scheme. There can be no doubt that this is
19 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd & another
[2015] ZACC 22.
what the general body of pensioners wishes it to do. Further delay is
undesirable and in any event I think that the outcome of a remittal would
inevitably be that the appeal by Mr Roy would be dismissed.
[57] For those reasons this is a case where the court should not remit the
matter but should substitute the decision of the Appeal Board with the
decision that it should have made. Accordingly the following order is
made:
The appeal is upheld.
The decision by the Gauteng Division, Pretoria is set aside and
altered to read as follows:
‘(a) The decision by the Appeal Board of the Financial Services
Board in the appeal by Mr Roy, the third respondent, against the
decision by the Registrar of Pension Funds to approve, in terms of
section 14 of the Pensions Act 24 of 1956, the application by
Tellumat Pension Fund under reference S14-092-11, is hereby set
aside.
(b) The decision by the Appeal Board is replaced by the following:
“The appeal is dismissed.’
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
P B J FARLAM SC
Instructed by:
Alastair
Morrison
Van
Huyssteen
Attorneys,
Bellville
McIntyre & Van der Post , Bloemfontein
For respondent:
No appearance.
|
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 December 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.
Tellumat (Pty) Ltd v Appeal Board of the Financial Services Board
[2015] ZASCA 202 and Registrar of Pension Funds v Financial
Services Appeal Board [2015] ZASCA 203 .
The SCA today delivered judgment in these two appeals. Both arose out
of a decision by the Registrar of Pension Funds to approve the transfer to
pensioners of the Tellumat Pension Fund of annuity insurance policies
selected by the pensioners for the purpose of providing them with the
benefits they would otherwise have had to obtain from the Fund. The
decision was taken on review to the Appeal Board and set aside. Both the
employer, Tellumat (Pty) Ltd and the Registrar challenged the Appeal
Board’s decision by way of judicial review. Their applications were
dismissed and they appealed to the SCA.
The SCA dismissed the Registrar’s appeal on the grounds that she lacked
locus standi to challenge the decision of the Appeal Board. It held that to
permit a review would be contrary to the purpose of the legislature in
establishing the Appeal Board with the power to hear appeals against the
Registrar’s decisions and either to confirm those decisions or to vary or
set them aside and replace them with its own.
The SCA upheld Tellumat’s appeal. It said that the Appeal Board had
failed to pay sufficient regard to the fact that the application for the
Registrar’s approval was part of a larger distribution scheme properly
agreed upon by the Fund’s trustees. The effect of its order would have
been to disturb that scheme and require the actions taken pursuant to it
from 2007, with the support of the majority of pensioners, to be
overturned and revisited. Instead of considering the scheme as a whole
and the part the transfer would play in that scheme it treated the issues
before it as discrete and separate from the scheme. This failed to
recognise that the arrangements between the parties, which included
substantial improvements in existing pensions would not have been the
same were the issue to be approached on the basis it had done. Its
decision was accordingly set aside.
|
4152
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1024/2022
In the matter between:
HOUGH & BREMNER INC
FIRST APPELLANT
ANITA ERNESTO CHIAU
SECOND APPELLANT
and
THE ROAD ACCIDENT FUND
RESPONDENT
Neutral citation: Hough & Bremner and Another v The Road Accident Fund
(1024/2022) [2023] ZASCA 179 (18 December 2023)
Coram:
MOCUMIE and WEINER JJA and KOEN, CHETTY and
KEIGHTLEY AJJA
Heard:
Matter disposed of without oral hearing in terms of s 19(a) of the
Superior Courts Act 10 of 2013
Delivered:
This judgment was handed down electronically by circulation to
the parties’ representatives by email, published on the Supreme
Court of Appeal website, and released to SAFLII. The date and
time for hand-down is deemed to be 11h00 on 18 December
2023.
Summary: Civil procedure and practice – Contingency Fees Agreement Act 66 of
1997 – high court finding that the fees agreement concluded between the appellants
was a contingency fee agreement, and setting it aside – refusing to make the
settlement agreement between the second appellant and the Road Accident Fund an
order of court and amending its terms without affording the parties a right to address
it – whether the high court was empowered to grant orders not sought and against a
party not cited in the proceedings.
ORDER
On appeal from: Mpumalanga Division of the High Court, Mbombela (Legodi JP
sitting as court of first instance):
The appeal is upheld.
The order of the high court is set aside and replaced with the following:
‘The settlement agreement concluded between the parties on 7 March 2022 is
made an order of court.’
JUDGMENT
Weiner JA (Mocumie JA, Koen, Keightley and Chetty AJJA concurring)
Introduction
[1] This is an appeal against the judgment and order of the Mpumalanga Division
of the High Court per Legodi JP (the high court), concerning a claim against the
Road Accident Fund (RAF). The appeal is the fourth of the appeals 1 that have come
before this Court on the same issue (fee agreements concluded between attorneys
and their clients) since 2022 to date. All the appeals center around whether fee
agreements concluded between attorneys and their clients, which make provision,
inter alia, for fees to be paid at the conclusion of the matter, are Contingency Fee
1 Mucavele and Another v MEC for Health, Mpumalanga Province (889/2022) [2023] ZASCA 129 (11 October
2023) (Mucavele); Majope and Others v The Road Accident Fund (663/2022) [2023] ZASCA 145 (Majope); Sibiya
v Road Accident Fund: In the matter of Chiau v Road Accident Fund (557/2016 1150/20) [2022] ZAMPMBHC 40
(2 June 2022) (Sibiya) – overruled by this Court in Danny Joseph Sibiya and Others v Road Accident Fund
(1067/2022) [2023] ZASCA 171 (05 December 2023) (Sibiya SCA); three from Legodi JP and one from Roelofse J.
Agreements (CFA), which can be set aside if they do not comply with the
Contingency Fees Act 66 of 1997 (the Act). This appeal involves a claim against the
RAF, where orders were made by the high court, inter alia, against the first
appellant, Hough & Bremner (H&B) Inc, a firm of attorneys, and their client, the
second appellant, Anita Ernesto Chiau (Ms Chiau). H&B, which was not a party to
the proceedings, obtained leave from the high court to join in the proceedings and it
and Ms Chiau applied for leave to appeal the judgment and order. The high court
refused leave to appeal. As a result, the appellants petitioned this Court, which
granted leave to appeal to it. The RAF does not oppose the appeal and abides the
decision of this Court.
[2] The high court reviewed and set aside a fee agreement dated 11 September
2015 (the fee agreement) that was entered into between H&B and Ms Chiau on the
basis that it was a CFA, which did not comply with the formal requirements of the
Act. It also refused to make a settlement agreement, concluded between Ms Chiau
and the RAF, an order of court, and made orders which were not sought by any of
the parties. These included orders against H&B, which was not a party to the
proceedings at that stage.
Background
[3] To arrive at the conclusion I have reached, a brief background is necessary.
H&B represented Ms Chiau in a delictual claim instituted against the RAF in the
high court for damages suffered as a result of injuries sustained in a motor vehicle
collision that occurred on 20 July 2015 in Mpumalanga. The fee agreement was
entered into on 11 September 2015, prior to the institution of the action.
[4] The action was settled between Ms Chiau and the RAF on 7 March 2022. In
terms of the settlement, the RAF accepted liability to pay 100% of Ms Chiau’s
proven or agreed damages that resulted from the collision and undertook to:
(a)
pay Ms Chiau an amount of R1 034 470.20, in full and final settlement, in
respect of loss of earnings and general damages suffered as a result of the collision;
(b)
provide Ms Chiau with an undertaking in terms of s 17(4)(a) of the Road
Accident Fund Act of 1996 to cover her future medical expenses suffered as a result
of the collision;
(c)
pay her taxed costs, incurred in the action, on the scale as between party and
party.
[5] The trial was set down for hearing in the high court for 14 March 2022. In
view of the settlement, H&B filed the settlement agreement, Notice of Acceptance,
and affidavits by both Ms Chiau and H&B confirming that no contingency fee
agreement had been concluded. Legodi JP, concerned as to whether no contingency
fee agreement was concluded, refused to allocate the matter to proceed on 14 March
2022.
[6] This was followed by a directive from Legodi JP removing the matter from
the roll and requesting certain information from H&B, under oath, relating to the
funding of the legal fees in the case. The questions revolved around whether the fee
agreement between H&B and Ms Chiau constituted a CFA within the ambit of the
Act. The query related to the following:
‘The suggestion that no contingency fee agreement has been concluded pre-supposes that the
plaintiff and his or her attorney agreed on a specific amount of a fee for the litigation when the
instructions were taken and that the agreed fee was so paid by the plaintiff…’
[7] In response to the list of questions, Mr Eastes of H&B, the attorney who acted
on behalf of Ms Chiau, on 8 March 2022, filed an affidavit in which he set out in
detail the background to his firm and Ms Chiau entering into the fee agreement,
which he attached to the affidavit. The fee agreement contained, inter alia, the
following provisions;
‘…
3.4.3 that the fee agreement is not a contingency fee agreement as defined in the Contingency Fee
Act, Act 66 of 1997;
3.4.4 plaintiff shall at all times be liable for payment of the attorney’s fees and disbursements,
including VAT, unless otherwise agreed in writing and signed by plaintiff;
3.4.5 that the accounts shall be delivered to plaintiff in respect of disbursements as soon as they
are incurred, and interim accounts in respect of attorney’s fees from time to time as well as
comprehensive accounts at the conclusion of the matter, unless otherwise agreed in writing and
signed by plaintiff;
3.4.6 plaintiff shall be liable upon demand by me to pay a deposit in respect of attorney’s fees and/
or disbursements…’
Mr Eastes went on to state:
‘3.11 On 15 February 2022, I consulted with the plaintiff and the plaintiff confirmed under oath
that she did not enter into a contingency fee agreement as defined in the Contingency Fee Act,
1996 with myself and I append hereto a copy of the plaintiff’s affidavit, dated 15 February 2022
marked annexure “C”;
3.12 I confirm that a copy of the affidavit by the plaintiff, mentioned in paragraph 3.11 above was
served on the State Attorney…;
3.13 I respectfully submit, that the fee agreement entered between the plaintiff and Hough Bremner
Inc, annexure “B” hereto, represents my normal fee, taking cognizance of my years of experience
and expertise, as I dealt with the matter from the outset;
3.14 I respectfully submit that the payment of the professional fees are not subject to the successful
completion of a claim against the defendant and I respectfully refer the above Honorable Court to
paragraph 2 of the agreement of fees as between attorney and own client, dated 11 September
2015, annexure “B” hereto and therefore it is not a contingency fee agreement, as contemplated in
the Contingency Fee Act, 66 of 1997.’
[8] Further directives emanated from Legodi JP. The pertinent ones which formed
the basis of his judgment were:
‘2.1. When was such fee agreed upon?
2.2. When was such fee paid in total?
2.3. What is the amount of the fee agreed upon?
2.4. If no fee was paid or was paid in part, when was such a fee or remaining part thereof
supposed to be paid?
2.5. If no fee was paid, what is the basis upon which it is alleged no contingency fee agreement
was concluded?’
H&B responded that the firm was to deliver a comprehensive account at the
completion of the matter, at which time, irrespective of the outcome of the
litigation, Ms Chiau would be liable to pay the fees.
[9] Legodi JP, mero motu, determined the present matter together with that of
Danny Joseph Sibiya and Others v Road Accident Fund (Sibiya)2 in which a
settlement agreement had been concluded between the parties, and handed down one
judgment in respect of both matters. The reasons for this approach are unclear save
for the finding that the fee agreements in both matters were in breach of the Act.
Despite evidence from Mr Sibiya and his attorneys that the fee agreement entered
into was a party and party agreement, the high court found otherwise. In Sibiya the
high court made a number of far reaching orders, none of which had been sought by
the parties. This Court, in setting aside the judgment of the high court, held that there
was no basis to interpret the fee agreement as a CFA nor was there any basis to
invoke rule 70(5A)(d)(ii) in the absence of any misconduct on the part of Mr Sibiya
2 Fn 1 above.
or his attorney at the taxation. This Court in Sibiya SCA,3 overruled the high court
on a similar basis - lack of audi alteram partem for the parties before the court made
far reaching orders affecting attorneys who were not a party to the action. Sibiya
was decided together with this case by Legodi JP in chambers.
[10] On 02 June 2022, the high court delivered the judgment (the subject of this
appeal) and ordered that:
‘84.1 The fee agreement concluded between [plaintiff] and [her] attorneys is hereby reviewed and
set aside for the reasons set out in this judgment;
84.2 The defendant to pay the costs of litigation to the [plaintiff] on a party and party scale as
agreed between the parties;
84.3 An amount of R1 034 470.00 awarded to the plaintiff by the defendant to shall be paid directly
to the plaintiff within 90 days from date of this order and the Road Accident Fund to take
reasonable steps to ensure that the capital amount is directly paid to the plaintiff;
84.4 The Legal Practice Council to consider the appropriateness or otherwise of the conduct of the
plaintiff’s attorneys of record;
84.5 The plaintiff’s attorneys of record to bring this judgment to the attention of the plaintiff by
explaining the contents thereof to the plaintiff and to provide an affidavit by not later than Friday
10 June 2022 confirming that the order in this paragraph has been complied with.’
[11] Thus, contrary to the averments of H&B and Ms Chiau that the fee agreement
was not a CFA within the ambit of the Act, the high court found that it was and that
it was unlawful because it did not comply with the formal requirements of the Act.
The high court thus reviewed and set it aside on that basis. There are at least three
anomalies which arise from the above orders which were not sought by any of the
parties. One, the RAF has no obligation to pay the costs to Ms Chiau as ordered.
Two, these orders were made against H&B, when it was not a party to the
3 Fn 1
proceedings and without it being given an opportunity to be heard on these issues.
Three, it is thus deprived, not only of its right to claim its fees from its client, but
also of its right to recover the costs from the RAF. The high court also refused to
make a settlement agreement, concluded between the parties, an order of court.
[12] As stated by this Court in Majope, ‘even if the fee structure agreement was an
agreement that was hit by the Contingency Fees Act, as the high court found, that in
itself was not a proper basis to deprive [the attorneys] of the right to recover their
fees for the services rendered to Ms Majope and Mr Machabe. It is particularly
concerning that these extraordinary orders were against [the attorneys] when they
were not parties to the case before the high court.’4
[13] The approach of the high court appears to be that any agreement, not
providing for payment of fees by the litigant prior to the finalisation of litigation,
constitutes a CFA within the ambit of the Act. On authority of the two precedents
referred to (Mucavele and Majope), this approach is clearly wrong. Legodi JP was
entitled to enquire whether there was a CFA and to have sight of the fee agreement,
in order to exercise judicial oversight as contemplated by s 4 of the Act.5 He was
4 Majope fn 1 para 11.
5 4. Settlement
‘(1) Any offer of settlement made to any party who has entered into a contingency fees agreement, may be accepted
after the legal practitioner has filed an affidavit with the court, if the matter is before court, or has filed an affidavit
with the professional controlling body, if the matter is not before court, stating—
(a) the full terms of the settlement;
(b) an estimate of the amount or other relief that may be obtained by taking the matter to trial;
(c) an estimate of the chances of success or failure at trial;
(d) an outline of the legal practitioner’s fees if the matter is settled as compared to taking the matter to trial;
(e) the reasons why the settlement is recommended;
(f) that the matters contemplated in paragraphs (a) to (e) were explained to the client, and the steps taken to ensure
that the client understands the explanation; and
(g) that the legal practitioner was informed by the client that he or she understands and accepts the terms of the
settlement.
(2) The affidavit referred to in subsection (1) must be accompanied by an affidavit by the client, stating—
(a) that he or she was notified in writing of the terms of the settlement;
(b) that the terms of the settlement were explained to him or her and that he or she understands and agrees to them;
and
not, however, entitled to ignore the responses he received, clearly stating that the fee
agreement was not a CFA and, without affording the parties an opportunity to be
heard, declare that the fee agreement was a CFA, and set it aside.
[14] Both merits and quantum had been settled and the matter had been removed
from the roll. Accordingly, what was before the high court? A settlement agreement
between the parties to the action to be made an order of the court. Despite this, the
high court disregarded the principle expressed in Fischer and Another v Ramahlele
and Others (Fischer),6 where this Court cautioned that it was for the parties to
‘define the nature of their dispute and it is for the court to adjudicate upon those
issues’.7 Fischer also stated that, in certain instances, a court may mero motu raise a
question of law if it arises from the evidence and is required for a decision in the
case. But as held in Mucavele:
‘The legality of the contingency fee arrangement was not such a question. Most recently, in
the Road Accident Fund v MKM obo KM and Another; Road Accident Fund v NM obo CM and
Another, this Court clarified that a contingency fee agreement ‘is a bilateral agreement between
the legal practitioner and his or her client. It has nothing to do with a party against whom the client
has a claim.’ Furthermore, an invalid or unlawful contingency fee agreement would not necessarily
invalidate the underlying settlement agreement. The high court failed to consider whether the
validity of the contingency fee agreement was severable from the rest of the settlement
agreement.’8
(c) his or her attitude to the settlement.
(3) Any settlement made where a contingency fees agreement has been entered into, shall be made an order of court,
if the matter was before court.’
6 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395
(SCA).
7 Ibid para 13. See also Bliss Brand (Pty) Ltd v Advertising Regulatory Board NPC and Others [2023] ZACC 19;
2023 (10) BCLR 1153 (CC) and further authorities cited in that judgment; De Nysschen v Government Employees
Pension Fund and Others (864/2022) [2023] ZASCA 147 (09 November 2023).
8 Mucavele fn 1 paras 15 and 16
[15] The high court erred in the same manner in this case. For this and the other
reasons set out above, the order by the high court ought to be set aside. It is opportune
after four appeals from the same court, on more or less the same facts,9 to state that
there is at this stage sufficient authority that, first, a fee agreement that provides that
the fees and disbursements due to an attorney be paid on the finalisation of a matter
is not necessarily a CFA which stands to be set aside for non-compliance with the
Act. Second, and, as stated in Mucavele, in any event, ‘an invalid or unlawful
contingency fee agreement would not necessarily invalidate the underlying
settlement agreement’.
[16] In the result, the following order is made:
The appeal is upheld.
The order of the high court is set aside and replaced with the following:
‘The settlement agreement concluded between the parties on 7 March 2022 is
made an order of court.’
___________________
S E WEINER
JUDGE OF APPEAL
9 Cases referred to in fn 1.
Appearances
For the appellant:
Heads of Argument prepared by J G Cilliers SC
Instructed by:
Hough & Bremner Inc, Mbombela
Pieter Skein Attorneys, Bloemfontein
For the respondent:
No opposition was filed by the Respondent
Instructed by:
State Attorney, Nelspruit
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:
18 December 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Hough and Bremner and Another v The Road Accident Fund (1024/2022) [2023] ZASCA 179 (18
December 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against the
decision of the Mpumalanga Division of the High Court, Mbombela (the high court) and replaced it with
the following order: ‘The settlement agreement concluded between the parties on 7 March 2022 is made
an order of court.’
This matter involved a claim against the Road Accident Fund (RAF), where orders were made by the
high court, inter alia, against the first appellant Hough & Bremner (H&B), a firm of attorneys and their
client, the second appellant, Ms Chiau. H&B represented Ms Chiau in a delictual claim instituted against
the RAF in the high court for damages suffered as a result of injuries sustained in a motor vehicle
collision that occurred on 20 July 2015. A fee agreement was entered into on 11 September 2015, prior
to the institution of the action. The action was settled between Ms Chiau and the RAF on 7 March 2022.
In view of the settlement, a notice of removal from the trial roll was filed. H&B also filed the Settlement
Agreement, Notice of Acceptance, and affidavits by both Ms Chiau and H&B confirming that no
contingency fee agreement had been concluded. This was followed by a directive from Legodi JP in
the form of a questionnaire requesting certain information from H&B, under oath, relating to the funding
of the legal fees in the case. The questions revolved around whether the fee agreement between H&B
and Ms Chiau constituted a contingency fee agreement (CFA) within the ambit of the Contingency Fees
Act (the Act). In response to the queries, Mr Eastes of H&B set out in detail the background to his firm
and Ms Chiau entering into the fee agreement stipulating that the fee agreement was not a contingency
fee agreement as defined in the Act; that Ms Chiau would at all times be liable for payment of the
attorney’s fees and disbursements; that the accounts would be delivered to Ms Chiau in respect of
disbursements as soon as they were incurred; and interim accounts would be delivered in respect of
attorney’s fees from time to time as well as comprehensive accounts at the conclusion of the matter;
and that she would be liable upon demand by Mr Eastes to pay a deposit in respect of attorney’s fees
and/ or disbursements.
Despite the explanations given by H&B, on 02 of June 2022, the high court delivered judgment and
ordered that the fee agreement entered between H&B and Ms Chiau be reviewed and set aside. The
high court found the fee agreement to be unlawful on the basis that it was a CFA within the ambit of the
Act and it did not comply with the formal requirements of the Act. It also refused to make the settlement
agreement, concluded between the parties, an order of court and made orders which were not sought
by any of the parties, and against H&B, which was not a party to the proceedings. It ordered the RAF
to pay the agreed quantum as well as the costs directly to Ms Chiau.
Aggrieved by the high court’s order, H&B applied to be joined and it and Ms Chiau applied for leave to
appeal which was refused. As a result, the appellants jointly petitioned this Court, which granted leave
to appeal. The RAF did not oppose the appeal and abided the decision of this Court.
The SCA disagreed with the high court’s approach that any agreement, that did not provide for payment
of fees by the litigant prior to the finalisation of litigation, constituted a CFA within the ambit of the Act.
The SCA also held that the orders granted were not sought by any of the parties. The RAF had no
obligation to pay the costs to Ms Chiau as ordered by the high court. This order was made against H&B,
when it was not a party to the proceedings and without it being given an opportunity to be heard on
these issues. H&B was thus deprived, not only of their right to have claimed their fees from their client,
but also of their right to have recovered the costs from the RAF. The SCA held that ‘even if the fee
structure agreement was an agreement that was hit by the Act, as the high court found, that in itself
was not a proper basis to deprive the attorneys of the right to recover their fees for the services
rendered’. The SCA further held that the high court disregarded the principle that it was for the parties
to ‘define the nature of their dispute and it was for the court to adjudicate upon those issues’. Based
on those findings, the SCA upheld the appeal and ordered that the settlement agreement concluded
between the parties on 7 March 2022 be made an order of court.
~~~~ends~~~~
|
1313
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 102 / 09
Case no: 499 / 09
THE OCCUPIERS, SHULANA COURT, 11 HENDON ROAD,
YEOVILLE, JOHANNESBURG
Appellants
and
MARK LEWIS STEELE
Respondent
___________________________________________________________________________
Neutral citation:
The Occupiers, Shulana Court, 11 Hendon Road, Yeoville,
Johannesburg v Steele
(102/09 and 499/09) [2010] ZASCA 28 (25 March 2010)
BENCH:
MPATI P, VAN HEERDEN, MHLANTLA, SHONGWE JJA and
THERON AJA
HEARD:
18 February 2010
DELIVERED:
25 March 2010
SUMMARY:
Rescission of Judgment – good cause shown – bona fide defence based on
non-compliance with s 4(6) and (7) of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998 and s 26(1) and
(3) of the Constitution.
______________________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Satchwell J and
Tsoka J, respectively, sitting as courts of first instance).
The rescission appeal (case no 499/09) is upheld with costs including the
costs of two counsel.
The order of the high court is replaced with the following:
‘(a)
The default judgment granted against the applicants on 18 June 2008
is rescinded and the applicants are granted leave to oppose the
application for their eviction.
(b)
The applicants are directed to file their opposing affidavits within the
time period prescribed by the Uniform Rules of this Court and the dies
in this respect will be calculated as from the date of this order.
(c)
The costs of this application are reserved for the trial court.’
No order as to costs is made in the appeal against the order of eviction (case
no 102/09).
_____________________________________________________________________________________________
JUDGMENT
__________________________________________________________________
THERON AJA
(MPATI P, VAN HEERDEN, MHLANTLA
and SHONGWE JJA concurring)
[1] The appellants are a group of people who occupy property situated at 11
Hendon Road, Yeoville in central Johannesburg (the property). A curious feature
of this matter is that there are two appeals before this court. One is directed against
an order of eviction that was granted by default against the appellants and the other
relates to the dismissal of an application for rescission of the order of eviction.
Both Satchwell J (who granted the eviction order) and Tsoka J (who refused the
rescission application) granted the appellants leave to appeal to this court. The
parties were agreed that if the rescission appeal was successful it would be
determinative of the entire matter.
[2] The respondent, Mr Mark Steele, became the owner of the property on 9
February 1993. The property consists of four large flats and three separate rooms,
which were originally staff quarters. These flats and rooms have been divided into
multiple units with each unit being occupied by several people. According to the
respondent, the appellants have occupied the property in terms of oral agreements
of lease. In terms of the agreements, their tenancy was on a periodic monthly basis
and the monthly rental was R1 239 per flat and R266 per room. It was alleged by
the respondent that the property had become run down, dilapidated and
overcrowded. He consequently decided to renovate it and terminated all the leases.
[3] On 30 October 2007, the respondent gave the appellants notice of
termination of their respective leases and they were given three months, until 31
January 2008, to vacate the property. None of the appellants vacated the property
by the due date. During April 2008, the respondent instituted eviction proceedings
against the appellants in the South Gauteng High Court (Johannesburg). The
appellants failed to oppose those proceedings and on 18 June 2008, the high court
granted the eviction order in terms of which the appellants were directed to vacate
the property. The appellants subsequently applied for rescission of the eviction
order, which application was dismissed by Tsoka J.
[4] Before us, as in the court below, the appellants relied on the common law, as
well as Uniform rule 42(1) for their claim for rescission. It is trite that in terms of
the common law, an applicant, in order to be successful in an application for
rescission, is required to show good cause. Generally, an applicant will establish
good cause by giving a reasonable explanation for his or her default and by
showing that he or she has a bona fide defence to the plaintiff's claim which prima
facie has some prospect of success.1
[5] Mr Muzikayifani Ngcobo, one of the occupiers of the property, deposed to
an affidavit in support of the rescission application, in which he set out his and the
remaining appellants’ personal circumstances and explained why they had failed to
1 Chetty v Law Society, Transvaal 1985 (2) SA 756 (A) at 765B-C; Colyn v Tiger Food Industries Ltd t/a Meadow
Feed Mills (Cape) 2003 (6) SA 1 (SCA) para 11.
appear in court on 18 June 2008. Ngcobo, his two wives and their children have
been residing in a single room on the property since 1992. According to Ngcobo,
approximately 70 people reside on the property, including children and disabled
persons and women who are household heads, most of whom have been living on
the property for a considerable number of years. Ngcobo described the occupiers as
poor, the majority of whom earn a living as hawkers selling goods such as sweets
and cigarettes from informal stalls set up in the inner city area. According to
Ngcobo, he and some of the appellants have - he does not specify when - searched
for alternate accommodation in the inner city but could not find anything that they
could afford. Ngcobo gave a plaintive description of his previous homelessness,
which was a result of being evicted.
[6] In respect of their failure to appear in court, Ngcobo states that after the
eviction papers were served on him and the remaining appellants, he, on behalf of
the appellants, sought assistance from the Inner City Resources Centre (the ICRC),
a non-governmental organization which provides assistance to people threatened
with eviction. Ms Shereza Sibanda, from the ICRC, unsuccessfully attempted to
secure legal representation for the appellants. According to Ngcobo, the appellants
had assumed that the ICRC would take all the necessary steps to oppose the
eviction application. On 13 June 2008, the Centre for Applied Legal Studies
(CALS), which had been contacted by Sibanda, advised Ngcobo that it would not
be able to assist the appellants. Ngcobo again contacted the ICRC, and discovered
that Sibanda was in Kenya. According to Ngcobo, he and the remaining appellants
had believed that the ICRC would appear in court on their behalf on 17 June 2008,
the date on which the eviction application was to be heard. Early in the morning of
17 June 2008, he again contacted the ICRC. He was advised that Sibanda was not
yet in the office. Later that morning, he went to the ICRC offices. It was only then
that Sibanda, who had just returned from Kenya, became aware of the fact that
CALS had declined to assist the appellants. Sibanda indicated that it was ‘too late
to attend court, because an order [of eviction] had most likely already been
granted’.
[7] It is apparent from the facts that the appellants failed to appear in court
because they genuinely believed that they were being assisted by the ICRC. The
appellants assumed that the ICRC would take all the necessary steps to oppose the
eviction application. Ngcobo explained that he and the remaining appellants had
not understood that the ICRC could not itself provide them with legal
representation and appear in court on their behalf.
[8] The appellants did take steps to secure legal assistance in opposing the
eviction application. It had clearly always been their intention to oppose the matter.
They failed to appear in court because they bona fide, but mistakenly believed that
they would be represented. That he had contacted the ICRC on the morning of the
hearing and later personally called at their offices, is confirmation of this fact. The
explanation for their non-appearance is reasonable and I am satisfied that they
were not in wilful default.
[9] The appellants relied on two grounds in support of their assertion that they
have a bona fide defence. First, they contended that in terms of s 4(6) and 4(7) of
the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19
of 1998 (PIE), a court can only grant an eviction order once it is satisfied that it is
just and equitable to do so. It was further contended that although the eviction
application was not opposed in the high court, there was sufficient evidence before
the court to have alerted it to the fact that the occupiers of the property were poor
and faced the very real prospect of homelessness if evicted. Thus, so it was
submitted, they were entitled to protection in terms of s 26(1) and (3) of the
Constitution. Second, it was argued that where the grant of an order of eviction
may result in the occupiers of the property being homeless, the municipality was a
necessary party to the proceedings and the failure to join the municipality rendered
the grant of the eviction order premature.
[10] Section 26 of the Constitution, which entrenches the right to housing,
provides that:
‘(1)
Everyone has the right to have access to adequate housing.
(2)
The state must take reasonable legislative and other measures, within its available
resources, to achieve the progressive realisation of this right.
(3)
No one may be evicted from their home, or have their home demolished, without an order
of court made after considering all the relevant circumstances. No legislation may permit
arbitrary evictions.’
Section 26(1) imposes a negative duty on the state not to interfere with or deprive a
person of existing access to adequate housing.2 Section 26(2) creates a positive
obligation on the state to devise and implement a reasonable housing programme.
In Government of the Republic of South Africa & others v Grootboom & others,3
the Constitutional Court held that a housing programme could only be reasonable
if it provided emergency shelter to people in desperate need who, for whatever
reason, faced the prospect of homelessness. The right to be protected from
arbitrary eviction, as contained in s 26(3) of the Constitution, is given effect to
through various provisions of PIE. One of the primary objectives of PIE is to
2 Jaftha v Schoeman & others; Van Rooyen v Stoltz & others 2005 (2) SA 140 (CC) paras 32-34.
3 2001 (1) SA 46 (CC) paras 52, 63 and 69.
ensure that evictions take place in a manner consistent with the values of the
Constitution.4 PIE prescribes the requirements which must be satisfied before a
court may grant an order of eviction. Of relevance to this application are ss 4(6)
and 4(7) which provide that a court may only grant an eviction order if it is just and
equitable to do so, after considering all the relevant circumstances. These sections
read:
‘4(6) If an unlawful occupier has occupied the land in question for less than six months at the
time when the proceedings are initiated, a court may grant an order for eviction if it is of
the opinion that it is just and equitable to do so, after considering all the relevant
circumstances, including the rights and needs of the elderly, children, disabled persons
and households headed by women.
(7) If an unlawful occupier has occupied the land in question for more than six months at the
time when the proceedings are initiated, a court may grant an order for eviction if it is of
the opinion that it is just and equitable to do so, after considering all the relevant
circumstances, including, except where the land is sold in a sale of execution pursuant to
a mortgage, whether land has been made available or can reasonably be made available
by a municipality or other organ of state or another land owner for the relocation of the
unlawful occupier, and including the rights and needs of the elderly, children, disabled
persons and households headed by women.’
In terms of s 4(6) and 4(7), a court is obliged to consider the rights and needs of the
elderly, children, disabled persons and households headed by women. These are
4 Port Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) para 11.
specifically listed as relevant factors to which a court must have regard. In terms of
s 4(7), the court is also obliged to consider the availability of alternative land for
the relocation of an occupier. Where information relating to these matters is not
placed before the court, the court will not be in a position to consider these
circumstances in determining whether the eviction was just and equitable.5
[11] Our courts have recognised that there is a duty on them, in eviction matters,
to consider all relevant circumstances and that they are not in a position to
discharge this duty where information relating to, inter alia, the rights and needs of
the elderly, children, disabled persons and households headed by women, has not
been placed before them.6 This constitutional approach was explained by Sachs J
in Port Elizabeth Municipality v Various Occupiers:7
‘The obligation on the court is to “have regard to” the circumstances, that is, to give them due
weight in making its judgment as to what is just and equitable. The court cannot fulfil its
responsibilities in this respect if it does not have the requisite information at its disposal. It needs
to be fully apprised of the circumstances before it can have regard to them. It follows that,
although it is incumbent on the interested parties to make all relevant information available,
technical questions relating to onus of proof should not play an unduly significant role in its
5 Occupiers of Erf 101, 102, 104 and 112 Shorts Retreat, Pietermaritzburg v Daisy Dear Investments (Pty) Ltd &
others [2009] 4 All SA 410 (SCA); [2009] ZASCA 80 paras 5-6.
6 Transnet t/a Spoornet v Informal Settlers of Good Hope & others [2001] 4 All SA 516 (W); Port Elizabeth
Municipality v Various Occupiers 2005 (1) SA 217 (CC); Ritama Investments v Unlawful Occupiers of Erf 62
Wynberg [2007] JOL 18960 (T); Cashbuild (South Africa) (Pty) Ltd v Scott & others 2007 (1) SA 332 (T);
Occupiers of Erf 101, 102, 104 and 112 Shorts Retreat, Pietermaritzburg v Daisy Dear Investments (Pty) Ltd.
7 2005 (1) SA 217 (CC).
enquiry . . . Both the language of the section and the purpose of the statute require the court to
ensure that it is fully informed before undertaking the onerous and delicate task entrusted to it.
In securing the necessary information, the court would therefore be entitled to go beyond the
facts established in the papers before it. Indeed, when the evidence submitted by the parties
leaves important questions of fact obscure, contested or uncertain, the court might be obliged to
procure ways of establishing the true state of affairs, so as to enable it properly to “have
regard” to relevant circumstances.’8 (Emphasis added and footnotes omitted.)
[12] PIE imposed a new role on the courts in that they are required to hold the
balance between illegal eviction and unlawful occupation and ensure that justice
and equity prevail in relation to all concerned.9 Sachs J, in Port Elizabeth
Municipality, described this new role of the court as ‘complex, and constitutionally
ordained’10 and one which required a court ‘to go beyond its normal functions, and
to engage in active judicial management’.11 A number of courts, including this
court, have, in relation to the provisions of s 4 of PIE, recognised the duty of the
court to act proactively, as well as its powers to investigate, call for further
evidence or make special protective orders.12 In Shorts Retreat,13 Jafta JA stated
that s 4 obliges courts to be ‘innovative’ and in some instances, ‘to depart from the
conventional approach’.
8 Para 32.
9 Port Elizabeth Municipality v Various Occupiers para 13.
10 Ibid.
11 Para 36.
12 See the authorities listed in n 6 above.
13 Para 14.
[13] In terms of s 4(7) a court is obliged, in addition to the circumstances listed in
s 4(6), namely, the rights and needs of the elderly, children, disabled persons and
households headed by women, to give due weight to the availability of alternative
land. There is nothing to suggest that in an enquiry in terms of s 4(6), a court is
restricted to the circumstances listed in that section. The court must have regard to
all relevant circumstances. The circumstances identified are peremptory but not
exhaustive.14 The court may, in appropriate cases, have regard to the availability
of alternative land. However, where the availability of alternative land is relevant,
then it is obligatory for the court to have regard to it.
[14] I turn now to consider whether the high court had, in granting the eviction
order, properly discharged its statutory obligations. In his founding affidavit, the
respondent had alleged that the property was extremely old, dilapidated and
overcrowded, with the flats and rooms having been informally subdivided into
multiple living quarters. It was also apparent from the evidence that the appellants
had paid relatively low rentals. Information relating to the needs of the elderly,
children, disabled persons and households headed by women was not placed before
the court. In my view, the court was not in a position to have regard to all relevant
14 Port Elizabeth Municipality v Various Occupiers above n 7 para 30. Although the court referred specifically to s
6, there is no reason why this reasoning should not apply to s 4 as well.
circumstances as the necessary information was not placed before it. It did not
have the views of the municipality which was best placed to inform the court of the
availability of land within its jurisdiction and measures that the court could put in
place, temporarily or permanently, to accommodate the appellants. As was
mentioned by Jafta JA in Shorts Retreat,15 a municipality has constitutional
obligations which it must discharge in favour of people facing eviction. These
safeguards are designed to ensure that an occupier’s constitutional rights are
protected and, as previously mentioned, that evictions take place in a humane
manner consistent with the values of the Constitution.16 Based on the information
which had been placed before the high court, it cannot be said that the court was
sufficiently informed of all relevant circumstances before granting an order which
had the effect of depriving people of their homes. The high court failed to comply
with the mandatory provisions of s 4 of PIE.
[15] Although the information which had been placed before the high court was
insufficient to enable it to discharge its statutory obligations, the scant information
which had been made available should have alerted the court to the fact that the
occupiers of the property were poor and that the prospect of homelessness, if they
were to be evicted, was very real. The high court ought to have been proactive and
15 Occupiers of Erf 101, 102, 104 and 112 Shorts Retreat, Pietermaritzburg v Daisy Dear Investments (Pty) Ltd
above n 5 para 14.
16 Para 10 above.
should have taken steps to ensure that it was appraised of all relevant information
in order to enable it to make a just and equitable decision. The court has, in these
circumstances, also failed to comply with its constitutional obligations.
[16] It will, generally, not be just and equitable for a court to grant an eviction
order where the effect of such an order would be to render the occupiers of the
property homeless.17 In Port Elizabeth Municipality,18 the Constitutional Court
cautioned that ‘a court should be reluctant to grant an eviction against relatively
settled occupiers unless it is satisfied that a reasonable alternative is available’. I
am of the view, having regard to the personal circumstances of the occupiers, and
in particular the real prospect that their eviction could lead to homelessness, that
they have established a bona fide defence that carries some prospect of success.
[17] In the result the appellants have shown good cause for a rescission order
under the common law. It is consequently unnecessary to consider whether the
appellants would be entitled to claim rescission in terms of Uniform rule 42(1) and
whether the failure to join the municipality as a party to the proceedings in the high
court was fatal.
17 Government of the Repuplic of South Africa v Grootboom above n 3; 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).
18 2005 (1) SA 217 (CC) para 28.
[18] The following order issues:
The rescission appeal (case no 499/09) is upheld with costs including the
costs of two counsel.
The order of the high court is replaced with the following:
‘(a)
The default judgment granted against the applicants on 18 June 2008
is rescinded and the applicants are granted leave to oppose the
application for their eviction.
(b)
The applicants are directed to file their opposing affidavits within the
time period prescribed by the Uniform Rules of this Court and the dies
in this respect will be calculated as from the date of this order.
(d)
The costs of this application are reserved for the trial court.’
No order as to costs is made in the appeal against the order of eviction (case
no 102/09).
_________________________
L V THERON
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellants:
P Kennedy SC
I Goodman
Instructed by:
Routledge Modise (in association with
Eversheds)
Sandton
McIntyre & Van Der Post
Bloemfontein
For Respondent:
J Both SC
A W Pullinger
Instructed by:
Kern and Partners
Johannesburg
Naudes 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
25 March 2010
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
The Occupiers, Shulana Court, 11 Hendon Road, Yeoville, Johannesburg v Steele
(102/09 and 499/09) [2010] ZASCA 28 (25 March 2010)
Media Statement
Today the Supreme Court of Appeal (SCA) upheld an appeal by the appellants, a group of people
who occupy property situated at 11 Hendon Road, Yeoville in central Johannesburg (the property).
There were two appeals before the court. One was directed against an order of eviction that was
granted by default against the appellants and the other relates to the dismissal of an application for
rescission of the order of eviction. Both Satchwell J (who granted the eviction order) and Tsoka J
(who refused the rescission application) granted the appellants leave to appeal to the SCA.
On 30 October 2007, the respondent gave the appellants notice of termination of their respective
leases and they were given three months, until 31 January 2008, to vacate the property. None of the
appellants vacated the property by the due date. During April 2008, the respondent instituted eviction
proceedings against the appellants in the South Gauteng High Court (Johannesburg). The appellants
failed to oppose those proceedings and on 18 June 2008, the high court granted the eviction order in
terms of which the appellants were directed to vacate the property.
The court found that the appellants did take steps to secure legal assistance in opposing the eviction
application and that it had always been their intention to oppose the matter. They failed to appear in
court because they bona fide, but mistakenly believed that they would be represented. The court
concluded that the explanation for their non-appearance was reasonable and that they were not in
wilful default.
The court found that the high court had, in granting the eviction order, failed to properly discharge its
statutory obligations. It found that the court was not in a position to have regard to all relevant
circumstances as the necessary information was not placed before it. The high court failed to comply
with the mandatory provisions of s 4 of PIE.
The court further found that although the information which had been placed before the high court
was insufficient to enable it to discharge its statutory obligations, the scant information which had
been made available should have alerted the court to the fact that the occupiers of the property were
poor and that the prospect of homelessness, if they were to be evicted, was very real. The high court
ought to have been proactive and should have taken steps to ensure that it was appraised of all
relevant information in order to enable it to make a just and equitable decision. The high court, in
these circumstances, also failed to comply with its constitutional obligations.
The SCA held that the appellants had shown good cause for a rescission order under the common
law. For these reasons the rescission appeal was upheld with costs.
--- ends ---
|
2791
|
non-electoral
|
2012
|
REPORTABLE
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 369/12
In the matter between:
DIRECTOR OF PUBLIC PROSECUTIONS,
WESTERN CAPE
Appellant
and
ARNOLD PRINS
Respondent
MINISTER OF JUSTICE AND
CONSTITUTIONAL DEVELOPMENT
Intervening Party
CENTRE FOR CHILD LAW
First Amicus Curiae
WOMEN’S LEGAL CENTRE TRUST
Second Amicus Curiae
Neutral citation: DPP v Prins (Minister of Justice and Constitutional
Development & two amici curiae intervening)
(369/12) [2012] 106 ZASCA (15 June 2012)
Coram:
MPATI P, NAVSA, BRAND, MALAN and WALLIS JJA.
Heard:
13 June 2012
Delivered: 15 June 2012
Summary: Criminal law – s 5(1) of the Criminal Law (Sexual Offences
and Related Matters) Amendment Act 32 of 2007 – failure to specify in
same statute penalty on conviction – in light of the provisions of s 276 of
the Criminal Procedure Act 51 of 1977 does failure mean that the section
does not create a criminal offence – application of maxim nulla poena
sine lege and principle of legality.
ORDER
On appeal from: Western Cape High Court (per Blignault J, Fortuin J
and Mantame AJ concurring, sitting on appeal from a regional
magistrate):
The appeal is upheld.
The order of the high court is set aside and replaced by the
following order:
‗The appeal succeeds and the order of the magistrate is altered to one
dismissing the objection to the charge.‘
JUDGMENT
WALLIS JA (MPATI P and NAVSA, BRAND and MALAN JJA
concurring)
[1] No judicial officer sitting in South Africa today is unaware of the
extent of sexual violence in this country and the way in which it deprives
so many women and children of their right to dignity and bodily integrity
and, in the case of children, the right to be children; to grow up in
innocence and, as they grow older, to awaken to the maturity and joy of
full humanity. The rights to dignity and bodily integrity are fundamental
to our humanity and should be respected for that reason alone. It is a sad
reflection on our world, and societies such as our own, that women and
children have been abused and that such abuse continues, so that their
rights require legal protection by way of international conventions1 and
domestic laws, as South Africa has done in various provisions of our
Constitution2 and in the Criminal Law (Sexual Offences and Related
Matters) Amendment Act 32 of 2007 (the Act). It was rightly stressed in
argument, in the light of evidence tendered and admitted in this appeal,
that the Act is a vitally important tool in the ongoing fight against this
scourge in our society.3 The issue in this appeal is whether, as the high
court held, the Act is fatally flawed in consequence of the legislature not
having expressly specified the penalties attracted by the commission of
the offences set out in chapters 2, 3 and 4 thereof.
[2] It is unnecessary to spell out in great detail the consequences of the
high court‘s judgment on the protection of victims of sexual violence.
There are many judgments in which our courts have emphasised the need
for the rights of vulnerable people, in particular women and children, to
be respected and protected. One of the ways in which that needs to be
done is by the effective prosecution of those who infringe those rights. In
S & another v Acting Regional Magistrate, Boksburg: Venter & another,4
Mthiyane AJ, speaking of s 69 of the Act, said:
‗Our Constitution sets its face firmly against all violence, and in particular sexual
violence against vulnerable children, women and men. Given this, and the Act‘s
emphasis on dignity, protection against violence against the person, and in particular
1 The principal ones to which we were referred by counsel for the first amicus were the United Nations
Convention on the Rights of the Child (Article 19) and the African Charter on the Rights and Welfare
of the Child (Article 16). Counsel for the second amicus referred us principally to articles 4 and 23 of
the Protocol to the African Charter on Human and Peoples‘ Rights on the Rights of Women in Africa,
Article 2 of the United Nations Convention on the Elimination of All Forms of Discrimination against
Women and Article 4 of the Declaration on the Elimination of Violence against Women..
2 Particularly ss 9, 10, 12(2), 28(1)(d) and 28(2) of the Constitution.
3 Since the Act came into operation, there have been over 12 000 convictions for offences under it, of
which rape and sexual assault provide the bulk. There are some 297 pending cases involving offences
under the Act in courts across South Africa.
4 S & another v Acting Regional Magistrate, Boksburg: Venter & another (CCT 109/10) [2011] ZACC
22; 2011 (2) SACR 274 (CC) para 23.
the protection of women and children, it is inconceivable that the provision could
exonerate and immunise from prosecution acts that violated these interests.‘
If the judgment of the high court in this case is correct, then its
consequence is to ‗exonerate and immunise from prosecution acts that
violate‘ the interests of vulnerable children, women and men who have
been subjected to sexual abuse. In order to determine whether that is so it
is necessary to set out the circumstances in which the issue arises.
Background to the appeal
[3] Mr Arnold Prins was charged, before the regional court at
Riversdale, with contravening s 5(1) of the Act in that he sexually
assaulted the complainant by touching her breasts and private parts
without her consent. Prior to his being called upon to plead, he objected
to the charge sheet in terms of s 85 of the Criminal Procedure Act 51 of
1977. His objection was based on the fact that neither s 5(1) itself, nor
any other provision of the Act, provides for a penalty for the offence
created by s 5(1). The magistrate upheld the objection, apparently on the
basis that the absence of a penalty infringed Mr Prins‘ fair trial rights in
terms of the Constitution, although his reasons are not entirely clear. The
Director of Public Prosecutions, Western Cape appealed to the Western
Cape High Court against that decision. That court (per Blignault J,
Fortuin J and Mantame AJ concurring), concluded that, in the absence of
a penalty in the Act, the charge failed to disclose an offence and
dismissed the appeal. This further appeal is with the leave of the high
court.
[4] The appeal has been heard urgently by this court in view of its
implications for all prosecutions arising under the various provisions of
the Act. None of the 24 sections describing sexual offences in chapters 2,
3 and 4 of the Act prescribes a penalty, nor does the Act contain a general
penalty clause. Accordingly, if the judgment of the court below is correct,
the Act will be rendered largely ineffective, because, in terms of that
judgment, the absence of specified penalties means that it will have failed
in one of its purposes, that of creating criminal offences. That has serious
implications for the ability to prosecute those who have committed sexual
offences since the Act came into operation on 16 December 2007 and
have not yet been prosecuted. They could at most be prosecuted for lesser
common law offences and perhaps not prosecuted at all. It could also
potentially affect the validity of convictions and sentences under the Act
since that date. All this was spelled out in an affidavit by the appellant
that was admitted by consent at the commencement of the appeal. The
statistics provided by the South African Police Service to the Women‘s
Legal Centre, and referred to in footnote 3, show the potential scale of the
problem.
[5] The judgment by the Western Cape High Court is in conflict with
three other judgments, one in the Free State,5 one in KwaZulu-Natal,6 and
one in South Gauteng,7 and it is imperative that there be clarity. The
Minister of Justice and Constitutional Development, under whose
portfolio this legislation falls, was granted leave at the outset of the
hearing to intervene and advance contentions in support of the validity of
the legislation. The Centre for Child Law and the Women‘s Legal Centre
Trust applied to be admitted as amici curiae and those applications were
also granted. They too contended that the legislation was effective to
enable the prosecution of the various offences provided therein. Their
5 S v Booi (14/2010) [2010] ZAFSHC 91 (12 August 2010).
6 S v Mchunu (168/2011) 15 September 2011
7 S v Rikhotso (SS105/11) [2012] ZAGPJHC 106.
arguments were largely based on a desire to ensure that the court gives
due weight to the constitutional rights of women and children.
The principle of legality
[6] I have already outlined the importance of this case from the
perspective of the right of all people, but in particular women and
children, who are the most vulnerable and the most affected, to be
protected against sexual violence. But that alone cannot be decisive of
this appeal. The reason is that the decision by the high court flows from a
constitutional principle that is equally fundamental, namely the principle
of legality.8 The power of the state to prosecute people and the power of
courts to try, convict and sentence offenders are public powers of the
greatest importance. In the history of the struggle for basic human rights
the abuse of the criminal process by governments to suppress dissent and
stifle the views of those opposed to the regime in power is notorious. One
can trace this in the history of many countries, but our own experience
suffices to underline the fact that abuse of power, including abuse of the
criminal process, lies at the heart of tyranny and oppression. In the light
of that history our Constitution demands that the ‗Legislature and
Executive in every sphere are constrained by the principle that they may
exercise no power and perform no function beyond that conferred upon
them by law‘.9 The courts, as the guardians of the Constitution, are
likewise constrained. Accordingly, it is essential to ensure that the
powerful feelings of disgust that sexual assault and sexual abuse arouse
do not overwhelm the need for the State, in the form of the prosecuting
authority in this case, to satisfy us that it would be lawful for a court
trying Mr Prins, not only to convict him, but also to sentence him in a
8 Fedsure Life Assurance Ltd v Greater Johannesburg Metropolitan Council 1999 (1) SA 374 (CC)
paras 56 to 59.
9 Fedsure para 58.
lawful manner. Just as we cannot invent new punishments,10 so also we
cannot invent a power to impose a punishment if none exists.
[7] Both the magistrate and the court below founded their judgments
on the principles encapsulated in the maxims nullum crimen sine lege (no
crime without a law) and nulla poena sine lege (no punishment without a
law). These maxims can be traced back to the French Revolution11 and
the provision in Articles 7 and 8 of the Declaration of the Rights of Man
and of the Citizen of 26 August 1789, which in translation read:
‗7
No person shall be accused, arrested, or imprisoned except in the cases and
according to the forms prescribed by law …
The law must prescribe only the punishments that are strictly and evidently
necessary, and no one may be punished except by virtue of a law drawn up and
promulgated before the offence is committed, and legally applied.‘12
The principles embodied in these maxims have subsequently been
embodied in a number of human rights instruments. They are part of our
law and are contained in ss 35(3)(l) and (n) of the Constitution, which
read as follows:
‗(3) Every accused person has a right to a fair trial, which includes the right—
(l)
not to be convicted for an act or omission that was not an offence under either
national or international law at the time it was committed or omitted;
(m)
…
(n)
to the benefit of the least severe of the prescribed punishments if the
prescribed punishment for the offence has been changed between the time that the
offence was committed and the time of sentencing.‘
10 S v Malgas 2001 (2) SA 1222 (SCA) para 2.
11 Or possibly earlier. See Aly Mokhtar ‗Nullum Crimen, Nulla Poena Sine Lege: Aspects and
Prospects‘ (2005) Statute Law Review 41 at 46-7.
12 Uttley, R (on the application of) v Secretary of State for the Home Department [2004] UKHL 38;
[2004] 4 All ER 1 (HL) para 39. The incorporation of these provisions in the Declaration of the Rights
of Man is hardly surprising. The French kings were absolute monarchs and summary imprisonment and
other forms of punishment were commonplace. The defining moment of the revolution was the
storming of the Bastille, a symbol of royal tyranny.
[8] The two maxims are, within their respective spheres, reflections of
the principle of legality. In S v Dodo,13Ackermann J summed up their
effect, insofar as the imposition of sentences for crimes is concerned, as
follows:
‗[T]he nature and range of any punishment, whether determinate or indeterminate, has
to be founded in the common or statute law; the principle of legality nulla poena sine
lege requires this.‘
In other words the imposition of a sentence by a court must have its
justification in either the common law or statute. In the absence of a
provision that empowers the court to impose a sentence it is powerless to
do so. This is not a new principle created by the Constitution. As long ago
as 1924 the authors of the leading textbook on criminal law and
procedure14 wrote:
‗The punishment to be inflicted for an offence must be of the nature and extent
authorised by law.‘
[9] The issue in the present case is whether our courts have power to
impose a sentence for offences under the Act. That question is
complicated by the fact that certain of those offences15 are specifically
referred to in Schedule 2 to Criminal Law Amendment Act 105 of 1997
(the minimum sentencing legislation). The court below thought that this
resolved any problem related to those offences, but it is unclear whether
that is correct, as the legislation merely provides for a minimum sentence,
not a general power to impose a sentence for these offences. However,
whatever the position in those cases, the offence constituted by s 5(1) of
the Act and the bulk of the offences in chapters 2, 3 and 4 of the Act are
not affected by the minimum sentencing legislation and raise in
13 S v Dodo 2001 (3) SA 382 (CC) para 13.
14 Frederick G Gardner and Charles W H Lansdown South African Criminal Law and Procedure Vol 1
at 420.
15 Those constituted under ss 3, 4 17, 23, 20(1) and 26(1) of the Act.
unadulterated form the fundamental question of whether the courts have
any power to sentence offenders for these offences.
The courts‘ sentencing powers
[10] Conduct is criminal either under the common law or by statute. In
the latter case it is usual for the legislature both to define the criminal
conduct and to specify the penalty or range of penalties that may be
imposed by courts trying the statutory offence. Where that occurs the
powers of the court in regard to sentence are, generally speaking, clear,
although problems can arise.16 In the case of common law crimes the
position is different, because it has never been the practice for parliament,
as the only legislative body having power to deal with this question, to
prescribe the sentences that courts may impose for such crimes. In such
cases courts imposed sentence in the exercise of a judicial discretion
within the limits of their jurisdiction. I will first examine the nature and
extent of that discretion.
[11] The jurisdiction of the high courts in regard to sentence for
common law offences was in general not circumscribed by statute.17 In
regard to magistrates‘ courts, where most criminal cases were prosecuted,
the constraints within which the courts operated in imposing sentences on
offenders were laid down in the statute prescribing the scope of their
jurisdiction and their general powers. The relevant provision has for
many years been s 92 of the Magistrates‘ Courts Act 32 of 1944. That
now reads:
16 S v Van Dyk 2005 (1) SACR 35 (SCA).
17 There was a limited exception to this general rule in regard to the death sentence. Until 1935 the
death sentence was mandatory for murder. Under s 277(1) of the Criminal Procedure Act 51 of 1977
the death sentence was mandatory for the crime of murder without extenuating circumstances until this
provision was struck down by the Constitutional Court in S v Makwanyane & another 1995 (3) SA 391
(CC). There were a number of notorious statutory offences for which minimum sentences were
prescribed.
‗Limits of jurisdiction in the matter of punishments.—
(1)
Save as otherwise in this Act or in any other law specially provided, the court,
whenever it may punish a person for an offence—
(a)
by imprisonment, may impose a sentence of imprisonment for a period not
exceeding three years, where the court is not the court of a regional division, or not
exceeding 15 years, where the court is the court of a regional division;18
(b)
by fine, may impose a fine not exceeding the amount determined by the
Minister from time to time by notice in the Gazette for the respective courts referred
to in paragraph (a);
(c)
…
(d)
by correctional supervision, may impose correctional supervision for a period
as contemplated in section 276A (1) (b) of the Criminal Procedure Act, 1977 (Act No.
51 of 1977).‘
[12] The general powers of both the high courts and the magistrates‘
courts in relation to sentence were affected, in respect of certain common
law crimes, by the provisions of the minimum sentencing legislation,
which introduced requirements for the imposition of minimum sentences
in relation to the offences described in Schedule 2 to that Act, most of
which were common law offences. Courts were empowered to impose
sentences less than the prescribed minimum sentences where there were
substantial and compelling circumstances justifying the imposition of a
lesser sentence and in some other limited circumstances.19 In its initial
form the legislation did not alter the jurisdiction of regional magistrates‘
courts. Instead they were enjoined, in cases where they were satisfied that
a sentence greater than any falling within that court‘s jurisdiction should
be imposed for a scheduled offence, to refer the case to the high court for
18 This section originally provided for sentences of six months and three years imprisonment
respectively. That was changed in 1977 (Act 91 of 1977) to 12 months and ten years and in 1998 (Act
66 of 1998) to its present limits.
19 This was dealt with by this court in S v Malgas supra and that judgment was endorsed by the
Constitutional Court in S v Dodo supra.
the purpose of sentencing.20 That has since been altered to extend the
sentencing powers of the regional court in relation to the scheduled
offences, whilst conferring an automatic right of appeal on a person
convicted and sentenced on this basis.
[13] Within these general constraints our courts, both the high courts
and the various levels of magistrates‘ courts, have continued to impose
sentences across the whole spectrum of common law criminal offences
from murder to common assault; robbery, housebreaking, theft and
malicious injury to property; kidnapping; fraud, forgery and uttering, and
extortion; sexual offences, ranging from rape to indecent assault; and
many others. In doing so they exercised a judicial discretion on the basis
that ‗the measure of punishment is a matter for the judge who imposes
it‘.21 The rules governing the exercise of that discretion were set out in
countless decisions of this court. It is appropriate to reflect on how Mr
Prins, if convicted, would have been dealt with under that regime. He was
charged on the basis of an allegation that he had fondled the
complainant‘s breasts and private parts without her consent. Such conduct
(if proven) has always constituted a crime in South Africa. Until the
coming into force of the Act it was prosecuted as the common law crime
of indecent assault, which was repealed and replaced by the offence of
sexual assault in s 5(1) of the Act.22 There was no statutorily prescribed
sentence for this offence. Accordingly under the law as it stood prior to
the coming into force of the Act Mr Prins would have been prosecuted for
the common law offence of indecent assault and, if convicted, sentenced
by the regional magistrate to a sentence within his statutory powers.
20 Section 52 of Act 105 of 1997.
21 I Lionel Swift and A B Harcourt QC The South African Law of Criminal Procedure (1st ed, 1957) at
479.
22 The long title to the Act says inter alia that it repeals the offence of indecent assault and replaces it
with the offence of sexual assault.
[14] None of this is controversial. Problems arise when statutory
offences are created without specifying a penalty. That is the problem in
the present instance. Although the instances where this arose are rare,
where a criminal offence was created by legislation, but no penalty was
prescribed in that legislation, there were judgments that held that the
court could impose a sentence, within the limits of its general
jurisdiction.23 That also had some academic support. Thus Professor
Snyman writes:
‗If a statutory provision creates a criminal norm only, but remains silent on the
criminal sanction … the punishment is simply in the court‘s discretion, that is, the
court itself may decide what punishment to impose.‘24
The high court‘s decision effectively holds that this latter proposition is
incorrect and that, in the absence of a statutorily prescribed penalty, no
offence is created, however clear the language of the statutory provision.
That is necessarily implicit in its conclusion that the charge sheet failed to
disclose an offence. In other words it held that the absence of a penalty
provision in the Act in respect of these offences meant that the relevant
sections did not give rise to an offence at all.
[15] This conclusion conflates the operation of the two maxims. One
can readily see that, when a court is confronted with the question whether
a statutory provision prohibiting particular conduct is a crime, the failure
of the legislature to attach a penalty to non-compliance is an important
factor in determining whether a crime was constituted thereby. This was
23 R v Forlee 1917 TPD 52 and the cases cited in paras 40 and 41 of the judgment of Blignault J in the
high court.
24 C Snyman Criminal Law 5 ed 41. This passage, appearing in the third edition, was cited by
Ackermann J in S v Francis 1994 (1) SACR 350 (C) at 355d-h, with apparent approval. See also
Milton and Cowling South African Criminal Law and Procedure Volume III Statutory Offences 2 nd
edition para 1-20; M A Rabie and M C Maré Rabie and Strauss Punishment: An Introduction to
Principles (4 ed) 81-82.
the determining factor in this court in R v Zinn,25 where it was held that a
Besluit by the Transvaal Volksraad, prohibiting the use or occupation of
land in townships by ‗Coloured‘ people, did not, in the absence of a
criminal penalty, create a criminal offence. Greenberg JA, who gave the
judgment of the court, carefully refrained from deciding whether, in the
absence of both an express statement of criminality and a penalty, it was
permissible for a court to construe a legislative prohibition on particular
conduct as creating a crime by necessary implication.
[16] That issue arose in the controversial decision in R v Forlee supra,
which concerned a statute that prohibited the sale of opium, save by a
pharmacist under a prescription, but did not say that such a sale was a
crime nor provided for a penalty for making such a sale. Mason J pointed
out that the sale of opium in such circumstances had always been a crime
and that the possession of opium, other than by a pharmacist or under a
prescription, was said specifically to be a crime. He concluded that the
absence of a penalty did not mean that the sale of opium was not an
offence punishable by the courts within their ordinary powers. I agree
with Greenberg JA in Zinn‘s case, supra,26 that:
‗The final conclusion, in Rex v Forlee (supra), that the enactment constituted an
offence was based on the broad ground that the act in question (viz., the sale of
opium) was ''expressly prohibited in the public interest and with the evident intention
of constituting an offence".‘
The approach of the court was that an inference of an intention to
criminalise the prohibited conduct could be drawn from the language of
the statute even though there was no clear statement to that effect.
25 R v Zinn 1946 AD 346.
26 At 355.
[17] The decision in R v Forlee has been the subject of considerable
academic, and some judicial, criticism on the basis that to hold that a
statute creates a crime by necessary implication infringes the principle of
legality.27 However, it is unnecessary to decide whether the criticism is
justified, because that question does not arise in the present case. We are
not asked to infer that s 5(1) and the other relevant provisions of the Act
render the conduct described therein criminal. The problem in the present
case is the effect of the absence of a penalty provision on the offences
created by the Act. Before turning to address that issue I will briefly
indicate why it is clear that the Act creates criminal offences in chapters
2, 3 and 4 thereof.
The Act creates criminal offences and contemplates offenders being
sentenced
[18] There can be no doubt that the Act in express terms created
criminal offences in ss 2 to 26 thereof, all of which are couched in similar
terms. My starting point is the statement of the objects of the Act in s 2
thereof, which reads:
‗Objects
The objects of this Act are to afford complainants of sexual offences the maximum
and least traumatising protection that the law can provide, to introduce measures
which seek to enable the relevant organs of state to give full effect to the provisions of
this Act and to combat and, ultimately, eradicate the relatively high incidence of
sexual offences committed in the Republic by:
(a) Enacting all matters relating to sexual offences in a single statute;
(b) criminalising all forms of sexual abuse or exploitation;
(c) repealing certain common law sexual offences and replacing them with new and,
in some instances, expanded or extended statutory sexual offences, irrespective of
gender …‘
27 J C de Wet and H L Swanepoel, Strafreg 4 ed 46-47; C Snyman Criminal Law 5 ed 41-42; S v
Francis supra at 355d-h.
Each of these objects refers expressly to the creation of criminal offences.
[19] The long title to the Act also makes its purpose clear. It is first a
consolidating measure directed at bringing together in one piece of
legislation all criminal offences of a sexual nature. Second, it replaces
and in some respects broadens the scope of existing common law crimes
of a sexual nature. Third, it creates a number of new offences. This
emerges clearly and without any need for explanation or clarification
from the following portions of the long title:
‗To comprehensively and extensively review and amend all aspects of the laws and
the implementation of the laws relating to sexual offences, and to deal with all legal
aspects of or relating to sexual offences in a single statute, by—
*
repealing the common law offence of rape and replacing it with a new
expanded statutory offence of rape, applicable to all forms of sexual penetration
without consent, irrespective of gender;
*
repealing the common law offence of indecent assault and replacing it with a
new statutory offence of sexual assault, applicable to all forms of sexual violation
without consent;
*
creating new statutory offences relating to certain compelled acts of
penetration or violation;
*
creating new statutory offences, for adults, by criminalising the compelling or
causing the witnessing of certain sexual conduct and certain parts of the human
anatomy, the exposure or display of child pornography and the engaging of sexual
services of an adult;
*
repealing the common law offences of incest, bestiality and violation of a
corpse, as far as such violation is of a sexual nature, and enacting corresponding new
statutory offences;
*
enacting comprehensive provisions dealing with the creation of certain new,
expanded or amended sexual offences against children and persons who are mentally
disabled, including offences relating to sexual exploitation or grooming, exposure to
or display of pornography and the creation of child pornography, despite some of the
offences being similar to offences created in respect of adults as the creation of these
offences aims to address the particular vulnerability of children and persons who are
mentally disabled in respect of sexual abuse or exploitation;
*
eliminating the differentiation drawn between the age of consent for different
consensual sexual acts and providing for special provisions relating to the prosecution
and adjudication of consensual sexual acts between children older than 12 years but
younger than 16 years;
*
criminalising any attempt, conspiracy or incitement to commit a sexual
offence …‘
[20] It is convenient, in considering a more specific example, to look at
the charge facing Mr Prins. He was charged with a contravention of s 5(1)
of the Act, which provides that:
‗(1) A person (―A‖) who unlawfully and intentionally sexually violates a complainant
(―B‖), without the consent of B, is guilty of the offence of sexual assault.‘
Nothing could be clearer than that this provision creates a criminal
offence. The same is true of each of the other provisions that define
criminal offences in chapters 2, 3 and 4 of the Act. They are all couched
in language that proclaims unequivocally that their purpose is to render
criminal the conduct described therein. This is not a case where the
intention to criminalise the conduct in question must be inferred. It is
expressly stated. The language of the sections is unequivocal and the
context provided by the need to protect vulnerable people against sexual
attacks in the light of the Constitution and South Africa‘s international
obligations reinforces the construction that each of the relevant sections
creates a criminal offence.28 No other construction has been suggested.
28 The language of the sections must always be read in the light of the context. Natal Joint Municipal
Pension Fund v Endumeni Municipality [2012] 2 All SA 262 (SCA) paras 18 and 24. Here language
and context converge.
[21] The Act is equally unequivocal in its contemplation that on
conviction the courts will impose an appropriate sentence on the accused.
That is clear from s 56(7) of the Act, which provides that:
‗If a person is convicted of any offence under this Act, the court that imposes the
sentence shall consider as an aggravating factor the fact that the person—
(a)
committed the offence with intent to gain financially, or receive any favour,
benefit, reward, compensation or any other advantage; or
(b)
gained financially, or received any favour, benefit, reward, compensation or
any other advantage,
from the commission of such offence.‘
In addition, the National Director of Public Prosecutions is required to
develop and publish directives dealing with the sentencing of persons
after conviction of offences under the Act, and the provision of pre-
sentencing reports and information concerning the impact of the sexual
offence on the complainant.29 A number of other sections contemplate the
imposition of a sentence on a person convicted of contravening any of the
provisions in chapters 2, 3 and 4 that creates an offence. The National
Register for Sex Offenders, provided for in s 42, must contain particulars
of the sentence imposed on an offender whose name falls to be included
in the Register.30 Among the persons whose names must be included in
the Register are those who are serving or have served a sentence of
imprisonment as the result of a conviction for a sexual offence against a
child or a person who is mentally disabled.31
[22] The Act thus expressly renders criminal the conduct described in
the various sections in chapters 2, 3 and 4 thereof and contemplates the
imposition of sentences on offenders. Its aim is the prosecution and
29 Section 66(2)(a)(viii).
30 Section 49(b)(iv). If the conviction and sentence took place in a foreign country the equivalent
information must be included (s 49(c)).
31 Section 50(1)(a)(iii) read with s 50(2)(a)(i). See also s 55.
sentencing of persons who commit these offences. This is not a matter of
implication but is expressly stated in the Act. The difficulties raised by R
v Forlee do not arise in this case.
The issues
[23] Against this background, the conclusion by the high court that the
charge sheet did not disclose an offence was, on the face of it, incorrect.
It undoubtedly disclosed an offence, unless the absence of a penalty in the
Act itself, or elsewhere in other legislation, has the effect of displacing
the clear language of these sections and rendering their statement that
particular conduct is a criminal offence nugatory. That raises two separate
issues. The first is whether, notwithstanding the absence of an express
penalty provision in the Act, there is a legal basis in either the common
law or an applicable statute for the imposition of sentences on persons
convicted of the various offences set out in the Act. If there is, the basis
for the high court‘s decision falls away as it was entirely founded on the
absence of any penalty. The second issue arises if the high court was
correct in holding that there is no legal basis for imposing a penalty on
offenders. If that is so the effect of this on the validity of charge sheets in
relation to offences set out in the relevant sections of the Act must be
determined. As already noted the high court held that this invalidated the
charges. That may be incorrect, as the effect of a decision that these
sections do not create criminal offences, because of the absence of a
statutorily prescribed penalty, is to say that the relevant sections are
unconstitutional. That follows from the reliance on the maxim nulla
poena sine lege and the principle of legality. A magistrates‘ court lacks
jurisdiction to hold that a statute is unconstitutional. Accordingly, if a
question of the constitutionality of a statutory offence arises in the course
of a criminal trial in the magistrates‘ court, the proper approach is to
conduct the trial, subject to a reservation of rights in relation to the point
of unconstitutionality, and then to raise that point in an appeal. There may
be special circumstances in which it would be proper to stay the
proceedings before the magistrate pending an appropriate challenge in the
high court, but in general that approach should be eschewed for the
reasons stated by Langa CJ in Thint (Pty) Ltd v National Director of
Public Prosecutions & others.32 In this case, considering the magistrate‘s
view that he lacked any sentencing power, as well as the importance of
the issues and the public interest, an approach to the high court would
probably have been the better course.
[24] The two issues identified in the previous paragraph were not
addressed in that form by the court below and they were not raised in
precisely those terms in the formulation of Mr Prins‘ objection to the
charge sheet. There it was said that the charge did not comply with the
requirements of the Criminal Procedure Act 51 of 1977 (the CPA)
because it did not refer to the penalty provisions applicable to the crime;
that because there was no reference to any penalty provisions the charge
lacked a material element of the statutory offence; that the charge did not
disclose an offence because it did not refer to the applicable penalty
provisions and that it lacked sufficient particularity because of the
absence of a reference to the relevant penalty provisions. In each of these
forms the objection was deficient because it proceeded from the
erroneous premise that it is necessary to the validity of a charge, at least
one of committing a statutory offence, to specify the penal consequences
of conviction. That is not correct. All that is required is that the charge set
32 Thint (Pty) Ltd v National Director of Public Prosecutions & others: Zuma & another v National
Director of Public Prosecutions & others 2009 (1) SA 1 (CC) para 65.
out the particulars of the offence with which the accused is charged.33
That does not include the sentence that may be imposed on conviction. It
is only necessary to specify the penal consequences of conviction where
the prosecution proposes to rely upon specific provisions, such as those in
the minimum sentencing legislation, where it is necessary to forewarn the
accused of the potential consequences of conviction, if that may affect the
manner in which the defence is conducted. Whilst it may be customary
and desirable, when an offence is created by statute and the statute also
specifies the penalty, for the charge sheet to refer to the penalty,34 its
absence does not render the charge invalid or warrant the quashing of the
charge.35 Whether it may, in some circumstances, impinge on an accused
person‘s fair trial rights in another way does not arise in this case. Before
us, counsel for Mr Prins accepted that his fair trial rights were not in
issue.
[25] There is much to be said for the proposition that the issue, that Mr
Prins was seeking to raise by his objection, only properly arises at the end
of a case where an accused has been convicted and the issue of sentence
comes to the fore. However, now that it is before us, it is undesirable not
to deal with it knowing that it will otherwise return to this court in the
near future. However, if the argument on his behalf is upheld, attention
will need to be given to the appropriate form of relief. On the charge as
formulated, he could plead guilty to, or be found guilty of, assault with
intent to commit grievous bodily harm or common assault,36 and there is
no question about the entitlement of the regional court before which he
33 Section 84(1) of the CPA. Insofar as the judgment in S v Rautenbach 1991 (2) SA 700 (T) at 701j-
702a suggests that the penalty is an essential part of a statutory criminal offence that statement was
obiter and is incorrect.
34 S v Ndlovu 1999 (2) SACR 645 (W) at 649f-i
35 S v Badenhorst 1991 (1) SACR 623 (T).
36 Section 261 (a) and (b) of the CPA.
has been arraigned to sentence him for those offences. Accordingly, even
if his contentions are correct it does not necessarily follow that the charge
should be quashed.
A legal basis for sentencing offenders under the Act
[26] I turn then to deal with the first question, namely, whether there is
any provision of the common law, or of a statute, that provides for the
imposition of sentence on a person convicted of an offence under the Act,
for which no penalty is expressly stipulated and which does not fall
within the minimum sentencing legislation. The debate before us
revolved around this question and in particular the state‘s reliance on
s 276 of the CPA. It is appropriate to note that this argument was not
raised before the high court (and presumably before the magistrate). Had
it been, I have no doubt that a judge, as experienced as Blignault J, would
have dealt with it and possibly the outcome of the case would have been
different. Although there was some muted protestation on behalf of Mr
Prins about the fact that in the high court reliance had not been placed on
s 276 counsel accepted that the argument was one of law that can
properly be raised before us.
[27] Section 276(1) provides that:
‗Subject to the provisions of this Act and any other law and of the common law, the
following sentences may be passed upon a person convicted of an offence …‘.
The sub-section
goes on to specify
imprisonment, periodical
imprisonment, declaration as an habitual criminal, committal to an
institution established by law, a fine, correctional supervision and
imprisonment from which a person may be placed under correctional
supervision, as permissible sentences. Sub-section (2) makes these
powers in regard to sentence subject to other provisions requiring a court
to impose a specific sentence or limiting its powers in regard to sentence
or derogating from powers conferred under legislation to impose some
other type of sentence or order a forfeiture in addition to any other
punishment.
[28] The State argued that s 276(1) is a general penalty provision
empowering courts to impose sentences in all situations where there is no
other provision in law prescribing the sentence that can be imposed for an
offence.37 It contends that the section provides the legal foundation for
the imposition of sentences in relation to common law crimes as well as
statutory crimes, where no sentence is otherwise prescribed. Beyond that
the precise scope of the court‘s sentencing powers depend upon whether
it is a high court, a regional court or a magistrates‘ court. In this way it
was submitted that the principle of legality is satisfied. It is immaterial, so
this argument proceeded, that the provisions in regard to sentence are
derived from a statute other than the Act and need to be garnered from
s 276, read with the jurisdictional limitations on the court before which
the accused is charged. That is the case with, for example, rape, where the
sentencing powers of courts are derived from the minimum sentencing
legislation. It is the case with all common law crimes, where the elements
of the offence are derived from the common law and the sentencing
powers of the court derive from s 276 of the CPA. The State contended
that the same position prevails when a statute creates a crime but does not
itself provide for a penalty. The permissible penalties are then to be found
in s 276 read with the relevant provisions (if any) regarding the powers of
the court concerned in regard to sentence.
37 E du Toit, F J de Jager, A Paizes, A St Q Skeen and S van der Merwe Commentary on the Criminal
Procedure Act (loose-leaf) p28-9 (Service 47, 2011).
[29] Counsel for Mr Prins join issue with this argument. They contend
that the opening words of s 276(1), namely:
‗Subject to the provisions of this Act and any other law and of the common law, the
following sentences may be passed upon a person convicted of an offence …‘,
contain a general enabling provision, as far as the various forms of
punishment are concerned, but are not meant as a source of the power to
sentence an offender for a statutory crime. They rely on the following
passage from the judgment of this court in S v Van Dyk:38
‗The correct interpretation of the section must be determined from the context of
s 276 as a whole. It is headed: ―Nature of Punishments‖. Section 276(1) lists, in
general terms, various forms of punishment available for consideration and imposition
by a court which has convicted a person of an offence either in terms of a particular
statute or under the common law. The use of the words ―subject to‖ at the beginning
of subsec (1) indicates that the subsection will be subservient to any provision of the
common law, the Act or another statute in case of conflict (cf S v Marwane 1982 (3)
SA 717 (A) at 747H – 748B).‘
They submit that if s 276 may be invoked in respect of any offence for
which no other sentence is prescribed then it renders the penalty
provisions in all other legislation superfluous and contend that the
proposition that it resolves the question of a legal basis for sentencing
offenders under the provisions of the Act ‗is simply not correct‘. They
also point out that the charge sheet makes no reference to this section.
[30] I start, as with the interpretation of any other statutory provision,
with the language of s 276(1). Its operative words are ‗the following
sentences may be passed upon a person convicted of an offence‘. There is
nothing obscure or unclear about that language. It identifies the sentences
that our law permits and says that those sentences may be imposed upon a
person convicted of an offence. It echoes the similar language of the
38 S v Van Dyk fn 16 above, para 10.
earlier Criminal Procedure Acts. Thus s 338(2) of the Criminal Procedure
Act 31 of 1917 read:
‗Sentences to the following punishments may be passed upon a convicted offender
subject to the provisions of this Act or of any other law or of the common law …‘
Section 329(3) of the Criminal Procedure Act 56 of 1955 read:
‗The following sentences may subject to the provisions of this Act or any other law or
of the common law be passed upon a person convicted of any offence …‘
The section has a twofold purpose. In the first place it empowers courts to
impose sentences upon persons convicted of crimes. It is the embodiment
of the principle nulla poena sine lege. Second it limits the punishments
that courts may impose to those set out in the section and no others. That
is what, as was said in S v Malgas supra,39 prevents the courts from
devising new punishments.
[31] That these sections have been, and s 276 now is, the source of the
power of our courts to impose sentences is apparent from looking at the
case of common law crimes. There is no other provision of our law
dealing with the power of courts to impose sentences for such crimes.
Absent s 276 neither the magistrates‘ courts nor the high courts would be
entitled to impose sentences on people who commit common law crimes.
Counsel for Mr Prins accepted that this is correct. But that poses an
insuperable problem for his argument. The language of s 276(1) does not
restrict its field of operation to common law crimes. It is an entirely
general empowering provision. An offence is defined in s 1 of the Act as
‗an act or omission punishable by law‘ and is not confined to common
law offences. Counsel was unable to point to anything in the section or
elsewhere in the CPA or in any material extraneous to the CPA that
would suggest that the power to sentence offenders, conferred by
39 Para 2.
s 276(1), should be confined to common law crimes. However, his
argument necessarily requires that we give a restrictive interpretation to
the section to confine the scope of its operation to common law crimes.
[32] We were referred to the opening words of s 276(1), that make its
provisions subject to the other provisions of the CPA or any other law.
The first part of this provision is there to make it clear, for example, that
s 276(1) does not override the power of a court, in terms of s 297, to
postpone the passing of sentence or to discharge the person with a caution
and reprimand. The latter subordinates the court‘s general sentencing
powers to specific legislation dealing with offences. Thus, a court is not
entitled to exercise its powers under s 276(1) to sentence to imprisonment
a person convicted of the offence of contravening their licence in terms of
s 74(1) of the Electronic Communications Act 36 of 2005, in the face of
the provisions of s 74(2) of the latter Act, which state that the penalty for
an offence under s 74(1) is that the licensee must outsource the
construction or placing into service of the relevant electronic
communications facility or electronic communications network to a third
party. Similarly the provisions of s 276(2), upon which some reliance was
also placed, do not warrant the restrictive construction of s 276(1) for
which counsel contended. The opening words also make it clear that
courts are bound to have regard to specific penal provisions in legislation.
It does not follow that the absence of specific statutory penal provisions
renders the court‘s power to impose the sentences provided for in s 276
nugatory. On the contrary it is to those powers that courts must turn in
imposing sentence. This has always been accepted in respect of common
law crimes and there is no reason to confine it to those crimes.
[33] Nor is there anything in the context of the statute to justify a
restrictive construction. Historically the section is derived from s 242 of
the Criminal Procedure Code enacted in Ordinance 1 of 1903 of the
Transvaal. However that section simply specified the range of permissible
sentences and did not say that courts were empowered to impose those
sentences on offenders. Similarly there appears not to have been a
provision in either of the Criminal Procedure Ordinances40 in the Cape or
the Criminal Procedure Ordinance 18 of 1845 (Natal) specifically
empowering courts to impose sentences on offenders. When the Criminal
Procedure Act 31 of 1917 was passed it took the earlier provision in the
Transvaal Code as its basis but recast the section to say that the specified
punishments ‗may be passed upon a convicted offender‘.41 That was done
at a time when it was known that there were a number of statutory
offences on the statute books and the possibility that the legislation in
which they were contained might lack a penalty provision had arisen in
some cases. The general language used is only consistent with its
applying to both common law and statutory crimes. The historical
background is therefore inconsistent with the limitation of language for
which counsel contended.
[34] The next important contextual matter is the principle of legality
and the need for the power to impose punishment and the extent of that
power to be contained in a law. Section 276(1) recognises and embodies
that principle in relation to common law crimes. There seems to be no
reason why it should not also be taken to ensure that the principle is
recognised and complied with in relation to any statutory crimes where
the legislature has, for whatever reason, not incorporated a specific
40 Ordinance 40 of 1828 and Ordinance 73 of 1830.
41 The 1917 Act was passed a few months after the decision in R v Forlee supra.
penalty provision in the statute creating the offence. An interpretation of
the section in compliance with the principle of legality is constitutionally
mandated.42
[35] It is also helpful to examine whether the restrictive interpretation
counsel sought to place on the key words in s 276(1) has a sensible
outcome. He accepted that they empower courts to impose sentences for
the offences of assault with intent to do grievous bodily harm and
common assault, which are the alternative crimes of which Mr Prins
could have been charged and convicted on precisely the same factual
allegations as the main offence under s 5(1) of the Act. This raised the
following conundrum. Had the prosecutor included, in the alternative to
the main charge under s 5(1) of the Act, an alternative charge of common
assault based on precisely the same facts, no objection could have been
made against that charge. The reason is that the magistrate would have
been empowered by s 276(1) to impose an appropriate sentence for that
offence. Once that is recognised the obvious question is why should it be
any different in relation to the statutory offence? The absurdity of
importing a limitation into the language of s 276(1), so that a charge
based on a particular set of facts will be unimpeachable if it is a charge of
a common law crime, but invalid if it is based on a statute making those
facts a statutory crime, is apparent. It is even more apparent when it is
recognised that the statutory crime is in substance the equivalent of the
common law crime that it replaces. No reason could be suggested why
the application of s 276(1) to the statutory crime would place Mr Prins in
a less advantageous position than he would have been in had he been
charged on the same facts with the crime of indecent assault. The
statutory offence under s 5(1) mimics the common law offence of
42 Section 39(2) of the Constitution.
indecent assault. Thus the courts will have a pattern of sentencing in past
cases to guide them in fixing an appropriate sentence for the equivalent
statutory offence.
[36] Although it cannot affect the construction of s 276(1), we were
addressed on the reasons for the omission in the Act to specify penalties
for the offences in chapters 2, 3 and 5. However, the submissions
fluctuated wildly, with parties commencing by saying that the omission
was a mistake and, under probing questions from the bench, ending by
saying that it was deliberate. All that this demonstrates, as was said in
Natal Joint Municipal Pension Fund v Endumeni Municipality, supra,43 is
that little purpose is served by speculation as to the intention of
Parliament.44 We simply do not know whether the omission of specific
penalties in relation to these offences or a general penalty clause covering
them, whether the omission was deliberate or an oversight. What we do
know is that the legislation clearly anticipated that people would be
charged with offences under the Act and, after conviction, would be
sentenced. In the absence of any provision in the Act governing penalty
the necessary implication is that this was to be left to the general
discretion of the courts in terms of their powers under s 276(1).
[37] In addition Parliament has, since the judgment of the high court
was delivered, met and passed an amending Bill,45 that expressly provides
that the powers of courts in regard to sentence for the offences in chapters
2, 3 and 4 of the Act are those specified in s 276 of the CPA.46 Whilst this
43 Para 20.
44 Significantly the Minister did not say in the affidavit in support of his application to intervene why
the Act did not contain any penalty provisions in respect of these offences. As he chose not to tell us
why this had happened I do not think it appropriate for us to speculate on the reasons.
45 Criminal Law (Sexual Offences and Related Matters) Amendment Act 2012 (B19/2012).
46 It inserts the following section in the Act:
Bill still awaits the assent of the President it nonetheless provides a clear
example of subsequent legislation constituting a ‗legislative declaration‘
of the meaning parliament wishes to have ascribed to earlier legislation.47
Whilst I do not suggest that this principle can be used to afford a meaning
to legislation that it is not otherwise capable of bearing – that would
amount to retrospective legislation – it is appropriate to invoke it in this
case where the Act clearly aimed at creating offences and ensuring that
the courts sentence those they convicted of those offences. In addition the
amending Bill says that its purpose is to provide expressly that the
imposition of penalties for certain offences in terms of the Act is to be left
to the discretion of the courts. That accords with what I regard as the
necessary implication to be drawn from the language of the Act itself.
Accordingly this is a proper case where the legislative declaration
coincides with the implications to be drawn from the Act itself.
[38] For all those reasons the argument that s 276(1) must be construed
as being a provision empowering courts to impose sentences in relation
only to common law crimes must be rejected. In my opinion it is a
general empowering provision authorising courts to impose sentences in
all cases, whether at common law or under statute, where no other
provision governs the imposition of sentence. I reject the argument that
the Act, in creating the offences set out in chapters 2, 3 and 4 thereof,
56A (1) A court shall, if—
(a) that or another court has convicted a person of an offence in terms of this Act; and
(b) a penalty is not prescribed in respect of that offence in terms of this Act or by any other Act, impose
a sentence, as provided for in section 276 of the Criminal Procedure Act, 1977 (Act No. 51 of 1977),
which that court considers appropriate and which is within that court‘s penal jurisdiction.
(2) If a person is convicted of any offence under this Act, the court that imposes the sentence shall
consider as an aggravating factor the fact that the person—
(a) committed the offence with the intent to gain financially, or receive any favour, benefit, reward,
compensation or any other advantage; or
(b) gained financially, or received any favour, benefit, reward, compensation or any other advantage,
from the commission of such offence.‘
47 Patel v Minister of the Interior & others 1955 (2) SA 485 (A) at 493A-D; National Education Health
and Allied Workers Union v University of Cape Town 2003 (3) SA 1 (CC) para 66.
infringed the principle of legality by not prescribing the penalties to be
imposed for those offences. I also reject the contention, unsupported by
authority, that a statutory offence can only be created by parliament if it
includes a penalty in the enacting legislation. That may be a requirement
in countries where the criminal law is codified, but that is not the position
in South Africa.
[39] It follows that the decisions of the magistrate and the high court
were wrong and must be set aside. The order I make is as follows:
The appeal is upheld.
The order of the high court is set aside and replaced by the
following order:
‗The appeal succeeds and the order of the magistrate is altered to one
dismissing the objection to the charge.‘
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
B E Currie-Gamwo (with her B Hendry-Sidaki)
from the office of the National Director of
Public Prosecutions
Instructed by:
State Attorney, Bloemfontein
For respondent:
P A Botha (with him Y Isaacs)
Instructed by:
Cape Town Justice Centre
Bloemfontein Justice Centre
For intervening party:
M R Madlanga SC (with him V Ngalwana and
N Nharmuravate).
Instructed by:
State Attorney, Johannesburg and
Bloemfontein.
For first Amicus Curiae S Budlender
Instructed by:
Legal Resources Centre, Cape Town
Locally represented by:
UFS Law Clinic,
Bloemfontein.
For second Amicus Curiae
M Norton (with her S Cowen)
Instructed by:
Women‘s Legal Centre Trust
Locally represented by:
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: 13 June 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.
Director of Public Prosecutions Western Cape (Minister of Justice
and Constitutional Affairs & two amici curiae intervening) v Prins
The SCA today overturned the decision by the Western Cape High
Court that held that criminal charges could not be successfully pursued
and prosecuted in respect of sexual offences under the Criminal Law
(Sexual Offences and Related Matters) Amendment Act 32 of 2007,
because of the absence of penalty provisions in that Act. The SCA held
that the penalty provisions in section 276 (1) of the Criminal Procedure
Act empower courts to impose sentences upon people convicted of sexual
offences under the Sexual Offences Act and the fact that the Act itself
does not contain penalty provisions does not justify the quashing of
charges laid under the Act. The court held that the constitutional principle
of legality as summed up in the Latin maxim nulla poena sine lege ( no
penalty without law) is satisfied by reference to the sentencing powers
enjoyed by all courts under the Criminal Procedure Act.
|
1224
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 233/07
Reportable
In the matter between:
MILOC FINANCIAL SOLUTIONS (PTY) LTD
APPELLANT
(Applicant a quo)
and
LOGISTIC TECHNOLOGIES (PTY) LTD
FIRST RESPONDENT
(First Respondent a quo)
LOG-TEK GROUP INVESTMENTS (PTY) LTD
SECOND RESPONDENT
(Second Respondent a quo)
IRIS INTEGRATED RESEARCH INFORMATION
THIRD RESPONDENT
SYSTEMS (PTY) LTD
(Third Respondent a quo)
TECHNIPRINT (PTY) LTD
FOURTH RESPONDENT
(Fourth Respondent a quo)
ROTER DESIGN (PTY) LTD
FIFTH RESPONDENT
(Fifth Respondent a quo)
UBUNTU EDUNET (PTY) LTD
SIXTH RESPONDENT
(Sixth Respondent a quo)
TECHNICAL ILLUSTRATIONS (PTY) LTD
SEVENTH RESPONDENT
(Seventh Respondent a quo)
LOG-TEK TRAINING & SIMULATION (PTY) LTD
EIGHTH RESPONDENT
(Eighth Respondent a quo)
Q-TECH SERVICES (PTY) LTD
NINTH RESPONDENT
(Ninth Respondent a quo)
INFORMATION DYNAMICS (PTY) LTD
TENTH RESPONDENT
(Tenth Respondent a quo)
MAXWELL NAESTED MOOLMAN
ELEVENTH RESPONDENT
(Eleventh Respondent a quo)
LOG-TEK MANAGEMENT SERVICES (PTY) LTD
TWELFTH RESPONDENT
(Twelfth Respondent a quo)
LOG-TEK 1993 (PTY) LTD
THIRTEENTH RESPONDENT
(Thirteenth Respondent a quo)
MOOLMAN TRUST
FOURTEENTH RESPONDENT
(Fourteenth Respondent a quo)
CORAM:
HOWIE P, FARLAM, CLOETE, VAN HEERDEN JJA et
SNYDERS AJA
HEARD:
22 FEBRUARY 2008
DELIVERED:
28 MARCH 2008
SUMMARY:
Contract - exceptio non adimpleti contractus – principle of reciprocity
– when applicable – payment, allocation of.
Neutral citation: This judgment may be referred to as Miloc Financial Solutions
(Pty) Ltd v Logistic Technologies (Pty) Ltd (233/2007) [2008] ZASCA 40 (28/03/08).
__________________________________________________
FARLAM JA
[1] INTRODUCTION
This is an appeal from a judgment of Van Rooyen AJ, sitting in the Pretoria
High Court, dismissing an application in which the appellant sought judgment
in respect of two money claims and also certain ancillary relief against twelve
of the respondents, in the case of the first claim, and against eleven of the
respondents, in the case of the second claim.
[2] The appellant’s first claim, which was brought against the first
respondent as principal debtor and eleven of the other respondents as
sureties, was for payment of R9 985 455,10, being the total of the unpaid
balance allegedly owing on the first respondent’s current accounts with the
Standard Bank of South Africa Ltd, which had ceded its claims and the
securities it held to the appellant.
[3] The appellant’s second claim, which was also brought against the first
respondent as principal debtor and against ten of the respondents as sureties,
was for payment of R3 141 337,87, being the total of the amounts allegedly
advanced to the first respondent by the appellant, and the interest which had
accrued thereon, pursuant to a loan agreement concluded between the
appellant and the first respondent on 6 May 2004.
APPELLANT’S FOUNDING AFFIDAVIT
[4] In the founding affidavit which accompanied the notice of motion the
deponent, Mr JD Lightfoot, a manager employed by the appellant, dealt with
the conclusion of the loan agreement which formed the basis of the second
claim and the cession agreement in terms of which the amounts forming the
subject matter of the first claim were ceded to the appellant. He also annexed
two certificates of balance signed by one of the appellant’s directors in respect
of the two claims. (The loan agreement authorised the appellant to prove the
balance owing under the loan agreement by the first respondent and the other
relevant respondents by means of a certificate issued by one of its directors. I
shall assume that the appellant was authorised by the various contractual
documents to prove as against the first respondent and the other relevant
respondents the balance owing on the overdrawn bank accounts in the same
way.)
[5] Mr Lightfoot also referred in his affidavit to an agreement concluded on
19 July 2005 in terms of which the second respondent, Log-Tek Group
Investments (Pty) Ltd, sold 200 shares (20% of the issued share capital) in
Sigma Logistic Solutions (Pty) Ltd and 20% of the existing claims on loan
account in that company to the eleventh respondent, Mr MN Moolman, for
R1.5 million. This amount was to be paid to the appellant, which held the
shares so sold under a perfected pledge and which agreed to allow the
second respondent to sell and transfer the shares to the eleventh respondent
and to release them from its pledge. The pledge referred to, as appears from
the share sale agreement (to which I shall refer in what follows as ‘the
Moolman-Sigma agreement’), was concluded on 6 May 2004, the date the
loan agreement was concluded, and it clearly forms part of the securities
furnished to the appellant to secure the amounts owing to the appellant under
the loan agreement.
[6] Clause 5.2 of the Moolman-Sigma agreement reads as follows:
‘After payment of the purchase consideration [ie, the amount of R1.5 million] by the purchaser
[the eleventh respondent] to Miloc [the appellant] the sale shares will be released from the
operation of the pledge, and the company’s obligations [ie, the obligations of Sigma Logistic
Solutions (Pty) Ltd] to Miloc, and or any of its nominees, will have been fully discharged.’
[7] Mr Lightfoot also referred in his affidavit to another agreement for the
purchase by the eleventh respondent of other shares pledged to the appellant
on 6 May 2004 by the first respondent. In what follows I shall call this
agreement ‘the USA agreement’.
[8] The shares sold under the USA agreement were 100 shares in
Information Dynamics (Pty) Ltd, the tenth respondent, and 100 shares in
Logtek USA Inc. The price to be paid was R4 million, payable to the appellant,
which agreed to allow the first respondent to sell the shares to the eleventh
respondent. The USA agreement provided for the purchase price of the
shares sold to be paid in three instalments, viz (i) R100 000 on the date when
certain suspensive conditions were fulfilled; (ii) R2.9 million within a period of
30 days thereafter; and (iii) R1 million on 30 November 2005 or the date on
which either of the companies whose shares were sold received the annual
licence fee payable to Logtek USA Inc.
[9] Clause 7.2.3 of the USA agreement provides as follows:
‘On the final payment date, the sale shares and all other shares held by Miloc [the appellant]
in terms of the pledge, will be released from the operation of the pledge, and Miloc shall
procure that all other securities provided by the seller, Logtek Group Investments
(Proprietary) Limited [the second respondent], their subsidiaries, [the eleventh respondent]
and the Moolman Trust [the fourteenth respondent] for all the seller’s and [the eleventh
respondent’s] obligations to Miloc, and/or any of their nominees in connection with the seller’s
indebtedness to Miloc, will have been fully discharged and Miloc will hand over all the original
security documents to the seller.’
[10] Mr Lightfoot stated that the eleventh respondent failed to adhere to the
terms of the Moolman-Sigma agreement and the USA agreement and in
particular he ‘failed to make payment of the amounts as agreed.’ He stated
that the eleventh respondent only paid a total of R2 million to the appellant,
namely R1 million on 3 September 2005 and a further amount of R1 million on
2 December 2005. He continued:
‘Since the Eleventh Respondent’s failure to adhere to the terms of the [Moolman-Sigma]
Agreement and the USA Agreement, I have on a regular basis communicated with the
Eleventh Respondent. Numerous meetings were also held. The purpose of the
communication and the meetings was to discuss the payment by the Eleventh Respondent of
the amount of R4 million, in order for all dealings between the various Respondents and the
Applicant to come to an end. It was provided by the USA Agreement that, upon payment of
the amount, all securities would be released to the First Respondent and the Applicant would
walk away from the remaining debt.’
[11] On 13 April 2006, Mr Lightfoot stated, he wrote a letter on behalf of the
appellant to the eleventh respondent informing him that the appellant was
‘prepared to extend the final payment date of the amount due to [it] of R3.5
million in terms of the [Moolman Sigma agreement and the USA agreement]
and to postpone cancellation thereof until 30th June 2006’ on certain
conditions. These included the signature of a CM 42 document in respect of
the Sigma Logistic Solutions (Pty) Ltd shares pledged to the appellant as
security for the amount due to it by the first respondent and that what Mr
Lightfoot called ‘the R3.5 million balance’ would bear interest from 1
December 2006 (sic: I take it he meant 2005) until payment at the rate of
prime plus 1%. The letter continued:
‘In terms of the sale of share agreements, on payment of the R3.5 million plus interest . . ., all
pledges, sureties, covering bonds and cessions we hold in respect of Log Tek’s indebtedness
to us will be cancelled and returned to you. Unfortunately we will not be able to extend the
validity of the sale of share agreements beyond 30 June 2006.
We hope this concession will be of assistance to you and ask that [you] acknowledge your
acceptance of these terms and conditions by signing the attached copy of this letter.’
[12] Mr Lightfoot explained that the amount of R3.5 million to which he had
referred in the letter was arrived at ‘by adding the R1.5 million in terms of the
[Moolman-Sigma agreement] to the R4 million in terms of the USA Agreement
(totaling R5.5 million) less the R2 million paid’.
[13] Mr Lightfoot stated that the eleventh respondent failed to make
payment by 30 June 2006 and that, on that date, he caused the appellant’s
attorneys to direct two letters of demand to the eleventh respondent and a
third to the first respondent. In the letters sent to the eleventh respondent the
amounts of R1.5 million allegedly due under the Moolman-Sigma agreement
and R3.5 million, plus interest, calculated at prime plus 1% from 1 December
2006 (presumably 2005 was meant) due under the USA agreement were
demanded and notice was given that, if these amounts were not paid within
fourteen days, the agreement would be cancelled. In the letter to the first
respondent the appellant demanded payment of R13 126 792,84, which it was
said was the total amount due by the first respondent to it as cessionary of the
amounts previously due to the Standard Bank of South Africa Ltd, plus the
amount which had been advanced to the first respondent under the loan
agreement dated 6 May 2004.
[14] As no payments were made by the eleventh respondent after receipt of
the letters dealing with the Moolman-Sigma agreement and the USA
agreement, further letters were sent to him on 17 July 2006 purporting to
cancel those agreements.
[15] Mr Lightfoot stated that ‘in light’, as he put it, of the cancellation of both
the Moolman-Sigma and the USA agreements, the respondents were liable
towards the appellant to pay the amounts outstanding in terms of both the
cession and the loan agreement.
[16] Mr Lightfoot stated further that the appellant’s attorneys received a
letter dated 18 July 2006 from the eleventh respondent’s attorneys,
responding to the letters of the 17 July 2006 in which the appellant had
purported to cancel the Moolman-Sigma and USA agreements. Attached to
the eleventh respondent’s attorney’s letter was a copy of a letter which the
appellant had sent to the eleventh respondent on 8 March 2006, in which the
date of payment of the amounts outstanding under the Moolman-Sigma and
USA agreements (which, so it was stated, were due by no later than 30
November 2005) was extended to 18 April 2006. (It will be recalled that this
was later further extended to 30 June 2006.) The letter contained the following
paragraphs:
‘2.
The total amount payable in terms of the sale of shares agreements is R5.5 million of
which only R2 million has been received, leaving a balance of R3.5 million unpaid.
. . .
4.
We understand that you wish to utilize the shares in Sigma Logistic Solutions (Pty)
Ltd as collateral in raising funds to settle the unpaid balance of R3.5 million referred
to above, and we confirm that we will be prepared to release these shares from the
pledge, provided that we receive suitable guarantees for payment of the R3.5 million
balance.’ (The italics are mine.)
[17] In their letter of 18 July 2006 the eleventh respondent’s attorneys
referred to the paragraphs of the appellant’s attorney’s letter of 8 March 2006
which I have quoted. They then stated that as the amount due under the
Moolman-Sigma agreement had been paid to it, the appellant, by refusing to
release the Sigma shares in question unless suitable guarantees for payment
of the R3.5 million balance under the USA agreement were furnished
(something to which it was not entitled under the Moolman-Sigma agreement),
had breached clause 5 of the Moolman-Sigma agreement and was
accordingly not entitled to claim the outstanding balance due under the USA
agreement. In this regard the eleventh respondent’s attorneys pointed out that
the appellant’s failure to release the shares had rendered it impossible for the
eleventh respondent at that stage to raise the capital required to pay the
outstanding balance of R3.5 million.
[18] Referring to the appellant’s attorneys’ letter demanding payment by the
first appellant of the full amounts due under the Standard Bank cession and
the loan agreement, the attorneys stated that they, as they put it, placed it
pertinently on record that the amounts outstanding under the cession and the
loan agreement were not owing because of the Moolman-Sigma and the USA
agreements. If these two agreements could not be carried out, they continued,
it was possible that what they called the over-arching (oorkoepelende) debt
under the cession and the loan agreement would be of application. In the
present case, they said, it did not apply and they enquired how what they
called this ‘dead point’ could be sorted out with the appellant.
[19] In dealing with the eleventh respondent’s attorneys’ letter Mr Lightfoot
said that it did ‘not affect the entitlement to relief sought in this application’. In
support of this contention he said the following:
’57.1
The USA Agreement provides for an amount of R4 million to be paid, whereafter the
parties would go their separate ways. It is common cause that only R2 million was
paid. The full amount has not been paid as alleged in the letter. Accordingly the
Applicant was entitled to, and cancelled the USA Agreement;
57.2
Both the [Moolman-Sigma] Agreement and the USA Agreement contain . . . non-
variation clauses. Any variation has to be in writing and signed by the parties,
otherwise it would have no effect;
57.3
The letter that I directed on 8 March 2006 . . . makes it clear that the Sigma shares
would be released, provided that a suitable guarantee for R3 million be received by
the Applicant. This did not happen;
57.4
My letters of 8 March 2006 and 13 April 2006 . . . clearly reflect that, if payment of
R3,5 million is not made to the Applicant, both the sale of shares agreements would
be cancelled;
57.5
At no point in time was a demand made for the release of the Sigma shares. If the
Eleventh Respondent contends that the R2 million was paid [in terms] of the Sigma
Agreement, one would have expected the Eleventh Respondent to have informed the
Applicant that the payment was for such purpose, and to have demanded the release
of the shares soon thereafter. This did not happen;
57.6
It appears from my letter of 13 April 2006 . . . that the Eleventh Respondent accepted
its terms and conditions, which were inter alia the applicant would retain all securities
until payment of R3,5 million, whereafter it would be cancelled and returned;
57.7
The Eleventh Respondent at no time indicated, that without the Sigma shares being
released to it, the Eleventh Respondent would not be able to raise the funds;
57.8
The letter . . . in fact reflects an admission of the liability for the full amount, but
seems to reflect a contention that the sale of shares agreements are still operative. It
follows that, due to the cancellation of those agreements, the full amount of the
liability on strength of the ceded claims and loan facility, [is] owing;
57.9
On any construction, it is submitted that R3,5 million is due and payable;
57.10
The letter does not raise any dispute as to the entitlement to the relief sought.’
OPPOSING AFFIDAVIT FILED ON BEHALF OF RESPONDENTS
[20] In his opposing affidavit filed on behalf of all fourteen respondents the
eleventh respondent denied that any amounts had been advanced to the first
respondent under the loan agreement. He also denied the total amount owing
by the first respondent to the Standard Bank of South Africa Ltd on 19 April
2004. In this regard he stated that the bank had charged interest at a rate
above the rate agreed. He also said that, after the cession, the appellant had
charged interest above the agreed rate, had wrongly charged two so-called
‘success fees’ of R603 253 and R375 250 and had further charged interest on
these fees. He further alleged that the appellant had, totally contrary to the
agreement, charged VAT at 14% on the interest which it had debited, which
rendered the effective interest levied excessive. The appellant, he said, would
thus have to reconcile what he called the whole transaction history (‘die
gehele transaksie geskiedenis’).
[21] He explained that it was for this reason that the appellant was prepared
to accept R7 million for the full liability for the outstanding indebtedness
towards itself. Settlement discussions took place between the respondents’
attorneys and those acting for the appellant. They took place in about June
2005 and were held with the purpose of replacing and settling the total liability
of the first respondent (and also of all the other respondents which stood
surety for the debts of the first respondent and provided security therefor) and
also in order to determine methods for the final disposal and payment of all
amounts.
[22] Thereafter, said the eleventh respondent, discussions took place
between Mr Lightfoot and himself and eventually, in July 2005 and at Pretoria,
they orally settled the matter on the following basis and terms:
(a)
the appellant was to receive an amount of R7 million in full and final
settlement of all its claims against the first respondent and the other
respondents;
(b)
the settlement would be implemented by means of the conclusion of
three agreements, viz (i) an agreement for the sale, to one WC Swanepoel, of
Sigma shares for R1.5 million, payable to the appellant (what I shall call the
Swanepoel-Sigma agreement); (ii) an agreement for the sale, to eleventh
respondent, of Sigma shares for R1.5 million, payable to the appellant (what I
have, in summarising Mr Lightfoot’s affidavit, called ‘the Moolman-Sigma
agreement’) and (iii) an agreement for the sale to the eleventh respondent of
shares in the tenth respondent and Logtek USA Inc for R4 million, payable to
the appellant (what I have, in summarising Mr Lightfoot’s affidavit, called ‘the
USA agreement’).
[23] The purpose of these three agreements, said the eleventh respondent,
was to put in place a practical mechanism to pay the R7 million and to carry
out the terms of the settlement agreement, to which all the respondents were
parties. The eleventh respondent also said that it was part of the settlement
that, on payment to the appellant of the two amounts of R1.5 million under the
two Sigma agreements, the shares sold would be immediately released from
the pledge to which they were subject. As far as the eleventh respondent was
concerned, this was in order to enable him to utilise his shares to provide
security to a financial institution so that he could raise the necessary funds to
pay the R4 million under the USA agreement. The provision that the appellant
was to release the Sigma shares was, he said, a material provision and a
reciprocal term of the settlement. Both he and Mr Lightfoot were thoroughly
aware of the fact and agreed that the remaining R4 million due under the
settlement would have to be paid by using the Sigma shares in order to get
the necessary funding.
[24] The eleventh respondent also said that the intention of the settlement
between Mr Lightfoot and himself was that it and the resulting three
agreements would constitute a novation of the rights the appellant had
received under the cession and the loan agreement. He explained further that
the actual intention of himself and the appellant’s representative was that
there would be only one final settlement agreement, in terms of which R7
million would be paid to the appellant in order to discharge the whole debt. He
submitted that, if the appellant were to contend that there was not one
agreement but three separate agreements, it should be estopped from relying
on the precise literal interpretation of the three agreements. Alternatively, he
said, he and the respondents concerned were entitled to have the agreements
rectified so that they were in accordance with the oral settlement agreement.
[25] The eleventh respondent stated both he and Mr Swanepoel had paid
the amounts due under the Sigma agreements and he had in addition paid
R500,000 in respect of the USA contract. Mr Swanepoel had received his
shares under the Swanepoel-Sigma agreement but he (the eleventh
respondent) had not.
[26] He annexed to his affidavit a letter which he sent to Mr Lightfoot on 20
February 2006. This letter contains the following:
‘1)
With regard to the two payments, totalling R2 million, made by myself
towards the [Moolman-Sigma and USA] transactions, I wish to confirm
that the Sigma transaction is now paid in full, being R1.5 million. The
balance of R500 000 was paid towards the [USA] transaction and the
balance owing on this transaction is currently R3.5 million as per our
agreement last year.
2)
I therefore respectfully request the return of the original Sigma share
certificates and signed transfer documentation to conclude the Sigma
transaction.
3)
I require the certificates and transfer documentation as a matter of
urgency to enable me to raise the final capital in my own name to effect
the final R3.5 million payment to you.’
[27] The appellant’s demand in paragraph 4 of its letter of 8 March 2006
(which was written in answer to his letter of 20 February 2006) that he provide
extra security for payment of the R3.5 million before the Sigma shares were
released was, he said, completely in conflict both with the settlement
agreement and the terms of the three written agreements. The appellant, he
contended, by refusing to release his Sigma shares was in mora in respect of
its obligations under the agreement. It was accordingly unable to demand
payment of the balance due in respect of the USA agreement.
[28] The eleventh respondent contended that the appellant was in the
circumstances not entitled to cancel the Moolman-Sigma and the USA
agreements. As regards the Moolman-Sigma agreement, this was because he
had paid the R1.5 million due in respect of the shares and, as regards the
USA agreement, because the R3.5 million, the balance outstanding under the
agreement, could for the reasons stated above not be demanded until the
appellant had complied with its obligation to release his Sigma shares.
[29] He also contended that, in any event, even if the two agreements were
validly cancelled, this would not revive the old indebtedness in terms of the
loan agreement and the indebtedness which formed the subject matter of the
cession by the Standard Bank of South Africa Ltd.
APPELLANT’S REPLYING AFFIDAVIT
[30] In a replying affidavit deposed to by Mr Lightfoot, which was filed on
behalf of the appellant, it is contended that the appellant is entitled to
judgment against the respondent in the amount of R3.5 million, namely the
amount outstanding under the USA agreement, in which amount - Mr Lightfoot
said - the respondents admitted they were indebted to the appellant but which
they alleged was not due because of the appellant’s failure to release the
Sigma shares. Mr Lightfoot further argued that the respondents could not rely
on the settlement alleged by the eleventh respondent because of non-
variation clauses contained in the loan agreement and the agreements
between the respondents and the Standard Bank of South Africa Ltd which
allegedly gave rise to the rights ceded to the appellant. Furthermore, so Mr
Lightfoot contended, the eleventh respondent, by signing the letter of 13 April
2006, to which I referred in para [11] above, ‘accepted the terms and
conditions contained in [that letter], which [included] that only upon payment of
R3.5 million together with interest would all pledges, sureties, covering bonds
and cessions be cancelled and returned. Also a term of [the letter] is that a
CM42 document in respect of the Sigma shares was to be signed. This flies in
the face of the allegation that payment had been made: the R2 million had
been paid by 3 December 2005, [the eleventh respondent] had directed the
letter of 20 February 2006 . . ., yet on 13 April 2006 [he] signed [the letter in
question] with this condition stipulated therein.’ Mr Lightfoot also stated that
the eleventh respondent had signed the relevant CM42 document.
[31] Mr Lightfoot stated that the respondents never demanded the release
of the Sigma shares, with the result that ‘[e]ven if payment had been made of
R1.5 million, as is alleged by [the eleventh respondent], the [appellant] has not
been placed in mora to release the Sigma shares. On this basis alone’, he
continued, ‘the allegation that the agreements were not cancelled, is bad in
law.’
[32] Mr Lightfoot stated that the appellant did lend and advance the amount
of R2 489 127 to the first respondent and he annexed two documents as proof
of payment of this amount.
[33] The first of the documents annexed, headed ‘Transaction History’,
relates to a ‘CFS Call Account’ and contains an entry apparently dated 30
June 2004. Under the heading ‘Amount’ appear the figures ‘-469705,87’ and
under the heading ‘Description’ are the words ‘BANKIT TRF TRF TO MFS-
LOGTEK’. (Presumably ‘MFS’ is a reference to the appellant.) The next entry
on this document, apparently dated 2 July 2004, also refers to LOGTEK.
Under the heading ‘Amount’ appear the figures ‘469705-87’ and under the
heading ‘Description’ are the words ‘BANKIT PMT TRF FROM LOGTEK TO
C’. Someone has drawn an arrow from the entry dated 30 June 2004 and
immediately below the head of the arrow the following appears in manuscript:
‘LOAN FACILITY R469,705,87 TRANSFERRED 30 JUNE 2006’.
[34] The second annexed document, headed ‘Standard Bank of South
Africa Ltd’, describes itself as a ‘Computer Generated Copy’ and ‘Customer
All Payments Interim Audit Report’. The ‘User Name’ reflected on the
document is ‘Credit Management Solution’ and the transaction reflected
relates to an amount of R2 019 421.05. The ‘Account Name’ is given as
‘LOGISTIC TECHNOLOGIES’, the “Statement Reference’ is ‘CREDIT
MANAGEMENT SOLUTIONS G’ and the ‘Status Description’ is ‘VALIDATED-
ADDITION’. (Presumably ‘CREDIT MANAGEMENT SOLUTIONS’ is a
reference to Credit Management Solutions (Pty) Ltd which, according to other
letters in the papers, is a subsidiary of Credit Management Solutions Group
(Pty) Ltd. According to other letters in the papers the appellant is also a
subsidiary of Credit Management Solutions Group (Pty) Ltd.)
An arrow has been drawn from the amount ‘R2 019 421.05’, which appears
against the entry ‘Total Batch amount’, and below the arrow are hand-written
the words:
‘LOAN FACILITY – R2, 019,421-05 TRANSFERRED 17 MAY 2004’.
FURTHER AFFIDAVIT BY ELEVENTH RESPONDENT
[35] The statement in the replying affidavit that the eleventh respondent by
signing the letter of 13 April 2006 accepted the ‘terms and conditions’ set out
in the letter elicited a further affidavit from the eleventh respondent. In this
affidavit the eleventh respondent pointed out that the allegation in question
was a new one which had not been included in the founding affidavit. He
stated that he signed the letter when Mr Lightfoot handed it to him, not
because he agreed with the terms and conditions for the extension of
payment, but merely because Mr Lightfoot requested him to acknowledge
receipt of the letter by placing his initials thereon before he was aware of the
contents.
JUDGMENT IN COURT A QUO
[36] The learned judge in the court a quo, applying the general rule set out
in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623
(A), held that on the eleventh respondent’s version, which had to be accepted
for present purposes, the appellant’s claim could successfully be resisted by
the respondents by raising the exceptio non adimpleti contractus. He held that
there was no reason to reject the eleventh respondent’s averment ‘that the
common intention was to make use of the share agreements to, as it were,
finance each other’. He pointed out that there was no reference in the
Moolman-Sigma agreement or the USA agreement ‘that before shares may
be released a guarantee would have to be provided for payment of the
balance due under the other contract.’ He also made the point that Mr
Lightfoot’s demand in the letter dated 8 March 2006 ‘that a guarantee must be
provided for the R3.5 million owing if the Sigma shares are transferred to [the
eleventh respondent] conflicts with the introductory part of the sentence: “We
understand that you wish to utilize the shares in Sigma . . . as collateral in
raising funds to settle the unpaid balance of R3.5 million referred to above .
. .” Although the settlement by way of the share agreements was intended to
be a unit’, he continued, ‘there is no indication in one of them that the release
of the shares under it could be made dependent on the other. If it were
possible for [the eleventh respondent] to obtain “suitable guarantees” for R3.5
million based on the shares which have been paid for, it is unlikely that he
would need the release of the Sigma shares at all.’
APPELLANT’S CONTENTIONS
[37] Mr Van Nieuwenhuizen for the appellant submitted that this was not a
case where the general rule in Plascon-Evans, supra, should be applied. On
the contrary, he contended, the court should find that the factual dispute
raised on behalf of the respondents in the eleventh respondent’s opposing
affidavit was not bona fide. He submitted that the eleventh respondent’s denial
that any moneys had been advanced to the first respondent under the loan
agreement was false. He argued in this regard that Mr Lightfoot had
demonstrated in his replying affidavit that the appellant had lent and advanced
R2 489 127 to the first respondent pursuant to the loan agreement. Counsel
drew attention to the fact that the eleventh respondent had chosen not to deal
in the further affidavit filed on his behalf with this aspect of Mr Lightfoot’s
replying affidavit nor with Mr Lightfoot’s statement that he had signed the
CM42 form referred to in the letter of 13 April 2006.
[38] Mr Van Nieuwenhuizen submitted that, once it was clear that the
eleventh respondent’s denial that moneys had been advanced under the loan
agreement was false, this was relevant on the broader question as to the
bona fides of the whole defence and that accordingly the appeal should on
that ground alone succeed.
[39] In the alternative, even if the case were to be decided on the basis of
what was contained in the eleventh respondent’s affidavit, counsel submitted
that the appeal should succeed because it was clear that the appellant had
validly cancelled the Moolman-Sigma and USA agreements on 17 July 2006.
He sought to answer the respondent’s contentions based on the exceptio non
adimpleti contractus by submitting that the eleventh respondent was not
entitled to transfer of the Sigma shares because he had not paid for them. It
follows, so he contended, that the appellant was entitled to cancel the
Moolman-Sigma agreement when the eleventh respondent failed to pay for
the shares by 30 June 2006, the extended date for payment. As the appellant
had, on this approach, not breached any reciprocal obligation under the
settlement agreement, it followed that it was also entitled to cancel the USA
agreement.
[40] When asked about the two amounts totalling R2 million paid by the
eleventh respondent on 3 September 2005 and 2 December 2005 and
whether R1.5 million thereof should not be regarded as having constituted
payment for the shares purchased under the Moolman-Sigma agreement, Mr
Van Nieuwenhuizen submitted that, as neither the eleventh respondent nor
the appellant had allocated the amounts paid to one of the debts due to the
appellant, the payment was to be regarded as being, as counsel put it, ‘in
suspense’ until it could be ascertained which debt was the most burdensome,
whereupon the common law rules as to appropriation of payments would be
applied. He submitted in the alternative that, on 2 December 2005, the most
burdensome debt was the USA debt of R4 million because until it was
discharged, the securities held by the appellant would not be released.
[41] Mr Van Nieuwenhuizen did not press the contention foreshadowed in
the papers that the rectification contended for by the respondents could not be
relied on because of the non-variation clauses in the various agreements. As
the clauses in question did not in clear and explicit terms prevent reliance on
rectification of a written variation contract, there was in any event, in my view,
no substance in the contention: see Gralio (Pty) Ltd v DE Claassen (Pty) Ltd
1980 (1) SA 816 (A) at 824A-B; Leyland (SA) (Pty) Ltd v Rex Evans Motors
(Pty) Ltd 1980 (4) SA 271 (W) at 273B-D and Primavera Construction SA v
Government North-West Province 2003 (3) SA 579 (B) at 598I–599A.
[42] At the end of his argument Mr Van Nieuwenhuizen submitted that, if the
court was against him on the question as to whether the appellant had validly
cancelled the agreements for the sale of shares, the court should order that
the matter be referred to trial. He conceded that he had not asked for this in
the court a quo but submitted that, if he had done so, he would have been
entitled to such an order. It was also not a point raised in the notice of appeal.
DISCUSSION
(1)
BONA FIDE DISPUTE?
[43] In my opinion it is not possible to find that the factual dispute raised on
the papers by the eleventh respondent is not bona fide. Apart from the fact
that I am not persuaded that the documents annexed to Mr Lightfoot’s replying
affidavit do ‘demonstrate’ that the eleventh respondent’s denial that the
appellant lent and advanced R2 489 127 to the first respondent is false, it
does not follow, even if the denial can be rejected, that the rest of the eleventh
respondent’s version cannot be correct, particularly in view of the fact that
there is considerable corroboration for the main parts thereof. I also do not
think that the fact that the eleventh respondent signed the CM42 document
relating to the shares takes the case any further.
(2)
WERE
THE
SALE
OF
SHARES
AGREEMENTS
VALIDLY
CANCELLED?
[44] I turn now to consider Mr Van Nieuwenhuizen’s submission that the
appellant validly cancelled the Moolman-Sigma and the USA agreements and
that it can claim what were alleged to be the correct amounts under the old
indebtedness.
[45] I shall assume, without deciding, that if the agreements in question
were validly cancelled, it is possible for the appellant to claim the full amounts
allegedly owing under the old indebtedness and that it was not limited to
claiming the balance of the amount outstanding under the USA agreement,
plus interest thereon.
[46] On 3 September 2005, when the first amount of R1 million was paid by
the eleventh respondent, only the Moolman-Sigma agreement had been
concluded and the amount paid thus reduced the amount owing under that
contract. When the second amount of R1 million was paid on 2 December
2005 there were two amounts owing: the balance of R500 000 under the
Moolman-Sigma agreement and the R4 million under the USA agreement. As
neither the debtor nor the creditor appropriated the payment to either of the
two debts, the common law rules (which are set out in Wessels The Law of
Contract in South Africa 2 ed (1951) vol 2, paras 2306-2313) apply. ‘The
fundamental principle underlying these rules’, as was pointed out by Henning
J in Ebrahim (Pty) Ltd v Mahomed 1962 (1) SA 90 (D) at 97G-H, ‘is that
payment made by a debtor to his creditor should, in the absence of express
appropriation by either party, be appropriated to the debt which is most
onerous to the debtor (Wolhuter v Zeederberg (1885) 3 H.C.G 437 at p 441),
or, as it has been put, to the debt which it would be most in the interest of the
debtor to pay (Western Province Bank, In Liquidation v Du Toit, Smith & Co
(1892) 2 C.T.R 22).’ We were not referred to any authority in support of Mr
Van Nieuwenhuizen’s main proposition, viz that where it is not clear what debt
is most burdensome the payment goes, as it were, into suspense, nor could I
find any authority on the point.
[47] In any event the submission lacks a factual basis. It is clear which debt,
as on 2 December 2005, it was more in the interest of the eleventh
respondent to pay: the balance due under the Moolman-Sigma agreement.
The discharge of that debt would have released the Sigma shares which the
eleventh respondent had purchased from the pledge to which they were
subject, thus enabling the seller to transfer them to him, whereupon he could
have used them in an endeavour to obtain financing to enable him to pay the
amount due under the USA agreement. Mr Van Nieuwenhuizen’s alternative
argument that the payment is to be appropriated to the debt due under the
USA agreement overlooks the fact that such appropriation would only have
partly discharged the debt in question, whereas an appropriation to the
Moolman-Sigma agreement debt would have discharged the indebtedness
and thereby, as I have said, brought about the release of the shares.
[48] It follows, that as the eleventh respondent must be taken to have paid
the amount due under the Moolman-Sigma agreement on 2 December 2005,
the appellant was not entitled to cancel the agreement on 17 July 2006.
[49] Mr Lightfoot’s statement that the respondents never demanded release
of the Sigma shares is clearly false, as the eleventh respondent’s letter of 20
February 2006, which has been quoted in para 26 demonstrates. It is thus
clear the appellant was in mora from 20 February 2006 in respect of its
obligation to release the shares.
(3)
PRINCIPLE OF RECIPROCITY
[50] It is clear, in my view, that on the version of the contract deposed to by
him, the eleventh respondent’s obligation to pay the balance due under the
USA agreement was so closely linked to the appellant’s obligation to release
the Sigma shares that the principle of reciprocity applies: that is to say the
appellant must release the Sigma shares before being able to claim the price
of the USA shares. In the interim the eleventh respondent is entitled to
withhold performance of his obligation to pay for the USA shares, which
obligation is suspended: see BK Tooling (Edms) Bpk v Scope Precision
Engineering (Edms) Bpk 1997 (1) SA 391 (A) at 418B-H.
[51] The fact that the overall transaction deposed to by the eleventh
respondent was given effect to by the conclusion of three separate
agreements will not in itself exclude the operation of the principle of
reciprocity, which can still apply if ‘the terms of the agreements considered as
a whole clearly evince the intention that there would be reciprocity between
the obligations undertaken in each’: Wynns Car Care Products (Pty) Ltd v
First National Industrial Bank Ltd 1991 (2) SA 754 (A) at 758C-D. It is the
failure of the agreements taken as a whole to evince that intention which the
respondents seek to deal with by having them rectified.
[52] It follows that the appellant was not entitled to cancel the USA
agreement on 17 July 2006 nor is it entitled, as Mr Van Nieuwenhuizen
argued in the alternative, to judgment in the amount of R3.5 million, being the
balance due under the USA agreement.
(4)
REFERENCE TO TRIAL?
[53] I now turn to deal with Mr Van Nieuwenhuizen’s last minute application
for the matter to be referred to trial. He conceded, as I have said, that he did
not apply for a reference to trial at any stage before the court a quo. The
circumstances were such that, if it had the power to do so, the court a quo
was not obliged to have acted mero motu in ordering a reference to trial: cf
Joh-Air (Pty) Ltd v Rudman 1980 (2) SA 420 (T) at 428H-429H. (Whether it
had the power to do so has been described as a question ‘not free from
difficulty’ which has not yet been decided by this court: see Minister of Land
Affairs and Agriculture v D&F Wevell Trust 2008 (2) SA 184 (SCA) at para
60.)
[54] The judge a quo can accordingly in my view not be faulted for not
having done so. While I am not prepared to say that a court of appeal should
never order a reference to trial where it has not been sought in the court
below nor raised in the notice of appeal, such an order would in my view only
be appropriate, if at all, in special circumstances, which have not been shown
to be present in this case.
[55] The appeal must accordingly fail.
ORDER
[56] The following order is made:
The appeal is dismissed with costs.
……………..
IG FARLAM
JUDGE OF APPEAL
CONCURRING
HOWIE
P
CLOETE
JA
VAN HEERDEN
JA
SNYDERS
AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM:
The Registrar, Supreme Court of Appeal
DATE:
28 MARCH 2008
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
The Supreme Court of Appeal today dismissed an appeal brought by Miloc Financial
Solutions (Pty) Ltd against a judgment given in the Pretoria High Court by Mr Acting
Justice Van Rooyen in favour of a Pretoria businessman, Mr MN Moolman, the
Moolman Trust, Logistic Technologies (Pty) Ltd and a number of other companies in
the Log-Tek group of which he was a director and shareholder.
The Appellant had sued Mr Moolman, the trust and the companies for R9.985 million,
which it said was owed by Logistic Technologies (Pty) Ltd under its current accounts
with the Standard Bank of South Africa Ltd, which had ceded its claims to the
appellant. The appellant also sued for a further amount of R3.141 million which it
said it had lent and advanced to Logistic Technologies (Pty) Ltd.
The defence set up by Mr Moolman, his companies and the trust was that there had
been a settlement between the appellant and himself. In terms of the settlement a total
amount of R7 million was to be paid to the appellant. Mr Moolman said R3.5 million
had already been paid and that before the balance of R3.5 million could be claimed
the appellant had, in terms of the settlement, to transfer to him 200 shares in one of
the companies in the Log-Tek group, Sigma Logistic Solutions (Pty) Ltd. He said that
the written agreements concluded between the appellant and himself had to be
rectified to insert this term of the settlement. The Supreme Court of Appeal said that
the defence put up by Mr Moolman could not be rejected on the papers and that the
appeal against the Pretoria High Court’s judgment had to fail.
|
1186
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
20 March 2008
Status: Immediate
Please note that the media summary is intended for the benefit of the media and does not form part of the
judgment of the Supreme Court of Appeal.
THEMBALETHU SAM v THE STATE
[1] The Supreme Court of Appeal today dismissed the appeal by Mr Thembalethu Sam who was
sentenced to 15 years’ imprisonment for being in possession of a semi-automatic pistol. The evidence led
at the trial was that he had used the firearm during the robbery of a bank in Adelaide, Eastern Cape.
[2] In the appeal before the SCA Sam argued that there was no offence for ‘possession of a semi-
automatic firearm’ and that, the provisions of the Criminal Law Amendment Act, commonly referred to as ‘the
minimum sentence provisions’ were not applicable. Sam argued further that the regional court was
consequently wrong to have sentenced him to 15 years’ imprisonment instead of no more than 3 years’
imprisonment as provided for in the now repealed Arms and Ammunition Act 75 of 1969. The firearm
concerned has also featured on a charge of attempted murder, arising out of the shooting of a bystander as
Sam tried to make good his escape after the robbery.
[3] The Supreme Court of Appeal rejected that argument, and held that in providing for increased penal
jurisdiction for the possession of a semi-automatic firearm the Legislature had not created a new offence. It
merely enhanced the penal jurisdiction of the court in respect of an existing offence, which was considered to
fall in a certain category specified in the Schedule. Offences relating to the possession of a semi-automatic
or automatic firearm were offences in respect of which the court acquired an enhanced penal jurisdiction.
[4] Having found no substantial and compelling circumstances justifying a departure from the minimum
sentence laid down in the Criminal Law Amendment Act to be present, the Supreme Court of Appeal
concluded that the regional magistrate had not misdirected himself and upheld the sentence of 15 years’
imprisonment of which 11 years were to run concurrently with the sentence of 15 years on the count of
robbery.
|
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:
18 March 2008
Status: Immediate
Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal.
JG SWANEPOEL v THE STATE (508/07) [2008] ZASCA 8 (18 March 2008).
[1] The SCA today allowed an appeal brought by a Pretoria businessman, Mr Jaco
Gunter Swanepoel, against his conviction in the Pretoria Magistrate’s Court on charges of
assault with intent to do grievous bodily harm (modified on appeal to the Pretoria High Court
to common assault), crimen injuria and statutory contempt of court.
[2] The SCA held that the evidence of the complainant, who was the only witness called
by the State, was unsatisfactory in certain respects and the magistrate had misdirected himself
in several points. In consequence the SCA was obliged to reassess the evidence itself on the
record. It held that it was not possible to say where the truth lay and the appeal had to be
allowed on the first two counts.
[3] On the charge of statutory contempt of court the court said that at best for the State
the appellant was negligent and that counsel for the State had conceded that this was not
enough to sustain the conviction.
|
2996
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20165/2014
In the matter between:
FEDGROUP PARTICIPATION BOND MANAGERS
APPELLANT
(PTY) LTD
and
TRUSTEE OF THE CAPITAL PROPERTY TRUST
RESPONDENT
COLLECTIVE INVESTMENT SCHEME IN PROPERTY
Neutral citation:
Fedgroup Participation Bond Managers v Trustee of the Capital
Property Trust [2015] ZASCA 103 (30 June 2015)
Coram:
Navsa ADP and Mhlantla, Pillay, Willis and Saldulker JJA
Heard:
19 May 2015
Delivered:
30 June 2015
Summary:
Ownership of Land: whether an encroacher can bring an independent
cause of action claiming transfer of the encroached – upon land in the absence of a
removal order by the owner of the land – Building – Illegal structure – No approval of
building plans by local authority.
________________________________________________________________
ORDER
_______________________________________________________________
On appeal from: Gauteng Local Division, Johannesburg (Victor J sitting as court
of first instance):
The following order is made:
1. The application to amend the notice of motion is dismissed with costs including
the costs of two counsel.
2. The appeal is dismissed with costs including the costs of two counsel.
3. The cross-appeal is dismissed and no order is made as to costs.
_________________________________________________________________
JUDGMENT
_________________________________________________________________
Navsa ADP et Saldulker JA (Mhlantla, Pillay and Willis JJA concurring):
[1] In this case the question is whether someone encroaching on another‟s land
is entitled, in the absence of an action or an application being brought by the owner
of the land for a removal order, to approach a court for an order compelling the
owner to transfer, not only that part of the land on which there is encroachment, but
also to seek transfer of additional vacant land against a tender of compensation. The
short answer is no. The background and the reasons for that conclusion follow.
[2] This appeal is directed against the judgment and order of Victor J in the
Gauteng Local Division, Johannesburg in terms of which she refused an application
by the appellant, Fedgroup Participation Bond Managers (Pty) Ltd (Fedgroup), for an
order along the lines described in the preceding paragraph. For clarity it is necessary
to record specific parts of the order sought by Fedgroup, namely:
„1. . . .[D]irecting the respondent, in its capacity as registered owner of Erf 990 Sunninghill
Extension 85 Township, Registration Division IR, Provence of Gauteng, in extent 1,1821
hectares (“the Property”), forthwith upon demand:
1.1 to do all things necessary and to sign all documents necessary to facilitate and to allow
the subdivision of the Property in accordance with the Subdivision Plan annexed to the
founding affidavit in these proceedings as Annexure “FA4”; and
1.2 to do all things necessary and to sign all documents necessary to facilitate and to allow
the transfer of the newly-created portion of the Property, in extent 2 396 m2 and as indicated
on the aforementioned Subdivision Plan, to the Applicant, . . .‟
[3] The respondent is the trustee of The Capital Property Trust Collective
Investment Scheme in Property. The trust was established in terms of the Collective
Investment Schemes Control Act 45 of 2002. We shall refer to it as CPT. As quid pro
quo for the order referred to in paragraph 2, Fedgroup was willing to accede to an
order in respect of which it would (i) bear all the costs pertaining to the subdivision of
the property and the transfer of the newly-created portion thereof (ii) against
registration of the transfer, pay to the respondent the sum of R1 950 000 plus value
added tax. Furthermore, Fedgroup agreed to pay CPT a pro rata amount of the rates
and taxes which the former had paid to the local authority since the commencement
of the encroachment, in the ratio that the property to be transferred bore to the whole
of the property.
[4] There is also a cross-appeal by CPT against the dismissal by Victor J of its
plea of prescription, in terms of which it had contended that any claim which
Fedgroup may have had for the transfer of the triangular piece of land it sought by
way of the order referred to in the preceding paragraph had prescribed. The matter is
before us with the leave of the court below.
[5] The background to the litigation culminating in the present appeal is set out
hereafter. Fedgroup and CPT are each the registered owner of one of two
contiguous prime commercial erven situated in Sunninghill Extension 85 Township,
namely, Erf 989 measuring 5960 m2 in extent (Erf 989), and Erf 990 measuring
1,1821 hectares in extent (Erf 990), respectively. Both erven are zoned in terms of
the relevant Town Planning Scheme to permit the erection of offices.
[6] The improvements on CPT‟s property consist of two office buildings which
have a gross lettable area of 6 652 m2 which were let to the United Nations World
Food Programme and Acer Computers.
[7] The improvements on Fedgroup‟s property included a substantial, but
incomplete structure, which consists of a basement and concrete formwork. There is
a dispute about what the gross built area of the incomplete structure would be. As
will become apparent later, this is not an insignificant dispute.
[8] What follows is a description of how Fedgroup and CPT became adjoining
land owners and how the encroachment at the centre of the present dispute
occurred. On 31 July 2006 Fedgroup and CPT entered into a written agreement in
terms of which the latter acquired from the former a total of twenty-seven income
producing properties and associated businesses, as letting enterprises, for an
aggregate amount of R308 035 000. One of the properties acquired by CPT is the erf
referred to in paragraph 5 above (Erf 990), including the improvements referred to in
paragraph 6. Registration of the property into CPT‟s name took place on 15
December 2006. The incomplete structure on Fedgroup‟s property referred to above
partially encroaches on CPT‟s property. The encroachment was discovered by
Fedgroup during April or May 2008, almost two years after the conclusion of the
written agreement of sale. It is common cause that the incomplete structure which
encroaches on CPT‟s property had already been erected when Fedgroup acquired it
from a predecessor in title. It is unchallenged that the structure was erected
unlawfully, more particularly because building plans had not been submitted for
approval. We return to this aspect later.
[9] A fence erected on the property lulled Fedgroup into a false sense of security
about the cadastral boundaries of the property it disposed of to CPT. Upon
discovering the real state of affairs, Fedgroup approached CPT concerning the
encroachment and to discuss a possible resolution. Communications between the
parties ensued but ultimately negotiations broke down. This is unsurprising since the
land concerned is prime commercial property with each party probably seeking to
extract maximum benefit for itself.
[10] An admitted stumbling block to a non-litigious resolution of the problem was
that CPT insisted that a proposed settlement agreement include a forfeiture clause in
terms whereof all approvals required for subdivision and consolidation had to be
obtained within a specified time, failing which any amount paid to CPT by Fedgroup
as compensation would not be repaid. Fedgroup found this unacceptable.
[11] In June 2009 Fedgroup contended by way of a letter to CPT that it was
entitled to seek rectification of the written agreement of sale so as to reflect the
cadastral boundaries as understood by it at the time of the conclusion of the
agreement. This was contested by CPT‟s attorneys and was not persisted in by
Fedgroup, perhaps because of a clause in the written agreement of purchase which
included a seller‟s warranty against encroachment.
[12] Because of the breakdown in negotiations and the resultant impasse
Fedgroup decided to go on the offensive and launched an application for the orders
referred to earlier. In resisting the application, CPT raised three points in limine. First,
that Fedgroup had no cause of action in that there was no justiciable dispute. It
contended that it was the owner of the property concerned and unwilling to dispose
of it by way of sale. It developed its contention as follows. A land owner could not be
compelled to sell property it was unwilling to part with. In effect, so CPT contended,
Fedgroup sought to compel an expropriation which, in our law, was incompetent.
Second, CPT raised prescription as a defence. It submitted that Fedgroup admittedly
first became aware of the encroachment during April or May 2008 and that even if it
had a cause of action, more than three years had elapsed before it launched
proceedings in the court below. Lastly, CPT contended that there were material
disputes of fact that could not be resolved on the papers. In this regard, CPT
contended that this was important in relation to the question of prejudice, more
particularly in relation to compensation and the proposed subdivision and the
necessary rezoning which is concomitant to transfer of the land sought by Fedgroup.
[13] We interpose to record that the order sought, set out in paragraph 2 above,
included land additional to that on which the partially erected structure was situated
and which Fedgroup sought to have excised from CPT‟s property, and transferred to
it, based on the assertion that it needed the additional vacant land for optimal
development of its own property and its further allegation, that CPT would have no
use of the undeveloped additional piece of land it sought to have transferred into its
name and that without which the transfer it sought would be worthless. It is
uncontested that the land sought by Fedgroup constitutes 20 per cent of the total
extent of the property owned by CPT.
[14] We return to list the material disputes asserted by CPT. First, there is a
dispute about the valuation of the land sought to be excised. The parties are poles
apart in their respective valuations.
[15] The parties‟ respective experts were divided about the extent of the financial
loss and prejudice to each in the event of an order in favour of the other. Disputes
arose in relation to demolition and the viability of redesign and redevelopment of the
partially completed structure so as to avoid encroachment. The cost of redesign and
demolition and removal was estimated by CPT‟s expert to be an amount of
R4 223 138, which was admitted by Fedgroup‟s expert. However, Fedgroup was
adamant that this amount did not constitute the total prejudice it would suffer in the
event of the order not being granted, contending that the loss of development
potential in financial terms far exceeded that amount. CPT on the other hand,
contended that if it were to lose the additional land sought by Fedgroup it would be
unable to develop the remaining land optimally and that its loss in financial terms
would run into many millions of rands. There is a related dispute about the effect that
the subdivision resulting from the order sought would have on the land-use rights of
the remaining portions of CPT‟s property and its valuation. It would mean that the
present improvement coverage would exceed the permitted land coverage and that it
would require a rezoning application by CPT. Furthermore, the parties are divided on
the probabilities of success of an application for subdivision and rezoning. In this
regard, Fedgroup contended that CPT‟s expert‟s present position on the difficulties to
be encountered in securing approval for the subdivision and rezoning, flies in the
face of an earlier indication by the same expert that there was a likelihood of
success. According to CPT‟s expert, in the event of an order being granted as
sought by Fedgroup, its property‟s value would be diminished by an amount of
R4 410 721. This is an amount that exceeds the amount of R4 223 138 referred to
above. CPT contended that it would thus be severely prejudiced in the event of the
order being granted.
[16] The court below dealt with the first point raised by CPT, namely whether
Fedgroup had a cause of action. Victor J categorised the order which Fedgroup
sought as being one for „specific performance‟. Before us the parties were agreed
that that conclusion could not be supported. Following on the aforesaid erroneous
categorisation, Victor J took the view that an order such as the one sought by
Fedgroup was entirely within the court‟s discretion.
[17] The court below went on to consider Christie v Haarhoff,1 in which the court
granted transfer of the encroached upon area, against compensation to be paid to
the landowner. Victor J also referred to Trustees, Brian Lackey Trust v Annandale,2
in which Griesel J held that the encroacher there could retain the structure against
payment of compensation. Victor J considered it significant that in that case the
encroaching structure encompassed 80 per cent of the owner‟s land. In support of
her view that the court has a discretion, based on consideration of reasonableness
and fairness, to order that an encroachment could continue against „the payment of
damages‟, Victor J cited Rand Waterraad v Bothma.3 Her conclusion on whether
Fedgroup had a cause of action is set out in paragraph 12 of the judgment of the
court below:
„Based on the case law set out above I find that this court has a discretion to order
transfer and compensation but obviously each case must depend on its facts. I find that the
applicant‟s cause of action is good in law and can be raised in the absence of a demolition
1 Christie v Haarhoff and others (1886-1887) 4 HCG 349.
2 Trustees, Brian Lackey Trust v Annandale 2004 (3) SA 281 (C).
3 Rand Waterraad v Bothma en ‘n ander 1997 (3) SA 120 (O).
order. The question still to be determined is whether on these facts such an order is
appropriate.‟
[18] In relation to prescription, Victor J ruled against CPT. She concluded that
Fedgroup‟s cause of action did not arise out of a „debt‟ as envisaged in s 11(d) of the
Prescription Act 68 of 1969, stating the following (para 14):
„The applicant has unwittingly been in possession of the respondent‟s immovable property.
This cannot be interpreted to be a debt.‟
She went on to state the following (para 15):
„This encroachment cannot be frozen in a point in time. The encroachment in my
view is a wrong which continues. As long as the respondent has a right to require demolition
there is no prospect of prescription.‟
For this conclusion she found support in Barnett v Minister of Land Affairs4 paras 20
and 21.
[19] Turning to the disputes of fact, Victor J took the view that there were indeed
disputes concerning the town planning aspects insofar as the extended excision of
land was concerned, and that there was „a mass of speculation‟ as to whether the
application for subdivision and rezoning would succeed. The reasons for inclining
against Fedgroup are set out in paras 38 and 39 of the judgment of the court below:
„In this case a factor which introduces a degree of complexity and affects the
exercise of my discretion is that the applicant is bent on seeking the entire triangular
encroachment and not for example the solid unfinished building. In exercising my discretion I
would have had no difficulty in directing the transfer of that portion of the encroachment
against payment of compensation. It was the applicant's case, after the court specifically
asked whether the transfer of the unfinished building would suffice. The applicant submitted
that it would be of no value to the applicant unless the adjoining sliver of land and the guard
house is incorporated. One area of the triangular piece of land has access to a public road
and this was of importance to the applicant. There is an already built guard house. To sum
up if the court were to order the transfer of only the incomplete building encroachment of 703
square metres this would not assist the applicant in any way as the entire encroachment was
required for development.
4 Barnett & others v Minister of Land Affairs & others 2007 (6) SA 313 (SCA).
In my view upon the proper exercise of my discretion based on all the facts set out above it
is only the incomplete building which can be transferred to the applicant. That has been
rejected and in those circumstances applicant's application must fail.‟
It is against the conclusions set out in the preceding paragraphs that the present
appeal and cross-appeal are directed.
[20] Before dealing with the correctness of the court below‟s reasoning and
conclusions we pause to state that in anticipation of this court perhaps reaching the
same conclusion as did Victor J, namely, that it was not competent to order transfer
of land beyond that on which the offending structure was erected, Fedgroup filed a
notice of application to further amend its notice of motion to include an alternative
prayer, to restrict the relief it sought to the land on which the offending structure was
erected. This amendment was only sought on appeal. It is, at this stage, apposite to
recall that Fedgroup was emphatic in its founding affidavit that its acquisition of the
limited land would be worthless. This is an aspect to which we shall revert in due
course. We record further that, in response to the application to amend the notice of
motion on appeal, CPT filed a notice of an application to strike out, conditional upon
the amendment being granted. We now return to deal with the judgment in the court
below and the applicable law.
[21] Regrettably, there are major misconceptions in the reasoning and conclusions
of the court below. First, as acknowledged by counsel on behalf of both parties, this
is not a case in which Fedgroup sought specific performance. Second, the
consideration of the cases involving compensation in relation to encroachment was
not sufficiently analytical. Christie was a case in which the court considered an action
for trespass. A landowner had come to court complaining that the defendants had
erected a large building on his property and had erected a wall and portion of the
building thereon. The defendants had continued and „refused to abate such
trespass‟. The extent of the ground trespassed upon was 141 square feet. The
defendants admitted the trespass and alleged that they had acted in the bona fide
belief that the whole of the ground upon which they had built belonged to themselves
and that, on discovering the error, they informed the plaintiff. They contended that it
was impossible, without great loss and damage, to remove the building and tendered
the amount of £20 as compensation, further offering to bear the expenses of
surveying the land and of transferring it into their own names. The following part of
the judgment is instructive (at 353 – 354):
„In this case, however, the plaintiff very properly does not press his strict rights to the
extreme point; and it is practically agreed that the proper course will be for the plaintiff to
transfer to the defendants the ground built upon, upon their paying all expenses of and
incidental to the transfer, together with reasonable compensation for depriving him of the
ground. The question for the Court to decide is what sum in all the circumstances of the case
should be awarded as reasonable compensation. . .‟ (Our emphasis.)
It can justifiably be said that Christie was a case in which the parties had agreed to
adjudication by the court of a reasonable amount to be paid for land in
circumstances where the landowner had already agreed to the transfer, subject to
the court deciding on adequate compensation. It can hardly be categorised as
authority for there being a „right‟ vested in an encroacher, to approach a court for an
order to compel transfer of property belonging to another. It is also not insignificant
that the action was instituted by the landowner.
[22] In Lackey, also relied upon by the court below, Griesel J referred to a
discretion vested in a court to award compensation instead of ordering removal of an
encroaching structure. It was stated that a substantial encroachment is not
necessarily a bar to an order of compensation. It is true that in Lackey the
encroacher instituted the action. That, however, was met by a plea and a
counterclaim by the landowner for removal of the encroachment. The lis then, was
not about whether an independent action at the instance of an encroacher was
competent in the absence of a claim for removal. The counterclaim sought precisely
that. What is important, though, is that the court in Lackey said the following (para
41):
„. . . On the evidence of this case, the inference is irresistible that the defendant was
prepared to accept monetary compensation for his erf . . . .‟
The court refused the aggrieved landowner‟s claim for a demolition order and issued
inter alia the following declaratory order:
„It is declared that the defendant is not entitled to the removal from erf 878 of the
encroachment erected thereon by the plaintiffs, subject to payment by the plaintiffs to the
defendant of such damages as the parties may agree or the Court may determine to be
payable.‟
[23] Rand Waterraad, another decision on which the court below relied, dealt with
an application by an aggrieved landowner for a declaratory order that the
respondents in that case had no right in structures encroaching on his property and
that the respondents had to remove them at their own cost. In that case the court
reaffirmed the principle that where a demolition order was sought, a court had a
discretion to refuse such an order and to confine the plaintiff to a claim for damages.
Furthermore, in that case, in refusing the application, the court took into account the
considerable time that had lapsed during which the landowner had raised no
objections against the erection and presence of the offending structures. At 139 I - J
the following appears:
„Geregverdigde billikheid dikteer dat vanweë die traak-my-nieagtige gelatenheid waarmee
applikant hierdie aangeleentheid bejëen het hy nie geregtig is op „n verwyderingsbevel soos
vervat in die kennisgewing van mosie nie.‟
This case is no authority for the proposition that an encroacher can approach a court
as of right to compel transfer of another‟s immovable property.
[24] In Meyer v Keiser,5 relied on by Fedgroup, the facts were as follows. A
landowner instituted action against an encroacher for the removal of an
encroachment. He alleged that unbeknown to him the defendant had built a house
on the adjoining property which, to a substantial extent, encroached upon his
property. In resisting the claim the defendant averred that the encroachment had
occurred as a result of a bona fide mistake about the beacons demarcating the
boundary. Moreover, the defendant indicated that in monetary terms greater
prejudice would attach to him in the event of a demolition order. The defendant
prayed that the court, in the exercise of its discretion, should order the plaintiff to
transfer to him that part of the property upon which there was encroachment against
payment of compensation. The plaintiff excepted to the plea on the ground that the
defendant was not entitled to claim transfer of part of his property. The following part
of the judgment in Meyer is important:
„When an award of damages is acknowledged as the permissible and appropriate form of
relief in the case of an encroachment, an order for the transfer of that portion of the property
encroached upon is incidental to, and consequent upon, such an award. The virtue of such
an ancillary order is obvious but it need not necessarily be made (cf De Villiers v Kalson
5 Meyer v Keiser 1980 (3) SA 504 (D).
1928 EDL 217 at 233), and in certain circumstances to do so may be impracticable or not
permissible in law. The important point is that, whatever form the order takes in such a case,
it is the award of damages which is the true basis for the relief granted. In my view, perhaps
as a result of the form of the orders in the two decisions relied upon, this was overlooked by
the pleader in the instant case which resulted in a misconception of the nature and extent of
the Court‟s discretionary authority.‟
The exception was upheld with costs and the plea was set aside with the defendant
being granted leave to file a new plea if so minded.
[25] In Phillips v South African National Parks Board,6 the South African National
Parks Board had erected an encroaching fence on the applicant landowner‟s
property. The court had regard to environmental legislation, and the prejudice that
the parties might suffer in the event of the fence remaining in place compared to
removal being ordered. Significantly, the court recognised that a loss of property
would result in the event of it being ordered that the fence remain in place against
the award of compensation. It reasoned that it might amount to deprivation of
property and that section 25(1) of the Constitution might come into play (para 24). It
nonetheless considered that such a deprivation might in appropriate circumstances
be ordered in the exercise of a court‟s discretion. In that case, however, the
landowner prevailed and removal was ordered.
[26] Professor Z T Boggenpoel, in an article in the South African Law Journal,7
dealing with the rights of a landowner in respect of encroachments, states with
reference to a number of authorities, that removal of the offending structure is
„ordinarily explained as being the default remedy in the case of encroachments‟. She
goes on to analyse cases that have reaffirmed the discretion to award compensation
instead of ordering the removal of encroaching structures.
[27] Professor Boggenpoel was rightly critical of Victor J‟s judgment in this case for
not being sufficiently analytical. She reasons with justification that the cases relied
6 Phillips v South African National Parks Board [2010] ZAECGHC 27.
7 Z T Boggenpoel „The Ambit of the discretion of courts in the case of encroachment: Fedgroup
Participation Bond Manager (Pty) Ltd v Trustee of the Capital Property Trust Collective Scheme in
Property‟ (2015) 132 SALJ 5.
upon did not provide the necessary authority to conclude that an encroacher can
claim as of right that his neighbour‟s land should be transferred to him.
[28] Professor Boggenpoel, in a separate article,8 very usefully traces the history
of our law in relation to an aggrieved landowner‟s right to seek removal of an
encroachment. The remedy has its roots in Roman law.9 The point of departure in
Roman Law was that an encroachment should be removed.10 This could be done by
self-help or by way of the actio negatoria where the encroachment protruded into
airspace. The learned author, while acknowledging that the remedy had undergone
significant development and modification when it was received into South African
case law states that there appears to be no mention of a power of a court to order
transfer of the encroached upon land to the encroacher.
[29] Similarly there is no mention of such a power in Roman-Dutch law.
Boggenpoel explains that in Roman-Dutch law, the point of departure was the same
as in Roman law, namely, that if anybody suffered as a result of something
belonging to his neighbour overhanging or encroaching on his property, he could
force the neighbour to remove it.11 In the context of acquisition of ownership, Grotius
stated that ownership is transferred to the affected landowner where someone built
on his land.12 According to Voet, „whatever someone lets unto or constructs on
another‟s tenement, becomes the property of him to whom the ground belongs.13
Boggenpoel explains that no mention is made in the commentaries regarding an
order for the transfer of the encroached upon land to the encroacher.14 She states
that her examination of early South African case law confirms the view that such an
order was not competent at common law.15 With reference to Christie, Boggenpoel
concludes that in that case the court merely facilitated a bilateral agreement and that
8 Boggenpoel „Compulsory transfer of encroached-upon land: A constitutional analysis‟ (2013) 76
THRHR 313 at 317.
9 Boggenpoel (2013) at 317. See also Corpus juris civilis (D 9.2.29.1) S P Scott The Civil Law:
Including the Twelve Tables; The Institutes of Gaius; The Rules of Ulpian; The Opinions of Paulus;
The Enactments of Justinian; and the Constitutions of Leo (1973)); J R L Milton „The law of
neighbours in South Africa‟1969 Acta Juridica 123 at 234; Van den Heever Aquilian damages in
South African law (1944) at 84.
10 See D 9.2.29.1.
11 Van Leeuwen Het Roomsche-Hollandsche Recht 2.20.6.
12 Grotius Inleidinge tot de Hollandsche Rechtsgeleerdheid 2.10.6.
13 Voet Commentarius ad Pandectas 8.2.4.
14 Boggenpoel (2013) at 318.
15 And in this she relies on C G Van der Merwe Sakereg 2 ed (1989) at 203.
the transfer that was ordered was not against the affected landowner‟s will.16
Similarly, in Van Boom v Visser,17 the plaintiff did not press his rights of ownership
and was willing to accept £100 to tolerate the encroachment. The court gave
judgment in favour of the aggrieved landowner, reiterating that removal was the
default remedy. The court stated, as an alternative, that the defendant could pay £25
for the transfer of the property and £10 damages. The following statement by the
author is worth repeating:
„Although the end result in this case was that transfer was ordered, a very important
qualification should be emphasised. The transfer of the encroached-upon land was
dependant on the willingness of the affected landowner to give up his property and it was not
an involuntary judicial transfer of the affected land.‟
[30] Boggenpoel considered Meyer as well as the decision in De Villiers v Kalson18
as illustrations that an order for transfer does not necessarily have to be made when
a court exercises its discretion to grant compensation rather than order removal. The
learned author submits that the power to transfer the encroached upon land, which
she says has typically formed part of the court‟s discretion in the context of building
encroachments, is a separate power that should be entirely dependent on the
willingness of the affected landowner to give up his property. She submits that the
judgments that endorse the view that the power exists for a court to effect an
involuntary transfer of property do not provide adequate authority for that position.
The following part of the article bears repeating:
„As the matter stands there is no authority in either common law or legislation in terms of
which a court can sanction a forced sale of land in the context of building encroachment,
against the will of the affected landowner. It should be kept in mind that South African courts
only have the powers granted to them by common law or legislation. In this regard, there is
no common law principle or legislation that grants them the authority to order compulsory
transfer of land.
Furthermore, if the affected landowner does not want to give up his property, the involuntary
transfer of property that the court authorises with a transfer order may be problematic in light
of section 25 of the Constitution. The order will result in a deprivation of property, which will
have to comply with section 25(1). Additionally, if the loss of property in the case where the
16 Boggenpoel (2013) at 318.
17 Van Boom v Visser (1904) 21 SC 360.
18 De Villiers v Kalson (1928) EDL 217.
decision is made to leave the encroachment in place and transfer the encroached-upon land
to the encroacher amounts to expropriation of property, the requirements of section 25(2)
and (3) of the Constitution would also be applicable.‟
[31] The learned author submits that the deprivation of property rights that occurs
as a result of leaving encroachment in place and ordering transfer of the encroached
upon land, must comply with s 25 of the Constitution which, she suggests, might be
problematic. She reaches the following conclusion:
„It is argued here that although it should be possible in terms of the court‟s discretion
to leave (even significant) building encroachments in place against compensation, the power
to order transfer of the affected property is an entirely different matter. The discretion of a
court in the context of building encroachments to decide on an appropriate remedy does not
include the authority to effect a forced transfer of the land affected by the encroachment.
Therefore, a compulsory transfer order will no doubt conflict with section 25(1) in as far as
the common law does not authorise such an order and the transfer order will be unjustified
and therefore arbitrary.‟
[32] Other academics have expressed similar concerns about the constitutionality
of court orders refusing the removal of encroachments, particularly where the
encroachments are extensive or where a transfer of ownership of the encroached
upon land is also ordered, on the grounds that this may constitute arbitrary
deprivation of property.19
[33] Our law has always been careful to protect the right of ownership, particularly
of immovable property. It is a most important and extensive right.20 It is thus
protected by registration in the Deeds Office. Limited real rights in land may also be
required to be registered. Silberberg and Schoeman’s The Law of Property,21 in
dealing with the exclusion of personal rights from the registration process, states the
following at 65:
19 See, for example, A Pope „Encroachment or accession? The importance of the extent of
encroachment in light of South African constitutional principles‟ (2007) 124(3) SALJ 537; AJ van der
Walt „Replacing property rules with liability rules: Encroachment by building‟ (2008) 125(3) SALJ 592
at 622; H Mostert (ed) and A Pope (ed) The Principles of the Law of Property in South Africa (2010) at
140.
20 Chetty v Naidoo 1974 (3) SA 13 (A) at 20 A - D.
21 P J Badenhorst, JM Pienaar and H Mostert Silberberg & Schoeman’s The Law of Property 5 ed
(2006).
„This exclusionary approach indicates support for the notion that ownership is the pinnacle of
– or the most important right within – a hierarchy of rights, with limited real rights following
close at heel. Other rights are understood as being in stages of inferiority to ownership as far
as their protection in property law and publicising thereof are concerned.‟
The learned authors provide a qualification, namely, that this hierarchical approach
has come under scrutiny for failing to provide acceptable solutions to the increased
pressure brought about by a proliferation of land reform legislation. However, it does
not follow from this that the right of ownership should not be afforded its appropriate
weight.
[34] Before us, counsel on behalf of Fedgroup, when engaged by this court on
how they would circumscribe the right the encroacher was seeking to enforce in the
court below, experienced difficulty in doing so. The response ultimately was that no
right could be circumscribed but that it would be a sad day if this court did not come
to Fedgroup‟s assistance especially in the face of the present impasse. Counsel on
behalf of CPT responded as follows; it was the owner of the land; it had not sought
the removal of the offending structure; and as far as it was concerned there was no
justiciable dispute. There was thus no impasse.
[35] With few exceptions, the decisions discussed earlier in this judgment flowed
from an owner seeking to enforce his full rights of ownership. Acquisitive prescription
aside, we have difficulty in conceiving a basis on which an encroacher might
offensively, as of right, claim the transfer of ownership into his or her name of
another‟s land. An encroacher might be able to defend an action or application for
removal on the basis that it is unjust and unfair to order demolition and removal. This
is a defensive position that might rightly be adopted. Courts, in exercising what has
now been accepted as a „discretion‟ to award compensation instead of ordering
removal, do so on the basis of policy considerations such as unreasonable delay on
the part of the landowner, or on the basis of what might be viewed as
acquiescence.22 Prejudice and the principles of neighbour law are taken into
account. However, an encroacher does not have an independent cause of action. He
or she cannot offensively compel another to part with rights of ownership. Estoppel is
22 In this regard, see Z T Boggenpoel „The Discretion of courts in encroachment disputes‟(2012) 23(2)
Stell LR 253 at 256-257.
an apt analogy. It is thus unsurprising that counsel on behalf of Fedgroup
experienced difficulty in formulating the legal basis for approaching the court below
as did Victor J in dealing with prescription. She had difficulty in determining what, in
effect, had been said to prescribe.23 In concluding in sweeping terms that a court has
a wide discretion to consider granting the relief sought by Fedgroup, the court below
erred. In our view, the response of counsel on behalf of CPT set out at the end of the
preceding paragraph is correct.
[36] It is clear from what is set out above that adjudication in relation to
encroachment is fraught with complexities. For example, is compensation to be
calculated in relation only to the value of use and occupation of the land, or should
the negative impact of the deprivation of the full use of the land be taken into
account? If the determination occurs in relation only to use and occupation it might
obviate the need to consider transfer of ownership. Does the right to use and occupy
endure only for the lifetime of the encroacher? In determining whether an
encroachment should remain in place, town planning and zoning considerations
might come into play. Ought compensation to be calculated in relation to the full
market value of the land? If the answer is in the affirmative, does it mean that
registration and transfer has to follow? If it does, does it amount to deprivation of
property within the meaning of s 25(1) of the Constitution. Of course these difficulties
arise only in the event of a landowner being unwilling to part with his or her property.
Carefully crafted legislation, preferably upon the advice of the South African Law
Reform Commission, may address at least some of these complexities.
[37] In the present appeal, Fedgroup has an insuperable difficulty. No court has
ever gone as far as ordering the transfer of land greater than the area of
encroachment. Such an order is just not competent.
23 In this regard, Victor J‟s reliance on Barnett was misplaced. That case dealt with the prescription of
an owner‟s vindicatory claim. Brand JA , himself, in a later judgment, namely, Bester NO & others v
Schmidt Bou Ontwikkelings CC 2013 (1) SA 125; [2012] ZASCA 125 (SCA) recognised that he had
erred in accepting that a vindicatory claim was a debt that prescribed after three years. In Absa Bank
v Keet [2015] ZASCA 81 (SCA), this court reiterated the significance of the distinction between real
and personal rights and held that the vindicatory action is not a „debt‟ that prescribes after three years
in terms of the Prescription Act 68 of 1969. The point is that in the present case prescription was
raised by the owner as against the encroacher. The court below, as is apparent from para 15 of the
judgment, approached the matter from a flawed perspective.
[38] And even if a court had an inclination to come to Fedgroup‟s assistance, there
is yet a further difficulty that Fedgroup cannot overcome, namely, several material
disputes in relation to values and ultimately in respect of computation of
compensation. On CPT‟s valuations and tendered evidence the compensation would
be inadequate and it would suffer the greater and irreparable prejudice.
[39] As suggested by Boggenpoel in her 2015 SALJ article, an intractable problem
for Fedgroup is that the encroaching structure it sought to have remain in place and
of which it required transfer was erected unlawfully, more particularly, no building
plans were submitted.24 A court will not countenance or be party to perpetuating
unlawful conduct.25 For all the aforesaid reasons, the appeal cannot succeed. The
difficulties referred to in paragraph 36 do not fall for consideration.
[40] It is necessary to deal briefly with the application to amend the notice of
motion on appeal. As noted earlier, Fedgroup sought to amend its notice of motion
on appeal to include an alternative prayer for transfer of only the encroached-upon
land (and excluding the additional vacant land sought in the initial prayer). Fedgroup
was emphatic in its founding affidavit that transfer of only this lesser area was
worthless. It is difficult to comprehend why it is now pursuing that worthless
endeavour. Furthermore, the case that CPT was called upon to meet was the
transfer of the extensive area initially sought and it marshalled evidence in relation to
valuation and prejudice relative to that case. The ground has now shifted radically to
CPT‟s prejudice. This cannot be countenanced. The application to amend the notice
of motion thus falls to be dismissed with costs.
[41] Insofar as the cross-appeal is concerned, it was in reality conditional.
Considering the conclusions reached, the question of prescription has been
rendered moot. The cross-appeal falls to be dismissed without an order for costs.
24 Section 4 of the National Building Regulations and Building Standards Act 103 of 1977 provides:
„4
Approval by local authorities of applications in respect of erection of buildings
(1) No person shall without the prior approval in writing of the local authority in question, erect
any building in respect of which plans and specifications are to be drawn and submitted in terms
of this Act.
. . .
(4) Any person erecting any building in contravention of the provisions of subsection (1) shall be
guilty of an offence . . . .‟
25 See Lester v Ndlambe Municipality [2014] 1 All SA 402 (SCA).
[42] For all these reasons the following order is made:
1. The application to amend the notice of motion is dismissed with costs including
the costs of two counsel.
2. The appeal is dismissed with costs including the costs of two counsel.
3. The cross-appeal is dismissed and no order is made as to costs.
_____________________
M S NAVSA
Acting Deputy President
_____________________
H SALDULKER
Judge of Appeal
APPEARANCES:
Appellant
J G Wasserman SC with G F Porteous
Instructed by:
Gideon Pretorius Incorporated, Cape Town
Van Der Merwe & Sour, Bloemfontein
Respondent
J Both SC and J Moorcraft
Instructed by:
Kokinis Incorporated, Randburg
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
30 June 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Fedgroup Participation Bond Managers v Trustee of the Capital Property Trust [2015]
ZASCA 103 (30 June 2015)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) delivered a judgment (i) dismissing an application by
Fedgroup Participation Bond Managers (Pty) Ltd (Fedgroup) for leave to amend its notice of motion;
(ii) dismissing the appeal by Fedgroup; and (iii) dismissing a cross-appeal by the trustee of the
Capital Property Trust Collective Investment Scheme in Property (CPT). Consequently, the court
upheld the order of the Gauteng Local Division, Johannesburg, and refused to grant Fedgroup’s
application for transfer of certain land belonging to CPT.
The appeal before the SCA concerned the issue of whether someone encroaching on another’s land
is entitled, in the absence of an action or an application being brought by the owner of the land for a
demolition order, to approach a court for an order compelling the owner to transfer, not only that part
of the land on which there is encroachment, but also to seek transfer of additional vacant land against
a tender of compensation. The cross-appeal of CPT concerned the question of whether, if an
encroacher has such a right, it had prescribed in this instance.
The facts of the matter are as follows. Originally, Fedgroup owned two adjacent pieces of prime
commercial land in Sunninghill, Gauteng. In 2006, Fedgroup sold one of these pieces of land to CPT.
In 2008, it was discovered that a substantial but incomplete structure on Fedgroup’s land encroached
upon what was now CPT’s land. Negotiations aimed at an amicable resolution were unsuccessful,
and Fedgroup launched an application for transfer of (i) the land encroached upon by the incomplete
structure, as well as (ii) further vacant land which, Fedgroup alleged, was necessary for the optimal
development of its property. The total extent of the land claimed by Fedgroup constituted 20% of
CPT’s property.
In its founding papers, Fedgroup was emphatic that its prayers for transfer of land were not in the
alternative, and that its case was squarely based on transfer of both pieces of land. However, before
the SCA, it sought leave to amend its notice of motion to include an alternative prayer for transfer of
only the encroached upon land. The SCA held that this represented a radical shift in its case, to
CPT’s prejudice, and that this could not be countenanced. Accordingly, the application for leave to
amend Fedgroup’s notice of motion was dismissed.
With regard to the main appeal, the SCA held that Fedgroup’s appeal (and, therefore, its application)
must fail for four reasons. First, after reviewing the old authorities and South African case law and
academic opinion on the powers of a court in encroachment matters, the SCA held that while a court
may have a discretion to refuse an application for removal of an encroaching building in certain
circumstances, this discretion is only activated where there is in fact an application by the owner for
demolition or removal. An encroacher does not have an independent cause of action to compel the
owner to part with his rights of ownership. In this regard, the SCA expressly rejected the conclusion to
the contrary reached by the court a quo. Second, Fedgroup had sought transfer of not only the
encroached upon land, but also additional vacant land. Such an order, it was held, is just not
competent. Third, there were several material disputes in relation to the properties and their values,
and on CPT’s valuations, the compensation tendered by Fedgroup would be inadequate and CPT
would suffer the greater and irreparable prejudice. Fourth, the encroaching structure which Fedgroup
sought to have remain in place was erected unlawfully. The SCA reiterated that a court will not
countenance or be party to perpetuating unlawful conduct.
With regard to the cross-appeal, the SCA held that the dismissal of the appeal rendered the cross-
appeal moot and so it also fell to be dismissed, without a full determination of the question in issue
being necessary. Nonetheless, the SCA did in passing criticise the approach and reasoning of the
court a quo on this topic.
Accordingly, the SCA dismissed (i) Fedgroup’s application to amend its notice of motion; (ii) the
appeal; and (iii) the cross-appeal.
--- ends ---
|
1788
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 292/10
In the matter between:
IAN LESLIE McDONALD Appellant
and
LESLEY JUDITH YOUNG Respondent
Neutral citation: McDonald v Young (292/10) [2011] ZASCA 31 (24
March 2011)
Coram:
MPATI P, CLOETE, SNYDERS and THERON JJA and
PETSE AJA
Heard:
17 February 2011
Delivered:
24 March 2011
Summary:
Contract ─ Standard of proof necessary ─ Uncontradicted
evidence is not necessarily acceptable or sufficient to discharge an
onus.
Maintenance ─ There is no legal duty of support on unmarried
cohabitants.
Formation of a tacit contract regarding maintenance ─ A tacit
contract cannot be inferred where its terms would conflict with an
express contract ─ Evidence and conduct of the parties must justify
an inference that there was consensus between them.
_____________________________________________________________________
ORDER
On appeal from: Western Cape High Court (Cape Town) (Veldhuizen J
sitting as court of first instance):
The appeal is dismissed with costs.
___________________________________________________________
JUDGMENT
THERON JA (MPATI P, CLOETE, SNYDERS JJA and PETSE AJA
concurring)
[1] The parties were involved in a relationship and had cohabited, as
man and wife, for approximately seven years from June 1999 until May
2006. After the relationship broke down, the appellant instituted an action
against the respondent in the Western Cape High Court (Cape Town) for
an order declaring that a joint venture agreement existed between the
parties in respect of immovable property (the property) situate at Port
Island, Port St Francis, in the Eastern Cape, alternatively, for an order that
the respondent pay maintenance to the appellant. The high court
(Veldhuizen J) found that the appellant had failed to prove the existence
of a joint venture agreement and, in respect of the maintenance claim, that
there was no duty on the respondent to support the appellant. The
appellant appeals to this court with the leave of the high court.
[2] The issues on appeal, as in the high court, are whether the appellant
has established the existence of a joint venture agreement between the
parties, alternatively, whether the respondent is under a duty (by
operation of law, or alternatively, by virtue of a tacit contract) to support
the appellant subsequent to their cohabitation.
[3] Shortly after the parties were introduced to each other the appellant
took up residence with the respondent at her farm in Knysna. The
appellant’s main business interest was the promotion and marketing of
surfing and surfboard products. During 1999, the appellant and his
Durban-based brother had been in the process of establishing a new
business, Inter Surf Africa Exporters (ISAE), which was involved in the
manufacture and export of surfboards. The appellant did not possess any
meaningful assets and had very limited income. The respondent, on the
other hand, was a woman of considerable means. She had an annual cash
income in excess of R1,3m and possessed substantial assets. When the
appellant and the respondent met, they were 59 and 54 years of age,
respectively. It was common cause that the appellant had not been in
receipt of a regular income and had, for a time, during the course of the
relationship, received a monthly allowance from the respondent.
[4] The appellant’s claim to a half-share in the property was based on
an express oral joint venture agreement concluded by the parties. The
appellant testified that the terms of the agreement were that the
respondent would contribute financially to the acquisition, completion
and refurbishment of the property while the appellant would contribute
his time and expertise to oversee the development of the property.
According to the appellant, it was agreed that they would each share
jointly in the property. The appellant testified that the primary objective
of the agreement was to ensure that he gained financial independence.
Despite the fact that the property was to have been registered in both their
names, it was subsequently agreed, according to him, that the property
would be registered in the respondent’s name for tax purposes. It was
common cause that the initial written agreement had reflected both their
names as purchasers of the property.
[5] It was contended, on behalf of the appellant, that the high court had
erred in failing to accept and rely on the appellant’s evidence regarding
the agreement, having particular regard to the fact that his evidence was
unchallenged. It was further contended that the respondent’s failure to
testify was fatal to her case and that this court was obliged to accept his
unchallenged evidence in respect of both the agreement and the claim for
maintenance.
[6] It is settled that uncontradicted evidence is not necessarily
acceptable or sufficient to discharge an onus. In Kentz (Pty) Ltd v Power,1
Cloete J undertook a careful review of relevant cases where this principle
was endorsed and applied. The learned judge pointed out that the most
succinct statement of the law in this regard is to be found in Siffman v
Kriel,2 where Innes CJ said:
‘It does not follow, because evidence is uncontradicted, that therefore it is true . . .
The story told by the person on whom the onus rests may be so improbable as not to
discharge it.’
[7] It is thus necessary to consider the appellant’s evidence in detail. It
is clear from the judgment of the high court that it was mindful that the
appellant’s evidence, in order to be reliable, had to be credible. The high
court, on the evidence, reached the conclusion that the respondent had
‘initially intended that the contract should reflect the [appellant] as one of
1 [2002] 1 All SA 605 (W).
2 1909 TS 538 at 543.
the purchasers’. However, it did not accept his evidence in its entirety and
went on to find that the appellant had failed to prove the existence of a
joint venture agreement.
[8] In my view, there were a number of unsatisfactory aspects in the
appellant’s evidence. It is significant to note how the appellant’s claim
against the respondent has developed over time. During May 2006 and
shortly after the parties parted ways, they met, in the presence of their
respective attorneys, with a view to settle the disputes between them. The
appellant’s evidence regarding the claim he had advanced at that meeting,
was as follows:
‘So the idea was to try and settle the split between yourself and Mrs Young? --- I
accept ─ I looked at it like that because it did look like we weren’t going to get
together again, so I assumed that that was the reason.
And what were your claims that day? --- My claims that day with regards to my share
of Port St Francis, with regards to my contribution I had made over the seven years
and discussion on my contract with the bakkie.’
This was in stark contrast to his testimony in the magistrate’s court3 to the
effect that he had, at the time of the meeting, been under the impression
that he did not have a claim against the respondent and that the claim had
‘materialised some time afterwards when I . . . approached some
attorneys for advice’. The appellant’s explanation for the contradiction,
that he had meant to convey that he had not yet ‘implemented’ his claim,
is, in my view, unsatisfactory. The very purpose of the meeting was an
attempt to resolve the dispute between himself and the respondent
without the need to resort to litigation.
3 The appellant had, during February 2007, instituted an action against the respondent in the
magistrates’ court, Knysna, in which he claimed damages from the respondent for, inter alia,
wrongfully and maliciously setting the law in motion by launching a false and unfounded application
for a protection order against him.
[9] On 17 July 2006, and following upon the May 2006 meeting, the
appellant’s attorney wrote a letter to the respondent’s attorney, which was
intended to ‘motivate and substantiate’ the appellant’s claim against the
respondent ‘as comprehensively as possible’. (My emphasis.) It was
recorded in the letter that the appellant believed that a universal
partnership had existed between the parties and that he was entitled to
‘some form of compensation’ (Again my emphasis.) for his contribution
to the partnership. It is instructive that no mention was made of the
appellant’s half-share in the property, despite the fact that the appellant
testified that he had given his attorney instructions in this regard and that
he (the appellant) had had sight of the letter prior to it being dispatched.
The development of the appellant’s claim over time is not without
significance.
[10] During the period that the parties were cohabiting, the appellant
drafted numerous agreements and proposals, the purpose of which was to
define the financial relationship between him and the respondent. It is not
necessary, for the purpose of this judgment, to consider all the
agreements entered into between the parties or drafted by the appellant.
On 24 July 2003, the respondent executed a sole agency mandate in terms
of which she appointed the appellant as agent to sell the property and
undertook to pay a commission of ten per cent to him. It was the
appellant’s testimony that the commission he would have earned was to
have provided him with financial security. The appellant agreed that he
had, during October 2004, drafted an agreement, aimed at resolving the
constant disputes he and the respondent had had regarding his financial
security. The salient terms of this agreement were that (i) he was
appointed as sole agent to sell two properties, including the property
which is the subject of this dispute; (ii) he would be paid a commission of
ten per cent for securing the sale of the properties; and (iii) the respondent
would purchase government retail bonds to the value of R500 000 on
behalf of the appellant. It was also his evidence that the relationship
between him and the respondent had been particularly volatile at that time
and his intention, in drafting this agreement, was to achieve clarification
regarding his financial position.
[11] It is surprising that the appellant failed to mention his half-share in
the property in the October 2004 proposal. This is even more surprising
when regard is had to his evidence that he was at that time concerned, as
there was uncertainty regarding his financial future. The wording of this
proposal, as well as the agency agreement, excludes the possibility that he
had acquired a share in the property. It is, in my view, extremely
improbable that had the parties agreed in 1999 when the property was
purchased that they would be joint owners thereof, the appellant would
not, in 2004, have recorded his right to, or even a claim for, a half-share
in a proposal aimed at settling outstanding matters between him and the
respondent.
[12] Counsel for the appellant attached great importance to the fact that
the initial agreement had recorded both parties’ names as purchasers. The
appellant assumed that both names were inserted on the instructions of
the respondent. There is no evidence to support this assumption. Even if
such instructions did emanate from the respondent, it does not necessarily
follow, as was found by the high court, that this meant that there was an
agreement between the parties as alleged by the appellant. The recording
of both parties’ names is nothing more than an indicator pointing towards
the conclusion of an agreement and it is a factor to be considered in
conjunction with the probabilities.
[13] There are a number of factors that support the respondent’s denial
of the existence of a joint venture agreement between the parties. These
include: the claim as articulated at the meeting with their legal
representatives shortly after the break-up, the letter written after that
meeting, various agreements drafted by the appellant, and the
unsatisfactory and often contradictory evidence given by the appellant. I
pause to mention that the appellant contradicted himself on one of the
essential terms of the agreement, namely, whether it was agreed that he
would be entitled to half of the proceeds of the sale of the property only
or the property together with its contents.
[14] The appellant bore the onus of proving the agreement upon which
he relied as well as the terms thereof. Having regard to the deficiencies in
the appellant’s evidence and the probabilities, it cannot be said that it
measures up to the standard required for acceptability in respect of the
existence of the joint venture agreement. In Da Mata v Otto NO,4 Van
Blerk JA, dealing with the approach to be adopted when deciding
probabilities, said:
‘In regard to the appellant's sworn statements alleging the oral agreement, it does not
follow that because these allegations were not contradicted ─ the only witness who
could have disputed them had died ─ they should be taken as proof of the facts
involved. Wigmore on Evidence, 3rd ed., vol. VII, p. 260, states that the mere
assertion of any witness does not of itself need to be believed, even though he is
unimpeached in any manner, because to require such belief would be to give a
quantative and impersonal measure to testimony. The learned author in this
connection at p. 262 cites the following passage from a decision quoted:
“It is not infrequently supposed that a sworn statement is necessarily proof,
and that, if uncontradicted, it established the fact involved. Such is by no means the
law. Testimony, regardless of the amount of it, which is contrary to all reasonable
4 1972 (3) SA 858 (A) at 869B-E.
probabilities or conceded facts ─ testimony which no sensible man can believe ─ goes
for nothing; while the evidence of a single witness to a fact, there being nothing to
throw discredit thereon, cannot be disregarded.”’
In my view, the appellant’s testimony is contrary to all reasonable
probabilities and, despite the fact that it was unchallenged, counts for
‘nothing’. In assessing the probabilities, the conclusion seems to be
inescapable that the appellant has not discharged the onus resting on him.
It follows that the appellant is not entitled to the relief sought in respect of
the main claim.
[15] I turn now to consider the alternative claim for maintenance. I shall
deal first with the argument that such a duty existed by operation of law.
In South African law, certain family relationships, such as parent and
child and husband and wife, create a duty of support. The common law
has been extended in line with the Constitution to protect contractual
rights of support in the same way as the common law duty of support.5 In
Amod v Multilateral Motor Vehicle Accidents Fund (Commission for
Gender Equality Intervening),6 this court recognised a contractual right to
support arising out of a marriage in terms of Islamic law for purposes of a
dependant’s action.7 In Du Plessis v Road Accident Fund,8 the common
law action by a spouse, for loss of support against the wrongdoer who
unlawfully kills the other spouse, was extended to partners in a same-sex
permanent life relationship similar in other respects to marriage, who had
tacitly undertaken reciprocal duties of support. The Constitutional Court
in Satchwell v President of the Republic of South Africa & another,9
5 See Langemaat v Minister of Safety and Security & others 1998 (3) SA 312 (T). Santam Bpk v
Henery 1999 (3) SA 421 (HHA); Petersen v Maintenance Officer & others 2004 (2) BCLR 205 (C).
6 1999 (4) SA 1319 (SCA).
7 See Khan v Khan 2005 (2) SA 272 (T).
8 2004 (1) SA 359 (SCA).
9 2002 (6) SA 1 (CC); 2002 (9) BCLR 986.
found that the common law duty of support, could, in certain
circumstances, be extended to persons in a same-sex relationship. Madala
J, writing for the court, commented as follows:
‘The law attaches a duty of support to various family relationships, for example,
husband and wife, and parent and child. In a society where the range of family
formations has widened, such a duty of support may be inferred as a matter of fact in
certain cases of persons involved in permanent, same-sex life partnerships. Whether
such a duty of support exists or not will depend on the circumstances of each case.’10
[16] Counsel for the appellant relied on Kahn, Amod and Du Plessis in
support of his contention that a legal duty of support rests on the
respondent. This contention is misplaced. In both Amod and Khan, the
parties in respect of whom a duty of support had been alleged had been
married to each other in terms of Islamic law. The ratio of the court, in
both cases, was that the marriage between the parties had given rise to
reciprocal contractual duties of support on the part of the parties to that
marriage. In Du Plessis, Cloete JA, having had regard to the facts of that
matter, concluded that the plaintiff had proved that the deceased had
undertaken to support him and that the deceased had owed the plaintiff a
contractual duty of support. The learned judge of appeal said:11
‘In the present case the case for drawing an inference that the plaintiff and the
deceased undertook reciprocal duties of support is even stronger. The plaintiff and the
deceased would have married one another if they could have done so. As this course
was not open to them, they went through a “marriage” ceremony which was as close
as possible to a heterosexual marriage ceremony. The fact that the plaintiff and the
deceased went through such a “marriage” ceremony and did so before numerous
witnesses gives rise to the inference that they intended to do the best they could to
publicise to the world that they intended their relationship to be, and to be regarded
as, similar in all respects to that of a heterosexual married couple, ie one in which the
10 Para 25.
11 Paras 14 - 15.
parties would have a reciprocal duty of support. That having been their intention, it
must be accepted as a probability that they tacitly undertook a reciprocal duty of
support to one another.
Further support for this finding is the fact that the plaintiff and the deceased thereafter
lived together as if they were legally married in a stable and permanent relationship
until the deceased was killed some 11 years later; they were accepted by their family
and friends as partners in such a relationship; they pooled their income and shared
their family responsibilities; each of them made a will in which the other partner was
appointed his sole heir; and when the plaintiff was medically boarded, the deceased
expressly stated that he would support the plaintiff financially and in fact did so until
he died.’
Amod, Khan and Du Plessis were decided on the basis of contracts
entered into by the respective parties, and are not authority for the
contention that there is a duty of support, by operation of law, on the
respondent to maintain the appellant.
[17] The question whether the relationship between the parties, a
heterosexual couple who choose to live together, free from the bonds of
matrimony, gives rise to a legal duty of support, can, in my view, be
answered with reference to Volks NO v Robinson & others.12 In that
matter the Constitutional Court was concerned with the interpretation and
constitutionality of s 2(1), read with s 1, of the Maintenance of Surviving
Spouses Act 27 of 1990, which confers on surviving spouses the right to
claim maintenance from the estates of their deceased spouses if they are
not able to support themselves.13 The court had to determine whether the
exclusion of survivors of permanent life partnerships from the protection
of the Act constituted unfair discrimination. Skweyiya J, writing for the
12 2005 (5) BCLR 446 (CC).
13 Section 2(1) of the Act states that:
‘If a marriage is dissolved by death after the commencement of this Act the survivor shall have a claim
against the estate of the deceased spouse for the provision of his reasonable maintenance needs until his
death or remarriage in so far as he is not able to provide therefor from his own means and earnings.’
majority, referred with approval to the comments made by O’Regan J in
Dawood & another v Minister of Home Affairs & others; Shalabi &
another v Minister of Home Affairs & others; Thomas & another v
Minister of Home Affairs & others14 that:
‘Marriage and the family are social institutions of vital importance. Entering into and
sustaining a marriage is a matter of intense private significance to the parties to that
marriage for they make a promise to one another to establish and maintain an intimate
relationship for the rest of their lives which they acknowledge obliges them to support
one another, to live together and to be faithful to one another.
. . .
The institutions of marriage and the family are important social institutions that
provide for the security, support and companionship of members of our society and
bear an important role in the rearing of children. The celebration of a marriage gives
rise to moral and legal obligations, particularly the reciprocal duty of support placed
upon spouses and their joint responsibility for supporting and raising children born of
the marriage. These legal obligations perform an important social function.’15
(Footnotes omitted.)
[18] The Constitutional Court was of the view that the law may
distinguish between married people and unmarried people and may, in
appropriate circumstances, accord benefits to married people which it
does not accord to unmarried people.16 The learned justice reasoned as
follows in para 55:
‘There are a wide range of legal privileges and obligations that are triggered by the
contract of marriage. In a marriage the spouses’ rights are largely fixed by law and not
by agreement, unlike in the case of parties who cohabit without being married.’
[19] The court found that whilst there was a reciprocal duty of support
between married persons, ‘no duty of support arises by operation of law
14 2000 (3) SA 936 (CC ); 2000 (8) BCLR 837.
15 Paras 30-31.
16 Para 54.
in the case of unmarried cohabitants’.17 This was an unequivocal
statement of the law by the Constitutional Court. Skweyiya J went on to
state that to the extent that any obligations arise between cohabitants
during the subsistence of their relationship, these arise by agreement and
only to the extent of that agreement.18
[20] I turn now to consider whether the respondent assumed a
contractual duty of support towards the appellant. The argument,
presented as a second alternative to the claim based on a joint venture,
was that the court should find that the parties had entered into a tacit
agreement in terms of which the respondent had agreed to support the
appellant even after the end of their relationship.
[21] The facts upon which the appellant relies in support of his claim
that the respondent had assumed a duty of support towards him are the
following:
(i)
He and the respondent had lived together as if they were legally
married in a stable and permanent relationship;
(ii)
The respondent had supported him during the seven-year period
that they had resided together and the appellant had been dependent on
such support. She had given him an allowance, provided transport for him
and paid for entertainment and overseas holidays;
(iii)
The respondent had, in a series of wills, made extensive provision
for financial support of the appellant in the event of her death;
(iv)
The respondent was a wealthy woman while he had no assets and
very limited income;
17 Para 56.
18 Para 58.
(v)
He had contributed to the maintenance of and increase in value of
the respondent’s estate, often at the expense of his own business interests;
(vi)
The appellant was reliant on an income from employment and
could not, due to his advanced age, guarantee for how much longer he
would be able to earn a living; and
(vii) The respondent had advised the appellant that she had sufficient
funds to support both of them.
[22] The argument that the parties had entered into a tacit agreement
regarding maintenance cannot be sustained for a number of reasons. First,
the reliance on a tacit contract is inconsistent with the appellant’s
evidence. The appellant believed and gave evidence to the effect that he
and the respondent had concluded an express agreement in respect of the
property, the aim of which was to ensure that he was financially
independent. Implicit in this is the intention that he would not have to rely
on the respondent, or any other person, for financial support. In the
circumstances, the appellant could not have formed the intention to
contract tacitly with the respondent. Having regard to his evidence that
the purpose of the joint venture agreement was to render him financially
independent, the appellant could not at the same time have contemplated,
that the respondent would continue to support him for the rest of his life.
A tacit contract must not extend to more than the parties contemplated.19
In Rand Trading Co Ltd v Lewkewitsch20 the parties had erroneously
assumed that there was a contract in existence between them. The court
did not accept the argument that the company’s conduct in recognising
the existence of the lease, paying the rent and otherwise performing in
terms of the contract had created a binding contract. Solomon J said:
19 Wessels, Law of Contract in South Africa 2nd ed vol 1 para 266(3).
20 1908 TS 108.
‘But I think the answer to that argument is a very clear one, and it is this ─ that all
these facts are explained on the simple ground that both parties erroneously assumed
that there was a contract in existence between them . . . And the mere fact . . . that
both parties erroneously assumed that there was a contract in existence at that date
altogether precludes us from now inferring a new contract.’21
[23] The appellant’s stated belief, that there was an express contract
between him and the respondent in respect of the property, precludes this
court from drawing an inference to the effect that the parties had entered
into a tacit agreement the terms of which were inconsistent with the
express agreement to which he testified. It was not open for the appellant
to contend that if the court disbelieved his evidence that a joint venture
agreement had been concluded, the court should infer from the proved
facts that a tacit contract had come into existence, because such an
inference cannot be drawn where it would conflict with what he said was
the actual position. A litigant can plead, but not testify, in the alternative.
[24] Secondly, the appellant’s evidence was that the respondent’s
attitude had always been that in the event that their relationship ended, he
would receive no financial benefit from her. This conduct, on the part of
the respondent, is inconsistent with a tacit agreement to support the
appellant. The appellant’s explanation for drafting the various proposals
regarding the financial relationship between him and the respondent was
as follows:
‘Well, the motivation behind it at that particular time, we were going through quite a
patchy period; we were arguing and not agreeing on a lot of things. And it appeared to
me that all of a sudden my situation could alter and I’d be left standing high and dry.
And I discussed it with Lesley [the respondent] and I felt that if we had something in
21 At 115.
writing, and if that did occur at least I had something to fall back on . . . ’.
(Emphasis added.)
[25] It is trite that a tacit contract is established by conduct. In order to
establish a tacit contract, the conduct of the parties must be such that it
justifies an inference that there was consensus between them.22 There
must be evidence of conduct which justifies an inference that the parties
intended to, and did, contract on the terms alleged. It is clear from the
appellant’s evidence that there was no consensus between the parties. The
appellant, on his own testimony, was uncertain about his financial future.
He realised that he would only be entitled to what had been agreed
between the parties, hence his desire to have a written contract ‘to fall
back on’. The respondent’s attitude, as testified to by the appellant, that
he would leave the relationship without any financial benefit, is an
indicator that she had not, tacitly or otherwise, agreed to support the
appellant. I am not satisfied that this court can conclude, from all the
relevant proven facts and circumstances, that a tacit contract, in terms of
which the respondent undertook to financially maintain the appellant, for
as long as he needed such maintenance, came into existence.
[26] For these reasons, the appellant’s maintenance claim which is
premised on a legal, alternatively, a contractual duty, must also fail.
22 Standard Bank of South Africa Ltd & another v Ocean Commodities Inc & others 1983 (1) SA 276
(A) at 292B–C; Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed and Hurwitz v
Vorner Investments (Pty) Ltd 1984 (3) SA 155 (A) at 164G–165G.
[27] The appeal is dismissed with costs.
___________________
L Theron
Judge of Appeal
APPEARANCES
APPELLANT:
RS van Riet SC
Instructed by Johan Rhoodie Attorneys, Pretoria;
Hill McHardy & Herbst Inc, Bloemfontein
RESPONDENT: (Ms) A de Vos SC
Instructed by Millers Attorneys, George;
Rosendorff Reitz Barry, 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:
24 March 2011
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
McDONALD v YOUNG
Today the Supreme Court of Appeal dismissed an appeal against an order of the
Western Cape High Court refusing to declare that a joint venture agreement existed
between the appellant and the respondent and holding that there was no legal duty
on the respondent to support the appellant.
The parties had cohabited, as husband and wife, for approximately seven years
before the relationship broke down. The appellant did not possess any meaningful
assets and had a very limited income while, on the other hand, the respondent was a
woman of considerable means. During the subsistence of the cohabitation the
respondent acquired immovable property at her own expense. The appellant claimed
that he was entitled to a half-share of the property, alleging that the parties had
concluded an express oral joint venture agreement in terms of which the respondent
would contribute financially to the acquisition, completion and refurbishment of the
property while he would contribute his time and expertise to oversee the
development of the property. The appellant claimed, in the alternative, that the
respondent was under a duty (by operation of law, or alternatively, by virtue of a
tacit contract) to support him subsequent to their cohabitation.
The SCA held, in respect of the claim based on the alleged joint venture agreement,
that the appellant’s evidence was contrary to all reasonable probabilities and that,
despite the fact that it was unchallenged, it counted for nothing. It held, therefore,
that the appellant had not discharged the onus resting on him. It held, in respect of
the alternative claim for maintenance, that there is no reciprocal duty of support on
cohabitants. It held further that it could not infer a tacit contract from the proven
facts, because such an inference would conflict with the appellant’s evidence that
the alleged joint venture agreement was intended to ensure that he gained financial
independence.
|
3257
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 511/2006
In the matter between:
DAVID ASHLEY PRICE
APPELLANT
and
MINISTER OF CORRECTIONAL SERVICES
RESPONDENT
______________________________________________________________
Coram:
Scott, Nugent, Van Heerden, Mlambo JJA et
Kgomo AJA
Date of hearing:
9 November 2007
Date of delivery: 28 November 2007
Summary: Meaning of ‘date of release’ in s 276A(3)(a)(ii) of Act 51 of 1977 in relation
to a prisoner to whom the provisions of Act 8 of 1959 relating to placement under
community corrections are applicable – Person serving a sentence on parole not
entitled to have sentence reconsidered in terms of s 276A(3)(a)(ii) of Act 51 of 1977.
Citation: This judgment may be referred to as Price v Minister of Correctional Services
[2007] SCA 156 (RSA).
SCOTT JA/….
SCOTT JA:
[1] The appellant was sentenced to an effective period of 15 years’
imprisonment on two counts of fraud. He commenced serving his sentence on
21 December 2000. After serving four and a half years, and while still a
prisoner at the St Albans Medium B Prison in Port Elizabeth, he launched
proceedings in the High Court, Port Elizabeth, to review the decision of
functionaries of the respondent not to consider him as eligible for possible
placement under correctional supervision in terms of s 276A(3)(a)(ii) of the
Criminal Procedure Act 51 of 1977 (‘the CP Act’) together with certain other
relief of an ancillary nature. The primary issue in this appeal is the correct
interpretation of the words ‘date of release’ in that section.
[2] In order to read the provision in its contextual setting, I quote the whole
of s 276A to the extent that is relevant.
‘276A. Imposition of correctional supervision, and conversion of imprisonment into
correctional supervision and vice versa.
(1) Punishment shall only be imposed under section 276(1)(h)─1
(a)
after a report of a probation officer or a correctional official has been placed before
the court; and
(b)
for a fixed period not exceeding three years.
(2) Punishment shall only be imposed under section 276(1)(i)─2
(a)
if the court is of the opinion that the offence justifies the imposing of imprisonment,
with or without the option of a fine, for a period not exceeding five years; and
(b)
for a fixed period not exceeding five years.
(3) (a) Where a person has been sentenced by a court to imprisonment for a period─
(i)
not exceeding five years; or
(ii)
exceeding five years, but his date of release in terms of the provisions of the
Correctional Services Act, 1959 (Act 8 of 1959), and the regulations made thereunder is not
more than five years in the future,
1 Section 276(1)(h) provides for the imposition of a sentence of correctional supervision.
2 Section 276(1)(i) provides for the imposition of a sentence of ‘imprisonment from which such
a person may be placed under correctional supervision in the discretion of the Commissioner
or a parole board’.
and such a person has already been admitted to a prison, the Commissioner or a parole
board may, if he or it is of the opinion that such a person is fit to be subjected to correctional
supervision, apply to the clerk or registrar of the court, as the case may be, to have that
person appear before the court a quo in order to reconsider the said sentence.
(b) On receipt of any application referred to in paragraph (a) the clerk or registrar of the
court, as the case may be, shall, after consultation with the prosecutor, set the matter down
for a specific date on the roll of the court concerned.
(c)
. . .
(d)
Whenever a court reconsiders a sentence in terms of this subsection, it shall have the
same powers as if it were considering sentence after conviction of a person and the
procedure adopted at such proceedings shall apply mutatis mutandis during such
reconsideration: Provided that if the person concerned concurs thereto in writing, the
proceedings contemplated in this subsection may be concluded in his absence: Provided
further that he may nevertheless be represented at such proceedings or cause to submit
written representations to the court.
(e)
After a court has reconsidered a sentence in terms of this subsection, it may ─
(i)
confirm the sentence or order of the court a quo;
(ii)
convert the sentence into correctional supervision on the conditions it may deem fit;
or
(iii)
impose any other proper sentence:
Provided that the last-mentioned sentence, if imprisonment, shall not exceed the period of the
unexpired portion of imprisonment still to be served at that point.’
. . .
Provision is also made in s 287(4) of the CP Act for correctional supervision
where imprisonment has been imposed as an alternative to a fine. The
section reads:
‘(4)
Unless the court which has imposed a period of imprisonment as an alternative to a
fine has directed otherwise, the Commissioner or a parole board may in his or its discretion
at the commencement of the alternative punishment or at any point thereafter, if it does not
exceed five years –
(a)
act as if the person were sentenced to imprisonment as referred to in section
276(1)(i); or
(b)
apply in accordance with the provisions of section 276A(3) for the sentence to be
reconsidered by the court a quo, and thereupon the provisions of section 276A(3) shall apply
mutatis mutandis to such a case.’
[3] The appellant’s contention, in short, is that by reason of the reference
to the Correctional Services Act 1959 (‘the 1959 Act’), the words ‘date of
release’ in s 276A(3)(a)(ii) of the CP Act are to be construed as meaning the
earliest date upon which a prisoner becomes eligible to be considered for
placement on parole or the date upon which the prisoner may be released
upon the expiration of his or her sentence, whichever occurs first. The
respondent, on the other hand, contends that the words ‘date of release’
mean the date of the expiration of the prisoner’s sentence, less any legal
remission of that sentence.
[4] The 1959 Act was repealed by the Correctional Services Act 111 of
1998 (‘the 1998 Act’). Section 136 of the latter contains transitional provisions.
Subsection (1) reads:
‘Any person serving a sentence of imprisonment immediately before the commencement of
Chapters IV, VI and VII is subject to the provisions of the Correctional Services Act, 1959 (Act
8 of 1959), relating to his or her placement under community corrections, and is to be
considered for such release and placement by the Correctional Supervision and Parole Board
in terms of the policy and guidelines applied by the former Parole Boards prior to the
commencement of those Chapters.’
The chapters referred to in the section commenced in 2004, ie while the
appellant was serving his sentence, so that the provisions of the 1959 Act
relating to his placement under community corrections were applicable to him.
It is also apparent from the section that the functions of ‘the Commissioner or
a parole board’ referred to in s 276A(3)(a)(ii) of the CP Act were to be
exercised by the Correctional Supervision and Parole Board established
under the 1998 Act.
[5] It was common cause between the parties that the procedure adopted
at the St Albans Medium B Prison is for a Case Management Committee (‘the
CMC’) to prepare a profile report on a prisoner together with a
recommendation which is then submitted to the Correctional Supervision and
Parole Board for the latter to consider whether in its opinion the prisoner is fit
to be subjected to correctional supervision as contemplated in s 276A(3)(a)(ii).
If the CMC decides not to recommend the prisoner for correctional
supervision,
no
recommendation
is
forwarded
to
the
Correctional
Supervision and Parole Board and the process ends with the CMC’s decision.
The CMC will, however, only consider whether the prisoner is fit for
correctional supervision if it is satisfied that his or her ‘date of release’ is ‘not
more than five years in the future’ as contemplated in s 276A(3)(a)(ii). It was
the CMC’s decision that the appellant’s date of release was more than five
years in the future that the appellant sought to have reviewed in the court a
quo. That decision, as indicated above, was premised on the interpretation of
‘date of release’ to mean the expiration of his sentence, less any remission. It
was not in dispute that having regard to the length of time the appellant had
already served and the number of credits awarded to him, the earliest date on
which he would become eligible for parole was less than five years in the
future. What was in issue was whether that entitled him to be considered for
correctional supervision as contemplated in s 276A(3)(a)(ii).
[6] The meaning to be attributed to the words ‘date of release’ in
s 276A(3)(a)(ii) has been the subject of conflicting decisions in the High
Courts.3 The issue was eventually decided by a full court in Steenkamp v
Commissioner of Correctional Services; Maaga and others v Minister of
Correctional Services and others [2005] JOL 13668 (T) which upheld the
interpretation adopted by the respondent in the present case. In the court a
quo Froneman J simply adopted the reasoning in Steenkamp’s case and
dismissed the application with costs, but granted leave to appeal to this court.
[7] Subsequently, on 2 October 2006, the appellant was released on
parole. He contends, however, that this does not preclude him from being
considered for placement under correctional supervision in terms of
s 276A(3)(a)(ii) of the CP Act. The reason, so the contention goes, is that on
reconsideration of his sentence, the trial court may, in the exercise of the
3 The interpretation advanced on behalf of the Minister was upheld in Fourie v Minister van
Korrektiewe Dienste en andere (unreported judgment of Swart J, case no 18605/97, delivered
on 4 November 1998); Koen v Minister van Korrektiewe Dienste NO en andere (unreported
judgment of Bertelsmann J, case no 3446/2000, delivered on 20 June 2000). The opposite
view was taken in Giani v Commissioner of Correctional Services (unreported judgment of
Webster J, case no 18141/2001 delivered in 2002.)
discretion afforded to it in terms of s 276A(3)(d) and (e), ‘impose any other
proper sentence’ which could well result in his unconditional release. In order
to decide whether the appellant is still eligible for consideration for correctional
supervision in terms of s 276A(3)(a)(ii), it remains necessary therefore to
determine the correct meaning to be attributed to the words ‘date of release’
in the section. To this extent the appeal is not rendered academic by the
appellant’s subsequent release on parole.
[8] It will be observed from the provisions of the CP Act quoted in
paragraph 2 above that, in most instances where correctional supervision may
be imposed, the period for which it is to endure is quite clearly limited,
whether expressly or by necessary implication, to five years at the most.
Thus, in terms of s 2761(h), read with s 276A(1)(b), a sentence of correctional
supervision imposed by a court may not exceed three years. Where, in terms
of s 276(1)(i), imprisonment is imposed from which a person may in terms of
s 276A(2) be placed under correctional supervision at the discretion of the
‘Commissioner or a parole board’, such imprisonment may not exceed five
years. Again, provided the sentence of imprisonment does not exceed five
years, the ‘Commissioner or a parole board’ may apply to the clerk or registrar
of the trial court to have the prisoner brought before court for reconsideration
of his or her sentence in terms of s 276A(3)(a)(i). Yet again, where
imprisonment which ‘does not exceed five years’ is imposed as an alternative
to a fine the ‘Commissioner or a parole board’ may at the commencement of
the alternative judgment or at any time thereafter either act as if the person
had been sentenced in terms of s 276(1)(i) or apply to have the person
brought before court in accordance with the provisions of s 276A(3)(a)(i).
[9] In the light of the above, the reference to ‘date of release’ in
s 276A(3)(a)(ii) would at first blush appear to be a reference to the date of the
expiration of the prisoner’s sentence so that the period of the correctional
supervision provided for in that section would similarly not exceed five years.
But the words ‘date of release’ in s 276A(3)(a)(ii) are qualified by what
immediately follows, namely ‘in terms of the provisions of the Correctional
Services Act, 1959 (Act 8 of 1959), and the regulations made thereunder’. As
previously mentioned, by reason of s 136 of the 1998 Act the provisions of the
1959 Act relating to the placement of a prisoner under community corrections
remain applicable to the appellant. It was common cause between the parties,
and I shall assume this to be the case, that one such provision is s 63 of the
1959 Act. In broad outline, s 63(1) provides that a parole board (it would now
be a CMC) is obliged in respect of each prisoner serving a sentence in excess
of six months to submit a report to the Commissioner (now the Correctional
Supervision and Parole Board) together with recommendations regarding the
placement of the prisoner under correctional supervision by virtue of
s 276(1)(i) or s 287(4)(a) of the CP Act or by virtue of a conversion of the
sentence under s 276A(3)(e)(ii) or s 287(4)(b) of the latter Act. Of particular
significance is the proviso contained in s 63(1)(b)(i) of the 1959 Act, which is
to the effect that for the purposes of the recommendations made to the
Commissioner the date of release contemplated in s 276A(3)(a)(ii) of the CP
Act is deemed to be the earliest date on which a prisoner may in terms of the
1959 Act be considered for placement on parole or the date on which the
prisoner may be released upon the expiration of his or her sentence,
whichever occurs first. For the sake of completeness I quote s 63(1) in full:
‘(1)
A parole board shall, in respect of each prisoner under its jurisdiction serving an
indeterminate sentence or a sentence of imprisonment in excess of six months or in respect
of whom a special report is required by the Minister or the Commissioner having regard to the
nature of the offence and any remarks made by the court in question at the time of the
imposition of sentence if made available to the Department, and at the times and under the
circumstances determined by the Commissioner or when otherwise required by the Minister
or the Commissioner –
(a)
submit a report to the Commissioner or to the Minister, as the case may be, with
regard, inter alia, to the conduct, adaptation, training, aptitude, industry and physical and
mental state of such prisoner and the possibility of his relapse into crime;
(b)
together with the report on each prisoner submitted in terms of paragraph (a), make
recommendations to the Commissioner regarding –
(i)
the placement of such prisoner under correctional supervision by virtue of a sentence
contemplated in section 276(1)(i) or 287(4)(a) of the Criminal Procedure Act, 1977 (Act No 51
of 1977), or by virtue of the conversion of such prisoner’s sentence into correctional
supervision under section 276A(3)(e)(ii) or 287(4)(b) of the said Act and the period for which
and the conditions on which such prisoner may be so subjected to correctional supervision:
Provided that for the purposes of such recommendations a prisoner’s date of release
contemplated in section 276A(3)(a)(ii) of the Criminal Procedure Act, 1977, shall be deemed
to be the earliest date on which a prisoner may, in terms of this Act, be considered for
placement on parole or the date on which the prisoner may be released upon the expiration of
his sentence, whichever occurs first; or
(ii)
the placement of such prisoner on parole in terms of section 65 or on daily parole in
terms of section 92A and the period for which, the supervision under which and the conditions
on which such prisoner should be so placed; and
(c)
exercise such other powers and perform such other functions and duties as may be
prescribed by regulation.’4
The construction placed by the appellant on the words ‘date of release’ in
s 276A(3)(a)(ii) of the CP Act is, of course, based upon the proviso in
s 63(1)(b)(ii), which was inserted in the 1959 Act5 shortly after s 276A6 was
inserted in the CP Act.
[10] In Steenkamp the full court, following the decisions in Fourie and
Koen7, rejected the argument advanced on behalf of the appellant in the court
a quo (and in this court) on essentially two grounds. The first was that the
‘date of release’ referred to in the proviso to s 63(1)(b)(i) of the 1959 Act was
deemed to be the date of release only for the purposes of the
recommendations made by the parole board (now the CMC) and for no other
purpose. The second was that the construction contended for would result in
serious anomalies and would be contrary to the intention of the legislature
evident from the CP Act that the period for which a person should be under
correctional supervision was not to exceed five years. In my view neither
ground is sound.
4 Section 63(1) of the 1959 Act corresponds to s 42(2) of the 1998 Act. The latter contains no
similar deeming provision.
5 By s 21 of Act 68 of 1993.
6 By s 42 of Act 122 of 1991.
7 See footnote 3.
[11] The recommendations referred to in s 63(1) of the 1959 Act are clearly
intended to be taken into consideration by the Commissioner (now the
Correctional Supervision and Parole Board) when deciding whether the
prisoner in question is fit for placement under correctional supervision as
contemplated in s 276A(3)(a)(ii) of the CP Act. If the ‘date of release’ in
s 276A(3)(a)(ii) were to be construed as meaning the expiration of the
sentence, the deeming provision in the proviso to s 63(1) of the 1959 Act
would serve no purpose. Indeed, the obvious question that would arise is for
what possible reason would the date of release be deemed for the purpose of
the recommendation to be the date on which the prisoner became eligible for
parole if that date is not also the date of release that is relevant for the
purpose of the Correctional Supervision and Parole Board’s decision to refer
the prisoner for reconsideration of sentence. No answer is provided in the
Steenkamp decision or the decisions on which it relies; nor were counsel for
the respondent in this court able to advance any reason for such an obviously
anomalous situation. In my view, the proviso makes it clear that, subsequent
to its insertion in s 63(1) of the 1959 Act, the words ‘date of release’ in s
276A(3)(a)(ii) of the CP Act were intended to have the same meaning as that
deemed to be their meaning in the proviso.
[12] In the Steenkamp case the court postulated two situations in order to
demonstrate the anomalies that could arise if s 276A(3)(a)(ii) were to be
construed in the manner for which the appellant contends. The first was the
case of a prisoner sentenced to 50 years imprisonment. The court pointed out
that in terms of the 1959 Act8 such a prisoner, in the absence of credits, would
become eligible for consideration for parole after serving 25 years. If the
prisoner were to become entitled to be considered for placement under
correctional supervision five years before the completion of 25 years, it would
mean that this would occur 30 years before the actual expiration date of the
sentence. Such a result, said the court, would be contrary to the whole tenor
of the CP Act regarding correctional supervision which was that correctional
supervision was not to endure for more than five years of the total sentence.
8 Section 65(4).
The anomaly complained of is based on a misreading of s 276A. It is true that
before a prisoner will be referred back to the trial court for reconsideration of
his or her sentence, the Correctional Supervision and Parole Board must be
‘of the opinion that such a person is fit to be subjected to correctional
supervision’. But the fallacy of the so-called anomaly would appear to be the
assumption that by reason of the inquiry postulated in the section the
competency of the court would be limited to the narrow issue of considering
the appropriateness or otherwise of correctional supervision and, if
appropriate, of imposing correctional supervision for the remaining period of
the sentence. That is not the position at all. As appears from s 276A(3)(a), the
object of bringing the prisoner before the trial court is for the court to
‘reconsider’ the sentence. In terms of s 276A(3)(d), the court has the same
powers as if it were considering sentence after conviction. Section 276A(3)(e),
in turn, provides that after reconsidering the sentence, the court may confirm
the original sentence; it may convert the sentence into correctional
supervision on the conditions it may deem fit; or it may impose any other
proper sentence. The consequence of the interpretation of ‘date of release’ for
which the appellant contends, does not, therefore, mean as was supposed in
Steenkamp, that in the event of the court imposing correctional supervision it
would be for a period of 30 years. If the court considered it appropriate, it
could, for example, impose a fresh sentence of 28 years’ imprisonment and
convert the final three years into correctional supervision, or for that matter
impose any other proper sentence, whether custodial or otherwise.
[13] The second ‘anomalous’ situation postulated in Steenkamp was the
case of a person sentenced to seven years’ imprisonment. It was said that if
the ‘date of release’ in s 276A(3)(a)(ii) were construed as meaning a date five
years prior to becoming eligible for consideration for parole, the result would
be that the ‘date of release’ would arrive before the person commenced
serving his or her sentence. This was because by reason of s 65(4) of the
1959 Act the person concerned would otherwise have become entitled to be
considered for parole after serving three and a half years’ imprisonment.
There are two answers to the supposed anomaly. First, in terms of
s 276A(3)(a) the person concerned must already have been admitted to
prison. Second, just as in the case of imprisonment imposed in terms of
s 276(1)(i)9 of the CP Act, a prisoner serving a sentence subject to the 1959
Act was required to serve a certain minimum period before being considered
for correctional supervision. The position is now governed by statute.10
[14] It follows from the aforegoing that, in my view, the Steenkamp case
was wrongly decided. The ‘date of release’ referred to in s 276A(3)(a)(ii) of the
CP Act means, for the purpose of a prisoner subject to the provisions of the
1959 Act relating to his or her placement under community corrections, the
date on which such prisoner may be considered for placement on parole or
the date on which the prisoner may be released upon the expiration of his
sentence, whichever occurs first. The appellant is accordingly entitled to a
declarator to this effect.
[15] A declaratory order was also sought in the court below to the effect that
the arrival of the date upon which a prisoner becomes eligible for parole
consideration in terms of the 1959 Act does not constitute a valid reason for
the CMC to refuse subsequently to recommend the prisoner as a suitable
candidate for placement under correctional supervision in terms of
s 276A(3)(a)(ii) of the CP Act. The circumstances giving rise to such a prayer
were the following. The Parole Manual drafted under the 1959 Act provided
that a prisoner who had reached his or her parole consideration date
remained eligible to have his or her sentence converted into correctional
supervision if the latter option was the ‘best’ for the prisoner.11 In S v Leeb
1993(1) SACR 315 (T) at 319 d-e Coetzee J remarked obiter that it would be
pointless for him to reconsider the sentence of a prisoner in terms of
s 276A(3)(a)(ii) if the prisoner were in any event to be released on parole in
three and a half months’ time. Based apparently on this dictum, the
Department of Correctional Services adopted a policy that once a prisoner
9 See footnote 2.
10 Section 73(7) of the 1998 Act provides that a person sentenced to imprisonment under s
276(1)(b) of the CP Act must serve at least a quarter of the effective sentence or the non-
parole period, if any, whichever is the longer before being considered for placement under
correctional supervision, unless the court has directed otherwise. The provisions relating to
imprisonment in terms of s 276(1)(i) of the CP Act appear to be contradictory.
11 See Chapter VI, Service Order 1(A) section (7)(a)(ii).
had reached his or her parole consideration date, that prisoner would no
longer be considered for correctional supervision. In Klaasen v Minister of
Correctional Services12 the policy was seemingly upheld but only on the
limited ground that once a prisoner had been found unfit to be released on
parole it would be an exercise in futility to then consider, taking into account
the same criteria, whether that prisoner was fit to be subjected to correctional
supervision. It is no doubt so, that there would be no point in considering
whether a prisoner was fit for correctional supervision if he or she had recently
been found unfit to be released on parole. But to the extent that the Klaasen
decision may be regarded as authority for a more general recognition of the
validity of the policy or for the proposition that once parole has been refused,
a prisoner may never again be considered for correctional supervision, I
regret that I am unable to agree. There are material differences between
release on parole and the possible consequences of a referral for
reconsideration of sentence in terms of s 276A(3)(a)(ii) of the CP Act. I can
think of no good reason why a prisoner who has reached his or her parole
consideration date should as a matter of policy be arbitrarily denied the
opportunity of having his or her sentence thereafter reconsidered while still a
prisoner. However the appellant has since been released on parole and it is
accordingly no longer necessary to finally determine the issue as it has
become academic for the purpose of the present appeal.
[16] There remains to consider whether the appellant is entitled to have his
sentence reconsidered in terms of s 276A(3)(a)(ii) now that he has been
released on parole and is no longer a prisoner. Counsel for the appellant
pointed to what they described as the unique features of s 276A(3) and how
the consequences of a reconsideration of the appellant’s sentence could differ
from his position as a released prisoner serving out his sentence on parole,
and argued that in these circumstances there was no reason why it should not
remain open to the appellant to have his sentence reconsidered at any stage
up until the expiration of his sentence, even though he had been released on
parole. I cannot agree. Section 276A(3)(a)(ii) quite clearly requires the person
12 Unreported judgment, Case no 2120/2005 (SECLD).
concerned to be a prisoner. Thus, such a person is required to be ‘a person
[who] has already been admitted to prison’ and his ‘date of release’ must be
‘not more than five years in the future’. Similarly, s 63(1) of the 1959 Act
makes it clear that the recommendation of the CMC, which initiates the
process, relates to ‘a prisoner’. A person released on parole is no longer a
prisoner, even though his sentence is yet to expire. The provisions of
s 276A(3)(a)(ii) are accordingly not applicable to a person once released on
parole.
[17] The principle issue in this appeal has been the proper interpretation of
the words ‘date of release’ in s 276A(3)(a)(ii) of the CP Act. In this the
appellant has been successful. The issue is undoubtedly one of importance
and as a result of the appellant’s efforts the decision in Steenkamp, which
was followed in the court a quo, has been overruled. In addition, the appellant
was obliged to proceed with the appeal after his release on parole in order to
have the costs order against him reversed. In these circumstances, I think that
he is entitled to his costs of appeal, notwithstanding his failure on the issue
dealt with in the previous paragraph.
[18] The appeal succeeds to the following extent:
(a)
The respondent is ordered to pay the appellant’s costs of
appeal, such costs to include those occasioned by the
employment of two counsel;
(b)
The order of the Court a quo is set aside and the following is
substituted in its place:
‘(i)
It is declared that the ‘date of release’ referred to in
s 276A(3)(a)(ii) of the Criminal Procedure Act 51 of 1977
means, for the purpose of a prisoner subject to the
provisions of the Correctional Services Act 8 of 1959
relating to his or her placement under community
corrections, the date on which such prisoner may be
considered for placement on parole or the date upon
which the prisoner may be released upon the expiration
of his or her sentence, whichever occurs first.
(ii)
The respondent (the Minister of Correctional services) is
ordered to pay the costs of the applicant (Mr David
Price).’
(c)
In addition, it is declared that while on parole, the appellant is
not entitled to have his sentence reconsidered in terms of
s 276A(3)(a)(ii) of the Criminal Procedure Act 51 of 1977.
_________
D G SCOTT
JUDGE OF APPEAL
CONCUR:
NUGENT
JA
VAN HEERDEN
JA
MLAMBO
JA
KGOMO
AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
DAVID ASHLEY PRICE/MINISTER OF CORRECTIONAL SERVICES CASE
NO 511/2006
From :
The Registrar, Supreme Court of Appeal
Date:
28 November 2007
Status:
Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
Mr David Price was sentenced to 15 years imprisonment for fraud in 2000. After
serving four and a half years he launched proceedings in the Port Elizabeth High
Court to review the decision of the prison authorities that he was not yet eligible
to be considered for possible reference back to the trial court in terms of section
276A(3)(a)(ii) of the Criminal Procedure Act to have his sentence converted into
correctional supervision or for the imposition of another appropriable sentence.
The application turned on the correct meaning of ‘date of release’ in that section.
The High Court rejected Price’s interpretation of the section but granted him
leave to appeal.
On appeal, the SCA upheld the interpretation of the section for which Price
contended but in the meantime on 2 October 2006 he had been released on
parole. The court held that the provisions in the Act relating to the conversion of
imprisonment into correctional supervision or the imposition of another sentence
applied only to prisoners and not to a person released on parole.
Although the judgment did not benefit Price, the SCA nonetheless awarded him
his costs of appeal. The court referred to the fact that his interpretation of the
section had been upheld and that he had had to proceed with his appeal in order
to have the costs order against him reversed.
--- ends ---
|
86
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 959/2015
In the matter between:
THE DIRECTOR OF PUBLIC PROSECUTIONS:
GAUTENG DIVISION, PRETORIA
APPLICANT
and
DANIEL CHAKA MOABI
RESPONDENT
Neutral Citation: The Director of Public Prosecutions: Gauteng Division, Pretoria v
Moabi (959/15) [2017] ZASCA 85 (2 June 2017)
Coram:
Maya AP, Theron, Dambuza JJA and Molemela and Gorven AJJA
Heard:
15 February 2017
Delivered:
2 June 2017
Summary: Appeal in terms of s 311 of the Criminal Procedure Act 51 of 1977: s 311
provides for an appeal as of right, without leave: question of law upheld: ‗intent to do
grievous bodily harm‘ not an element in a rape contemplated in Part I(c) of the Criminal
Law Amendment Act 105 of 1997: conviction and sentence imposed by the regional
court reinstated and matter remitted to the high court for appeal to proceed on
sentence.
______________________________________________________________________
ORDER
_____________________________________________________________________
On appeal from Gauteng Division of the High Court, Pretoria (Louw J and Kooverjie AJ
sitting as court of appeal):
The appeal is upheld in respect of the question of law.
The order of the high court on sentence is set aside.
The sentence imposed by the regional court is reinstated.
The matter is remitted to the high court for the appeal to proceed on sentence.
___________________________________________________________
JUDGMENT
___________________________________________________________
Molemela AJA (Dambuza JA concurring):
[1] This is an application by the Director of Public Prosecutions, Gauteng Division,
Pretoria (DPP) for special leave to appeal to this court on a question of law in terms of
s 311(1) of the Criminal Procedure Act 51 of 1977 (CPA).
[2] The respondent was arraigned in the Regional Division of North West held at
Klerksdorp (Magistrate Nzimande) (the regional court) on a charge of housebreaking
with intent to rape and rape, read with the provisions of s 51(1) of the Criminal Law
Amendment Act 105 of 1997 (CLAA). On 16 May 2014 the regional court convicted the
respondent and sentenced him to life imprisonment as contemplated in s 51(1), read
with Part I(c)1 of the CLAA on the basis that the complainant had suffered grievous
bodily harm during the course of the rape.
[3] The facts leading to the respondent‘s conviction and sentence are the following.
On the night of 3 April 2012, the heavily pregnant complainant was asleep on her sofa
in the dining room of her house in Jouberton, Klerksdorp, when she felt something
touching her. She opened her eyes only to find an intruder standing near her feet. The
intruder closed her mouth with his hand and pressed a sharp object against the side of
her mouth. The complainant wrestled with her assailant and broke a window pane so as
to alert her neighbour to her plight. At some point during the scuffle she switched on the
light and recognized her assailant as the respondent – a man who had accompanied
her boyfriend to her house earlier that day.
[4] During the scuffle that ensued, the respondent managed to overpower the
complainant. He strangled her until she lost consciousness. When she regained
consciousness, the respondent dragged her to her bedroom and ordered her to
undress. She refused. He then pushed her onto the bed, undressed her, undressed
himself and raped her. She pleaded with him to stop, impressing upon him that he was
hurting her unborn twins. He ignored her pleas and hit her with fists on the buttocks.
After the respondent‘s departure the complainant went to her neighbour‘s house and
reported the rape to her. The neighbour arranged for a car to take her to the police
station, after which the complainant was transported to the hospital, where she received
medical attention for the injuries she had sustained.
1 Part I provides
‗Rape as contemplated in section 3 of the Criminal Law (Sexual Offences and Related Matters)
Amendment Act, 2007─
(a) . . . .
(b) . . . .
(c) involving the infliction of grievous bodily harm.‘
‗Section 51 provides Discretionary minimum sentences for certain serious offences
(1) Notwithstanding any other law, but subject to subsections (3) and (6), a regional court or a High Court
shall sentence a person it has convicted of an offence referred to in Part I of Schedule 2 to imprisonment
for life.‘
[5] Pursuant to the sentence of life imprisonment being imposed by the regional
court, the respondent lodged an appeal against his conviction and sentence by virtue of
the automatic right of appeal granted in terms of s 309(1)(a) of the CPA. The appeal
was heard by two Judges of the Gauteng Division of the high court, Pretoria (Louw, J
and Kooverjie, AJ (high court). The high court confirmed the conviction but set aside the
sentence on the basis that life imprisonment was not the applicable minimum sentence
because the State had failed to prove that the respondent had the intent to inflict
grievous bodily harm on the complainant. In making that conclusion, the high court
reasoned as follows: ‗. . . . We are not satisfied that the element of ―intent‖ exists. Hence there was
assault but not intention to do grievous bodily harm.‘
[6] The high court concluded that the failure of the State to prove the element of
intent resulted in the rape not falling within the purview of s 51(1) read with Part I(c) of
Schedule 2 of the CLAA, which attracted a minimum sentence of life imprisonment. It
regarded the rape as falling within the purview of s 51(2) read with Part III of Schedule 2
of the CLAA,2 which attracts a minimum sentence of 10 years‘ imprisonment. The high
Court then found that, having regard to all the appropriate factors, the aggravating
factors far outweighed the mitigating factors. It considered the appropriate sentence for
the respondent to be 14 years‘ imprisonment.
[7] Aggrieved by the high court‘s finding, the DPP lodged an application for special
leave to appeal to this court on a question of law in terms of s 311(1) of the CPA, read
2 Part III provides
‗Rape or compelled rape as contemplated in section 3 or 4 of the Criminal Law (Sexual Offences and
Related Matters) Amendment Act, 2007, respectively in circumstances other than those referred to in Part
I.
Section 51 (2)(b) provides: ‗(2) Notwithstanding any other law but subject to subsection (3) and (6), a
regional court or a High Court shall sentence a person who has been convicted of an offence referred to
in –
(a ) . . . .
(b) Part III of Schedule 2, in the case of─
(i) a first offender, to imprisonment for a period not less than 10 years;
(ii) a second offender of any such offence, to imprisonment for a period not less than 15 years; and
(iii) a third or subsequent offender of any such offence, to imprisonment for a period not less than 20
years.
(c) …‘
with the provisions of s 16(1)(b)3 and s 17(3)4 of the Superior Courts Act 10 of 2013
(Superior Courts Act). The applicant formulated the question of law as follows:
‗That the Honourable Court a quo erred in law by holding that s 51(1) and Schedule 2 Part I of the
Criminal Law Amendment Act 105 of 1997, providing for a minimum sentence of life imprisonment to be
imposed in circumstances where an accused is convicted of rape involving the infliction of grievous bodily
harm, requires also an intent on the part of the convicted person to cause such harm.‘
[8] This court then referred the application for special leave to appeal for oral
argument in terms of s 17(2)(d) of the Superior Courts Act and issued a directive
requiring the appellant to clarify on what basis it considered this court to have
jurisdiction to hear the intended appeal.
[9] In argument before us it was contended on behalf of the DPP that this court‘s
jurisdiction to hear the matter is derived from the provisions of s 311 of the CPA. The
respondent disputed that the question raised on appeal was one of law within the
meaning of s 311(1) of the CPA. He averred that there are no provisions in the CPA and
the Superior Courts Act providing for the reservation of a question of law from appeal
proceedings in relation to sentence. He argued that this appeal is misguided and is an
impermissible appeal against sentence. The respondent further contended that
s 16(1)(b) of the Superior Courts Act is not applicable to s 311 appeals because s 1 of
3 Section 16 of the Superior Courts Act states:
‗(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) if the court consisted of a single judge, either to the Supreme Court of Appeal or to a full court of that
Division, depending on the direction issued in terms of section 17(6); or
(ii) if the court consisted of more than one judge, to the Supreme Court of Appeal.
(b) an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of Appeal upon
special leave having been granted by the Supreme Court of Appeal; and
(c) an appeal against any decision of a court of a status similar to the High Court, lies to the Supreme
Court of Appeal upon leave having been granted by that court or the Supreme Court of Appeal, and the
provisions of section 17 apply with the changes required by the context.‘
4 Section 17(3) states:
‗(3) An application for special leave to appeal under section 16(1)(b) may be granted by the Supreme
Court of Appeal on application filed with the registrar of that court within one month after the decision
sought to be appealed against, or such longer period as may on good cause be allowed, and the
provisions of subsection (2)(c) to (f) shall apply with the changes required by the context.‘
the Superior Court Acts5 provides that an appeal envisaged in Chapter 5 of that Act
does not include an appeal in a matter regulated by the CPA, or in terms of any criminal
procedural law.
[10] The issues for our determination were therefore whether: (a) this court has
jurisdiction to hear an appeal brought by the State on a question of law against the
decision made by the high court, on appeal, in favour of a convicted person as
contemplated in s 311 of the CPA; and (b) the high court was correct in finding that the
intention to do grievous bodily harm is one of the elements that the State must prove in
a rape contemplated in the provisions of Part I(c) of Schedule 2 to the CLAA.
[11] Section 311 of the CPA reads:
‗311 Appeal to Appellate Division
(1) Where the provincial or local division on appeal, whether brought by the attorney-general or other
prosecutor or the person convicted, gives a decision in favour of the person convicted on a question of
law, the attorney-general or other prosecutor against whom the decision is given may appeal to the
Appellate Division of the Supreme Court, which shall, if it decides the matter in issue in favour of the
appellant, set aside or vary the decision appealed from and, if the matter was brought before the
provincial or local division in terms of-
(a) section 309 (1), re-instate the conviction, sentence or order of the lower court appealed from, either
in its original form or in such a modified form as the said Appellate Division may consider desirable; or
(b) section 310 (2), give such decision or take such action as the provincial or local division ought, in the
opinion of the said Appellate Division, to have given or taken (including any action under section 310 (5)),
and thereupon the provisions of section 310 (4) shall mutatis mutandis apply.
(2) If an appeal brought by the attorney-general or other prosecutor under this section or section 310 is
dismissed, the court dismissing the appeal may order that the appellant pay the respondent the costs to
which the respondent may have been put in opposing the appeal, taxed according to the scale in civil
cases of that court: Provided that where the attorney-general is the appellant, the costs which he is so
ordered to pay shall be paid by the State.‘
5 In terms of s 1 of the CPA ‗appeal‘ in Chapter 5 does not include an appeal in a matter regulated in
terms of the Criminal Procedure Act, 1977 (Act No. 51 of 1977), or in terms of any other criminal
procedural law.
[12] It is evident from the wording of s 311 of the CPA that an appeal lies to this court
under this section only if the basis for the appeal is a question of law decided by a high
court, sitting as a court of appeal, in favour of the convicted person. I turn now to
consider whether this appeal is indeed based on a question of law. It was held in
Magmoed v Van Rensburg6 that the question whether the proven facts bring the
conduct of an accused person within the ambit of the crime charged, is one of law.7 The
provisions of Part I and III of Schedule 2 of the CLAA do not create separate offences of
rape.8 They do, however, prescribe different penalties depending on the circumstances
which warrant the categorisation of the rape as falling within the purview of either Part I
or Part III of Schedule 2 of the CLAA. If the proven facts establish that the convicted
person inflicted grievous bodily harm in the course of the rape, then that would bring the
rape within the ambit of Part I of the CLAA, which prescribes a harsher minimum
sentence than the one contemplated in Part III. Clearly, the question raised involves the
interpretation of the CLAA in order to ascertain what must be proved to bring the rape
within the ambit of either Part I or III of Schedule 2 of the CLAA. I am satisfied that the
DPP has indeed raised a question of law.
[13] I now turn to determine whether the high court was correct in finding that the
intention to do grievous bodily harm must be proven in a rape involving contemplated in
Part I(c) of Schedule 2, read with s 51(1) of the CLAA. I deem it instructive to pay regard
to the following remarks made by Hoexter JA in a concurring judgment in R v Jacobs9
pertaining to the infliction of grievous bodily harm, albeit in the context of the offence of
robbery with aggravating circumstances:
‗The question whether grievous bodily harm has been inflicted depends entirely upon the nature, position
and extent of the actual wounds or injuries, and the intention of the accused is irrelevant in answering
that question.‘ (My emphasis.)
6 Magmoed v Van Rensburg [1992] ZASCA 208; 1993 (1) SA 777 (A) at 807 i-j.
7 See also Director of Public Prosecutions Gauteng v Pistorius [2015] ZASCA 204; [2016] 1 All SA 346
(SCA); 2016 (1) SACR 431 (SCA).
8 S v Kolea [2012] ZASCA 199; 2013 (1) SACR 409 para 16.
9 R v Jacobs 1961 (1) SA 475 (A) at 478A.
In the majority judgment Van Winsen AJA, in deciding whether or not grievous bodily
harm was inflicted, said:
‗In deciding whether the Crown has proved the infliction of grievous bodily harm by the accused, the jury
would, in my opinion, be entitled to have regard to the whole complex of objective factors involved in the
accused's assault upon the deceased. It could take into consideration the shock which would inevitably
result to the deceased by reason of the fact that the accused directed two blows at his face with a knife. It
could have regard to the wounds resulting from the stabs in the face, their number, nature and
seriousness, as well as to the two blows directed to the accused's stomach, their severity and the results
which flowed from their infliction.‘10
I respectfully echo these sentiments.
[14] In the absence of any interpretative factors which would warrant a different
approach in this matter, I am inclined to adopt the same reasoning in the interpretation
of the same phrase in relation to the rape contemplated in Part I(c) of the CLAA. It is
clear from this case that the test for ascertaining whether grievous bodily harm has
been inflicted is factual and objective. The correct approach to that enquiry necessitates
a holistic consideration of all objective factors pertaining to the incident, with a view to
ascertaining whether bodily injuries were inflicted and whether they are of a serious
nature.
[15] In my view, the high court‘s reliance on cases where the accused was charged
with the offence of assault with intent to do grievous bodily harm was clearly wrong. By
importing the intention of the respondent into the enquiry, the high court disregarded the
principles laid down in Jacobs. It committed an error of law as ‗intent‘ is irrelevant in the
determination of whether grievous bodily harm was inflicted on a complainant in the
rape envisaged in Part I(c) of the CLAA. Rather, the question to be answered is
whether, as a matter of fact, the victim of such a rape sustained grievous bodily harm. It
is evident from the high court‘s judgment that its erroneous conclusion that the DPP had
failed to prove the element of intent resulted in it concluding that the rape committed by
the respondent did not fall within the purview of s 51(1) read with Part I(c) of Schedule 2
of the CLAA and instead considered the applicable minimum sentence to be 10 years
10 Ibid, at 485B-D. See also S v Maselani 2013 (2) SACR 172 (SCA) at para 12-13.
imprisonment as stipulated in Part III of the CLAA. This erroneous finding pertaining to
the applicable minimum sentence was clearly made in favour of the respondent.11 The
applicant has thus shown a basis for invoking the provisions of s 311(1) of the CPA and
this court has jurisdiction to hear the appeal.
[16] The respondent contended that the definition of appeal in s 1 of the Superior
Courts Act precluded this court from entertaining appeals brought at the instance of the
Director of Public Prosecutions in respect of decisions made by the high court on
appeal. I disagree with that contention. Section 1 of the Superior Courts Act provides
that ‗appeal‘ in Chapter 5, does not include an appeal in a matter regulated in terms of
the CPA, or in terms of any other criminal procedural law.‘ Section 311 of the CPA
grants the State the right to appeal to this court against the judgment of the high court
given on appeal, on a question of law decided in favour of the convicted person.
However, it does not go as far as laying down a procedure pertaining to how this right
must be exercised. None of the general provisions of the CPA regulating appeals and
applications for leave to appeal specifically deal with how the right of appeal granted in
s 311 must be exercised. Furthermore, no other criminal procedural law makes
provision for this.
[17] In view of the fact that neither the CPA nor any other criminal procedural law
regulates s 311 appeals, there is simply no basis for concluding that s 311 appeals are
excluded from the application of the Superior Courts Act by virtue of s 1 of that Act. It
stands to reason that an appeal envisaged in s 311 of the CPA does not fall within the
category of those excluded from the application of the Superior Courts Act in terms of
s 1 and falls to be regulated by s 16(1)(b) of the Superior Courts Act. This court does
have jurisdiction to consider an appeal against a decision of the high court on appeal to
it on a question of law as contemplated in s 311 of the CPA.
11 In S v Goabab 2012 JD3 1063 (Nm) at para 8, the court found that alternative charges, viewed against
maximum sentences constituted a lesser offence and therefore the decision of the court to acquit the
accused on the main charge constituted a decision in favour of the accused.
[18] I turn now to consider whether the DPP has an automatic right to appeal to this
court or whether leave has to be sought. Sections 20(1), 20(4) and 21(1) of the
Supreme Court Act 59 of 1959, which is the predecessor of the Superior Courts Act,
conferred jurisdiction on this court to hear and determine appeals from any decision of
provincial or local division. The question whether leave to appeal was required for the
State to prosecute appeals on a question of law was considered in Attorney-General,
Transvaal v Nokwe & others.12 Having considered the provisions of s 21(2)(a) of the
Supreme Court Act (in its earlier form, prior to its amendment in 1982), the court
concluded that leave was indeed necessary.13 After the 1982 amendment, s 20(4) of the
Supreme Court Act made the granting of leave a pre-requisite to the hearing of an
appeal by this court in the following terms:
‗(4) No appeal shall lie against a judgment or order of the court of a provincial or local division in any civil
proceedings or against any judgment or order of that court given on appeal to it except-
(a)
in the case of a judgment or order given in any civil proceedings by the full court of such a
division on appeal to it in terms of subsection (3), with the special leave of the appellate division;
(b)
in any other case, with the leave of the court against whose judgment or order the appeal is to be
made, or where such leave has been refused, with the leave of the appellate division.‘ (My emphasis).
[19] I have already concluded that s 1 of the Superior Courts Act does not serve as a
bar to the adjudication of appeals envisaged in s 311 of the CPA. The general
provisions applicable to appeals to this court are set out in s 16 of that Act. The granting
of leave to appeal from the judgment of a high court, or court of similar status, to this
court is a pre-requisite in terms of ss 16(1)(a)(b) and (c)14 of the Superior Courts Act.
This is not surprising, for the indisputable purpose of a party having to apply for leave to
appeal is to limit appeals to those which have reasonable prospects of success.15 In my
view, it would be an anomaly for leave to appeal to this court to be required in respect of
12 Attorney-General, Transvaal v Nokwe & others 1962 (3) 803 at 804.
13 Ibid at 806D.
14 See footnote 3.
15 Cronshaw & another v Coin Security Group (Pty) Ltd [1996] ZASCA 38; 1996 (3) SA 686 (SCA) at
689B; Pharmaceutical Society of SA and Others v Minister of Health & Another; New Clicks SA (Pty) Ltd v
Tshabalala Msimang NO & another [2004] ZASCA 122; [2005] 1 All SA 326 (SCA) at para 20-23.
all appeals except for those that are at the instance of the State on a question of law. I
see no basis for such a distinction.16
[20] If the legislature intended to grant an automatic right of appeal, it would have
done so expressly.17 It is significant that s 16(1)(b) of the Superior Courts Act expressly
states that an appeal against the decision of the high court on appeal to it lies to this
court upon special leave having been granted. It is self-evident that an appeal
envisaged in s 311 of the CPA relates to a decision made by the high court on appeal,
which is the case in the matter at hand. The provisions of s 16(1)(b) have therefore
been triggered. The respondent correctly conceded that ‗apropos the application of
s 311 in general, where an appeal is permissible, the respondent is in agreement with
the appellant‘s submissions that special leave would be required from this honourable
court in terms of s 16(1)(b) of the Superior Courts Act.‘ For all the reasons stated above,
I conclude that the appellant‘s application for special leave to appeal on a question of
law relating to the sentence imposed by the high court on appeal to it is therefore
correctly before us.
[21] I now consider whether special leave ought to be granted in this matter. The
factors relevant to the granting of special leave are well established. The general
principle is that in addition to reasonable prospects of success, an applicant for special
leave to appeal must show that there are special circumstances which merit a further
appeal to this court. This court, in Westinghouse Brake & Equipment (Pty) Ltd v Bilger
Engineering18 held that the word ‗special‘ denotes that some additional factor or criterion
is to play a part in the granting of leave. It considered special circumstances as (i)
where the appeal raises a substantial point of law; (ii) where the matter turns on factual
issues but the prospects of success are so strong that the refusal of leave would result
in a manifest denial of justice; (iii) where the matter is of very great importance to the
16 Attorney-General, Transvaal v Nokwe & others supra, at p805D-806A.
17 Section 309(1)(a) of the CPA grants automatic leave to appeal to a High Court where the regional court
has imposed life imprisonment under s 51(1) of the CLAA.
18 Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering [1986] ZASCA 10; 1986 (2) SA 555
(A).
parties or to the public.19 This list is by no means exhaustive. The existence of the first
two special circumstances is self-evident from the consideration of the facts of this
matter in the preceding paragraphs and need not be repeated here.
[22] Turning now to consider whether this matter is of substantial importance to the
parties or the public,20 I have already found that the high court erred in considering
intent to be a consideration in determining whether there was infliction of grievous bodily
injury on the complainant. If this court does not intervene, the unfortunate result will be
that the high court‘s erroneous decision will, on the basis of the doctrine of stare decisis,
continue to be considered as a precedent, thus perpetuating the error of law it
committed. I therefore conclude that this matter is indeed of substantial importance to
the State and to the public and that there are compelling reasons which justify the
hearing of the appeal. I am satisfied that all the requirements for the granting of special
leave to appeal have been met.
[23] Having found that the decision made by the high court in favour of the
respondent was based on an error of law and that the DPP has met the threshold for
the granting of special leave to appeal, it stands to reason that the appeal is to be
upheld. Section 311(1) of the CPA sets out the powers which an appeal court has after
a successful appeal. These depend on whether it was the DPP or the accused person
who originally appealed against the decision of the lower court. In terms of s 311(1)(b)
of the CPA, if, pursuant to s 309(1), the accused had successfully appealed against the
decision of a lower court, and the Director of Public Prosecutions in turn had succeeded
with an appeal to the Supreme Court of Appeal in terms of s 311, the latter court may
restore, in its original or amended form, the sentence or order of the lower court which
the accused had originally appealed.
[24] Notably, there is no provision in s 311 of the CPA for remittal of the matter to the
high court whose decision is the subject of this appeal. In Attorney-General v
19 At p 564 – 565.
20 Director of Public Prosecutions v Nokwe (supra).
Steenkamp,21 Van den Heever JA held that it could hardly have been the intention of
the legislature that where the order of this court does not finally dispose of the issues
raised in the first court of appeal, those issues must arbitrarily be deemed to have been
decided or be left hanging in the air. In The Director of Public Prosecutions KwaZulu-
Natal v Mekka22 this court upheld the appeal on the question of law. Having found that
the regional court had correctly convicted and sentenced the respondent, it set aside
the order of the high court and re-instated the conviction and sentence imposed by the
regional court. I am of the view that the circumstances of this matter warrant the remittal
of the matter back to the high court for a de novo hearing on the respondent‘s appeal on
sentence.
[25] In the result, I would grant special leave to appeal; uphold the appeal in respect
of the question of law; set aside the order of the high court on sentence and remit the
matter to the high court, Gauteng Division, for a de novo hearing on the respondent‘s
appeal on sentence.
________________
M B Molemela
Acting Judge of Appeal
Gorven, AJA (Maya AP and Theron JA concurring)
[26] I have read the judgment of my colleague Molemela AJA. The high court held
that intent must be proved when establishing whether grievous bodily harm was
inflicted. This was clearly wrong as is pointed out in paragraph 15 of the minority
judgment. This conclusion was accordingly a question of law wrongly decided in favour
of the respondent. The provisions of s 311 of the CPA23 are therefore triggered. This is
211954 (1) SA 351 (A) at 357F-G; Also see S v Meje (248/11); 2011 ZASCA 127 (13 September 2011).
22 The Director of Public Prosecutions KwaZulu-Natal v Mekka 57/2002; [2003] ZASCA 17 (26 March
2003).
23 Criminal Procedure Act 51 of 1977.
so whether the question of law relates to conviction or sentence. The appeal must be
allowed on the question of law. I agree, also, that, as a result of the error of law, the
appeal court did not properly consider whether the offence fell within the ambit of Part I
or Part III of Schedule 2 to the CLAA. This means that the merits of the appeal on
sentence were not dealt with by the appeal court. The matter should therefore be
remitted for this to take place.
[27] I write because it is my view that special leave to appeal is not required in a
matter arising from s 311 of the CPA. This section provides for an appeal as of right,
without leave. An appeal under s 311 of the CPA is also an appeal ‗regulated in terms of
the Criminal Procedure Act‘.24 It is therefore one to which the provisions of Chapter 5 of
the Superior Courts Act,25 and in particular s 16(1)(b) thereof, do not apply.
[28] The minority judgment finds that, ‗[i]f the legislature intended to grant an
automatic right of appeal, it would have done so expressly.‘ In para 17 of the judgment it
is stated:
‗In view of the fact that neither the CPA nor any other criminal procedural law regulates s 311
appeals, there is simply no basis for concluding that s 311 appeals are excluded from the
application of the Superior Courts Act by virtue of s 1 of that Act. It stands to reason that an
appeal envisaged in s 311 of the CPA does not fall within the category of those excluded from
the application of the Superior Courts Act in terms of s 1 and falls to be regulated by s 16(1)(b)
of the Superior Courts Act.‘
The minority judgment goes on, in para 19, to say:
‗The granting of leave to appeal from the judgment of a high court, or court of similar status, to
this court is a pre-requisite in terms of ss 16(1)(a)(b) and (c) of the Superior Courts Act. This is
not surprising, for the indisputable purpose of a party having to apply for leave to appeal is to
limit appeals to those which have reasonable prospects of success. In my view, it would be an
anomaly for leave to appeal to this court to be required in respect of all appeals except for those
that are at the instance of the State on a question of law. I see no basis for such a distinction.‘26
I respectfully differ from this approach.
24 From s 1 of the Superior Courts Act 10 of 2013 – this section will be dealt with more fully below.
25 Superior Courts Act 10 of 2013.
26 References omitted.
[29] The introduction of the definition of an appeal in s 1 of the Superior Courts Act
has given rise to a new situation. This must prompt fresh enquiries on matters settled
under the previous legislation. Certain appeals are now excluded from the operation of
Chapter 5 of the Superior Courts Act. This was not the position under the Supreme
Court Act.27 The enquiry which must be made prior to concluding that s 16(1)(b), which
requires special leave to appeal, applies, is whether the appeal in question is subject to
the provisions of Chapter 5. I now turn to that enquiry.
[30] Section 1 of the Superior Courts Act provides that an appeal in Chapter 5 ‗does
not include an appeal in a matter regulated in terms of the Criminal Procedure Act . . . or
in terms of any other criminal procedural law‘. Chapter 5 of the Superior Courts Act
comprises ss 15-20. This means that, if an appeal is ‗regulated in terms of‘ the CPA, the
provisions of s 16(1)(b) requiring special leave to appeal do not apply. The crisp issue in
this regard is whether an appeal under s 311 is one ‗regulated in terms of‘ the CPA.28
[31] Section 311 of the CPA reads:
‗(1) Where the provincial or local division on appeal, whether brought by the attorney-general or
other prosecutor or the person convicted, gives a decision in favour of the person convicted on
a question of law, the attorney-general or other prosecutor against whom the decision is given
may appeal to the Appellate Division of the Supreme Court, which shall, if it decides the matter
in issue in favour of the appellant, set aside or vary the decision appealed from and, if the
matter was brought before the provincial or local division in terms of–
(a) section 309(1), re-instate the conviction, sentence or order of the lower court appealed
from, either in its original form or in such a modified form as the said Appellate Division may
consider desirable; or
(b) section 310(2), give such decision or take such action as the provincial or local division
ought, in the opinion of the said Appellate Division, to have given or taken (including any action
under section 310(5)), and thereupon the provisions of section 310(4) shall mutatis
mutandis apply.
(2) If an appeal brought by the attorney-general or other prosecutor under this section or
section 310 is dismissed, the court dismissing the appeal may order that the appellant pay the
27 The Supreme Court Act 59 of 1959 was repealed by the Superior Courts Act.
28 It has not been contended that such an appeal is regulated by any other criminal procedural law.
respondent the costs to which the respondent may have been put in opposing the appeal, taxed
according to the scale in civil cases of that court: Provided that where the attorney-general is the
appellant, the costs which he is so ordered to pay shall be paid by the State.‘
[32] It can be seen that s 311 gives jurisdiction to this court when a high court ‗on
appeal . . . gives a decision in favour of the person convicted on a question of law‘.
Jurisdiction is founded on s 311 itself and is clear and express. The present matter was
brought before the high court by way of an appeal in terms of s 309(1) of the CPA. We
have found that, in that appeal, the high court decided a question of law in favour of the
respondent. Accordingly, the provisions of s 311(1)(a) find application. In those
circumstances, this court‘s jurisdiction is established under s 311.
[33] As mentioned, the introduction of the definition of appeal in s 1 of the Superior
Courts Act has brought about a new situation requiring the consideration of whether an
appeal is regulated by the CPA. In S v Van Wyk & another,29 in the context of an appeal
by an accused person, this court held that ‗[t]he CPA does not contain any provision
dealing with a right of appeal to this court from a decision of the high court taken on
appeal to it from a magistrates‘ court.‘ Accordingly, it was held, such an appeal is not
regulated by the CPA and is not excluded from the operation of Chapter 5 of the
Superior Courts Act. As a result, the provisions of s 16(1)(b) govern such an appeal.30
This requires the grant of special leave to appeal by this court. In contrast to the position
dealt with in Van Wyk, s 311 of the CPA clearly does ‗contain [a] provision dealing with
a right of appeal to this court from a decision of the high court taken on appeal to it from
a magistrates‘ court‘.31 This distinguishes the position under s 311 from that dealt with in
Van Wyk. Applying the dictum in Van Wyk, because s 311 of the CPA gives a right of
appeal, such an appeal is excluded from the operation of Chapter 5 of the Superior
Courts Act.
29 S v Van Wyk & another [2014] ZASCA 152; 2015 (1) SACR 584 (SCA) para 18.
30 Van Wyk para 20.
31 Van Wyk para 18.
[34] In DPP Western Cape v Kock,32 this court held that, where the state seeks to
appeal against sentence under the provisions of s 316B(1) of the CPA, that right of
appeal ‗is specifically regulated by the CPA, therefore the provisions of s 16(1)(b) do not
find application.‘33 And in Director of Prosecutions v Olivier,34 this court held that it only
has jurisdiction to deal with an appeal against sentence brought by the state under
s 316B of the CPA where the high court acted as a court of first instance and not as an
appeal court.35 These both dealt with attempts to appeal against sentence in this court
where that sentence had been imposed by the high court sitting as a court of appeal. In
both of those matters this court held that it had no jurisdiction to entertain such an
appeal. In each of those cases the appeal was struck from the roll, which is the
appropriate order when there is a lack of jurisdiction to adjudicate an appeal. Neither of
those matters dealt with an appeal brought under s 311 of the CPA.
[35] The context of s 311 of the CPA must be considered. Most other sections of the
CPA which allow for an appeal require applications for leave to appeal. These include
s 309(1)(a), s 309B(1)(a), s 310A(1), s 316(1)(a) and s 316B(1) of the CPA. It is clear
that these are appeals ‗regulated in terms of‘ the CPA. They give the right of appeal and
deal with the procedure for the exercise of that right. In all cases, the procedure requires
an application for leave to appeal.
[36] Leaving aside s 311 for the moment, the exceptions to the requirement of leave
to appeal in the CPA are twofold. The first is the proviso to s 309(1)(a):
‗Provided that if that person was sentenced to imprisonment for life by a regional court
under section 51(1) of the Criminal Law Amendment Act, 1997 (Act 105 of 1997), he or she may
note such an appeal without having to apply for leave in terms of section 309B‘.
There is therefore an explicit provision that an accused person in the circumstances set
out in the proviso to s 309(1)(a) ‗may note such an appeal without having to apply for
leave‘. The reason for specifying this is clear. It is stated as an exception to the general
32 DPP Western Cape v Kock [2015] ZASCA 197; 2016 (1) SACR 539 (SCA).
33 Para 18.
34 Director of Public Prosecutions v Olivier 2006 (1) SACR 380 (SCA) approved in S v Nabolisa [2013]
ZACC 17; 2013 (2) SACR 221 (CC).
35 Olivier para 81.
provision in that section requiring leave to appeal. In this section, the right to appeal is
given, it is expressly stated that no leave to appeal is required and the person is
directed to exercise that right by simply noting an appeal.
[37] The second is s 310, the relevant parts of which provide:
‗(1) When a lower court has in criminal proceedings given a decision in favour of the accused on
any question of law . . . the attorney-general . . . may require the judicial officer concerned to
state a case for the consideration of the provincial or local division having jurisdiction, setting
forth the question of law and his decision thereon and, if evidence has been heard, his findings
of fact, in so far as they are material to the question of law.
(2) When such case has been stated, the attorney-general or other prosecutor, as the case may
be, may appeal from the decision to the provincial or local division having jurisdiction.
(3) The provisions of section 309(2) shall apply with reference to an appeal under this section.‘
Section 309(2) provides that such an appeal must be noted and prosecuted according
to the rules of court. Section 310 thus gives a right of appeal. Unlike s 309(1)(a), it does
not provide in terms that no leave to appeal is required. It does specify that the right to
appeal must be exercised by noting and prosecuting the appeal according to the rules
of court. It is clear that leave to appeal is not first required and that it is also an appeal
as of right.
[38] The wording of s 311 is similar to that of s 310(2). Section 311 says that ‗the
attorney-general or other prosecutor against whom the decision is given may appeal‘.
Both sections allow this when a decision in favour of the accused on any question of law
has been made. The right to appeal is given. As is the case with s 310(2), the section
does not state in terms that no leave to appeal is required. Sections 310 and 311 differ
in two respects. First, s 310(3) imports the provisions of s 309(2), which specifies that
the noting and prosecution of the appeal must take place as ‗prescribed by the rules of
court‘. There is no equivalent provision in the CPA concerning an appeal under s 311.
Secondly, an appeal under s 310(2) does not lie to this court.
[39] Dealing with the second of these first, an objection has been raised that appeals
without leave do not lie to this court. This is not so. In the context of an appeal by an
accused against a refusal by the high court of condonation for the late noting of an
appeal, this court has consistently recognised appeals as of right without leave in
certain circumstances.36 Until the coming into effect of the Superior Courts Act, this was
also the case for appeals against the refusal of bail or the imposition of a condition of
bail by a high court sitting as a court of first instance.37 The Superior Courts Act also
brought about a change of approach in this regard.38
[40] Section 315(4) of the CPA is of some significance:
‗An appeal in terms of this Chapter shall lie only as provided in sections 316 to 319 inclusive,
and not as of right.‘
This section is part of Chapter 31 of the CPA, comprising ss 315 to 324, and deals with
appeals in cases of criminal proceedings in superior courts. Chapter 30, comprising
ss 302 to 314, must thus be taken to allow for appeals as of right. This chapter deals
with reviews and appeals in cases of criminal proceedings in lower courts. We have
seen that the proviso to s 309(1)(a) and s 310(2) fall into the category of appeals as of
right. Section 311 is part of this chapter.
[41] Section 311(2) ties ss 310 and 311 together. It provides that, if an appeal arising
from these two sections is dismissed, ‗the court dismissing the appeal may order that
the appellant pay the respondent the costs to which the respondent may have been put
in opposing the appeal‘. This provides a check against abusive appeals which might
otherwise arise from such a provision.
[42] Similar provisions are found in ss 310A(6) and 316B(3). These allow the State to
apply for leave to appeal against a sentence and, if given leave, to appeal against
sentence. What is significant is that, in addition to providing for an ‗order that the State
pay the accused concerned the whole or any part of the costs to which the accused
may have been put in opposing‘ the appeal, they also provide for an ‗order that the
36 S v Swiegers 1969 (1) PH H110 (A); S v Tsedi 1984 (1) SA 565 (A) at 570A-C; S v Absalom 1989 (3)
SA 154 (A) at 162D-E; S v Botha en ’n ander 2002 (1) SACR 222 (SCA) para 13.
37 S v Botha en ’n ander [2001] ZASCA 146; 2002 (2) SA 680 (SCA); 2002 (1) SACR 222; [2002] All SA
577.
38 S v Banger 2016 (1) SACR 115 (SCA).
State pay the accused concerned the whole or any part of the costs to which the
accused may have been put in opposing‘ the application for leave to appeal. The
absence of a similar provision in s 311(2) for costs of an application for leave to appeal
fortifies an interpretation that no such application is necessary.
[43] As mentioned, s 310(3) specifies that the appeal must be noted and prosecuted
in terms of the rules of court. This provision does not find echo in s 311. As such, no
procedure for the prosecution of the appeal is set out in the CPA. The question is
whether the absence of a provision setting out the procedure to exercise the right of
appeal means that it is not one ‗regulated in terms of‘ the CPA. If so, it is not excluded
from Chapter 5 of the Superior Courts Act and the provisions of s 16(1)(b) requiring
special leave to appeal would apply.
[44] Section 16(1)(b) of the Superior Courts Act provides that:
‗an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of
Appeal upon special leave having been granted by the Supreme Court of Appeal . . . .‘
What this means is that, until given by this court, there is no right to appeal. The right to
appeal can be withheld or given by this court. But s 311 of the CPA already gives that
right if the circumstances specified in it are met. In addition, it also specifies that such
an appeal lies to this court. What the minority judgment does not explain is why, if a
right of appeal is given by s 311, leave is required in order to obtain that right.
[45] It is, of course, instructive that, unlike other sections in the CPA, s 311 does not
in terms specify that any form of leave to appeal must be obtained. All of the sections
requiring leave specify this requirement. There is also no need to specify the procedure
to exercise the right because rule 7(1)(a) of the rules of this court does so:39
‗(1) An appellant shall lodge a notice of appeal with the registrar and the registrar of the court a
quo within one month after the date of—
(a) the granting of the judgment or order appealed against where leave to appeal is not
required‘.
39 Rules Regulating the Conduct of the Proceedings of the Supreme Court of Appeal of South Africa.
Rule 7(1)(a) thus deals in terms with a situation where leave to appeal is not required.
Holding that s 311 deals with an appeal as of right accordingly does not give rise to a
procedural lacuna.
[46] It is my view that, because a right to appeal is given in s 311 of the CPA, such an
appeal is one ‗regulated‘ by the CPA. It is not necessary, in addition, for the CPA to
specify the procedure by which to exercise that right. The Director of Public
Prosecutions, or other prosecutor, has an appeal as of right. That being the case, an
appeal under s 311 is excluded from the operation of Chapter 5 of the Superior Courts
Act. As such, the provisions of s 16(1)(b) of the Superior Courts Act do not apply. An
appeal under s 311 accordingly does not require special leave to appeal.
[47] Arising from this conclusion, accordingly, no application for special leave to
appeal was necessary in this matter. It follows that an order granting special leave to
appeal is neither necessary nor competent.
[48] In the result the following order is made:
The appeal is upheld in respect of the question of law.
The order of the high court on sentence is set aside.
The sentence imposed by the regional court is reinstated.
The matter is remitted to the high court for the appeal to proceed on sentence.
_______________________
T R Gorven
Acting Judge of Appeal
APPEARANCES:
For the Appellant:
S Mahomed SC (with C P Harmzen )
Instructed by:
Office Director of Public Prosecutions, Pretoria
c/o Director of Public Prosecutions, Bloemfontein
For the Respondent:
H L Alberts (with S Moeng)
Instructed by:
Legal Aid South Africa, Pretoria
c/o Bloemfontein Justice Centre, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
2 June 2017
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
DIRECTOR OF PUBLIC PROSECUTIONS
v
MOABI
Today the Supreme Court of Appeal handed down judgment dealing with an appeal
under s 311 of the Criminal Procedure Act. This allows for an appeal to this court
from a high court sitting as a court of appeal where that court decided a point of law
in favour of the convicted person.
In the present matter, Mr Moabi was convicted of one count of rape in the Klerksdorp
regional court and sentenced to life imprisonment. The regional court applied the
provisions of s 51(1) read with Part I of Schedule 2 to the Criminal Law Amendment
Act. This requires a minimum sentence of life imprisonment if the rape involved the
infliction of grievous bodily harm. If no grievous bodily harm was inflicted, s 51(2)
read with Part III of Schedule 2 to the Criminal Law Amendment Act prescribes a
minimum sentence of 10 years’ imprisonment.
He exercised his right of appeal, which came before the Gauteng Division of the
High Court, Pretoria. The high court dismissed his appeal against conviction. It held
that the regional magistrate has incorrectly found that the sentence fell under Part I.
It said that, for this to be the case, it must be proved that the accused person had the
intention to inflict grievous bodily harm. Since it found that no such intention had
been proved, it held that the sentence fell under Part III. It then upheld the appeal
against sentence and substituted a sentence of 14 years’ imprisonment.
The Director of Public Prosecutions invoked the provisions of s 311 of the Criminal
Procedure Act. It contended that the conclusion of the high court that intention to
inflict grievous bodily harm was necessary amounted to a question of law which the
high court found in favour of the respondent. The DPP applied for leave to appeal
and the Supreme Court of Appeal required argument on the application and required
the parties to be prepared to also argue the merits of the appeal.
The Supreme Court of Appeal found that the high court erred in law in requiring that
an intention to inflict grievous bodily harm was required. The requirement was only
that, as a matter of fact, grievous bodily harm was inflicted. The provisions of s 311
of the Criminal Procedure Act were therefore triggered. The error of law committed
by the high court meant that the respondent’s appeal on sentence had not been
considered on the merits. The sentence of the respondent was re-instated as
imposed by the regional court. The matter was remitted to the high court for it to
properly exercise its appeal jurisdiction on sentence.
The majority judgment held, in addition, that an appeal under s 311 was one
regulated in terms of the Criminal Procedure Act. The definition of ‘appeal’ in s 1 of
the Superior Courts Act excluded an appeal regulated in terms of the Criminal
Procedure Act from the appeal provisions of the Superior Courts Act. It was thus
unnecessary to obtain special leave to appeal. The appeal was one of right, without
leave.
The minority judgment concluded that special leave to appeal was necessary. It
would have granted special leave and would have upheld the appeal under s 311 on
the same basis.
|
1855
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No 605/10
In the matter between:
SAID MOHAMMED
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Mohammed v State (605/10) [2011] ZASCA 98 (31 May
2011)
Coram:
HEHER, MAYA and MAJIEDT JJA
Heard:
25 May 2011
Delivered: 31 May 2011
Summary:
Criminal law ─ robbery with aggravating circumstances ─
identification ─ proof of beyond reasonable doubt ─ requirements restated ─
alibi defence ─ effect of late disclosure ─ sentence ─ 15 years’ imprisonment
─ no appellate interference warranted.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Western Cape High Court (Cape Town) (Cleaver J and
Brusser AJ sitting as court of appeal):
The appeal is dismissed.
______________________________________________________________
JUDGMENT
______________________________________________________________
MAJIEDT JA (HEHER and MAYA JJA concurring):
[1] This is an appeal against the judgment of Brusser AJ, with Cleaver J
concurring, sitting as court of appeal in the Western Cape High Court, Cape
Town, in terms of which the appellant's appeal against his conviction in the
regional court of robbery with aggravating circumstances and the sentence of
15 years’ imprisonment was dismissed. Leave to appeal was granted by the
court below.
[2] The appellant's conviction in the regional court arose from the following
set of facts:
2.1
The complainants, Ms Nomonde Patience Botha and her boyfriend, Mr
James Mecca, were accosted in the latter's flat by four men, brandishing
firearms. They were tied up, Mecca was repeatedly beaten up and dragged
around the house, the flat was ransacked and the robbers eventually made off
with the complainants' goods valued at approximately R22 000.
2.2
The ordeal lasted between half an hour (on Botha's estimation) to over
an hour (as estimated by Mecca). The flat's lights were on throughout and the
obvious ringleader of the gang, whom they both subsequently identified as the
appellant, had his face uncovered.
2.3
Botha encountered and recognized the appellant on at least three
subsequent occasions. On one such occasion, she sought to engage the
assistance of the security guards at a shopping mall, the Golden Acre, where
she had seen the appellant, to have him arrested. They declined to do so in
the absence of a case number.
2.4
Mecca also recognized the appellant on two subsequent occasions,
namely at a Seven Eleven store and at the Cape Town railway station. After
the first such occasion he furnished the Milnerton police with the registration
number of the motor vehicle in which he had seen the appellant. After the
second occasion, he alerted the police on patrol at the station, who arrested
the appellant. Botha was asked to come to the police station where she
immediately positively identified the appellant as the lead robber, even before
she was asked to do so.
2.5
The appellant denied having robbed the complainants. His attorney
raised an alibi on his behalf belatedly during the trial, namely when the State's
second witness, Mecca, was being cross-examined. No such alibi defence
was put to the first State witness, Botha, by the appellant’s former attorney
(he was represented by another one when Mecca testified).
2.6
The appellant alleged in his testimony that he had been in Pretoria at
the time of the robbery. He had gone there at the request of his friend and
compatriot (the appellant is a Tanzanian citizen), one Mr Malik Ponza, to
assist him in his business. Ponza testified in support of this alibi.
3.
The regional magistrate accepted the State’s version and rejected the
appellant's alibi defence as false beyond reasonable doubt. She found the
State witnesses' identification of the appellant credible and reliable. She was
satisfied that the identification occurred in circumstances where there was
adequate opportunity for a reliable identification.
4.
The court below endorsed the regional magistrate's aforementioned
findings. I, too, can find no fault with her findings. This appeal turns on the
reliability of the complainants’ identification. The appellant has in my view
failed to establish that the regional magistrate erred in finding the
identifications to be reliable. With regard to identification, Botha and Mecca
had ample opportunity to observe the appellant who, as stated, directed
proceedings during the robbery. The appellant's face was uncovered and the
flat's lights were on throughout. Botha enumerated some of the identifying
features of the appellant, namely his hefty build, a big face, thick lips and what
she described as 'sexy' eyes. Mecca was adamant that he would never forget
the appellant's face and stated that whenever he closed his eyes he could see
the appellant's face. Added to this of course, is the fact that the appellant was
in command, thus the complainants focused most of their attention on him.
Moreover, the complainants recognized the appellant on several occasions
thereafter and sought to have him arrested.
[5] The identification of the appellant unquestionably passes muster when
measured against the well-known cautionary approach enunciated in a long
line of cases, most recently by this court in S v Ngcamu 2011 (1) SACR 1
(SCA) para 10, where Mthiyane JA made reference to this court's earlier locus
classicus on identification evidence, S v Mthetwa 1972 (3) SA 766 (A) at
768A-C. The cumulative weight of the factors enumerated by Holmes JA in
Mthetwa such as 'lighting, visibility and eyesight; the proximity of the
witness[es] . . . opportunity for observation, both as to time and situation . . .
the [appellant's] face, voice, build, gait and dress' conduce to a reliable
identification in the present matter.
[6] The appellant’s counsel laid heavy emphasis on the complainants’ lack
of any description of their assailants, particularly of the appellant, to the police
after the robbery. He contended that this omission raises reasonable doubt
about the reliability of their identification. It seems to me that the police, rather
than the complainants, are to blame for this omission. The police were told by
the complainants that they would be able to recognize the robbers in the
event that the complainants see them again. But no descriptions of the
robbers were sought from the complainants. In any event, even if it can be
said that the omission is attributable to the complainants, it must be
considered on the evidence as a whole. As stated above, the complainants
had adequate opportunity for a reliable identification and the conditions were
conducive to such reliability. As it turned out both complainants did, on their
version, see one of their assailants, the appellant, again on more than one
occasion and they took active steps to have the appellant arrested. The
complainants’ lack of any description of their assailants can therefore not
detract from the reliability of their identification when all the facts and
circumstances are considered.
[7] Criticism was also levelled against Botha's identification of the appellant
at the police station after his arrest. The submission was made that it is
tantamount to a 'dock identification' on which no reliance can be placed. In S v
Tandwa 2008 (1) SACR 613 (SCA) para 129, this court reiterated that '. .
.[d]ock identification . . . may be relevant evidence, but generally, unless it is
shown to be sourced in an independent preceding identification . . . carries
little weight'. The exception alluded to in this passage applies in this matter.
Botha's identification at the police station therefore serves as a further factor
enhancing the reliability of the identification, albeit to a very limited extent.
[8] Against this compelling identification evidence, stands the appellant's
belatedly raised alibi defence. On a conspectus of the evidence as a whole,
that defence cannot be reasonably possibly true. The regional magistrate
correctly found that there were material contradictions between the versions
propounded by the appellant and his witness, Ponza, on inter alia the precise
reason for the appellant’s visit to Pretoria and the extent of the injuries
sustained by Ponza and his girlfriend in a car accident. She also correctly
found it to be riddled with inconsistencies and improbabilities. The alibi
defence simply lacked credibility, a fact which is exacerbated by its late
introduction into the case (compare in this regard, the facts and findings in S v
Carolus 2008 (2) SACR 207 (SCA) para 29). The appellant’s explanation that
the alibi defence was raised late because of his former attorney’s neglect,
lacks persuasion. It was the very essence of his case and it strikes one as
improbable that the attorney would not have referred to it in cross-
examination; equally unlikely is that the appellant would have failed to draw
the attorney’s attention to this material omission.
[9] The appeal against conviction is devoid of merit and must be
dismissed. Short shrift can be made of the appeal against sentence. The
offence carries a statutorily prescribed minimum sentence of 15 years’
imprisonment, unless substantial and compelling circumstances exist to justify
a departure from it. The appellant and his confederates terrorised the
complainants in Mecca's residence, his sanctuary where he and his visitors
were supposed to be safe. Mecca was repeatedly beaten up and both he and
Botha were threatened with firearms. Only two factors were advanced at the
trial as substantial and compelling circumstances, warranting departure from
the minimum sentence of 15 years prescribed in s 51(3)(a) of the Criminal
Law Amendment Act 105 of 1997. These were the appellant's lack of previous
convictions and the fact that the appellant has children to care for. The
regional magistrate rightly rejected these factors. The aforementioned Act
stipulates a sentence for first offenders. And it was not the appellant's case on
sentence at the trial, or on appeal in the court below, or before us, that he is
the sole breadwinner or primary caregiver to the children. The sentence fits
the offender and the offence in my view.
[10] The appeal is dismissed.
___________
S A Majiedt
Judge of Appeal
APPEARANCES:
Counsel for Appellant
:
Adv. J A du Plessis
Instructed by
:
Liddell, Weeber & Van der Merwe Inc,
Wynberg
Ben van der Merwe
Bloemfontein
Counsel for Respondent
:
Adv. S Vakele
Instructed by
:
The Director of Public Prosecution,
Cape Town
The Director of Public Prosecution,
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
31 May 2011
STATUS: Immediate
SAID MOHAMMED v THE STATE (605/2010)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today dismissed an appeal against
conviction and sentence in this matter. The appellant, Mr. Mohammed, was
convicted in the Regional Court on robbery with aggravating circumstances. He was
sentenced to 15 years imprisonment. An appeal to the Western Cape High Court
against conviction and sentence was unsuccessful.
The SCA upheld the findings of the Regional Court Magistrate that the complainants’
identification was reliable. The complainants were accosted in a flat by five men
brandishing firearms. They described the appellant as the ringleader. The flat was
ransacked and one complainant was repeatedly beaten. The SCA endorsed the
Regional Court’s findings that the conditions were conducive to a reliable
identification and that the complainants had sufficient opportunity to observe and
identify the appellant.
The SCA found that there were no grounds to interfere with the sentence and
consequently dismissed the appeal against conviction and sentence.
-- ends --
|
2616
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 20273/2014
In the matters between:
HENDRICK VAN WYK
APPELLANT
and
THE STATE
RESPONDENT
Case No: 20448/2014
BONILE GALELA
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Van Wyk v The State (20273/2014) and Galela v The State
(20448/2014) [2014] ZASCA 152 (22 September 2014)
Coram:
Navsa ADP, Brand, Ponnan, Swain JJA and Mathopo AJA
Heard:
22 September 2014
Delivered:
29 September 2014
Summary:
North Gauteng High Court dismissing appeal on the merits – Western
Cape High Court refusing petition in terms of s 309C of the Criminal
Procedure Act 51 of 1977 – in either event special leave required of the
SCA in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 to
appeal further.
ORDER
Hendrick Van Wyk v The State, Case No 20273/2014
On appeal from: North Gauteng High Court, Pretoria (Raulinga J with Louw AJ
concurring, sitting as the court of appeal):
1.
The appellant is granted special leave to appeal in terms of s 16(1)(b) of the
Superior Courts Act 10 of 2013 against the sentence of imprisonment imposed by
the Regional Court, Pretoria-North, confirmed on appeal by the North Gauteng High
Court.
2.
The appeal is upheld. The order of the court a quo is set aside and
substituted with the following order:
„The appeal is upheld. The sentence imposed by the trial court is set aside and the
following sentence is substituted:
The appellant is sentenced to imprisonment for a period of three years five months
and 28 days.
The substituted sentence is antedated to 25 March 2011.‟
Bonile Galela v The State, Case No 20448/2014
On appeal from: Western Cape High Court, Cape Town (Erasmus J with Rogers J
concurring, sitting as the court of appeal):
1.
The application for special leave to appeal in terms of s 16(1)(b) of the
Superior Courts Act 10 of 2013, against the dismissal of the applicant‟s petition for
leave to appeal by the Western Cape High Court in terms of s 309C of the Criminal
Procedure Act 51 of 1977 is refused.
JUDGMENT
_______________________________________________________________
Swain JA (Navsa ADP, Brand, Ponnan JJA and Mathopo AJA concurring):
[1] The passing of the Superior Courts Act 10 of 2013 (the Act) which repealed
the Supreme Court Act 59 of 1959 (the SC Act) from 23 August 2013, has given rise
to uncertainty concerning the rights of accused persons convicted in the magistrates‟
court, to appeal against the dismissal of their appeals by the high court, to this court.
[2] Uncertainty has also arisen in regard to the right of accused persons who
have unsuccessfully petitioned the high court for leave to appeal to that court against
their convictions in the magistrates‟ court or the sentences imposed pursuant to
those convictions, to then seek the leave of this court to appeal to the high court.
[3] The uncertainty relates to whether the high court, sitting as a court of appeal,
has jurisdiction to grant leave to appeal against its own order dismissing an appeal
on its merits or where, in terms of s 309C of the Criminal Procedure Act 51 of 1977
(the CPA), it dismissed a petition against a magistrates refusal to grant leave to
appeal.
[4] The present appeals are representative of each of these categories. In
Hendrick van Wyk v The State the appellant was convicted by the Regional Court,
Pretoria North of one count of rape in terms of s 3 of the Sexual Offences and
Related Matters Amendment Act 32 of 2007 (the Sexual Offences Act) and one
count of sexual assault in terms of s 5(1) of this Act and sentenced to an effective
term of 15 years‟ imprisonment. An application by the appellant for leave to appeal
against conviction and sentence in terms of s 309B of the CPA was dismissed by the
regional court. The appellant in terms of s 309C(2) of the CPA then petitioned the
North Gauteng High Court, Pretoria against the refusal of leave to appeal. The
petition was partially successful in that the appellant was granted leave to appeal
against the sentence imposed. This appeal was subsequently dismissed by the high
court (Raulinga J and Louw AJ). The appellant then filed an application for special
leave to appeal to this court, in respect of sentence in terms of s 16(1) of the Act.
[5] In Bonile Galela v The State the appellant was convicted by the Regional
Court, Winburg of one count of rape in terms of s 3 of the Sexual Offences Act and
sentenced to a term of 17 years‟ imprisonment. An application for leave to appeal in
terms of s 309B of the CPA was dismissed by the regional court. The appellant in
terms of s 309C(2) then unsuccessfully petitioned the Western Cape High Court,
Cape Town (Erasmus and Rogers JJ) for leave to appeal. The appellant then applied
to this court for leave to appeal in terms of s 16(1) of the Act.
[6] The parties in Van Wyk were directed to present argument on the following
issues:
„a)
Whether, in view of the definition of “appeal” in section 1 of the Superior Courts Act
10 of 2013, the provisions of section 16(1)(b) of that Act may be invoked for purposes of
applying to the Supreme Court of Appeal for special leave to appeal.
b)
If not, whether the North Gauteng High Court, which dismissed the applicant‟s
appeal, has jurisdiction to consider the applicant‟s application for leave to appeal to this
Court.
c)
If not, whether leave to appeal is required from this Court for it to consider the
appeal? The Applicant and Respondent are referred to National Union of Metalworkers of
SA v Fry’s Metals (Pty) Ltd 2005 (5) SA 433 (SCA) and American Natural Soda Ash
Corporation & another v Competition Commission & others 2005 (6) SA 158 (SCA).‟
[7] To answer the first two questions in relation to criminal appeals it is
necessary to briefly set out the law under the SC Act, pertaining to criminal appeals
from the then supreme court (now high court) to this court, as well as petitions to this
court for leave to appeal to the high court from the magistrates court. Whether the
Act has changed the existing law can then be considered.
[8] Section 309 of the CPA provides that subject to leave to appeal being
granted in terms of s 309B or 309C, any person convicted of any offence by any
lower court may appeal against such conviction and sentence to the high court
having jurisdiction. In terms of s 309B any accused who wishes to note an appeal
against any conviction or sentence of a lower court must apply to that court for leave
to appeal against the conviction or sentence. If leave to appeal is refused by the
lower court, the accused may in terms of s 309C petition the Judge President of the
high court having jurisdiction to grant leave to appeal. In terms of s 309C(5) the
petition is considered by two judges in chambers. Section 309 was amended to
ensure its constitutional validity after a series of cases revealed its constitutional
shortcomings.1
[9] These provisions of the CPA have to be considered alongside the applicable
sections of the SC Act which regulated appeals from the high court to this court.
These were ss 20(1), 20(4) and 21(1). Section 20(1) provided that:
„An appeal from a judgment or order of the court of a provincial or local division in any civil
proceedings or against any judgment or order of such a court given on appeal shall be heard
by the appellate division or a full court as the case may be.‟
[10] Section 20(4) provided that:
„(4)
No appeal shall lie against a judgment or order of the court of a provincial or local
division in any civil proceedings or against any judgment or order of that court given on
appeal to it except –
(a)
in the case of a judgment or order given in any civil proceedings by the full court of
such a division on appeal to it in terms of subsection (3), with the special leave of the
appellate division;
(b)
in any other case, with the leave of the court against whose judgment or order the
appeal is to be made or, where such leave has been refused, with the leave of the appellate
division.‟
1 Shinga v The State & another (Society of Advocates ((Pietermaritzburg Bar)) intervening as Amicus
Curiae); S v O’Connell & others 2007 (2) SACR 28 CC, S v Rens 1996 (1) SACR 105 (CC), S v Ntuli
1996 (1) SACR 94 (CC), S v Steyn 2001 (1) SACR 25 (CC).
[11] Section 21(1) provided that:
„In addition to any jurisdiction conferred upon it by this act or any other law, the appellate
division shall subject to the provisions of this section and any other law, have jurisdiction to
hear and determine an appeal from any decision of the court of a provincial or local division.‟
Sections 21(2) and (3) of the SC Act made provision for application to be made to
this court by way of petition for leave to appeal as referred to in s 20(4).
[12] Section 21(1) of the SC Act was applicable to both civil and criminal cases2
and conferred a jurisdiction upon this court that it did not possess in terms of s 20 of
the SC Act.3
[13] This court held in S v Khoasasa 2003 (1) SACR 123 (SCA) paras 14 and 19-
22, that a petition for leave to appeal to a high court in terms of s 309C of the CPA,
was in effect an appeal against the refusal of leave to appeal by the magistrates
court in terms of s 309B of the CPA. It concluded that such refusal of leave to appeal
by the high court was a „judgment or order‟ of the high court as contemplated in
ss 20(1) and 20(4) of the SC Act, given by the high court on appeal to it. Accordingly,
in terms of s 20(4)(b) the refusal of leave to appeal by the high court, was appealable
to this court with the leave of the high court (being the court against whose order the
appeal was to be made) or where leave was refused, with the leave of this court. The
order appealed against was the refusal of leave with the result that this court could
not decide the appeal itself.
[14] As pointed out by this court in S v Matshona 2013 (2) SACR 126 (SCA) para
4, the issue to be determined is not whether the appeal against conviction and
sentence should succeed, but whether the high court should have granted leave,
2 S v Botha en ‘n ander 2002 (1) SACR 222 (SCA) at 225H.
3 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) at 8B-C.
which in turn depends upon whether the appellant could be said to have reasonable
prospects of success on appeal.4
[15] In S v Tonkin 2014 (1) SACR 583 (SCA) para 4, Brand JA pointed out that if
an appeal of this nature should succeed „the result is cumbersome and wasteful of
both time and money. After two rounds before the high court and one round before
this court, the appeal process will remain uncompleted. Two judges of the high court
will still have to hear the appeal on its merits with the possibility of a further appeal to
this court‟.
[16] Brand JA in Tonkin (para 6) set out the reasons why this court could not
„short-circuit the cumbersome process by entertaining the appeal against conviction
directly‟ in the exercise of its inherent jurisdiction.
„(a)
Although this court has inherent jurisdiction to regulate its own procedure, it has no
inherent or original jurisdiction to hear appeals from other courts. In the present context its
jurisdiction is confined to that which is bestowed upon it by ss 20 and 21 of the Supreme
Court Act. In terms of these sections the jurisdiction of this court is limited to appeals against
decisions of the high court.
(b)
When leave to appeal has been refused by the high court, that court rather
obviously, did not decide the merits of the appeal. If this court were therefore to entertain an
appeal on the merits in those circumstances, it would in effect be hearing an appeal directly
from the magistrates‟ court. That would be in direct conflict with s 309 of the Criminal
Procedure Act, which provides that appeals from lower courts lie to a higher court. The
“order on appeal” by the high court – in the language of s 20(4) – that is appealed against is
the refusal of the petition for leave to appeal, and nothing else.
(c)
As to this court‟s inherent jurisdiction to regulate its own process it goes without
saying that it is to be exercised within the confines of statutory limitations. With regard to
4 This position has been followed by this court. S v Kriel 2012 (1) SACR 1 (SCA) paras 11-12, S v
Smith 2012 (1) SACR 567 (SCA) paras 2-3.
appeals against judgments and orders by the high court, the procedure is dictated by s
20(4)(b).‟
[17] This court in AD v The State (334/2011) [2011] ZASCA 215 para 13, called
for „thought to be given to legislative reform so that petitions can be finalised speedily
at the high court level‟. Whether the Act has provided this reform requires a
consideration of s 16(1) of the Act.
[18] Section 1 of the Act provides that „appeal‟ in Chapter 5, does not include an
appeal in a matter regulated in terms of the CPA, or in terms of any other criminal
procedural law. The CPA does not contain any provision dealing with a right of
appeal to this court from a decision of the high court taken on appeal to it from a
magistrates‟ court.5 A right of appeal from the high court sitting as an appeal court to
this court in criminal cases, consequently falls within Chapter 5 of the Act. Sections
16(1)(a) and (b) which are relevant provide as follows:
„(1)
Subject to s 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)
if the court consisted of a single judge, either to the Supreme Court of Appeal or to
a full court of that division, depending on the directions issued in terms of s 17(6); or
(ii)
if the court consisted of more than one judge, to the Supreme Court of Appeal;
(b)
an appeal against any decision of a Division on appeal to it, lies to the Supreme
Court of Appeal upon special leave having been granted by the Supreme Court of Appeal, . .
.‟
[19] The jurisdiction of this court to hear appeals from the high court whether as a
court of first instance, or an appeal court is derived from this section and s 19 of the
5 Sections 315 and 316 of the CPA deal with appeals to this court from the high court sitting as the
court of first instance.
Act. Whereas under s 20(4) of the SC Act, the special leave of this court was only
required in respect of an appeal from a decision of the full court (three judges) given
on appeal to it, the special leave of this court is now also required where leave to
appeal is sought in respect of a decision of two judges, given on appeal to it.
[20] A „decision‟ of the high court in refusing a petition in terms of s 309C of the
CPA for leave to appeal is one taken on appeal to it and is governed by s 16(1)(b) of
the Act.6 Accordingly, the refusal of leave to appeal by the high court is appealable
with the special leave of this court. Although s 16(1)(b) of the Act has ameliorated
the „cumbersome procedure‟ to the extent that an unsuccessful petitioner in the high
court no longer has to obtain the leave of the high court to appeal to this court, it has
replaced it with the more stringent requirement that „special leave‟ be obtained from
this court.
[21] An applicant for special leave to appeal must show, in addition to the
ordinary requirement of reasonable prospects of success, that there are special
circumstances which merit a further appeal to this court. This may arise when in the
opinion of this court the appeal raises a substantial point of law, or where the matter
is of very great importance to the parties or of great public importance, or where the
prospects of success are so strong that the refusal of leave to appeal would probably
result in a manifest denial of justice. See Westinghouse Brake and Equipment v
Bilger Engineering 1986 (2) SA 555 (A) at 564H-565E.
[22] Rule 6 of the rules of this court, which deals with applications for leave to
appeal must be scrupulously followed. The application must succinctly set out the
respects in which it is alleged the high court erred and the judgment must be
subjected to a critical analysis, either as to the findings of fact or as to the exposition
6 There is no distinction between a „decision‟ of the high court „on appeal to it‟ in terms of s 16(1)(b) of
the Act, or a „judgment or order‟ of the high court „given on appeal to it‟ in terms of ss 20(1) and 20(4)
of the SC Act.
and application of the law.7 A generalised attack on the findings of the high court is
insufficient, as is reliance on the notice of appeal, or a recitation of the grounds of
appeal.8
[23] Reasons must be given why special leave is justified. The special
circumstances relied upon must be clearly and succinctly set out. This is not an
invitation to practitioners to conjure up the requisite special circumstances if they do
not exist. If these specific requirements are not adhered to, the application may be
rejected by the Registrar or an adverse order de bonis propriis may be granted.9
[24] I turn to consider the questions which were posed in paragraph [6] above.
(a)
The definition of „appeal‟ in s 1 of the Act renders the provisions of s 16(1)(b)
applicable to criminal appeals from the high court sitting as a court of appeal to this
court.
(b)
In Van Wyk the Gauteng High Court did not have jurisdiction to hear an
application for leave to appeal to this court. This court has jurisdiction to hear the
appellant‟s appeal, against the dismissal by the Gauteng High Court of the
appellant‟s appeal against the sentence imposed by the regional court.
(c)
In Galela the Western Cape High Court did not have jurisdiction to hear an
application for leave to appeal to this court. This court has jurisdiction to hear the
appellant‟s appeal, against the dismissal by the Western Cape High Court of the
appellant‟s petition for leave to appeal in terms of s 309C(2) of the CPA, against his
conviction and sentence imposed by the regional court.
7 National Union of Metalworkers of South Africa v Jumbo Products CC 1996 (4) SA 735 (A) at 739C-
H.
8 D Harms Civil Procedure in the Superior Courts at C-37.
9 H Merks & Co (Pty) Ltd v The B-M Group (Pty) Ltd 1996 (2) SA 225 (A) at 235H-236B.
(d)
In both appeals the appellants will have to satisfy this court that special leave
to appeal should be granted. In Van Wyk the appellant has to satisfy this court that
special leave to appeal against the sentence imposed should be granted. In Galela
the appellant will have to satisfy this court that special leave to appeal against the
refusal of his petition for leave to appeal against his conviction and sentence to the
high court should be granted.
(e)
The decisions of this court in National Union of Metalworkers and American
Natural Soda Ash, referred to in para 5 supra, are not applicable.10
[25] I turn to examine the merits of the applications for special leave to appeal to
this court in terms of s 16(1)(b) of the Act.
[26] In Van Wyk, the applicant seeks special leave to appeal against the
dismissal of his appeal against sentence by the Gauteng High Court. The appellant
was sentenced to 15 years‟ imprisonment on one count of rape and two years‟
imprisonment on one count of sexual assault, the sentences being ordered to run
concurrently.
[27] The salient facts giving rise to the appellant‟s conviction were as follows. The
complainant, a 15 year old girl, testified that there had been a party at her home on
New Year‟s Eve 2009. During the course of the evening the complainant a minor had
been allowed by her mother to consume vodka, champagne and beer which must
have affected her state of sobriety. The appellant who was at the party, asked to
10 In the following cases: Mthethandaba v S 2014 (2) SACR 154 (KZP), Tuntubele v S (A524/12)
[2014] ZAWCHC 91 (6 June 2014) and Hagin, Patrick R v The State Case No A113/2013 Gauteng
Local Division, applications for leave to appeal to this court, against the dismissal of the appellants‟
appeals, were correctly struck from the roll, on the grounds that the high court lacked jurisdiction to
hear the applications. (In Mthethandaba the appellant had sought leave to appeal against the refusal
of his petition in terms of s 309C of the CPA. In Tuntubele and Hagin the appellants sought leave to
appeal to this court against the dismissal of their appeals on the merits). In the case of Imador v S
(A167/2013) [2014] ZAWCHC 66 (3 April 2014) the high court incorrectly decided that an accused
does not have a further right of appeal to this court after his/her appeal has been determined by two
judges in the high court.
sleep at the home after the party, because he did not wish to ride his motorcycle
after having consumed alcohol. It was agreed that the appellant could sleep in the
complainant‟s room, whilst the complainant and other children slept in the sitting
room. During the night, the appellant approached the complainant and asked her for
a beer. She took the appellant to the kitchen and showed him the beers in the fridge.
The appellant went outside to smoke, then returned to the house and sat at a table
behind the complainant and drank his beer. When he had finished the beer he
moved a girl sleeping next to the complainant and lay down next to her on her
mattress. The complainant testified that she dozed off but woke up when she
realised the appellant was touching her breasts underneath her clothes. The
appellant then inserted his finger into her vagina and took the complainant‟s hand
and placed it on his private parts. The appellant then started to pull the complainant‟s
pants down from the back. The complainant turned around to look at the appellant
who kissed her. She then pushed the appellant away who asked why she was
pushing him away. The complainant insisted he should leave which he did, returning
to the room where he was sleeping. The complainant then reported to her mother
that the appellant had molested her. The appellant denied the incident and insisted
the complainant was falsely implicating him.
[28] In imposing sentence the trial court found that substantial and compelling
circumstances were present which justified a departure from the minimum sentence
of life imprisonment specified in terms of part 1 of Schedule 2 of the Criminal Law
(Sentencing) Amendment Act 38 of 2007 where the victim of the rape was under 16
years of age. The trial court then sentenced the appellant as set out above. The
court a quo in dismissing the appeal against the sentence imposed found that there
was no misdirection which was improper or unreasonable on the part of the trial
court which would entitle the court a quo to interfere with the sentence. No regard
was paid by the court a quo as to whether the sentence itself was disproportionate
on the facts of this case.
[29] Counsel for the appellant submitted that the trial court failed to have regard
to the unique circumstances of this case and as a result sentenced the appellant to a
term of imprisonment which was out of proportion to the facts of the case. Counsel
submitted that the trial court failed to consider that no violence or weapon was used
during the incident, the appellant did not threaten the complainant and alcohol
played a role in the appellant‟s conduct. Counsel also drew attention to the personal
circumstances of the appellant. He was 32 years of age, divorced with two minor
children he was supporting from fixed employment and was a first offender. Against
this, however, must be considered the fact that the complainant has suffered
psychological trauma as a result of the incident and was still undergoing counselling.
In addition, the probation officer recommended a custodial sentence be imposed.
[30] In S v Bogaards 2013 (1) SACR 1 (CC) para 41 the Constitutional Court held
that an appellate court‟s power to interfere with sentences imposed by lower courts
was as follows:
„It can only do so where there has been an irregularity that results in a failure of justice; the
court below misdirected itself to such an extent that its decision on sentence is vitiated; or
the sentence is so disproportionate or shocking that no reasonable court could have
imposed it.‟
[31] This court has held that it 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 this court would have imposed was such that interference
was competent and required. The appellate court must be able to arrive at a definite
view as to what sentence it would have imposed. It would suffice that a particular
range be identified within which it would have imposed sentence.11
[32] This is a case where there is a sufficient degree of disparity between the
sentence imposed and what this court would have imposed to justify interference.
When regard is had to all the facts of the present case, the sentence of 15 years‟
imprisonment is so disproportionate and shocking that no reasonable court could
have imposed it. The trial court appears to have placed undue weight upon the need
11 S v Monyane & others 2008 (1) SACR 543 (SCA) paras 23 and 26.
to deter sexual offenders, without having proper regard to the particular facts of this
case. The court a quo appears to have adopted the erroneous view that in the
absence of a misdirection by the trial court it was not entitled to interfere with the
sentence. Counsel for the state did not with any vigour argue the contrary.
[33] The appellant has been in prison since being sentenced on 25 March 2011.
He has served a sentence in excess of three years‟ imprisonment. If this court had
been sitting as the trial court it would not on the facts of this case have imposed an
effective sentence of imprisonment which would have resulted in a period of
incarceration in excess of that time. It follows that the appellant must be granted
special leave to appeal in terms of s 16(1)(b) of the Act to this court against his
sentence. Special circumstances are present in that a refusal of leave to appeal
would result in a manifest denial of justice. The time served by the appellant in prison
accordingly constitutes a sufficient term of imprisonment. The effect of the
substituted sentence is that the appellant is not to undergo any further period of
imprisonment and is entitled to his immediate release.
[34] I turn to the appeal of Galela. The appellant was convicted of the rape of a
nine year old girl and sentenced to 17 years‟ imprisonment. His petition to the
Western Cape High Court for leave to appeal in terms of s 309C(2) of the CPA was
refused. The appellant now petitions this court for special leave to appeal against his
conviction and sentence to the high court.
[35] Having considered the evidence, I am satisfied that the appellant does not
have reasonable prospects of success on appeal. In addition, there are no special
circumstances present which would justify the grant of special leave to appeal to the
high court.
[36] The following orders are made:
In the appeal of Hendrick Van Wyk v The State, Case No 20273/2014
1.
The appellant is granted special leave to appeal in terms of s 16(1)(b) of the
Superior Courts Act 10 of 2013 against the sentence of imprisonment imposed by
the Regional Court, Pretoria-North, confirmed on appeal by the Gauteng High Court.
2.
The appeal is upheld. The order of the court a quo is set aside and
substituted with the following order:
„The appeal is upheld. The sentence imposed by the trial court is set aside and the
following sentence is substituted:
The appellant is sentenced to imprisonment for a period of three years five months
and 28 days.
The substituted sentence is antedated to 25 March 2011.‟
In the appeal of Bonile Galela v The State, Case No 20448/2014
1.
The application for special leave to appeal in terms of s 16(1)(b) of the
Superior Courts Act 10 of 2013, against the dismissal of the applicant‟s petition for
leave to appeal by the Western Cape High Court in terms of s 309C of the Criminal
Procedure Act 51 of 1977 is refused.
K G B SWAIN
JUDGE OF APPEAL
Ponnan JA (Navsa ADP, Brand, Swain JJA and Mathopo AJA concurring):
[37] I have had the benefit of reading the judgment of Swain JA, with which I am
in respectful agreement. I nonetheless feel constrained to write separately to express
feelings of disquiet that I experience in relation to the application of s 16(1)(b) of the
Superior Courts Act.
[38] For the present I shall restrict my observations to the preliminary
jurisdictional prerequisite of petitions for leave to appeal to a high court in terms of s
309C of the CPA. That, as Streicher JA held in Khoasasa, is in effect an appeal
against the refusal of leave to appeal by the magistrates‟ court in terms of s 309B of
the CPA. Prior to the introduction of s 16(1)(b), if the petition failed before the high
court, an accused person‟s recourse was to apply to that court for leave to appeal
against that refusal. If that application failed, a petition to this court had to follow. In
either event, to succeed such a person had to satisfy the court that the envisaged
appeal had reasonable prospects of success. If the petition to this court proved
successful then leave was granted to the accused to appeal from the magistrates‟
court to the high court.
[39] In Tonkin (para 4), Brand JA lamented that cumbersome and wasteful
procedure. In answer perhaps, s 16(1)(b) has done away with an application for
leave to appeal to the high court against that court‟s refusal of a petition. The result
is that once a petition is refused by the high court it is to this court that an accused
must turn. And, having failed to persuade at least two judges in the high court that
there are reasonable prospects of the contemplated appeal succeeding, he or she
has to now (perhaps somewhat incongruously) meet the higher „special
circumstances‟ threshold set by s 16(1)(b) for this court. If this court takes the view
that the higher threshold has been met then leave to appeal will be granted to the
high court for it to enter into the merits of the appeal. The high court will then, no
doubt, enter into the merits of the appeal in the full knowledge that this court has
already taken the view that „special circumstances‟ subsist. If the appeal were to fail
on the merits in the high court then, as in the past, a further appeal would lie to this
court. The difference though is that now even though just an appeal from a full bench
of the high court, it would only lie with the special leave of this court. But, it needs to
be remembered, that the higher threshold had previously been met by that accused
when this court granted leave to appeal to the high court.
[40] What is more is that whilst the record of the proceedings in the magistrates
court would serve before the high court when the petition is there considered (see s
309C(4) of the CPA), it does not serve before this court (SCA rule 6(5)). SCA rule
6(5)(b) makes plain that an application for leave to appeal shall not be accompanied
by the record, although in terms of rule 6(6), the Judges considering the petition may
call for the record or portions of it. Indeed SCA rule 6(5) emphasizes that every
application for leave to appeal must furnish succinctly the information necessary to
enable this court to decide whether leave ought to be granted (H Merks & Co (Pty)
Ltd v The B-M Group (Pty) Ltd 1996 (2) 225 at 235H – 236C). Thus an accused who
has failed to meet the much lower „reasonable prospects of success‟ threshold in the
high court whilst armed with the full record of the proceedings is somehow expected
to thereafter persuade this court, minus that record, that „special circumstances‟ are
present.
[41] Moreover, the high court is not obliged to furnish reasons for declining to
grant the petition. This court will thus be none the wiser as to the considerations that
weighed with it. In divesting the high courts of their jurisdiction to consider
applications for leave to appeal against decisions on appeal to it, an important filter
has been jettisoned by the legislature. That filter has in truth been moved up the
judicial hierarchy to this court. The practical consequence of that is that this court will
henceforth be burdened by those applications. To be sure many of those
applications will be unmeritorious and not truly deserving of this court‟s attention. On
the other hand, there may well be a real danger that appeals which deserve to be
heard are stifled because the bar has been set far too high once the petition to the
high court fails. Thus in failing to properly regulate the process, the legislature may
have opened the door on some worthy appeals failing to make the cut. After all, we
need to remind ourselves that an accused person is doing no more at this stage than
seeking to exercise a right of appeal from the magistrates‟ court to the high court.
[42] For now, we fortunately do not need to consider the constitutional tolerability
of the statutory provision in issue. Regrettably though it would appear that s 16(1)(b)
falls far short of the nuanced legislative enactment that Brand JA may have had in
mind when he decried the procedure then in force.
V M PONNAN
JUDGE OF APPEAL
Appearances in Hendrick Van Wyk v The State:
For the Appellant:
L Augustyn (with her J Mojuto and F van As)
Instructed by:
Legal Aid South Africa, Pretoria
Legal Aid South Africa, Bloemfontein
For the Respondent:
M Jansen van Vuuren (with her P Vorster)
Instructed by:
Director of Public Prosecutions, Pretoria
Director of Public Prosecutions, Bloemfontein
Appearances in Bonile Galela v The State:
For the Appellant:
M Calitz
Instructed by:
Legal Aid Board, Cape Town
Legal Aid Board, Bloemfontein
For the Respondent:
S Raphels
Instructed by:
Director of Public Prosecutions, Cape Town
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 September 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Van Wyk v The State (20273/2014) and Galela v The State (20448/2014)
[2014] ZASCA 152 (22 September 2014)
Media Statement
The SCA held that the high court does not have jurisdiction to grant leave to appeal
to the SCA, in respect of criminal cases dismissed on appeal by the high court, or in
respect of applications for leave to appeal to the high court, refused by the high court.
Only the SCA may grant special leave to appeal further, in terms of s 16(1)(b) of the
Superior Courts Act 10 of 2013.
--- Ends ---
|
3504
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not-Reportable
Case no: 900/2019
In the matter between:
SILWANE COMMUNITY DEVELOPMENT
TRUST
APPELLANT
and
REGIONAL LAND CLAIMS COMMISSIONER,
KWAZULU-NATAL
FIRST RESPONDENT
COMMISSION ON RESTITUTION
OF LAND RIGHTS
SECOND RESPONDENT
MINISTER OF RURAL DEVELOPMENT
AND LAND REFORM
THIRD RESPONDENT
DIRECTOR GENERAL OF THE
DEPARTMENT OF RURAL
DEVELOPMENT AND
LAND REFORM
FOURTH RESPONDENT
THE CHARL SENEKAL SUIKER TRUST
IT 855/1984
FIFTH RESPONDENT
MBONGENI ZULU
SIXTH RESPONDENT
NOMUSA MATHE
SEVENTH RESPONDENT
NTOMBIFUTHI MATHABELA
EIGHTH RESPONDENT
NDABA GUMBI
NINTH RESPONDENT
MUSWENKOSI MATHABELA
TENTH RESPONDENT
REGISTRAR OF DEEDS,
KWAZULU-NATAL
ELEVENTH RESPONDENT
Neutral citation: Silwane Community Development Trust v Regional Land
Claims Commissioner, Kwazulu-Natal and Others (900/2019 [2021] ZASCA
02 (6 January 2021)
Coram:
PETSE DP, MBHA, DAMBUZA and NICHOLLS JJA
and MATOJANE AJA
Heard:
18 November 2020
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives via e-mail, publication on the Supreme Court
of Appeal website and released to SAFLII. The date and time for hand-down
are deemed to be delivered on 7 January 2021.
Summary: Restitution of Land Rights Act 22 of 1994 – claim for restitution
of land rights – review of Regional Land Claims Commissioner’s decision to
publish claim as described in claim form – appellant alleging that additional
properties depicted in map wrongfully omitted – no reviewable irregularity
established.
ORDER
On appeal from: The Land Claims Court, Randburg (Kollapen J sitting as
court of first instance):
The appeal is dismissed with costs, such costs to include those consequent
upon the employment of two counsel.
JUDGMENT
Matojane AJA (Petse DP, Mbha, Dambuza and Nicholls JJA
concurring):
[1] This is an appeal against the judgment of the Land Claims Court,
Randburg (LCC) dismissing a review application in respect of a decision of
the Regional Land Claims Commissioner (the RLCC) to publish a notice in
the government gazette in terms of section 11(1) of the Restitution of Land
Rights Act 22 of 1994 (the Restitution Act) without including a number of
farms that the appellant contends ought to have been included.
[2] The application has its origin in two restitution of land claims that were
lodged by the late Inkosi Silwane Ernest Myeni (Inkosi Myeni) with the
RLCC on 4 February 1997. The claims were submitted on behalf of the
community by virtue of the provisions of the Restitution Act, for the
restitution of the land to the community. They were published in the
Government Gazette Notice 1586 of 26 August 2005.
[3] After the death of Inkosi Myeni, the appellant trust was formed to
pursue the claims on behalf of the community. In a letter dated 24 October
2016, the appellant took issue with the land description as set out in the
Government Gazette publication by the first respondent in terms of s 11(1) of
the Restitution Act. The applicant contended that the RLCC had wrongly
excluded 28 other farms not expressly referred to in the two claim forms in
the gazette notice. The RLCC, on the other hand, took the view that the claim
forms lodged by Inkosi Myeni were clear and precise as to the claimed farm
portions and that it acted procedurally fair before publishing the notice.
[4] With the impasse having arisen, the appellant applied to the LCC for an
order reviewing and setting aside the decision of the RLCC to publish the
Government Gazette Notice. It also sought an order directing the RLCC to
withdraw the said notice and publish a new notice in the Gazette containing
the additional properties that were not published in Government Gazette
Notice 1586 of 26 August 2005.
[5] The application was unsuccessful. On 24 July 2019, Kollapen J granted
limited leave to the appellant to appeal to this Court in relation to the manner
and process in which the state respondents dealt with the matter once there
was the identification of additional properties.
[6] A right to restitution of rights in land was created by s 8(3)(b) of the
Interim Constitution of the Republic of South Africa Act, 200 of 1993 and
was entrenched in the final Constitution of the Republic of South Africa Act
108 of 1996.1 Section 25(7) of the Constitution provides for the restitution of
rights in the land as follows:
‘A person or community dispossessed of property after 19 June 1913 as a result of past
racially discriminatory laws or practices is entitled, to the extent provided by an Act of
Parliament, either to restitution of that property or to equitable redress’.
[7] The Restitution Act is the Act envisaged in s 25(7) of the Constitution.
The object of the Restitution Act is, amongst others, to give effect to the
constitutionally entrenched rights of individuals and communities who had
been dispossessed of land rights and disadvantaged as a result of past racially
discriminatory laws and practices. The restitution process is a finite one with
a limitation placed on the period within which claims may be lodged. Section
2(1) and (2) of the Restitution Act deals with entitlement to restitution and
provides:
'(1)
A person shall be entitled to restitution of a right in land if -
(a)
he or she is a person dispossessed of a right in land after 19 June 1913 as a result of
past racially discriminatory laws or practices; or
(b)
it is a deceased estate dispossessed of a right in land after 19 June 1913 as a result
of past racially discriminatory laws or practices; or
(c)
he or she is the direct descendant of a person referred to in paragraph (a) who has
died without lodging a claim and has no ascendant who -
(i)
is a direct descendant of a person referred to in paragraph (a); and
(ii)
has lodged a claim for the restitution of a right in land; or
(d)
it is a community or part of a community dispossessed of a right in land after
19 June 1913 as a result of past racially discriminatory laws or practices; and
(e)
the claim for such restitution is lodged not later than 31 December 1998.’
1 Gamevest (Pty) Ltd v Regional Land Claims Commissioner for Northern Province and Mpumalanga and
Others [2002] ZASCA 117; 2003 (1) SA 373 (SCA) paras 3 and 4.
[8] Section 6 of the Restitution Act sets out the general functions of the
Commission. Those functions include, amongst others, receiving and
acknowledging receipt of claims, the taking of reasonable steps to ensure that
claimants are assisted in the preparation and submission of the claims,
advising claimants of the progress of their claims and investigating the merits
of claims that have been submitted, and mediating and settling disputes arising
from such claims.2
[9] Section 10 of the Restitution Act sets out the requirements for lodging
a valid claim. s 10 (1) provides:
‘(1) Any person who or the representative of any community which is entitled to claim
restitution of a right in land, may lodge such claim, which shall include a description of the
land in question, the nature of the right in land of which he, she or such community was
dispossessed and the nature of the right or equitable redress being claimed, on the form
prescribed for this purpose by the Chief Land Claims Commissioner under section 16.’
(My emphasis.)
[10] Section 11(1) obliges the RLCC having jurisdiction to cause a notice to
be published in the Gazette and make it known in the district in which the land
in question is situated if he or she is satisfied that:
‘(a)
the claim has been lodged in the prescribed manner;
(b)
the claim is not precluded by the provisions of section 2; and
(c)
the claim is not frivolous or vexatious.’
[11] In terms of s 11(2) the RLCC may, on such conditions as he or she may
determine, condone the fact that a claim has not been lodged in the prescribed
manner.
2 Section 6(1)(cA) and (cB) of the Restitution of Land Rights Act as amended.
[12] Section 16 empowers the Chief Land Claims Commissioner to make
rules regarding, among others, any matter which is required or permitted to be
prescribed. Section 16(1)(b) confers the power to make rules in regard to the
filing of claims. Rule 2(1) of the Rules Regarding Procedure of the Land
Claims Court3 provides that a claimant:
‘. . . shall lodge a claim in writing on a duly completed claim form, as prescribed by the
Commission in terms of section 10 of the Act, substantially in the form of Annexure A
together with such additional documents as are relevant to substantiate the claim, with the
regional office of the Commission having jurisdiction over the land in respect of which
such a claim is instituted.’
[13] In the present matter, Inkosi Myeni was able to identify the claimed
properties in the claim forms with precision. He completed the claim forms
with meticulous care. In paragraph 1.1, the standard form requires the person
completing the form to provide ‘the portion(s), name(s) and number(s) of the
farm and district in which it is situated’. He provided the correct portions and
farm names in the first claim form as follows:
‘MORGENSTOND. NO. 599 A-B AND
AVONSTOND MP. 581 B-C. STRAIGHT TO PONGOLA
UBOMBO DISTRICT’
[14] In the second claim form, he provided the accurate name, portion and
district in which portions of the farm Overwin lay. He described the property
as follow:
‘OVERWIN NO. 163 A & B - UBOMBO DISTRICT.’
3 Promulgated in Government Gazette 16407 of 12 May 1995.
[15] In paragraph 15 of the review application, the appellant explained that
the land described in the claim forms and claimed by the Myeni community
encompasses the following properties:
‘The land described in the said claim forms and accompanying description by the Inkosi
and the applicant community includes land which stretches from the Mkuze River, i.e. from
Overwin Farm to Pongola River and all the farms which are on the Myeni land including
the land on which the Inkosi of the applicant community lived during the material period
and continues to live. In support of this description of the subject land, I annex hereto
marked “C” a copy of the document entitled Meeting of the Myeni Ntsinde [Tribal]
Authority in connection with the restitution of land.’
[16] In the review application the appellant also relied on a transcription of
the minutes of the Myeni Ntsinde Tribal Authority held on 14 January 1997,
in which the land sought to be claimed was described as stretching from:
‘Mkuze river i.e. Overwin farm to Pongola River, and all the farms which are there are on
the Myeni’s land . . .
The other land is Makhathini on the Eastern part which is now used as a development area,
that is Myeni land. We therefore refer the Commission to the District Code which states
everything and the Old Maps with the boundary beacons, this land also stretches from
Pongola river Nyawashana where the old wagon road was to Mkuze river where the
Delukufa area is. There is now a great dispute of land in this area amongst three Amakhosis
ie J.Z. Gumede, M. Qebe and the Myeni.’
[17] The difficulty with the description contended for by the appellant is that
it is inconsistent with the description in the claim forms. Secondly, the last
paragraph of the resolution of the Myeni Ntsinde Tribal Authority on which
appellant relies records that the claim to this very broad area of land is
disputed. It is recorded that ‘there is now a great dispute of land in this area
amongst three Amakhosis, i.e. JZ Gumede, M Qebe and the Myeni.’
18]
After receipt of the claim forms, the RLCC appointed Khuhlaza
Management Consultants CC to investigate the claims. The consultants
produced three validation reports dated 3 December 2001. The validation
reports record the historical name of the area where people were removed as
Nkonkoni Farm (current name Avonstond No 581), Mooi Plaats (current
name Morgenstond No 598) and Overwin (current name Overwin 163(A) and
Overwin 163(B)).
[19] The RLCC also assigned Ms Xolisa Shembe, the Project Officer of the
RLCC, to investigate the merits of the claims. She interviewed Inkosi Myeni
and the claimant community and compiled an investigation case report. Her
report states that there were two different removals from the three farms, the
first being from Farm Overwin No 163 A & B in the late 30s and the second,
from the farms Morgenstond No 598 A & B and Avonstond no 581 B. This
report is in respect of only the land claimed in the claim forms and not the
farms listed in the amended notice of motion.
[20] As part of the investigation process, a mapping exercise of the areas
from which the community was alleged to have been removed was undertaken
by officials of the Commission. Members of the claimant community and an
official from the Surveyor-General’s office took part in the mapping exercise.
A map of the areas pointed out by the appellant community was produced by
the office of the Surveyor-General. The map depicts properties extending over
a total area of 72 082 740 hectares stretching between the Mkhuze River in
the South and the Pongolapoortdam in the North.
[21] Following the mapping exercise, the Commission discovered that a
large number of the land portions that were pointed out in relation to the
appellant’s land claim during the mapping exercise had not been claimed by
the appellant. Instead they were the subject of a land claim of the Gumbi
Community who had also lodged a claim for restitution with the Commission.
[22] As a result of the competing claims, the RLCC convened a meeting of
the representatives of the two communities on 2 March 2005 to discuss the
conflicting claims, more particularly with reference to the farm Avonstond.
[23] The recorded minutes of the meeting have, in item 3 thereof, a heading
‘Introductory remarks’, under which the following is recorded:
‘Walter pointed out that a claim was lodged by Myeni and Gumbi
-Properties claimed and restituted are those stated in the claim form only
-Once a claim is mapped and gazetted there are no additions allowed
-He then asked the Commissioner to take over.’
[24] The minutes continued:
‘Apart from Avonstond, there are properties mapped by Myeni which are not on the claim
form. Ms Shange asked the committee members to comment on what she had just pointed
out.
Mr Myeni responded by saying that they understand how restitution works, they are
prepared to leave out properties, not on the claim form.’
[25] In relation to this minute, Mr Walter Silaule, the deponent to the
answering affidavit on behalf of the first to fourth respondents, who was
present at the meeting states that he recalls what Mr Myeni said and meant.
He states that the Myeni community accepted that the properties not
specifically identified in the claim form, but identified in the mapping
exercise, could not legitimately be claimed. The claimant community denies
that it relinquished any land it claimed as alleged by Mr Silaule.
[26] The RLCC was satisfied that the claim was lodged in the prescribed
manner and that the requirements of s 2 of the Restitution Act had been
satisfied. The properties listed in the claim form were published in
Government Gazette Notice 1586 of 26 August 2005.
[27] An applicant who seeks final relief on motion must, in the event of a
dispute of fact arising, recognise that final relief may be granted only if the
facts averred in the applicant's affidavits which have been admitted by the
respondent, together with the facts alleged by the respondent, justify such an
order. However, where the court is of the opinion that the respondent's denials
do not raise a real, genuine or bona fide dispute of fact or are so far-fetched
or clearly untenable that the court would be justified in rejecting them merely
on the papers, it may grant final relief.4
[28] The version of Mr Silaule is supported by the minutes of the meeting
which show that representatives of the community were made aware, and
accepted that only the farms identified in the claim forms and not farms
identified in the mapping exercise would be included in the Government
Gazette. This version is not contradicted by any witness. The belated
allegations by Ms Shembe in her confirmatory affidavit put up in reply that
4 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 62 3 (A) at
634E -635C. Wightman t/a JW Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; 2008 (3)
SA 371 (SCA) at paragraph 13
she informed Mr Silaule that certain information in the respondents’
answering affidavit was incorrect are inconsistent with the minutes of the
relevant meeting and was not made in the founding papers where they would
have been subjected to scrutiny in the answering papers.
[29] The appellant alleges that Mr Silaule omitted to annex the third page of
the minutes of the meeting of 2 March 2005, which allegedly, indicates that
no resolution was taken. From the context of the minutes it appears that after
dealing with the matter of the properties omitted from the claim, the
discussion reverted to the purpose of the meeting, namely, the conflicting
claims between the Gumbi and the Myeni communities concerning the Farm
Avonstond. It is to this farm that Mr Myeni suggested a field visit so that both
communities could point out beacons to resolve the conflict.
[30] It follows that the allegations raised by the respondents have not, on
genuine and bona fide grounds, been disputed and must thus carry the day.
[31] The appellant claims that it became aware of the publication of its claim
in the Government Gazette by chance only on 8 September 2016 when its
attorney overheard a conversation about the transfer of the Farm Gumbi 2.
This assertion is not credible because its attorney was already at that time
acting for the community and was well-versed with the facts of the claim at
that time.
[32] In any event, the appellant would have become aware of the gazetting
of the properties when its other claim concerning the Overwin No 163 was
negotiated and finalised on 24 January 2007. The appellant was made to
understand that the part-settlement of their claim was phase 1 and that phase
2 dealing with the remaining two properties mentioned in the claim form,
Avonstond and Morgenstond, would be dealt with later as the owner had
objected to the claim.
[33] In Makhuva-Mathebula Community v Regional Land Claims
Commissioner, Limpopo and Another5 a review of the RLCC’s decision was
brought on the basis that the RLCC did not include the more extensive land
described in the map attached to the claim form but published the claim on
the basis of information contained in paragraph 1.1 of the claim form. The
issue was determined by reference to whether the RLCC had failed to apply
his mind when refusing to add these farms to the claim. This Court concluded
that in publishing the claim on the face value understanding that the properties
claimed were those listed in paragraph 1.1 of the claim form, the RLCC
applied his mind in accordance with the Restitution Act and acted rationally
in so doing.
[34] In Minaar NO v Regional Land Claims Commissioner for
Mpumalanga and Others,6 the decision of the RLCC to publish a notice in the
Gazette in respect of all subdivisions of Daisy Kopje farm and not confine the
publication to Portion D only was set aside on review. The LCC held that as
no claim as required by s 2(1)(e) was lodged in respect of the other portions,
the RLCC had no power to include unclaimed portions of Daisy Kopje as part
of the claimed land.
5 Makhuva-Mathebula Community v Regional Land Claims Commissioner, Limpopo and Another [2019]
ZASCA 157.
6 Minaar NO v Regional Land Claims Commissioner for Mpumalanga and Others [2006] ZALCC 12.
[35] In the present case, the RLCC relied on the accurate property
descriptions in paragraph 1.1 of the claim forms, which is a primary source of
information which is required to gazette a claim. Inkosi Myeni well knew the
area of land his community occupied when they were dispossessed. He did
not mention the additional 28 disputed properties listed in the amended notice
of motion when he completed the claim form.
[36] The RLCC applied her mind to the precise location and extent of the
land identified in the claim form as appears from the various validation reports
and the case reports which are a result of investigations regarding the history
of the communities' residence and forced removal from the land. The
appellant was afforded a procedurally fair opportunity to respond before the
publication of the notice as appears from the minutes of the meeting of 2
March 2005. The RLCC acted as a reasonable decision-maker.7
[37] That being so, the appellant has failed to establish a legally cognisable
ground of review upon which the decision under challenge could have been
set aside. It follows that the LCC correctly dismissed the community’s
application, and therefore, this appeal cannot succeed.
Order
[38] In the result the following order is made:
The appeal is dismissed with costs, such costs to include those consequent
upon the employment of two counsel.
7 Batho Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others [2004] ZACC 15; 2004 (4)
SA 490 (CC) para 44.
________________________
K MATOJANE
ACTING JUDGE OF APPEAL
Appearances
For appellant:
M Naidoo SC
Instructed by:
Maseko Mbatha Inc., Durban
Phatshoane Henney Attorney, Bloemfontein
For respondents:
A Dodson SC (with him P Naidu)
Instructed by:
State Attorney, Durban
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:
6 January 2021
Status:
Immediate
Please note that the media summary is for the benefit of the media and does
not form part of the judgment.
Silwane Community Development Trust v Regional Land Claims Commissioner,
Kwazulu-Natal and Others (900/2019 [2020] ZASCA 02 (6 January 2021).
The SCA today dismissed an appeal against the judgment of the Land Claims
Court, Randburg (LCC) dismissing a review application in respect of a decision
of the Regional Land Claims Commissioner (the RLCC) to publish a notice in
the government gazette in terms of s 11(1) of the Restitution of Land Rights Act
22 of 1994 (the Restitution Act) without including a number of farms that the
appellant contends ought to have been included.
The late Inkosi Silwane Ernest Myeni (Inkosi Myeni) lodged two restitution of
land claims for three specifically named farms with the RLCC on 4 February
1997 on behalf of the community. Notices of the claims were published in the
Government Gazette Notice 1586 of 26 August 2005.
A review of the RLCC’s decision was brought on the basis that she had wrongly
excluded 28 other farms not expressly referred to in the two claim forms in the
gazette notice. The RLCC, on the other hand, took the view that the claim forms
lodged by Inkosi Myeni were clear and precise as to the claimed farm portions
and that she acted procedurally fair before publishing the notice.
The SCA held that the RLCC had acted fairly in publishing the claims on the
basis on the information contained in the claim forms as she understood that the
properties claimed were those listed on paragraph 1.1 of the claim form. The
court found that no reviewable irregularity was established.
In the result, the appeal was dismissed with costs including the costs consequent
upon the employment of two counsel.
-END-
|
3381
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 554/2019
In the matter between:
ASSOCIATED PORTFOLIO
SOLUTIONS (PTY) LTD
FIRST APPELLANT
PENTAGON FINANCIAL SOLUTIONS
(PRETORIA) (PTY) LTD
SECOND APPELLANT
and
PIETER WILLEM BASSON
FIRST RESPONDENT
REGISTRAR OF FINANCIAL
SERVICE PROVIDERS
SECOND RESPONDENT
MOONSTONE COMPLIANCE (PTY) LTD THIRD RESPONDENT
Neutral citation: Associated Portfolio Solutions (Pty) Ltd & Another v
Basson & Others (554/2019) [2020] ZASCA 64 (12 June
2020)
Coram:
PONNAN, DAMBUZA and PLASKET JJA and
GORVEN and MATOJANE AJJA
Heard:
07 May 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 12H00 on 12 June 2020
Summary: Administrative Law – debarment of a representative and key
individual of a financial service provider under the Financial Advisory and
Intermediary Services Act 37 of 2002 an administrative action – relevant facts
established in a preceding disciplinary inquiry for misconduct may be taken
into account in resolving to debar a representative – directors of financial
service provider charged with the responsibility to debar representatives –
some measure of institutional bias present and tolerated in this mode of
regulation.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Sievers AJ, sitting as court of first instance)
The appeal as to the main application is upheld with costs, such costs,
including those of two counsel, to be paid by the first respondent.
The appeal as to the counter-application is dismissed with costs, such
costs to include those of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application and counter-application are dismissed with costs, such
costs to include those of two counsel’.
JUDGMENT
Dambuza JA (Ponnan, and Plasket JJA and Gorven and Matojane AJJA
concurring)
Introduction
[1] This appeal, with the leave of the court below, is against a judgment of
the Western Cape High Court, Cape Town (Sievers AJ) which set aside the
debarment of the first respondent, Mr Pieter Willem Basson (Mr Basson) by
the appellants and dismissed a counter-application by them, which sought a
range of declaratory orders against the second respondent, the Registrar of
Financial Services Providers (the Registrar).
Background
[2] From the early 2000s Mr Basson, was one of the four founder-
shareholders, directors and employees of the first appellant, Associated
Portfolio Solutions (Pty) Ltd) (APS), a fund management business, and the
second appellant, Pentagon Financial Solutions (Pretoria) (Pty) Ltd
(Pentagon), a financial services provider. The two businesses operated as a
quasi-partnership and Mr Basson was a ‘registered representative’ and a ‘key
individual’ in both of them under the Financial Advisory and Intermediary
Services Act 37 of 2002 (FAIS Act). 1 The other directors were Mr Cornelis
Kruger (also a key individual), Mr Harold Nimmo and Mr Jacob Van
Westhuizen Neethling.
[3] During 2016 there was a falling out between Mr Basson and his fellow
directors. In September of that year Mr Basson stopped coming to work.
Negotiations for his exit from APS and Pentagon were unsuccessful as no
agreement could be reached as to the market value of his shares. Subsequent
thereto, evidence of wrongdoing on his part was brought to the attention of
Mr Kruger. On 7 November 2016 Mr Basson was suspended from his
employment, pending an investigation into the allegations of misconduct that
had been made against him. The investigations culminated in a disciplinary
inquiry in which Mr Basson was charged with ten counts of misconduct.
1 In terms of s1 of the FAIS Act a ‘key individual’ in relation to an authorised financial services provider
means a natural person responsible for managing and overseeing the activities of the authorised financial
services provider. A ‘representative’ means any person who renders a financial service to a client for or on
behalf of the financial services provider, in terms of conditions of employment or any mandatory
agreement, , but excludes a person rendering clerical, technical, administrative, legal accounting or other
service in a subsidiary or subordinate capacity, which service –
(a) Does not require judgment on the part of the latter person; or
(b) Does not lead a client to any specific transaction in respect of a financial product in response
to general inquiries.
[4] On 9 December 2016 Mr Basson instituted proceedings against Mr
Kruger and the other directors in the high court, under s 163 of the Companies
Act 71 of 2008, alleging oppressive and unfair conduct by them. He sought
an order that they be directed to purchase his shares in the quasi-partnership
at a fair value. He alleged that their conduct, in laying unfounded misconduct
charges against him, was motivated by the desire to devalue his shares so as
to acquire them for far less than their fair value. That application was referred
to arbitration.
[5] Whilst the arbitration was pending, the disciplinary enquiry against Mr
Basson proceeded. The charges included: (a) establishing or taking steps to
establish an asset management business in competition with and in breach of
his fiduciary obligations to the quasi-partnership; (b) disclosing confidential
information to third parties with whom he had private business interests,
engaging in discussions with third parties regarding the sale of assets of the
quasi-partnership managed by him (his client book); (c) negligently
communicating false and unrealistic information about a ‘10M’ investment
program; (d) ‘purporting’ to conclude an agreement without authorisation and
without conducting due diligence, for the provision of financial services to
Germix Investments SA and Caleb Foundation; and (e) consistently using the
quasi-partnership’s resources for private and personal business interests in
conflict with his fiduciary duties.
[6] The disciplinary hearing was presided over by Mr Graham Leslie, an
advocate of the Cape Bar. At the end of the hearing Mr Basson was found
guilty of five of the charges. The chairperson recommended his dismissal. He
was of the view that each individual transgression that had been established
was, on its own, sufficiently serious to warrant Mr Basson’s dismissal. The
ruling was delivered on 28 April 2017.
[7] On 2 May 2017, the appellants’ attorneys wrote to the third respondent,
Moonstone Compliance (Pty) Ltd (Moonstone), being the appellants’
compliance officer under the FAIS Act, seeking advice on how to proceed,
now that Mr Basson had been found guilty in the disciplinary enquiry. On the
same day Moonstone advised the appellants’ attorneys that, as a result of Mr
Leslie’s ruling the appellants had ‘very little choice other than to debar [Mr]
Basson as a representative based thereon that he ha[d] contravened the FAIS
Act in a material manner and [did] not exhibit the characteristics of honesty
and integrity’.
[8] On 4 May 2017 the appellants’ attorneys forwarded to Mr Basson
notices of a directors’ meeting of both appellants that was scheduled for 17
May 2017. The notices included proposed resolutions to be considered for the
contemplated debarment of Mr Basson, consequent upon the findings made
against him in the disciplinary process. Save in one respect that is not material
for present purposes, the notices in respect of each of the appellants were
identical.2 In terms thereof, the board of each of the appellants was to consider
resolutions to: (a) remove Mr Basson from each board (resolution 1); (b)
dismiss him from his employment (resolution 2); (c) terminate a mandatory
agreement dated 18 February 2008 between Mr Basson and APS (resolution
3 – this resolution was applicable only in respect of APS); (d) debar Mr
Basson as a representative of each company in terms of s 14(1) of the FAIS
2 Save for one resolution relation to termination of an agreement dated 18 March 2008 which was not
applicable to Pentagon.
Act (resolutions 4 and 3 respectively); and (e) authorise directors to take all
steps necessary to give effect to these resolutions (resolution 5 and 4
respectively). Mr Basson was, in each notice, informed that he could ‘make a
presentation, in person or through a representative, to the meeting before the
resolutions [were] put to the vote, save that no further presentations [could]
be made in respect of resolutions 2 and 5’.3
[9] In a letter dated 17 May 2017, entitled ‘representations to board
meetings held by APS and Pentagon’, Mr Basson’s attorneys made
representations on his behalf in terms of s 71(2)(b) of the Companies Act 71
of 2008’.4 They highlighted the fact that Mr Basson did not accept the results
of the disciplinary proceedings and warned that acceptance thereof by the
boards would lead to legal action. They pointed to what they considered to be
‘material shortcomings’ in the findings of the chairperson, which included
disregarding the ulterior motives of the directors in pursuing the charges, chief
of which was to acquire his shares cheaply. They insisted that the chairperson
had erred in his consideration of the matter and urged the directors to consider
very carefully the implications of accepting the recommendation to ‘dismiss
[their] client’. They alluded to the fact that ‘[Mr Basson’s] income stream as a
professional [was] likely to be destroyed by the adoption of the recommendation to dismiss
him, and the likely accompanying decision to disbar him’, and to the fact that ‘the
damaging consequences to both the company and himself may be irreversible once the
decision to dismiss him [was] taken’.
[10] Neither Mr Basson nor his attorneys attended the meeting of 17 May
2017. The meeting proceeded and the proposed resolutions were all passed.
3 The last resolution in respect of Pentagon was resolution 4.
4 This section prescribes the procedure by which a board may remove a director.
On the same day the appellants (through Mr Kruger) wrote to Mr Basson,
informing him of the outcome of the board meetings. In relation to Resolution
4 (and 3) the letter read:
‘In light of the findings of the disciplinary inquiry, and especially the Chairman’s findings
contained in [certain specified paragraphs] Basson no longer complies with the
requirements referred to in section 13(2)(a) of the FAIS Act and/or has contravened or
failed to comply with the FAIS Act in a material manner, and accordingly the Board
resolves that Pieter Willem Basson be and is hereby prohibited from rendering any new
financial service on behalf of the Company, and his authority to act on behalf of the
Company either as a registered representative or key individual is withdrawn; that his name
be and is hereby removed from the Company’s register of representatives as contemplated
in section 14(1) of the FAIS Act, and further that the Company shall inform the registrar
in writing thereof and provide written reasons for the implementation of Basson’s
debarment as contemplated in terms of section 14(3)(a) of the FAIS Act.’ 5
[11] On the same day (17 May 2017), Mr Kruger also wrote to the registrar
of the Financial Services Board (the FSB) requesting that Mr Basson be
debarred as a representative for material contravention or non-compliance
with provisions of the FAIS Act as well as non-compliance with ‘Fit and
Proper Requirements’. The letter set out details of Mr Basson’s transgressions
and a copy of the judgment in the disciplinary enquiry was attached. In a form
5 The specified paragraphs related to the findings made by Mr Leslie on the complaints in respect of which
Mr Basson was found guilty. In complaint 4, Mr Basson was found to have sent an email dated 22 September
2016 from his work email address to a Mr Richard Turner advising him that the returns on a ‘10M’ investment
program were “. . . 300% in 30 days, and then about 50% per week from 40 weeks”, and that it was a very
good program”. The chairperson found that, as an experienced financial services representative he should
have been extremely careful before accepting the legitimacy of the 10M programme. His unqualified
endorsement of it amounted to gross negligence which posed a risk to his employer’s reputation and business.
In relation to complaint 5, Mr Basson was found to have concluded an agreement between himself, APS,
Germix Investments SA and C.A. L.E.B Foundation without the necessary authority.
In relation to complaint 8, he was found to have repeatedly failed to comply with internal compliance
procedures and statutory obligations relating to the completion of client documents.
In relation to complaint 9, he was found to have caused the appellants’ names to be used in what may well
have been illicit diamond trade dealings with Congolese nationals, which dealings had nothing to do with the
appellants.
entitled ‘Notification of Debarment in terms of Section 14 of the FAIS Act’
completed in respect of Mr Basson, the appellants were described as ‘the
debarring FSP’. On 2 June 2017, the FSB notified the appellants’ attorneys
that its register had been updated on the previous day and that Mr Basson’s
name appeared on it as a person who had been debarred.
[12] On 6 September 2017 Mr Basson launched review proceedings in the
high court seeking that the decision taken by the appellants to debar him be
set aside. The grounds for the review were that, firstly, he had not been
afforded a reasonable opportunity to make representations and to call
witnesses before the debarment decision was taken. Aligned to that was a
contention that the compliance authority, Moonstone, recommended his
debarment without having been involved in the investigations and the
disciplinary proceedings, and that it made its recommendations to the
appellants based purely on the results of the disciplinary proceedings.
Therefore the debarment recommendation was tainted by procedural
unfairness. Secondly, the majority directors who passed the resolutions had
pre-judged the issues; the decision was tainted by ulterior motive; and they
had acted as judges in their own case, because they had given evidence at the
disciplinary hearing.
[13] In the meantime, Mr Basson had, on 23 August 2017, prior to
consideration of his review application by the high court, been reappointed as
a representative by Rebalance Fund Managers (Pty) Ltd (Rebalance). In
addition to opposing the review application, the appellants brought a counter-
application, in which they sought the joinder of Rebalance and the review of
the decision by Rebalance to appoint Mr Basson as its representative. As
against the Registrar, the appellants sought a range of declaratory orders to
the effect that Mr Basson’s debarment ought not to have been lifted without
the Registrar first satisfying herself that he complied with the necessary fit
and proper requirements of FAIS and was honest and had integrity.
[14] The appellants also sought a declarator that Mr Basson would only be
eligible for re-appointment after the lapse of 12 months from the date of his
debarment. It was contended that his re-appointment was in contravention of
the regulatory framework which governed re-appointments.6 In response, the
Registrar explained that Mr Basson ‘[was] currently not a representative of
Rebalance or any FSP’. Rebalance had since removed Mr Basson as its
representative. In a further affidavit the appellants alleged that Mr Basson had
once more been appointed by another FSP (financial service provider) -
Vision Risk and Investment Consultants (Pty) Ltd. The high court dismissed
the counter-application on the basis that the issues raised therein had become
moot.
[15] At the time of Mr Basson’s re-appointment by Rebalance the guidelines
issued by the FSB for re-appointment of representatives provided that:
‘the onus rests on the reappointing provider . . . as a first step to convince the [FSB] on a
balance of probabilities that there has been a genuine, complete and permanent reformation
on the part of the representative and that the defects and character, attitude or other aspects
that led to the representative being considered not fit and proper, no longer exist . . . it must
be clear when the registrar peruses the documents supplied by the provider, that the latter
is aware of the details of the applicant’s transgression and the provider is satisfied that the
representative will not commit the offence again’.
6 Titled ‘Determination of Requirements for Reappointment of Debarred Representatives, 2003’, published
in Board Notice 82 of Government Gazette 25299.
[16] Subsequent to the removal of Mr Basson as a representative for Vision
Risk, the Registrar withdrew the reappointment guidance notice, which was
in force at the time of Mr Basson’s re-appointment and on which the
appellants had largely relied in their counter-application. A fresh guidance
notice was issued in which the Registrar advised that it played a ‘relatively
minor role’ in supervising entry into and debarment from the profession,
‘mainly relating to the updating of the central register of representatives’.
[17] In setting aside Mr Basson’s debarment and dismissing the appellants’
counter-application, the high court found that because the disciplinary
proceedings were regulated by provisions of the Labour Relations Act 66 of
1995, the results thereof could not inform the debarment proceedings as the
latter fell under the FAIS Act. The court was of the view that a separate
‘debarment inquiry’ should have been held under s14(1) of the FAIS Act ‘to
determine whether Mr Basson complied with the “fit and proper”
requirements contemplated in s 13 of [that] Act and published in regulations
under section 6A’. It also found that the responsibility lay exclusively with
the appointing FSP (Rebalance) to ensure that the pre-requisites were met for
Mr Basson’s re-appointment and upheld the argument by the Registrar that
the relief claimed in the counter-application was moot.
[18] On appeal, the appellants took issue with the key finding of the high
court – that the disciplinary and debarment processes were separate and
distinct and that the earlier process could not inform the later one. It was
submitted on their behalf that on a finding that Mr Basson lacked integrity and
honesty, the appellants had a duty to debar him. The appellants also persisted
in their appeal against the dismissal of their counter-application because of
Mr Basson’s further appointment by Vision Risk.
[19] Mr Basson also persisted in his procedural unfairness contention, re-
asserting that he was not afforded the opportunity to make representations and
to call witnesses prior to his debarment. He also insisted that his debarment
was fatally flawed as a result of bias on the part of his co-directors.
Debarment and administrative decision
[20] An overview of the relevant sections of the FAIS Act is helpful for an
understanding of the context and the relationship between the parties. The
purpose of the Act is, according to its long title, to ‘regulate the rendering of
certain financial advisory and intermediary services to clients’. It does so by
means of an administrative system of licencing, controlled by the FSB under
the management of its Registrar, and largely thereafter, by a system of self-
regulation in which licenced FSPs ensure that their representatives and key
individuals are fit and proper persons to be entrusted with providing financial
advice to the investing public. 7
[21] In terms of s 7, the FSP may not provide financial services unless it is
licenced in terms of s 8. Neither may a representative of a FSP do so unless
he or she has been appointed as such by an ‘authorised’ or licenced FSP in
terms of s 13. FSPs are required to keep registers of their representatives and
key individuals.8
7 See the FAIS Act, ss7, 8 and 13.
8 In terms of s 1 ‘an ‘authorised service provider’, or provider means a person who has been granted an
authorisation as a financial service provider by the issue to that person of a licence in terms of section 8’.
[22] The Act decrees a close supervisory responsibility by FSPs over their
representatives. In terms of s 13(1)(b)(i), no person may act as a representative
of an authorised FSP unless, prior to the rendering of a financial service, he
or she provides to clients confirmation certified by the FSP, that the FSP
accepts responsibility for the activities of the representative performed within
the scope of or within the course of implementing a service contract with the
FSP. Section 13(iA) prescribes that a representative must meet the ‘fit and
proper’ requirement. In terms of s 13(2)(a) an authorised FSP must, at all
times, be satisfied that its representatives and key individuals are competent
to act and that they comply with the fit and proper requirement. FSPs are
charged with the duty to take reasonable steps to ensure that representatives
comply with any applicable code of conduct and applicable laws in the
conduct of business.
[23] Under s 14 of the FAIS, the FSPs bear the duty to debar representatives,
who do not meet the fit and proper requirement. Section 14(1)(a) provides that
an FSP must debar its representative and key individual if satisfied that he or
she (the representative and key individual) does not meet, or no longer
complies with the requirements set in s 13(2)(a), or has contravened any
provision of the Act in a material way. Mr Basson’s debarment was effected
in terms of s 14(1) of the Act.
[24] Once debarment has been effected, the FSP must immediately
withdraw any authority that may still exist for the person to act on its behalf,
remove the name of the debarred person from the its register of
representatives, immediately take steps to ensure that the debarment does not
prejudice the interests of clients, notify the FSB of the debarment within five
days, and provide the authority with the reasons for the disbarment. A
(previously) debarred person may only carry on business or render financial
services to clients or act as a representative or a key individual of an authorised
provider if he or she complies with the requirement set in s 13(1)(b)(ii) of the
FAIS Act.
[25] The appellants, being private juristic entities, exercised their authority
under s 14(1) of the FAIS Act to debar Mr Basson. In doing so they acted in
furtherance of the objects of the FAIS Act – and in the public interest. They
exercised public power in terms of that Act. The debarment had an adverse
impact and direct, external legal effect on his rights.9 It was not in dispute that
the debarment of Mr Basson was an administrative action and that it was
therefore reviewable under s 6(2) of the Promotion of Administrative Justice
Act 3 of 2000 (PAJA). Section 6(2) of the PAJA enumerates the grounds for
review of administrative action. In terms of s 6(2)(c) a court may set aside
administrative action if it ‘was procedurally unfair’, whilst s 6(2)(a)(iii)
provides that administrative action may be set aside if the administrator who
took it ‘was biased or reasonably suspected of bias’.
Procedural fairness
[26] Section 33 of the Constitution provides that everyone has a right to
administrative action that is lawful, reasonable and procedurally fair. Section
3(1)(a) of PAJA incorporates the procedural fairness requirement by
9 In terms of s 1 of PAJA administrative action as any decision taken or any failure to take a decision by:
an organ of state when:
exercising a power in terms of the Constitution or a provincial constitution; or
exercising a public power or performing a public function in terms of any legislation; or
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 a person and
which has a direct, external legal effect.
providing that ‘administrative action which materially and adversely affects
the rights and legitimate expectations of any person must be procedurally
fair’. What is fair in the particular circumstances, will depend on the context
of each case.10 But the core of the right comprises the giving to the affected
person of ‘adequate notice of the nature and purpose of the proposed
administrative action’; a ‘reasonable opportunity to make representations’;
and a ‘clear statement of the administrative action’ (section 3(2)(b) of PAJA).
[27] The procedural fairness requirement is, again, ordained in ss 14(2) and
(3) of the FAIS Act wherein the procedure for debarment is prescribed as
follows:
‘(2)
(a)
Before effecting a debarment in terms of subsection (1), the provider must
ensure that the debarment process is lawful, reasonable and procedurally fair.
(b)
If a provider is unable to locate a person in order to deliver a document or
information under subsection (3), after taking all reasonable steps to do so,
including dissemination through electronic means where possible, delivering the
document or information to the person's last known e-mail or physical business or
residential address will be sufficient.
(3) A financial services provider must-
(a)
before debarring a person-
(i)
give adequate notice in writing to the person stating its intention to debar
the person, the grounds and reasons for the debarment, and any terms
attached to the debarment, including, in relation to unconcluded business,
any measures stipulated for the protection of the interests of clients;
(ii)
provide the person with a copy of the financial services provider's written
policy and procedure governing the debarment process; and
(iii)
give the person a reasonable opportunity to make a submission in response;
10 Section 3(2)(a) of PAJA. See also Chairman, Board on Tariffs and Trade v Brenco Inc 2001 (4) SA 511
(SCA) at para 19.
(b)
consider any response provided in terms of paragraph (a)(iii), and then take a
decision in terms of subsection (1); and
(c)
immediately notify the person in writing of-
(i)
the financial services provider's decision;
(ii)
the persons' rights in terms of Chapter 15 of the Financial Sector Regulation
Act; and
(iii)
any formal requirements in respect of proceedings for the reconsideration
of the decision by the Tribunal.’
[28] Against the factual background and legislative framework, it becomes
readily apparent that the contention that Mr Basson was not given a fair
opportunity to make representations cannot be supported. The letter addressed
by the appellants’ attorneys to Mr Basson (dated 4 May 2017 - almost two
weeks prior to the date of the meeting) and the notices attached thereto were
an express invitation to Mr Basson to attend the meeting of the appellants’
boards on 17 May 2014. He was expressly invited to make representations in
relation to the proposed resolutions.11 Mr Basson’s attention (and that of his
attorneys) was drawn pertinently to the findings of the chairperson in the
disciplinary process and the effect those had on his position as a financial
service provider. More particularly in relation to proposed resolutions 4 and 3
respectively the notice referred to specific portions of the chairperson’s
findings in his judgment12 and warned that:
‘Basson no longer complies with the requirements referred to in section 13(2)(a) of the
FAIS Act and/or has contravened or failed to comply with the FAIS Act in a material
manner, and accordingly the Board resolves as follows:
“ that Basson be and is hereby prohibited from rendering any new financial service on
behalf of APS, and his authority to act on behalf of APS either as a registered
11 Except Resolutions 2 and 5 (and 4 respectively) in terms of which the directors would be authorised to
execute the directives of the resolutions.
12 See para 10 supra.
representative or key individual is withdrawn; that his name be and is hereby removed
from APS’s register of representatives as contemplated in section 14(1) of the FAIS Act,
and further that APS shall inform the registrar in writing thereof and provide written
reasons for the implementation of Basson’s debarment as contemplated of section 14(3)(a)
of the FAIS Act”.
[29] Not only was Mr Basson apprised, through the notices, of the
implications of the findings made against him in the disciplinary process, but
it is clear from the record that he was independently aware of the significance
thereof. In his representations (dated 17 May 2017), his attorneys wrote that
‘his income as a professional is likely to be destroyed by the adoption of the
recommendation to dismiss him and the likely accompanying decision to
disbar him’. Significantly, Mr Basson responded pertinently to the invitation
to make representations but did not address the core question of debarment –
except in passing. He can hardly complain of procedural unfairness when the
resolutions were passed after he had chosen not to address that core issue.
[30] The fact that in the disciplinary hearing Mr Basson was not required to
address issues of his honesty and integrity or whether he was a fit and proper
person, weighed heavily with the high court, leading to the finding that there
was a failure to afford him an opportunity to make representations. Whilst it
is correct that the disciplinary enquiry was not directly concerned with
whether Mr Basson was a fit and proper person to represent APS and
Pentagon, the disciplinary inquiry afforded him the opportunity to respond to
the transgressions under consideration, the nature of which pertinently
implicated his honesty and integrity.13
13 In terms of s 6A(2) of the FAIS Act ‘Fit and proper requirement may include, but are not limited to,
appropriate standards relating to –
(a) personal character qualities of honesty and integrity;
[31] The argument that a ‘debarment factual inquiry’ should have been held
in compliance with procedural fairness prescripts is unsustainable. It was clear
in the notices of 4 July 2017 that the outcome of disciplinary hearing was the
factual basis for the meetings and the proposed resolutions. The facts
established in the disciplinary proceedings impacted directly on Mr Basson’s
honesty and integrity, raising the issue squarely whether he met the crucial
requirement of a fit and proper person to be a representative and key
individual under s 8(1) of the FAIS Act.14 Any further inquiry would have
been absurd and unnecessary, particularly as it could hardly be accepted that
whilst not a fit and proper person qua employee, he could nonetheless be a fit
and proper person qua representative. To insist on a further inquiry in these
circumstances would be to place form above substance.
[32] At the hearing of the appeal, Counsel for Mr Basson accepted that the
disciplinary hearing could indeed have unearthed facts that enjoined the
appellants to exercise their authority under the FAIS Act. But even then, it
was submitted (without reference to any authority), they could only take into
account common cause facts. Allegations that were in dispute at the
disciplinary hearing had to be adjudicated afresh, so it was submitted. The
argument rested on an untenable distinction between the appellants qua
employers and qua FSPs. And, contrary to the submission, the facts on which
the debarment was founded had already been established in the disciplinary
(b) competence, including-
(i)
experience;
(ii)
qualifications; and
(iii)
knowledge tested through examinations determined by the registrar;
(iv)
operational ability
(v)
financial soundness; and
(vi)
continuous professional development’.
14 In the representations Mr Basson threatened to challenge any decision taken on the basis of the
chairman’s finding. However no challenge was pending at the time of the hearing of the appeal.
proceedings. Those facts had been established after a full enquiry. Mr Basson
had participated fully in the enquiry. He had every opportunity to test the
allegations levelled against him. By the conclusion of the enquiry many
serious allegations that impacted substantially on Mr Basson’s honesty and
integrity were either common cause or undisputed. None of that could
subsequently have changed.
Was the debarment decision free of bias?
[33] In this regard the argument on behalf of Mr Basson was threefold – a)
that the decision was motivated by an ulterior motive, b) that the majority
shareholders had pre-judged the matter, and c) that they had acted as judges
in their own case. The high court held that the majority of the directors of APS
and Pentagon pre-judged Mr Basson’s debarment because that decision was
based on the findings made by the chairperson and Moonstone’s advice. That
court also found that the directors were biased because they testified in the
litigation initiated by Mr Basson regarding his exit from the companies and
the fair value of his shares.
[34] Mr Kruger denied that the resolutions were passed for the ulterior
purpose of rendering Mr Basson’s shares worthless. His denial was a detailed
explanation of precisely how the resolutions came to be proposed and why
they were passed. There can be no doubt that there was a strong rational
connection between the facts that were found to have been established in the
disciplinary enquiry and the decision to debar Mr Basson. The fact that a
resolution for debarment was proposed prior to the meeting of the 17 May
2017 was consistent and in compliance with the provisions of s 14(1) of the
FAIS Act. Once the findings impacting on Mr Basson’s honesty and integrity
were made by the chairperson the appellants were obliged to inquire into
whether or why he should not be debarred. The duty fell on the appellants and
no one else. Section 14(1)(a) compels a provider to debar a representative or
a key individual who has misconducted him or herself, if he or she is no longer
a fit and proper person to be trusted to give financial advice to members of the
public. Mr Basson’s argument that the decision should have been referred or
left for the Registrar to make is untenable: the Registrar had no power to
decide on Mr Basson’s debarment. So too was the submission that it was
improper for the appellants to sit in judgment of Mr Basson in the middle of
a pending dispute about the valuation of his shares. The appellants were the
only persons empowered by the FAIS Act to decide whether Mr Basson
should be debarred.
[35] Curiously the objection based on bias was never raised prior to the
debarment. In any event, nothing on the record supports the argument that the
debarment was made for reasons other than those prescribed in the FAIS Act.
The very purpose of giving Mr Basson notice of the contemplated resolutions
was to afford him the opportunity to make representations. To suggest that
this amounted to pre-judgment is unsustainable, otherwise every
administrative decision requiring prior hearing would be susceptible to being
set aside on account of pre-judgment. Moreover, the FAIS Act vests the power
to debar in persons who inevitably would have a history to speak of – and be
aware of the misdeeds of – what may be described as an errant representative.
This method of regulation thus accepts that some institutional bias may be
present and will be tolerated in respect of debarment proceedings in terms of
the FAIS Act.
The counter-application
[36] The appellants persisted in their appeal against the dismissal of their
counter-application on the basis that although Rebalance had revoked Mr
Basson’s registration as its representative he was, once more, registered as a
representative for Vision Risk. It was also submitted that there was evidence
of laxity in the supervision, by the Registrar, of reappointment of formerly
debarred representatives. Much reliance was placed on Financial Services
Board v Barthram and Another15 in which this court held that debarment of a
representative in terms of s 14(1) of the FAIS Act becomes effective on an
industry-wide scale because of the risk posed to the public by a debarred
person who does not meet the requirements of honesty and integrity.
[37] However, as far back as December 2017, it was stated on behalf of the
FSB that Mr Basson was not registered as a representative of any FSP. There
was also an explanation that Mr Basson’s online appointment by Rebalance
resulted from compliance with a court order in terms of which the FSB was
ordered to remove publication of his debarment from its website. This resulted
in an inadvertent disabling of a search function for debarred representatives
on the website, allowing the uploading of Mr Basson’s appointment by
Rebalance. In this sense his appointment by Rebalance was never a
‘reappointment’, but no more than an administrative error.
[38] In this context the counter-application had indeed become academic.
There had been no reviewable decision by the FSB. Neither could the FSB
15 Financial Services Board v Barthram and Another [2015] 3 All SA 665 (SCA)
‘take any steps as may be required in terms of s 14A (now s 153) of the FAIS
Act in regard to [Mr Basson]’.16
The order
[39] Consequently, it is ordered that:
The appeal as to the main application is upheld with costs, such costs,
including those of two counsel, to be paid by the first respondent.
The appeal as to the counter-application is dismissed with costs, such
costs to include those of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application and counter-application are dismissed with costs, such
costs to include those of two counsel’.
________________________
N DAMBUZA
JUDGE OF APPEAL
16 This was the alternative order sought by the appellants in the alternative to remittal of the reappointment
for reconsideration. Section 153 of The Financial Sector Regulation Act No 9 of 1017 also regulates
debarment under the authority of the Reserve Bank.
Appearances
For appellants:
Adv Kirk-Cohen SC with him Adv Mark Greig
Instructed by:
Webber Wentzel Attorneys, Cape Town
Symington & De Kok Attorneys, Bloemfontein
For 1st Respondent:
Adv Van Riet SC with him Adv Dorsten
Instructed by:
De Waal Grobbelaar Fischer Attorneys, Cape Town
JL Jordaan Attorneys, Bloemfontein.
For 2nd Respondent:
Adv Pillay SC
Instructed by
:
Bisset Boehmcke Mcblain, Cape Town
Webbers, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Associated Portfolio Solutions (Pty) Ltd & Another v Basson & Others
(554/2019) [2020] ZASCA 64 (12 June 2020)
From:
The Registrar, Supreme Court of Appeal
Date:
12 June 2020
Status:
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Today the Supreme Court of Appeal (SCA) upheld an appeal by two appellants, Associated Portfolio
Solutions Pty Ltd and Pentagon Financial Solutions (Pretoria) Pty Ltd against the first respondent Pieter
Willem Basson. During May 2017 the two companies, being financial services providers, dismissed the
first respondent, Pieter Basson from his position as an employee and director in both companies,
following a disciplinary process in terms of which he was found guilty of misconduct involving acts of
dishonesty which impacted on his integrity. They then debarred him as their representative and key
individual under the Financial Advisory and Intermediary Services Act of 2002 (The FAIS Act).
Basson then successfully challenged his debarment in the Western Cape High Court, Cape Town. The
high court found that the appellant should not have relied on the outcome of the disciplinary process in
debarring Basson; they should have held another inquiry in which there would have been another
inquiry into the transgressions which formed the basis of his debarment. That court also found that the
debarment process was vitiated by bias as Basson’s co-directors in the appellant companies, who took
the decisions to debar him, had prejudged the issues, were driven by ulterior motive as they were locked
in a dispute with Bassson about the value of his shares in the companies, and had testified against him
in the disciplinary hearing,
In upholding the appeal against the judgment of the high court, the SCA held that the facts established
in a disciplinary hearing may be taken into account in a debarment process. In this case Basson had
been afforded opportunity to, and did make representations prior to the debarment meeting. Further, in
terms of section 14(1) of the FAIS Act the appellants, as financial services providers must debar a
representative who does not meet the requirement of a ‘fit and proper’ person as prescribed in the Act.
Once Basson was found guilty of acts of dishonesty which impacted on his integrity, the appellants had
a duty to debar him. The Registrar of the Financial Services Board had no basis, in the circumstances,
to debar Basson.
The SCA also dismissed an appeal by the appellants against the dismissal of their counter-application
by the high court. In that counter-application the applicants had sought a declaratory order that Basson
would only be legible for re-appointment 12 months from the date of his debarment. The SCA held that
although subsequent to his debarment Basson had been erroneously appointed by another financial
services provider, that appointment had since been withdrawn and that issue had become academic.
|
95
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 781/2016
In the matter between:
TRANSALLOYS (PTY) LTD
APPELLANT
and
MINERAL-LOY (PTY) LTD
RESPONDENT
Neutral Citation: Transalloys v Mineral-Loy (781/2016) [2017] ZASCA 95
(15 June 2017)
Coram:
Navsa, Theron, Wallis, Petse and Zondi JJA
Heard:
11 May 2017
Delivered:
15 June 2017
Summary: Requirements for res judicata and issue estoppel: When
appropriate to separate issues.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from Gauteng Division, Pretoria, of the High Court, (Janse van
Nieuwenhuizen J sitting as court of first instance):
The order of the high court is set aside and replaced with the following
order:
„1
The replication of res judicata is upheld and paras 9.2 to 9.4, 17.2 and
22.2.1 of the amended plea are struck out.
The second defendant is ordered to pay costs of the separate
determination of the issues raised by the replication.‟
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
Zondi JA (Navsa, Theron, Wallis and Petse JJA concurring):
Introduction
[1] The respondent, Mineral-Loy (Pty) Ltd, instituted an action against
Highveld Steel and Vanadium Corporation Limited (Highveld) and the
appellant, Transalloys (Pty) Ltd, as first and second defendants respectively,
in the Gauteng Division, Pretoria, of the High Court, claiming payment of
commission due to it for services rendered on behalf of the appellant pursuant
to a distribution and service agreement allegedly concluded by the parties.
The respondent based its claim on two invoices for August 2008 and
September 2008. It also claimed damages for the loss of profit allegedly
resulting from the repudiation of the distribution and service agreement.
Highveld and the appellant disputed liability. When the matter came before
Fabricius J on 14 March 2013 in the court below, the parties sought and
obtained an order that 27 issues, inter alia, relating to the existence of the
agreement, its precise terms and conditions and its repudiation be determined
separately before any other issues.
[2] In due course Bertelsmann J heard the separated issues and on 3
June 2013 delivered a judgment and determined them in favour of the
respondent. Following upon Bertelsmann J‟s judgment the respondent
amended its particulars of claim, inter alia, by relying on new breaches of the
distribution and service agreement and by increasing the quantum of its claim
for damages.
[3] In turn, the appellant amended its plea by pleading that on or about 21
December 2006 the parties varied the terms of the agreement. The appellant
alleged that in terms of the agreement as varied the respondent had to meet
certain contractual prerequisites to qualify for the payment of commission.
The appellant contended further that the respondent failed to meet those
prerequisites and that it was therefore not entitled to be paid commission. In
the alternative, the appellant alleged that the respondent had waived its rights
under the agreement and was therefore not entitled to be paid any
commission.
[4] The respondent replicated and pleaded that the issues sought to be
introduced by means of the amended plea were res judicata. It contended that
the appellant should be precluded from raising and relying on those issues.
[5] At the hearing of this matter we were advised by counsel that Janse
van Nieuwenhuizen J had on 14 July 2016, and by agreement between the
parties, granted an order that the special plea of res judicata be adjudicated
separately, before any other issues. Janse van Nieuwenhuizen J made no
formal ruling to that effect, but the matter proceeded in accordance with the
agreement and ultimately, she upheld the respondent‟s special plea of res
judicata with costs. The appellant appeals against that judgment with leave of
the court below.
[6] Before dealing with the merits of the appeal, it is necessary to make a
few remarks about separating issues. The purpose of rule 33(4) of the
Uniform Rules of Court - entitling a court to try issues separately in
appropriate circumstances - is to facilitate the convenient and expeditious
disposal of litigation. But that result is not always achieved. It may not be
appropriate to deal with the matter on separated basis where the issues are
inextricably linked and not discrete. This court in Denel (Edms) Bpk v Vorster
2004 (4) SA 481 (SCA) para 3 held that even where the issues are discrete,
the expeditious disposal of the litigation is often best achieved by ventilating
all the issues at one hearing, particularly where there is more than one issue
that might be readily dispositive of the proceedings. In other words, careful
thought must be given to the anticipated course of the litigation as a whole,
before a decision to separate the issues is taken. The trial court must be
satisfied that it is proper to order a separation as it has a duty to ensure that
the issues to be tried are clearly circumscribed with clarity and precision, so
as to avoid confusion. These guiding principles were not observed when a
separation order was sought and obtained in this matter.
[7] Careful thought was not given to the anticipated course of litigation as
a whole before on each occasion a decision to separate the issues was taken.
The issues have been adjudicated on a separated basis twice in this matter
resulting in a delay in the determination of the real issues. The history of
litigation in this matter makes it clear that separation was ordered without first
ensuring that the issues to be tried were clearly circumscribed. That was
particularly the case with the separation order on the first occasion, which
purported to state 27 separate issues for determination and led Bertelsmann J
to issue an order declaring that: „Plaintiff succeeds against the second
defendant on every issue identified in [the separation order]‟. The
indeterminate nature of that order led to much of the confusion in the present
proceedings.
[8] Back to the merits of this appeal, the question is whether a replication
of res judicata was rightly upheld. In other words, the broad question is
whether all the issues raised in the appellant‟s amended plea are the same as
those that were before and finally adjudicated by Bertelsmann J on 3 June
2013. In this regard the pleadings and the judgment of Bertelsmann J must be
carefully analysed.
Original claim
[9] The dispute between the parties has its genesis in the distribution
agreement the respondent concluded with Highveld, the appellant‟s
predecessor, in October 1985 and amended in October 1994. A dispute arose
between the parties regarding payments allegedly due to the respondent
under the agreement. That led to the institution of the action against Highveld.
[10] The respondent‟s original claim had two components; one for the
payment of two invoices issued in August 2008 and September 2008 for
commissions in the amount of R168 712.56 and R114 316.69 respectively
(invoice claims). The other was for damages in the sum of R1 195 403.76
representing the respondent‟s loss of profit for a 12 month period as a result
of Highveld‟s repudiation of the agreement and alleged failure to give
reasonable notice of termination (damages claim).
[11] The respondent‟s cause of action was based on the terms and
conditions of the distribution agreement and the assignment of that agreement
by Highveld to the appellant. It pleaded as follows:
11.1. The respondent alleged that it was appointed by Highveld as its sole
distributor of ferromanganese, and later silico-manganese, in the Republic of
South Africa and would purchase such products from Highveld and on-sell the
products at a profit to various customers.
11.2. Certain customers were excluded and Highveld would supply such
excluded customers directly with the products. The respondent alleged that it
was expected to visit the excluded customers and do market surveys and
other services for Highveld in respect of such excluded customers and that
Highveld agreed to pay the respondent a commission on all Highveld‟s sales
to them.
11.3. Highveld would on a monthly basis furnish the respondent with values
of sales of ferromanganese by Highveld to excluded customers and of
commission payable to the respondent to enable the respondent to invoice
Highveld.
11.4. The respondent further alleged that it invoiced the appellant for
commission on sales effected in August 2008 and September 2008 and that
the appellant refused to pay such invoices.
11.5. Highveld sold the business in question to the appellant and assigned
its rights and obligations under the agreement to the appellant with effect from
either 1 July 2007 or April 2008, after which latter date the respondent
invoiced the appellant for its commission.
11.6. As regards the claim for damages for loss of profit, the respondent
alleged that after the agreement was assigned to the appellant, the appellant
in repudiation of the agreement refused to furnish the respondent with
monthly values of sales of the products sold by the appellant or of the amount
of commission payable to the respondent.
[12] Highveld and the appellant defended the action. Not only did they deny
liability to the respondent, but they disputed the terms of the agreement as
pleaded by the respondent. When the matter came before Fabricius J in the
court below, the parties agreed on the 27 issues upon which the court hearing
the matter would be required to adjudicate. In the main, the separated issues
related to the existence of the agreement on which the respondent relied; its
precise terms; whether during the months of May to September 2008 the
respondent rendered the distribution and support services in accordance with
the agreement; whether the appellant failed to make payment of the
commission for the months of August and September 2008; whether it was
repudiated and whether the rights and obligations of Highveld under and in
terms of the agreement were assigned to the appellant.
[13] The separated issues went on trial before Bertelsmann J and he
determined them in favour of the respondent. In short, the effect of the
findings on the separated issues was that the appellant had assumed the
obligations of Highveld in terms of the 1985 agreement as amended in 1994;
and its refusal to provide calculations to determine commission due and to
make payment, constituted repudiation.
[14] The respondent and Highveld subsequently concluded a settlement
agreement and the respondent withdrew its claims against Highveld. With that
Highveld fell out of the picture.
The amended claim
[15] During the trial before Bertelsmann J it became apparent to the
respondent that the appellant and/or Highveld had sold the relevant products
to customers who were not excluded customers in terms of the distribution
agreement and to whom only the respondent was entitled to sell such
products. Furthermore the respondent became aware that the appellant
and/or Highveld had during the period July 2007 to 30 September 2008
effected sales to customers on the excluded list without disclosing the values
of those sales and the amount of commission payable to the respondent.
Arising from these facts, the respondent amended its particulars of claim.
[16] In the amended particulars of claim the respondent retained its claim
for payment of the commission on the two invoices it issued to the appellant in
August 2008 and September 2008. What was amended was the following:
16.1. The amount claimed for damages consequent upon the repudiation of
the distribution agreement was increased from R1 195 403.76 to R5 237 121
on the basis that the average amount of the monthly invoices issued by the
respondent during the 12 month period preceding the repudiation was
R436 426.75 and not R99 616.98 as initially averred.
16.2. Two further claims for damages due to the breach of the distribution
agreement were introduced, namely:
16.2.1
A claim for damages for loss of profit in the amount of
R15 071 485.04 arising from sales of the relevant products to Afro Mineral
Trading AG (AMT); a non-excluded customer, in terms of the tolling
agreement (AMT claim); and
16.2.2
A claim for damages for loss of profit of 5 per cent on sales and
distribution by the appellant of silico-manganese and ferro-manganese to non-
excluded customers during the period July 2007 to 30 September 2008 and a
claim of 2 per cent commission on sales and distribution of ferro-manganese
effected by the appellant to customers on the excluded list (undisclosed
sales). The amount claimed was R5 093 663.
Appellant’s amended plea
[17] In response to the respondent‟s amended particulars of claim the
appellant amended its plea by pleading in para 9.2 that the distribution
agreement was varied in terms of a memorandum of 21 December 2006
(variation defence), alternatively that the respondent waived its rights under
the distribution agreement (waiver defence). The appellant contended in para
17 of its amended plea that the respondent was not entitled to be paid
commission on the ground that in breach of its obligations in terms of the
agreement as varied, it inter alia, failed to submit valid claims for commission
in respect of the excluded customers; procure orders with a referral number
issued by Highveld and/or the appellant; and submit monthly visitation reports.
This defence related only to the claim on the two invoices and not to the
original damages claim based on the repudiation of the distribution
agreement.
[18] The allegations underlying the appellant‟s variation defence are
pleaded in para 9.3 of its amended plea as follows:
18.1. The respondent was appointed as Highveld‟s agent for local sales;
18.2. Highveld would pay to the respondent a commission of 2 per cent for
sales to the excluded customers;
18.3. Any clients of Highveld visited by the respondent would be issued with
a referral number to be used when the client concerned placed an order with
Highveld;
18.4. Orders placed with Highveld without a referral number would not be
included for commission payable to the respondent;
18.5. The respondent was obliged to submit a monthly visitation report to
Highveld and/or the appellant detailing the clients visited during the month
with the relevant referral number that had been issued;
18.6. For market development, the respondent would consult with Highveld
prior to visiting a new client to ensure that the client was not already a direct
client of Highveld and the appellant.
[19] As regards the respondent‟s AMT claim, the appellant in para 22 of its
amended plea denied that the respondent was entitled to be paid the
commission for the sales to AMT. In addition, the appellant alleged that AMT
was registered in Switzerland, that sales to it would have been foreign sales
and that it was not a potential customer that the respondent would have
approached.
[20] The appellant‟s waiver defence, which is in the alternative to what is
pleaded in paras 9.2 and 9.3, is set out in para 9.4 of its amended plea. The
appellant contended that, whilst fully aware of its rights under the distribution
agreement, as amended in December 2006 and at all times thereafter, the
respondent waived its rights to obligations by Highveld and/or the appellant in
terms of the distribution agreement, inter alia, by:
20.1. receiving the memorandum;
20.2. not challenging and/or disputing the contents of the memorandum; and
20.3. conducting itself in a manner that was consistent only with having
accepted the terms and obligations as contained in the memorandum.
[21] This gave rise to a replication by the respondent that in light of the
earlier judgment by Bertelsmann J, the appellant was precluded from relying
on variation, alternatively waiver, by the exceptio rei judicata. As alluded to
above, this contention was upheld by Janse van Nieuwenhuizen J. The issue
on appeal is whether Janse van Nieuwenhuizen J was correct. The parties
agreed that the matter concerns the application of the extended res judicata in
the form of issue estoppel.
[22] For res judicata to operate it must be shown that the earlier judgment
relied upon was a final judgment, and that there must be identity of parties
and of the subject-matter in the former and in the present litigation. This court
in Prinsloo NO & others v Goldex 15 (Pty) Ltd & another [2012] ZASCA 28;
2014 (5) SA 297 (SCA) described the res judicata and the issue estoppel as
follows:
„[10]
The expression “res iudicata” literally means that the matter has already been
decided. The gist of the plea is that the matter or question raised by the other side
had been finally adjudicated upon in proceedings between the parties and that it
therefore cannot be raised again. According to Voet 42.1.1, the exceptio was
available at common law if it were shown that the judgment in the earlier case was
given in a dispute between the same parties, for the same relief on the same ground
or on the same cause (idem actor, idem res et eadem causa petendi) (see
eg National Sorghum Breweries Ltd (t/a Vivo African Breweries) v International
Liquor Distributors (Pty) Ltd 2001 (2) SA 232 (SCA) ([2001] 1 All SA 417) at 239F – H
and the cases there cited). In time the requirements were, however, relaxed in
situations which gave rise to what became known as issue estoppel. This is
explained as follows by Scott JA in Smith v Porritt and Others 2008 (6) SA 303
(SCA) para 10:
“Following the decision in Boshoff v Union Government 1932 TPD 345 the ambit of
the exceptio res iudicata has over the years been extended by the relaxation in
appropriate cases of the common-law requirements that the relief claimed and the
cause of action be the same (eadem res and eadem petendi causa) in both the case
in question and the earlier judgment. Where the circumstances justify the relaxation
of these requirements those that remain are that the parties must be the same (idem
actor) and that the same issue (eadem quaestio) must arise. Broadly stated, the
latter involves an inquiry whether an issue of fact or law was an essential element of
the judgment on which reliance is placed. Where the plea of res iudicata is raised in
the absence of a commonality of cause of action and relief claimed it has become
commonplace to adopt the terminology of English law and to speak of issue estoppel.
But, as was stressed by Botha JA in Kommissaris van Binnelandse Inkomste v Absa
Bank Bpk 1995 (1) SA 653 (A) at 669D, 667J – 671B, this is not to be construed as
implying an abandonment of the principles of the common-law in favour of those of
English law; the defence remains one of res iudicata. The recognition of the defence
in such cases will however require careful scrutiny. Each case will depend on its own
facts and any extension of the defence will be on a case-by-case basis (Kommissaris
van Binnelandse Inkomste v Absa (supra) at 670E – F). Relevant considerations will
include questions of equity and fairness, not only to the parties themselves but also
to others. . . .”‟
(See also Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC
& others [2013] ZASCA 129; 2013 (6) SA 499 (SCA) paras 21 and 22.)
[23] The main thrust of the appellant‟s argument was that in the
circumstances of the matter, where the respondent has introduced new
causes of action for further breaches of the same agreement between the
parties (which breaches were only discovered during the course of evidence
in the first hearing), it would be inequitable and unfair to prevent the appellant
from relying on a variation of the agreement, alternatively a waiver of certain
rights therein as a defence to the new claims by the application of issue
estoppel and that the appellant did not have a duty to rely on the variation or
waiver in the first hearing.
[24] In contrast, the respondent‟s contention was that it was incumbent
upon the appellant to have pleaded such defences to the claims as they
existed on the pleadings at the first hearing. It argued that insofar as the
variation of the agreement would give rise to defences to its initial claims –
something that is not wholly apparent on a reading of the memorandum and
the pleaded terms of the variation – those defences should have been raised
to the initial claims.
[25] It is clear that the issues now raised by the appellant form part of the
issues that Bertelsmann J was called upon to determine, namely whether the
respondent and Highveld (the appellant‟s predecessor) had concluded the
agreement; what were the precise terms and conditions of the agreement and
whether the parties had concluded the amendment of the agreement so that it
covered sales of silico-manganese. As I have pointed out by way of
introduction, Bertelsmann J finally determined those issues in favour of the
respondent. It is therefore not open to the appellant to seek to avoid liability
under the distribution agreement by contending that the agreement was
varied in the respects now alleged, alternatively that respondent waived its
rights to obligations by the appellant. The „once and for all rule‟ requires that
all claims generated by the same cause of action, be instituted in one action.1
Similarly, once the merits of a claim have been finally determined in favour of
1 African Farms and Townships Ltd v Cape Town Municipality 1963 (2) SA 555 (A); National
Sorghum Breweries Ltd (t/a Vivo African Breweries) v International Liquor Distributors (Pty)
Ltd 2001 (2) SA 232 (SCA) para 10; Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3)
SA 462 (A) at 472A-D
a party it is not permissible for the defendant to seek to raise fresh defences
not raised initially. What is sauce for the plaintiff goose, is also sauce for the
defendant gander. It was therefore incumbent upon the appellant to have
pleaded the variation and waiver defences to the original claims as they
existed on the pleadings at the first hearing in so far as they constituted
defences to those claims.
[26] The object of the defence of res judicata is based on two grounds: the
one public policy, that is to say, it is in the interest of justice that there should
be an end to litigation, and the other, the hardship to a litigant, that he should
not be vexed twice for the same cause.2 To allow the appellant‟s new
defences in relation to the respondent‟s claims for payment of the two unpaid
invoices and the claim for damages arising from repudiation would defeat the
whole object of the defence of res judicata. The two defences which are now
sought to be advanced would require reconsideration of the findings of
Bertelsmann J on issues that were before him. Bertelsmann J concluded that
an agreement on the terms and conditions alleged by the respondent had
been established and that the appellant had repudiated the agreement. These
findings will have to be revisited and will be disturbed were the issues sought
to be introduced by the appellant to be allowed. The appellant had a fair
opportunity to participate in the initial litigation, where the issues relating to the
existence of the agreement, its precise terms and conditions and whether it
was breached, were fully ventilated and decided. The amounts claimed by the
respondent in the initial litigation in respect of the commission and for
damages were not so insignificant to justify his failure to raise these two
defences in the initial litigation.
[27] In relation to the respondent‟s claim for commission on the two invoices
and the claim for damages the appellant‟s defences of variation and waiver
are res judicata and the appellant is therefore precluded from raising them
again. In the circumstances the replication of res judicata in relation to para
17.2, read with paras 9.2; 9.3 and 9.4, of the amended plea, was correctly
2 Carl-Zeiss-Stiftung v Rayner and Keeler Ltd & others (No 2) [1966] 2 All ER 536 at 549.
upheld, but the order requires amendment by striking out the offending
paragraphs.
[28] The AMT claim, however, stands on a different footing. I agree with the
appellant‟s submission that the court below erred in finding that the issue
relating to the AMT claim was considered by Bertelsmann J and is therefore
res judicata. Bertelsmann J, in para 61 of his judgment, made it clear that the
AMT agreement fell outside the issues he was called upon to decide and
therefore it was not necessary for him to deal with it. The fact that the
appellant had concluded a tolling agreement with AMT, in terms of which the
appellant would sell its entire ore production to AMT, arose during the cross-
examination of Mr Duff by the appellant‟s counsel in the proceedings before
Bertelsmann J. But other than that it never enjoyed any further attention in the
initial proceedings. It featured for the first time when the respondent amended
its particulars of claim during 2015 to introduce a fresh claim of some R15
million.
[29] Although the AMT agreement was referred to in the appellant‟s
amended plea and counterclaim, but not as giving rise to a separate claim,
the parties did not want it to form part of the issues in respect of which a
separation order was granted. That this is the approach adopted by the
parties finds support in para 36 of Bertelsmann J‟s judgment in which the
following is stated:
„Prior to the commencement of the hearing the parties argued a proposed limitation
of the issues for decision by this court. Fabricius J issued an order limiting the
present disputes for decision to all those relating to the merits of the disputes as set
out above, but excluding any consideration of what would constitute a reasonable
notice period for the termination of plaintiff‟s agreement with the first defendant, (if
any), and any potential damages suffered by plaintiff if its factual averments were to
be accepted. Any reference to the tolling agreement was also excluded.‟
[30] If the alleged amendment or waiver pleaded in para 9 of the amended
plea constituted a defence to the AMT claim, this would have posed a
dilemma. The appellant would be facing a fresh claim in excess of R15 million
to which it had not been required to respond during the hearing before
Bertelsmann J and it would be precluded from raising that defence by the fact
that it could and should have raised this in relation to a claim of less than R1
million on the invoices. In those circumstances it would have been necessary
for us to consider whether this would give rise to injustice. However, although
the amended plea to the AMT claim purports to incorporate a reference to the
amendment of the agreement, nothing in the amendment impinges on the
defence actually pleaded as summarised in para 19 above. The reference to
the amendment is simply surplsage. In the circumstances, the allegation in
this regard in para 22.2.1 of the amended plea can be struck out, without
affecting the defence actually raised that AMT was a foreign company and the
respondent would not have sought to make sales to it.
The order
[31] In the result the following order is made:
The order of the high court is set aside and replaced with the following
order:
„1
The replication of res judicata is upheld and paras 9.2 to 9.4, 17.2 and
22.2.1 of the amended plea are struck out.
The second defendant is ordered to pay costs of the separate
determination of the issues raised by the replication.‟
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel.
________________
D H Zondi
Judge of Appeal
Appearances
For the Appellant:
J Daniels (with him C T Vetter)
Instructed by:
Mervyn Taback Inc, Parktown
Webbers Attorneys, Bloemfontein
For the Respondent:
G Kairinos SC (with him A Schluep)
Instructed by:
Andrew Duff Attorneys, Bryanston
Bezuidenhout 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:
15 June 2017
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
NMB Bank Limited
v
David Capsopoulos & another
The appellant, a bank operating in Zimbabwe, instituted action against the
respondents arising out of the events which occurred in 2005-2007 at a time
when the respondents conducted business in Zimbabwe. The respondents had
purported to buy US dollars from a third party and, in doing so, had made
payment in Zim dollars to the respondent which, in due course, paid US
dollars to a Swiss bank account for the benefit of the respondents. These
payments were made as a result of the fraud committed upon the appellant
bank which involved the falsification of numerous documents, including one
that reflected that the holder of the Swiss bank account had made a loan to the
Zimbabwe Reserve Bank which was being repaid in instalments.
Once the fraud had been discovered, the appellant sued the respondents in the
High Court, Durban claiming the payment of the sum in excess of $6 million
that had paid out in this way. Its claim was dismissed. The matter then came
before the Supreme Court of Appeal.
In upholding the appeal, the Supreme Court of Appeal found that the
respondents must have been acutely aware of the restrictions relating to the
use of foreign currency that had been imposed by Zimbabwe Central Bank. As
evidenced by the respondents having issued instructions to Switzerland in the
form of a code in which payments were referred to as ‘shipments’ and US
dollars as ‘roses’ or ‘flowers’, it held that the respondents must have known
that the payment of the US dollars they alleged they had ‘bought’ from third
parties had been unlawful; and that, even if they had not known the precise
details of the actions taken within the walls of the bank to procure the
payments, they must have known that the US dollars were being paid by the
appellant to Switzerland solely as a result of improper procedures. The funds
were therefore being transferred as part of a fraudulent scheme designed to
mislead and to which the respondents were complicit.
In these circumstances the court upheld the appeal and ordered that the
respondents pay the appellant a sum in excess of $6 million or the rand
equivalent, with interest and costs.
|
2884
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 157/12
Reportable
In the matter between:
JAN OOMPIE KOLEA
Appellant
and
THE STATE
Respondent
Neutral citation: Jan Oompie Kolea v The State (157/12) [2010] ZASCA 199 (30
November 2012)
Coram:
MPATI P, MTHIYANE DP, BRAND and SHONGWE JJA and
MBHA AJA
Heard:
07 November 2012
Delivered: 30 November 2012
Summary: Criminal Procedure – appeal – conviction and sentence – charge of rape
with reference to the Criminal Law Amendment Act 105 of 1997 – s 51(2)
erroneously referred to instead of s 51(1) – whether this was an irregularity which
vitiated the sentence proceedings.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Free State High Court, Bloemfontein (Musi JP, Jordaan J and
Murray AJ sitting as Full Court):
The appeal against both conviction and sentence is dismissed.
JUDGMENT
MBHA AJA (MPATI P, MTHIYANE DP, BRAND and SHONGWE JJA
concurring):
[1] The appellant was convicted by the regional court Kroonstad, on one count of
rape. Thereafter the matter was referred to the Free State High Court, Bloemfontein,
where Moloi J confirmed the conviction and imposed a sentence of 15 years’
imprisonment. On appeal against both conviction and sentence to the Full Court, the
matter came before Musi JP, Jordaan J and Murray AJ, who confirmed the conviction
and increased the appellant’s sentence to one of life imprisonment. The further appeal
against both conviction and sentence, is with the special leave of this court.
[2] The main issue in this appeal is whether, on a charge of rape, a sentencing
court is precluded from imposing a life sentence – or from referring the matter to a
higher court for consideration of that sentence – solely on the basis that the charge
sheet refers to s 51(2) instead of s 51(1) of the Criminal Law Amendment Act 105 of
1997 (the Act). The issue arises in circumstances where the evidence established that
the victim was raped more than once by more than one person. It arises because
s 51(2) of the Act provides for the imposition of a minimum sentence of 10 year’s
imprisonment in respect of a first offender while s 51(1) prescribes a minimum
sentence of life imprisonment.
[3] The appellant was originally charged in the regional court, Kroonstad with one
count of rape, read with the provisions of s 51(2) of the Act. He pleaded not guilty
but after hearing evidence, the magistrate convicted him as charged. In convicting the
appellant, the magistrate accepted the complainant’s evidence that she was raped
more than once by both the appellant and a co-perpetrator who managed to evade
arrest.
[4] After convicting the appellant, the magistrate informed him that as he was
liable to be sentenced to life imprisonment, which sentence was beyond the
jurisdiction of the court, he was accordingly transferring the matter to the high court
in terms of s 52 of the Act. Hence the matter came before Moloi J who, having found
that there were substantial and compelling circumstances present justifying a
departure from the sentence of life imprisonment prescribed by s 51(1) of the Act,
sentenced the appellant to 15 years’ imprisonment. He subsequently granted the
appellant leave to appeal to the Full Court against the conviction and the sentence.
The Full Court dismissed the appellant’s appeal against conviction, and upheld the
respondent’s cross appeal which was based on the contention that there were no
substantial and compelling circumstances, present. It accordingly sentenced the
appellant to life imprisonment in terms of s 51(1) of the Act.
[5] Section 51(1), (2) and (3) of the Act provide that:
‘(1) Notwithstanding any other law, but subject to subsections (3) and (6), a regional court or a
High Court shall sentence a person it has convicted of an offence referred to in Part I of Schedule 2
to imprisonment for life.
(2) Notwithstanding any other law but subject to subsections (3) and (6), a regional court or a High
Court shall sentence a person who has been convicted of an offence referred to in–
(a)
Part II of Schedule 2, in the case of–
(i)
a first offender, to imprisonment for a period not less than 15 years;
. . .
(b)
Part III of Schedule 2, in the case of–
(i)
a first offender, to imprisonment for a period not less than 10 years;
. . .
(c)
Part IV of Schedule 2, in the case of–
(i)
a first offender, to imprisonment for a period not less than 5 years;
. . .
(3)(a) If any court referred to in subsection (1) or (2) is satisfied that substantial and compelling
circumstances exist which justify the imposition of a lesser sentence than the sentence prescribed in
those subsections, it shall enter those circumstances on the record of the proceedings and must
thereupon impose such lesser sentence: Provided that if a regional court imposes such a lesser
sentence in respect of an offence referred to in Part 1 of Schedule 2, it shall have jurisdiction to
impose a term of imprisonment for a period not exceeding 30 years.’
Part I of Schedule 2 includes:
‘Rape . . .–
(a) when committed–
(i)
in circumstances where the victim was raped more than once whether by the accused
or by any co-perpetrator or accomplice;
(ii)
by more than one person, where such persons acted in the execution or furtherance
of
a common purpose or conspiracy;
. . .’
Part III of Schedule 2 provides: ‘Rape. . . in circumstances other than those referred
to in Part I’.
[6] In this court it was contended on behalf of the appellant that as he was charged
and convicted under s 51(2) of the Act, it was not thereafter open to the respondent to
invoke a completely different sub-section, ie s 51(1), which provides for a more
severe sentence. It was contended further that the regional court was competent to
impose a sentence in terms of s 51(2) of the Act, read with Part III of Schedule 2, and
had no authority to refer the matter to the high court for sentencing. Counsel for the
appellant submitted that the referral and the invocation of the provisions of s 51(1)
constituted an irregularity which was so gross and so unfair that it vitiated the
proceedings, with the consequence that the sentence should be set aside and
substituted with a sentence under s 51(2), which is 10 years’ imprisonment.
[7] The accused’s right to be informed of the charge he is facing, and which must
contain sufficient detail to enable him or her to answer it, is underpinned by s
35(3)(a) of the Constitution, which provides that every accused person has a right to a
fair trial. The objective is not only to avoid a trial by ambush, but also to enable the
accused to prepare adequately for the trial and to decide, inter alia, whether or not to
engage legal representation, how to plead to the charge and which witnesses to call. It
follows that if the State intends to rely on the minimum sentencing regime created in
the Act, this should be brought to the attention of the accused at the outset of the trial.
The question which must be answered though, is what does sufficient detail in the
charge entail.
[8] In S v Legoa,1 Cameron JA held that under the common law it was desirable,
but not essential, that the charge sheet should set out the facts the State intended to
prove in order to bring the accused within a minimum sentencing jurisdiction.
Referring to the Bill of Rights, he said that one of the specific rights referred to
therein is to be informed of the charge with sufficient detail so as to enable an
accused to answer to it. Although Cameron JA did not elaborate on what this exactly
meant, he emphasised that, under the current constitutional dispensation it could be
no less desirable than under the common law that the facts which the State intended
to rely on for an increased sentence under the Act, should be clearly set out in the
charge sheet. Significantly, his expressed view was that the matter was one of
substance and not form. He was therefore reluctant to lay down a general rule that the
charge sheet must
1 S v Legoa 2003 (1) SACR 13 (SCA).
in every case recite either the specific form of the scheduled offence, or the facts the
State intended to prove to invoke a particular provision of the Act.
[9] In S v Seleke2 (referred to by Cameron JA) it was held that although it was
desirable for a charge to contain a reference to a penalty, this was not essential, and
that the ultimate test was whether the accused had had a fair trial. And the presence of
prejudice to the accused will point to an unfair trial. Thus the question that should be
posed should be the following: Did the appellant have a fair trial and more
specifically, was the appellant sufficiently apprised of the charge he or she was facing
and was he or she informed in good time, of any likelihood of his or her being
subjected to any enhanced punishment in terms of the applicable legislation. This of
necessity, entails a fact based enquiry into the entire proceedings of the trial.
[10] Mpati JA, in S v Ndlovu3 endorsed this approach, stating:
‘The enquiry, therefore, is whether, on a vigilant examination of the relevant circumstances, it can
be said that an accused had had a fair trial. And I think it is implicit in these observations that where
the State intends to rely upon the sentencing regime created by the Act, a fair trial will generally
demand that its intention pertinently be brought to the attention of the accused at the outset of the
trial, if not in the charge-sheet then in some other form, so that the accused is placed in a position to
appreciate properly in good time the charge that he faces as well as its possible consequences’.
The court, however, left open the question whether, or in what circumstances, it
might suffice if the charge and its possible consequences were brought to the
attention of the accused during the course of the trial. What is clear, however, is that
the court never expressly ruled as improper or irregular the fact that possible
consequences of an offence were never spelt out to the accused at the commencement
of the trial. As Ponnan JA recently said in his minority judgment in S v Mashinini:4
‘I have been at pains to stress, as enjoined by the authorities to which I have referred, that a fair-
trial enquiry does not occur in vacuo, but that it is first and foremost a fact-based enquiry. And, as I
2 S v Seleke 1976 (1) SA 675 (T).
3 S v Ndlovu 2003 (1) SACR 331 (SCA) para 12.
4 S v Mashinini 2012 (1) SACR 604 (SCA) para 51.
have already stated any conclusion as may be arrived at requires a vigilant examination of all the
relevant circumstances.’
[11] In this case, the State’s intention to rely on and invoke the minimum sentencing
provisions was made clear from the outset. The charge sheet expressly recorded that
the appellant was charged with the offence of rape, read together with the provisions
of s 51(2) of the Act. I am accordingly satisfied that the appellant, who was legally
represented throughout the trial, well knew of the charge he had to meet and that the
State intended to rely on the minimum sentencing regime created in the Act.
[12] On advising the appellant that his case was being referred to the high court for
sentencing, the magistrate stated:
‘In die lig daarvan dat die klaagster deur meer as een persoon verkrag is, is die hof van oordeel dat
die hof nie oor die regsbevoegdheid beskik om die beskuldigde te vonnis nie, aangesien‘n vonnis
van lewenslank oorweeg moet word. In terme van artikel 52, Wet 105 van 1997 word die saak dan
oorgeplaas vir vonnisdoeleindes na die hooggeregshof.’
Significantly, there was no objection to the fact that the matter was now being
transferred to the high court and to the prospect of a sentence of life imprisonment
being imposed on the appellant as provided for in s 51(1) – and not s 51(2) – of the
Act.
[13] Before Moloi J, and subsequently before the Full Court, there was no objection
to the indictment or the summary of substantial facts. On the contrary, the appellant’s
counsel readily conceded, in both courts and without demur, that the appellant had
been properly convicted.
[14] During the entire process up to the time the Full Court dismissed the
appellant’s appeal against conviction; upheld the respondent’s cross-appeal; and
imposed life imprisonment on the appellant in terms of s 51(1) of the Act, there was
never any complaint by the appellant that he was in any way prejudiced in the
conduct of the proceedings. Furthermore, he pleaded not guilty to the charge and fully
participated in the trial. In the end, he was convicted in accordance with the evidence
that was led in relation to the charge of rape. It has not been demonstrated that the
appellant would have acted differently, had the mistake not been made in the charge
sheet.
[15] In argument before us, the appellant’s counsel conceded that the complaint
based on the proposition that the appellant was sentenced under the wrong section
was raised for the first time in this court. He also conceded that the complaint was
inspired by the judgment of the majority in S v Mashinini (supra), the rationale of
which I now turn to consider. The facts of that case were briefly that the two
appellants and their two co-perpetrators were charged in the regional court with rape,
read with the provisions of s 51(2) of the Act. They pleaded guilty to the charge but
in their separate statements made in terms of s 112(2) of the Criminal Procedure Act
51 of 1977, they admitted that all four of them had raped the complainant. After they
were convicted, their case was transferred to the high court which, after confirming
the convictions, sentenced each one of them to life imprisonment. On appeal, the
majority (per Mhlantla JA, with Bosielo JA concurring), set aside the sentence of life
imprisonment imposed on the appellants, and substituted it with a sentence of 10
years’ imprisonment.
[16] In upholding the appeal against sentence, the majority found that (a) in terms of
s 51(2) read with Part III of Schedule 2 of the Act, which provides for a minimum
sentence to be imposed for rape of the aggravated kind provided for in Part I of
Schedule 2, the appellants, who were first offenders, were liable to be sentenced to a
maximum sentence of 10 years’ imprisonment; (b) the appellants were originally
charged under s 51(2) but were incorrectly and unfairly sentenced under s 51(1) and
for an offence different to the one for which they were convicted, and (c) as the State
had decided to restrict itself to s 51(2) when formulating the charge sheet, it was not
thereafter open to it to invoke a different section for the purpose of sentence unless it
had sought and obtained an amendment to the charge sheet in terms of section 86 of
the Criminal Procedure Act.
[17] In my view the majority, with respect, misread the provisions of s 51(2). The
term of 10 years’ imprisonment referred to therein is the minimum sentence that can
be imposed. This means that any sentence in excess of 10 years’ imprisonment, and
possibly even life imprisonment, could be imposed by a court having jurisdiction to
do so. Furthermore, the fact that a statute provides for an increased sentence with
reference to a particular type of offence when committed under particular
circumstances does not mean that a different offence has been created thereby. In S v
Moloto, Rumpff CJ5 held that, where an accused is charged with robbery committed
with aggravating circumstances, this did not create a new category of robbery but
simply meant that the court had a discretion, where such aggravating circumstances
existed, to impose the increased sentence in terms of s 277(1)(c) of the Criminal
Procedure Act, in that case the death penalty. The fact that the Act specifies penalties
in respect of certain offences (in this case rape, where more than one person raped the
victim), does not in any way mean that a new type of offence has been created. Rape
remains rape, but the Act provides for a more severe sanction where, for example, the
victim has been raped more than once or by more than one person.
[18] Section 86(4) of the Criminal Procedure Act provides that the fact that a charge
is not amended as provided in this section, shall not, unless the court refuses to allow
the amendment, affect the validity of the proceedings. A reading of this section
establishes that a formal application to amend a charge sheet is not always required.
The fact that the charge sheet had a defect which was never rectified in terms of s
86(1), as was the case both in Mashinini and in this case, did not of its own render the
proceedings invalid.6 The test is always whether or not the accused suffered any
prejudice.
[19] A close investigation of the circumstances in Mashinini reveals that s 51(2) of
the Act was erroneously typed instead of s 51(1) of the Act; that the appellants were
correctly apprised of the applicability of the increased penalty provisions of the Act;
that they pleaded guilty to a charge involving multiple rape which, in any event, is not
even applicable to s 51(2); that they never complained of, nor showed that they had
suffered, any prejudice; and that they participated fully in the trial. In view of what I
have said above, I believe that the appellants in that case were not in any way
prejudiced by the erroneous reference to s 51(2) instead of s 51(1) in the charge sheet.
I am therefore satisfied that the conclusion at which the majority arrived in Mashinini
was clearly wrong.
[20] Finally, it must always be borne in mind that the concept of fairness connotes
fairness to both the accused and the complainant or the public as represented by the
State. As the Constitutional Court pointedly remarked in S v Jaipal:7 ‘The right of an
accused to a fair trial requires fairness to the accused, as well as fairness to the public
as represented by the State. It has to instil confidence in the criminal justice system
with the public, including those close to the accused, as well as those distressed by
the audacity and horror of crime.’
[21] I now turn to consider the appeal against conviction in this case. Although in
the heads of argument it was contended that the identification of the appellant by the
complainant was in dispute, this aspect was not seriously pursued during argument.
The complainant testified that she was attacked by the appellant, a person well known
5 S v Moloto 1982 (1) SA 844 (A) at 850.
6 E du Toit, F J de Jager, A Paizes, A S Skeen and S van der Merwe Commentary on the Criminal Procedure Act at
14-21.
7 S v Jaipal 2005 (1) SACR 215 (CC), para 29
to her, and his co-perpetrator. The area around where the perpetrators attacked and
grabbed her was well lit; so she was able to have a good look at the appellant’s face.
They dragged her to an open veld where they took turns to rape her. After raping her
in the veld, the perpetrators forced her to accompany them. When they arrived at a
certain shack, which she knew was where the appellant resided, they again took turns
to rape her. She testified further that during this ordeal, there was a knock on the door
of the main house and later the shack. The appellant went outside to speak to the
people who were knocking and they turned out to be her daughter and the latter’s
friends who had come there to look for her. The appellant lied to them saying that she
was not there and they went away. Upon his return to the shack, the appellant told his
co-perpetrator that as there were people looking for her, they had to let her go. They
then escorted her half way to her home.
[22] In his testimony, the appellant confirmed that during the said evening the
complainant’s daughter and her friends did arrive at his shack looking for the
complainant. However, he denied that the complainant ever came to his shack. In my
view, the complainant’s version finds corroboration in the appellant’s testimony
particularly with regard to what transpired when there was a knock at the door of the
appellant’s shack. This proves that she was indeed with the appellant and his co-
perpetrator in his shack during the night in question. In argument, appellant’s counsel
conceded that the complainant was able to properly identify the appellant while inside
the shack as, inter alia, the electric light inside was on.
[23] It being undisputed that the complainant was raped that evening, I do not have
the slightest hesitation to find that the appellant was positively identified as the
person who, together with a co-perpetrator, took turns to rape her. The Full Court
correctly dismissed the appellant’s appeal against conviction.
[24] Regarding the sentence, the Full Court correctly found that Moloi J erred in
finding that there were substantial and compelling circumstances in this case without
specifically recording the factors relied upon for such a finding as is required by
s 51(3) of the Act. That sub-section stipulates that where the court finds that
substantial and compelling circumstances are present, these must be entered into the
record of the proceedings. Moloi J never indicated in his judgment what those
circumstances were.
[25] The Full Court considered the appellant’s personal circumstances, namely, that
he was 23 years old and still young, that he had been employed and earned R1200 per
month, and that although he had previous convictions, they were all more than 10
years old and none involved rape. However, it correctly found that there were
aggravating circumstances in the case, namely, that the complainant, a 48 year old
woman, was raped by the two men who each raped her more than once; that she was
dragged through the night to a veld and later forced to accompany them to the
appellant’s shack; that she was threatened with death; that she continuously pleaded
with her assailants to spare her life as she had young children; and that she was a
widow. In addition, when the complainant’s daughter and her friends came to the
appellant’s shack looking for her, the appellant deviously misled them by saying she
was not there when he knew that the complainant was inside his shack. The entire
ordeal traumatised her and also adversely affected her relationship with men. The Full
Court also noted that the appellant had not shown any remorse whatsoever.
[26] I find that the Full Court correctly upheld the respondent’s cross-appeal and
properly imposed life imprisonment on the appellant, and that the entire appeal falls
to be dismissed.
[27] In the circumstances I make the following order:
The appeal against both conviction and sentence is dismissed.
_____________________
BH Mbha
Acting Judge of Appeal
APPEARANCES
For Appellant:
PW Nel
Instructed by:
Justice Centre, Bloemfontein
For Respondent:
JHS Hiemstra
Instructed by:
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 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.
JAN OOMPIE KOLEA v THE STATE
The Supreme Court of Appeal (SCA) today held that the sentencing of Mr Jan Oompie
Kolea on a conviction of rape read with the provisions of section 51(1) of the Criminal Law
Amendment Act 105 of 1997 (the Act) when he was originally charged with rape read with
the provisions of section 51(2) of the Act did not constitute an irregularity vitiating the
sentencing proceedings. The SCA dismissed Mr Kolea’s appeal against both conviction and
sentence.
Mr Kolea was charged with one count of rape read with the provisions of section 51(2) of
the Act in the Kroonstad Regional Court. During the trial the complainant testified that she
had been repeatedly raped by Mr Kolea and a co-perpetrator who had evaded arrest. The
regional court accepted the complainant’s evidence that she had been repeatedly raped by
more than one person. Section 51(1) of the Act prescribes a sentence of life imprisonment
for a rape which was committed more than once by one or more than one perpetrator. Being
of the view that the sentence that should be imposed exceeded its sentencing jurisdiction,
the regional court referred the matter to the Free State High Court, Bloemfontein, in terms
of section 52 for sentencing.
The matter came before Moloi J who confirmed the conviction, found that there were
substantial and compelling circumstances which justified a deviation from the prescribed
sentence of life imprisonment and sentenced Mr Kolea to 15 years’ imprisonment. Mr
Kolea’s appeal to the Full Bench of the high court against the both conviction and sentence
was dismissed. The Full Bench, upholding the State’s cross-appeal against the sentence
imposed by Moloi J, found that there were no substantial and compelling circumstances and
substituted the sentence with one of life imprisonment. Mr Kolea then appealed to the SCA
again against both the conviction and sentence.
Before the SCA counsel for Mr Kolea argued that the referral of the matter to the high court
and the sentencing in terms of section 51(1) of the Act when the original charge sheet
referred to section 51(2) constituted an irregularity which was so gross and so unfair that it
vitiated the proceedings, with the consequence that the sentence of life imprisonment
should be set aside and substituted with a sentence of 10 years’ imprisonment which is
prescribed by section 51(2). Counsel relied on the majority judgment in S v Mashinini &
another 2012 (1) SACR 604 (SCA) in support of this argument.
The SCA rejected the argument. It held that there was no irregularity as the State’s
intention to rely on and invoke the minimum sentencing provisions was made clear to Mr
Kolea, who was legally represented throughout the trial, from the outset. Mr Kolea, the
SCA held, knew the charge that he had to face as required by section 35(3)(a) of the
Constitution. The prescription of a penalty for the rape of the nature involved in the case
did not mean that the Legislature had created a new offence as implied by the majority in S
v Mashinini. The SCA, overruling the decision, held that S v Mashinini had been wrongly
decided. In dismissing Mr Kolea’s appeal, the SCA held that he had been correctly
convicted and that the Full Bench had correctly concluded that there were no substantial
and compelling circumstances.
|
3906
|
non-electoral
|
2022
|
`
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 406/21
In the matter between:
DEON NEL
APPELLANT
and
PETRUS JACOBUS DE BEER
FIRST RESPONDENT
PIETER HENDRIK JACOBUS BURGER NO
SECOND RESPONDENT
Neutral citation:
Deon Nel v Petrus Jacobus de Beer & Another (406/21) [2022]
ZASCA 145 (26 October 2022)
Coram
Zondi, Molemela, Plasket and Mabindla-Boqwana JJA and Musi
AJA
Heard:
14 September 2022
Delivered:
26 October 2022
Summary:
Sale of land – right of pre-emption – right of pre-emption in lease
agreement in respect of five separately registered farms – sale of two of those farms
constitutes breach of contract – third party purchasing two of the farms with knowledge
of right of pre-emption – remedy – specific performance, subject to court’s discretion,
suitable remedy.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Van der Westhuizen J
sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘(i) The plaintiff is directed to submit a duly signed deed of sale to the defendants
in respect of Portions 6 and 11 of the farm Swarts Rust, which deed of sale shall
contain all the terms and conditions of the Fanie Trust agreement, save for
clause 2(d), within 14 days from the date of this order;
(ii) The defendants are ordered to sign the deed of sale submitted to them by
the plaintiff within 14 days from date of receipt thereof;
(iii) Should the defendants fail and/or refuse to sign the deed of sale aforesaid,
the Sheriff of the Court (in which district the properties are situated) is
authorised and ordered to sign the deed of sale on behalf of the defendants;
(iv) The defendants are ordered to pay the costs of the action, including the
costs of two counsel.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Musi AJA (Zondi, Molemela, Plasket and Mabindla-Boqwana JJA concurring):
Introduction
[1] This appeal, which is with the leave of this Court, is against the judgment of the
Gauteng Division of the High Court, Pretoria (the high court). The appeal concerns a
dispute about the validity and enforceability of a right of pre-emption contained in a
lease agreement. The high court found that there was no valid and enforceable pre-
emption clause in the lease agreement and consequently dismissed the claim. Mrs de
Beer (the erstwhile second respondent) passed on after the proceedings were
instituted. The current second respondent is the executor of her estate. Although the
lease agreement was entered into between the appellant (the plaintiff) and the
respondents (the de Beers), the plaintiff’s brother Mr Marius Nel played a pivotal role
in the dispute.
Facts
[2] On 20 November 2008, the plaintiff and the de Beers entered into a lease
agreement in terms of which the plaintiff leased five farms from the de Beers for a
period of three years (the capacity in which the plaintiff entered into the lease
agreement is in dispute, and will be dealt with below). The five farms consisted of two
portions of the farm Welgevonden (Portion 18 – a portion of Portion 1 – and Portion
20 – a portion of Portion 18), as well as three Portions of the farm Swarts Rust
(Portions 2, 6 and 11). All the portions were separately registered. The parties agreed
that the extent of the land was 600 hectares.
[3] The plaintiff initially desired to have an option to purchase the farms. However,
the parties agreed to include a right of pre-emption in favour of the plaintiff. The right
of pre-emption read as follows:
‘Die verhuurder verleen hiermee aan die huurder die eerste reg om die gemelde eiendomme
voor die verstryking van hierdie huurkontrak te koop.’1
On 30 July 2009, whilst the lease agreement was extant, and unbeknown to the
plaintiff, the de Beers concluded a sale agreement with the Fanie Trust (represented
by Mr Marius Nel) in terms of which Portions 6 and 11 of the farm Swarts Rust
(Portions 6 and 11) were sold for R3 137 103 (the Fanie Trust agreement). On the
same day the Moladora Trust (represented by Mr Marius Nel) sold two farms (Portion
15 – a portion of Portion 5 of the farm Rietkuil and Portion 16 a portion of Portion 12
of the farm Doornfontein) to the de Beers for R2 100 000 (the Moladora Trust
agreement).
[4] The Fanie Trust agreement stated that the properties shall not be registered
before 1 November 2011, a day after the expiry of the lease agreement and
consequently the right of pre-emption (clause 2(c)). The parties agreed, in clause 2(d)
of both sale agreements, that the registration of the properties in the Fanie Trust
agreement must be done simultaneously with the registration of the properties in the
Moladora Trust agreement. They further acknowledged, in the Fanie Trust agreement,
the existence of the lease agreement entered into between the de Beers and the
plaintiff and recorded that the sale agreement was subject to that lease agreement.
[5] The de Beers did not offer the Swarts Rust farms to the plaintiff for him to
exercise his right of pre-emption. Instead, on 22 September 2011 after the Swarts Rust
farms were sold to the Fanie Trust the de Beers entered into another lease agreement
in respect of the same five farms with the plaintiff for another three years. The second
lease agreement also granted the plaintiff the right of pre-emption. The plaintiff
subsequently found out about the Fanie Trust agreement when Mr Marius Nel told him
about it. The plaintiff confronted Mr de Beer and told him that he wanted to exercise
his right of pre-emption.
[6] On 28 November 2011, the plaintiff gave notice of his intention to exercise his
right of pre-emption to the de Beers. He included a signed standard draft agreement
1 The lessors grant to the lessee the first right to purchase the said properties before this lease
agreement expires. (My loose translation.)
for the de Beers’ consideration. The de Beers did not sign the draft agreement. They
also did not indicate that they were dissatisfied with any term or condition in the draft
agreement or that they regarded the draft as a counter-offer. On 9 November 2012 the
plaintiff’s attorney transmitted letters to the de Beers’ and Marius Nel’s attorneys
respectively, informing them that the plaintiff intended to purchase the farms sold to
the Fanie Trust on the same terms and conditions set out in the Fanie Trust
agreement.
[7] On 4 July 2014, the plaintiff launched an application wherein he inter alia sought
an order declaring that he properly exercised his right of pre-emption over the farms
sold to the Fanie Trust. He also requested that the de Beers be ordered to enter into
a sale agreement with him on the same terms as the Fanie Trust agreement excluding
paragraphs 2(c), 2(d) and 2(e).2 Due to the factual disputes on the papers the matter
was referred to trial.
The Trial
[8] The plaintiff testified and called two witnesses, his wife, Mrs Mariette Nel, and
Mr Nieuwoudt, the attorney who drafted the first lease agreement. Mr Marius Nel and
Mrs Gagiano, the de Beers’ daughter, testified on behalf of the respondents. Mr de
Beer could not give coherent testimony, due to ill health.
[9] The plaintiff testified that he was informed by his mother that Mr de Beer asked
her for his number. He called Mr de Beer and they arranged to meet at Mr de Beer’s
farm. They duly met and during that meeting they agreed that he could lease the farms.
They agreed on the rental amount and Mr de Beers contacted Mr Nieuwoudt who
drafted the lease agreement. Mr Marius Nel was not at the meeting and was not a
party to the lease agreement. It was already planting season (which is between middle
November and 15 December) and he was in a hurry to clear the land and commence
planting.
2 Clause 2(e) was a recordal that the parties are aware of the Moladora Trust agreement and accept
the contents of that agreement.
[10] He testified that the tractor that he used to rip the soil broke and the agents
informed him that it would take approximately six weeks to repair it. He contacted Mr
Marius Nel and asked him to rent him a tractor. He refused. In desperation he
requested Mr Marius Nel to clear and cultivate the land. Mr de Beer consented to the
arrangement and Mr Marius Nel paid for the lease of the land and cultivated it for the
entire lease period. He confirmed that during November 2011 when he was cultivating
the land, Mr Marius Nel informed him that he bought the farms. He consulted his
attorney and it was as a result of the attorney’s enquiries that they received the Fanie
Trust and Moladora Trust sale agreements from Mr Marius Nel’s attorney.
[11] Mrs Mariette Nel, confirmed that Mr Marius Nel was not at the meeting where
the lease of the farms was discussed by her husband and the de Beers. Mr Nieuwoudt
testified that Mr Marius Nel was not a party to the lease agreement.
[12] Mr Marius Nel testified that on 15 November 2008, Mr du Preez, the de Beers’
son-in-law, informed him telephonically that Mr de Beer wanted to rent out his farms.
He went to the de Beers’ farm where he found the de Beers, Mr du Preez, the plaintiff
and the plaintiff’s wife. During the negotiations the plaintiff stated that he did not have
enough implements to cultivate the farms. They agreed on the lease amount and that
he would cultivate Portions 6 and 11 and the plaintiff would cultivate the rest. He paid
the rental amount plus VAT for the properties. On 17 November 2008 he started
cleaning and cultivating Portions 6 and 11. When he noticed that the plaintiff only
delivered implements on the other farms without cultivating them, he decided to
cultivate them. After the first season when he heard nothing from the plaintiff, he paid
the de Beers and cultivated all the farms.
[13] He testified that during June 2009 he bought the farm Rietkuil from his mother.
Mr du Preez informed him that Mr de Beer was interested in buying Rietkuil. Mr de
Beer offered to sell Portions 6 and 11 of the Swarts Rust farm to the Fanie Trust.
However, he only saw the first lease agreement in 2009 when the attorney who drafted
the sale agreements requested it from Mr De Beer, and was disappointed to see that
the plaintiff was the only lessee. As a result, the Fanie Trust and Moladora Trust
agreements were entered into.
[14] Mrs Gagiano testified that she was not present at the meeting in her parental
home. She confirmed that she filled in the other particulars on the cheque that Mr
Marius Nel presented to the de Beers.
High Court
[15] The high court found that the impugned clause did not contain a proper right of
pre-emption since it did not provide for the price of the properties. It opined that the
purported pre-emption clause was in effect an agreement to enter into an agreement
about the purchase price and other terms and conditions of the sale. It also found that
if the plaintiff wanted to step into the shoes of the Fanie Trust, no term of the
agreement between the de Beers and the Fanie Trust may be added or deleted. It
reasoned that the deletion of clause 2(d) from the Fanie Trust agreement would
constitute a counter-offer. Furthermore, it found that the pre-emption clause was not
triggered because the Fanie Trust agreement was in respect of certain specified farms
and not the entire 600 hectares mentioned in the lease agreement.
Issues
[16] The issues that fall to be determined are: (a) whether the Nel brothers were co-
lessees; (b) whether the pre-emption clause was triggered when only two farms were
sold; (c) whether the right was properly exercised; (d) whether the exclusion of clause
2(d) in the offer to step into the Fanie Trust’s shoes constituted a counter-offer; and
(e) the appropriate remedy.
[17] The principles regarding a right of pre-emption are well-established. In
Owsianick v African Consolidated Theatres3 it was stated as follows:
‘A right of pre-emption is well known in our law . . . and it is to be distinguished from an option
to purchase . . .The granter of the right of pre-emption cannot be compelled to sell the subject
of the right. Should he, however, decide to do so, he is obliged, before executing his decision
to sell, to offer the property to the grantee of the right of pre-emption upon the terms reflected
in the contract creating that right.’4
3 Owsianick v African Consolidated Theatres (Pty) Ltd 1967 (3) SA 310 (A).
4 Ibid 316C-D.
Was Mr Marius Nel a co-lessee?
[18] Only the testimonies of the Nel brothers are relevant to determine whether Mr
Marius Nel was a co-lessee. The high court did not deal with this issue. The de Beers
contended that the plaintiff could not exercise the right of pre-emption unilaterally
because Mr Marius Nel was a co-lessee and therefore had to exercise the right with
the plaintiff. They argued that the plaintiff’s name was inserted in the lease agreement
as the nominee for himself and Mr Marius Nel. Mr Marius Nel testified that the
agreement between him, the de Beers, and the plaintiff was that he would lease the
two Swarts Rust farms and that the plaintiff would lease the rest. He did not sign any
lease agreement. He initially testified that he assumed that the plaintiff was going to
sign the contract on their behalf.
[19] During cross-examination, Mr Marius Nel testified that he assumed that he would
sign a separate contract for the two Swarts Rust farms and that the plaintiff would do
so with regard to the rest of the farms. He stated that he paid the full lease amount for
all five farms because he assumed that the plaintiff would later repay him his (the
plaintiff’s) pro rata amount. However, he did not discuss any of this with the plaintiff.
When he was not given a lease agreement in respect of the two farms, he did not
enquire from the de Beers or the plaintiff about it. He testified that he did not confront
the plaintiff or Mr de Beer when he found out that the plaintiff was the only lessee in
terms of the contract. He also did not take any steps to try and rectify the anomaly.
During the discussions preceding the signing of the sale agreement he, Mr de Beer
and Mr du Preez discussed the lease agreement whereupon Mr de Beer informed him
that the lease agreement is null and void because the plaintiff sub-let the property to
him. He accepted this proposition without demur.
[20] In their plea, the de Beers stated that Mr Marius Nel and the plaintiff were co-
lessees of all the farms, in terms of the first and second lease agreements. They later
abandoned their stance with regard to the second lease agreement. The high court
found that the de Beers were scoundrels because they entered into the second lease
agreement with the plaintiff knowing that they concluded a sale agreement with the
Fanie Trust, in respect of Portions 6 and 11. This finding was not challenged before
us. Mr Marius Nel insisted that he was a co-lessee, however, he could not coherently
explain why the Fanie Trust agreement was made subject to the lease agreement
entered into between the de Beers and the plaintiff. The high court did not make any
credibility findings in respect of the Nel brother’s testimonies.
[21] On the probabilities, I agree with the plaintiff that Mr Marius Nel’s conduct was
consistent with that of a sub-lessee. He did not ask for a separate lease contract; he
paid the full lease amount whereas he stated that he leased only two farms and, when
he was told by Mr de Beer that he was a sub-lessee, he did not object. Also, Mr Marius
Nel signed the Fanie Trust agreement wherein he and the de Beers recognised the
plaintiff’s right of pre-emption in the lease agreement. This conduct is contrary to that
of a person who claims to have been a co-lessee. Furthermore, Mr Marius Nel did not
give the plaintiff an instruction to enter into the lease agreement as his nominee.5 As
such, the doctrine of the undisclosed principal is also not applicable firstly, because
Mr Marius Nel did not testify that he was the plaintiff’s principal and secondly, he did
not give the plaintiff, as the purported intermediary, a mandate. There must be a
relationship between the principal and the intermediary:
‘It would appear though, that the required relationship exists only where the undisclosed
principal has instructed the intermediary to conclude the contract either in the name of the
principal or in his or her own name or in either as he or she chooses. If no such relationship
exists, the situation is not an undisclosed-principal relationship and the alleged undisclosed
principal can acquire no right and incur no obligations from the contract’6
I find that Mr Marius Nel was not a co-lessee. There was therefore no need for him to
exercise the right of pre-emption jointly with the plaintiff.
Interpretation of Clause 19
[22] This Court has set out the proper approach to interpreting a document in the
oft-quoted decision in Natal Joint Municipal Pension Fund v Endumeni Municipality:7
‘Interpretation is the process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract, having regard to the context provided
by reading the particular provision or provisions in the light of the document as a whole and
the circumstances attendant upon its coming into existence. Whatever the nature of the
5 In Dadabhay v Dadabhay and Another 1981 (3) SA 1039 (A) at 1047 Holmes AJA said ‘The nominee
shareholder takes his instructions from the beneficial shareholder.’ See also Smyth and Others v
Investec Bank Ltd and Another [2017] ZASCA 147; 2018 (1) SA 494 (SCA) paras 21-23.
6 The Law of South Africa, Volume 1, Third Edition para 174.
7 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA).
document, consideration must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which the provision appears; the apparent purpose to
which it is directed and the material known to those responsible for its production. Where more
than one meaning is possible each possibility must be weighed in the light of all these factors.
The process is objective, not subjective. A sensible meaning is to be preferred to one that
leads to insensible or unbusinesslike results or undermines the apparent purpose of the
document . . . [t]he “inevitable point of departure is the language of the provision itself”, read
in context and having regard to the purpose of the provision and the background to the
preparation and production of the document.’8
[23] The approach to interpretation is a unitary exercise: the text, context and
purpose must be considered simultaneously.9 In determining the intention of the
parties to an agreement the court must have regard to all the facts. Although the words
used by the parties are important, it must, however, be remembered that ‘words
without context mean nothing’.10
[24] The de Beers argued that the right of pre-emption was not triggered because
in terms of clause 19 the farms were leased as a unit and the right could only be
triggered if they were sold as a unit. The sale of the two farms, so the argument went,
did not activate the right of pre-emption. The plaintiff argued that the wording of clause
19 is clear in that it refers to properties and not property, as the high court erroneously
stated.
[25] It is correct that the high court referred to property instead of properties when it
interpreted clause 19. The submission by the plaintiff that the high court should have
found that the use of the word properties in clause 19 was indicative of an intention to
disaggregate the farms is without merit. This is so because the parties clearly used
the words ‘properties’ and ‘property’ interchangeably. In clause 1 it is stated that the
‘properties leased are described as follows’ later in the same clause it is stated that
‘both parties agreed on the size of the property’.
8 Natal Joint Municipal Pension Fund v Endumeni Municipality para 18.
9 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13;
2021 (6) SA 1 (CC) para 65.
10 Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA) para 28.
[26] There is no evidence that the parties agreed that the farms had to be sold as a
unit. It was common cause that the de Beers’ other son-in-law, Mr Gagiano, occupied
Portions 6 and 11. The relationship between the de Beer family and Mr Gagiano was
strained and Mr de Beer wanted him to vacate those farms. Mrs Gagiano pertinently
testified that one of the ways the de Beers considered to get rid of Mr Gagiano was to
sell Portions 6 and 11. The de Beers therefore contemplated selling the Swarts Rust
farms separately in order to get rid of Mr Gagiano. The plaintiff testified that Portions
6 and 11 could be sold separately as a viable unit because the land was arable with
good soil. The de Beers eventually sold only Portions 6 and 11 to the Fanie Trust.
When the plaintiff informed the de Beers that he wanted to exercise his right of pre-
emption in respect of Portions 6 and 11, they did not inform him that he could not do
so because their agreement was that he could only do so if all the properties were
sold.
[27] I agree with the plaintiff that the contention that all the farms had to be sold
simultaneously as a unit does not make business sense. The de Beers’ contention
would give them licence to undermine the plaintiff’s right of pre-emption by selling the
farms separately and on a piece-meal basis. The only sensible interpretation is that
the right of pre-emption could be triggered by the sale of any or all the farms. There
is, however, another reason why the de Beers’ contention is untenable.
[28] In McGregor v Jordaan11 the plaintiff (lessee) had a right of pre-emption over a
farm. The defendant sold a portion of the farm to a third party who had knowledge of
the plaintiff’s prior right of pre-emption. Kotze J held that the object of the law is, inter
alia, to discourage and prevent fraud and that the conduct of the second defendant
(purchaser) amounted to fraud.12 The court declared the sale agreement null and void
and interdicted the seller from giving and the purchaser from accepting transfer of the
half share of the farm.
11 McGregor v Jordaan and Another 1921 CPD 301.
12 Ibid at 309.
[29] T Naude13 states, with reference to McGregor v Jordaan and Transvaal Silver
Mines v Jacobs Le Grange and Fox14 that:
‘It is, however, clear that the sale of a portion of the pre-emption property is regarded as a
breach of the right of pre-emption, and that the holder is entitled to an interdict prohibiting such
a sale or an order cancelling the transfer of the pre-emption property to a third party with prior
knowledge of the right of pre-emption’15
She summarises the legal position in other jurisdictions as follows:
‘A majority of courts in the USA have decided that the grantor’s willingness to sell a partial
interest in the pre-emption property gives the holder the right to buy that partial interest by
matching the third party’s offer. A Canadian court has also held that the sale of a portion of
the pre-emption property (one of three parcels of land), triggers the right of pre-emption to buy
that portion. . . The German BGB provisions on Vorkaufsrechte are silent on the effect of the
sale of a partial interest in the pre-emption property. However, there is authority that the sale
of a portion of the pre-emption property triggers the right of pre-emption to buy that portion.’16
[30] In Pushka v Magnowski Estate,17 the Canadian case referred to by Naude, the
right of pre-emption in a lease agreement referred to an offer for the ‘demised
premises’ which consisted of three parcels of land. The defendant sold one parcel of
land and contended that the right of pre-emption could only be triggered if all three
parcels, and not merely a part thereof, were sold. The court said the following about
the contention:
‘…it would follow that, although “the demised premises” retains the same meaning – all three
parcels – the lessor, by offering and selling only one parcel to a third party would not only not
trigger the lessee’s right to match the offer, but would terminate his right to match any later
offer on either or both of the remaining parcels. Such a devious and tortured reading is not
warranted when in their ordinary meaning the words are apt to include the parts in the whole.’18
[31] The absurdity illustrated in Pushka v Magnowski Estate would present itself in
this matter if the de Beers’ contention were to be accepted. The plaintiff’s right of pre-
13 T Naudé, ‘Which transactions trigger a right of first refusal or preferential right to contract?’ (2006)
123 SALJ 461.
14 Transvaal Silver Mines v Jaobs Le Grange and Fox 1891 4 SAR 116.
15 Footnote 11 at 493.
16 Ibid 494.
17 Pushka v Magnowski Estate (1983), 23 Man. R. (2d) 189 (QB).
18 Ibid at 194.
emption would be nugatory. In my view, where a right of pre-emption was granted in
respect of land or separate parcels of land and the grantor sells a portion of the land
or one of the parcels, the right of pre-emption would be triggered, unless a contrary
intention is indicated in the agreement between the parties.
Did the plaintiff exercise his right of pre-emption?
[32] On 28 November 2011, the plaintiff’s attorney wrote to the de Beers to inform
them that the plaintiff insists on exercising his right of pre-emption and attached a deed
of sale for the de Beers to append their signatures to. The de Beers, however, did not
respond. On 9 January 2012 the plaintiff’s attorney again wrote to the de Beers’
attorney and informed him that the plaintiff insisted on specific performance of his right
of pre-emption relating to Portions 6 and 11 and was prepared to buy them on the
same conditions as those contained in the Fanie Trust agreement. Mr Marius Nel, on
behalf of the Fanie Trust, entered into an agreement of sale with the de Beers in
respect of Portions 6 and 11 whilst fully aware of the plaintiff’s right of pre-emption.
Accordingly, the plaintiff exercised his right of pre-emption properly.
Did plaintiff make a counter-offer?
[33] The high court found that any attempt to delete any term contained in the
proposed agreement would constitute a counter-offer. Additionally, it found that the
plaintiff rejected the Fanie Trust offer and provided a counter-offer, ie the offer without
clause 2(d) of the Fanie Trust agreement. No offer was ever made to the plaintiff. He
could therefore not have made a counter-offer. On the contrary, the plaintiff offered to
purchase Portions 6 and 11 on the same conditions contained in the Fanie Trust
agreement.
[34] The finding with regard to the omission of clause 2(d) of the Fanie Trust
agreement in the initial agreement that the plaintiff presented to the de Beers is a red
herring. The de Beers pleaded that the Moladora Trust and Fanie Trust agreements
were cancelled. The clause 2(d) issue was therefore moot. Clause 2(d) was in any
event not a material clause; it was inserted for practical reasons to facilitate payment.
The de Beers conceded that the Moladora Trust and Fanie Trust agreements did not
constitute an exchange. The de Beers could therefore still continue with the Moladora
Trust agreement without the Fanie Trust agreement.
Was the price of Portions 6 and 11 determinable?
[35] The high court found that the price in the Fanie Trust agreement was for
Portions 6 and 11 and not the entire 600 hectares. It opined that additional terms and
conditions would have to be added to provide for the remaining farms. This reasoning
was based on its unfortunate finding that the farms had to be sold as a unit for the right
of pre-emption to be triggered. The finding of the high court is unsustainable. It is not
in dispute that the price of Portions 6 and 11 was determinable based on the Fanie
Trust agreement. A right of pre-emption is enforceable if the price and method of
payment are determinable.19
Remedy
[36] The de Beers argued that the only remedies at the plaintiff’s disposal are a
declaratory order or an interdict. This argument is misplaced. In Associated South
African Bakeries v Oryx20 this Court held that where a seller enters into a contract of
sale with a third party, who had knowledge of the right of pre-emption, in breach of
that right, the purchaser can by way of a unilateral declaration of intent step into the
shoes of the third party.21 The moment a right of pre-emption is exercised after a
contract was concluded with a third party, an independent contract, and not a
substitutionary one, comes into existence between the grantor and grantee and this
does not affect the validity of the contract between the grantor and the third party.22
[37] In Hirschowitz v Moolman23 this Court stated that:
‘In principle the holder of a right of pre-emption is entitled (in addition to claiming an interdict
or damages in appropriate circumstances) to seek the positive enforcement of his right.’24
19 Van Aardt & Another v Weehuizen & Others 2006 (4) SA 401 (N) para 16.
20 Associated South African Bakeries (Pty) Ltd v Oryx & Verenigte Bӓckereien (Pty) Ltd en Andere 1982
(3) SA 893 (A) (Oryx).
21 Ibid at 907E. In Mokone v Tassos Properties CC 2017 (5) SA 456 (CC) para 57 The Constitutional
Court said: ‘The idea of a “unilateral declaration of intent” is understandable in the circumstances. It is
consonant with the notion that, subject to whatever the law may be held to be in ordering or not ordering
specific performance, the grantor of the right is liable to coercion.’
22 Oryx at 919C-E.
23 Hirschowitz v Moolman and Others [1985] ZASCA 38; 1985 (3) SA 739 (A).
24 Ibid at 776D.
It is now well-settled in our law that a right to specific performance exists subject to the
Court’s discretion to grant or refuse it.25 There is no reason not to grant it in this matter.
The appeal must succeed and the order of the high court should be set aside.
[38] The following order is made:
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘(i) The plaintiff is directed to submit a duly signed deed of sale to the
defendants in respect of Portions 6 and 11 of the farm Swarts Rust, which
deed of sale shall contain all the terms and conditions of the Fanie Trust
agreement, save for clause 2(d), within 14 days from the date of this order;
(ii) The defendants are ordered to sign the deed of sale submitted to them by
the plaintiff within 14 days from date of receipt thereof;
(iii) Should the defendants fail and/or refuse to sign the deed of sale aforesaid,
the Sheriff of the Court (in which district the properties are situated) is
authorised and ordered to sign the deed of sale on behalf of the defendants
(iv) The defendants are ordered to pay the costs of the action, including the
costs of two counsel.’
______________________
MUSI AJA
ACTING JUDGE OF APPEAL
25 Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A).
APPEARANCES
For Appellant:
SG Maritz with him JF van der Merwe
Instructed by:
JP Kruyshaar Attorneys, Pretoria
Honeys Attorneys, Bloemfontein
For First and Second
Respondents:
R Grundlingh with him ASL van Wyk
Instructed by:
Hengst Attorneys, Pretoria
Lovius Block Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 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
Deon Nel v Petrus Jacobus de Beer & Another (406/21) [2022] ZASCA 145 (26 October
2022)
Today the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the
High Court, Pretoria (high court). The SCA set aside the order of the high court and replaced
it with one that ordered the plaintiff to submit a duly signed agreement to the defendants in
respect of Portions 6 and 11 of the farm Swart Rust (the farm), failing which, the Sherriff was
authorised and ordered to sign the agreement on behalf of the defendants.
This appeal revolved around a dispute about the validity and enforceability of a right of pre-
emption contained in a lease agreement. In terms of the agreement, five farms were to be
leased from the respondents for a period of three years. The plaintiff sought to buy the
property, but the parties decided to include a right of pre-emption in the agreement in favour
of the plaintiff instead. However, while the agreement was extant, the respondents concluded
a sale agreement with the Fanie Trust (the Fanie Trust agreement) in terms of portions 6 and
11 of the farm. The respondents did not offer the plaintiff the opportunity to exercise his right
of pre-emption. Rather, after the farms were sold to the Fanie Trust, the respondents entered
into another lease agreement with the plaintiff in respect of the same five farms for another
three years, also with the right of pre-emption. The plaintiff was unaware that the farms had
been sold, and when he became aware of this, informed the respondents that he intends to
exercise his right of pre-emption and provided them with a signed standard draft agreement.
The respondent did not sign the agreement. They also did not indicate that they were
unsatisfied with any particular term in the agreement, or that the draft agreement was
considered to be a counter offer. This prompted the plaintiff to launch an application seeking
an order declaring that his right of pre-emption was properly exercised over the properties sold
to the Fanie Trust.
The SCA had to determine whether the pre-emptive clause was triggered as only two of the
five farms were sold and whether the right was properly exercised. No evidence was tendered
indicating that the parties required the farms to be sold as a unit. This Court found that had
this been the case, the respondents would have been at liberty to undermine the plaintiff’s
right of pre-emption by selling the farms piece-by-piece, rendering the plaintiff’s rights
nugatory. This Court confirmed that where a right of pre-emption was granted in respect of a
property or separate properties and the grantor of the right sells a portion of the property or
one of the properties, the right of pre-emption would have been triggered, unless a contrary
intention emanated from the agreement between the parties. The moment when the right of
pre-emption was exercised after the contract was concluded with the third party, an
independent contract and not a substitutionary one came into existence between the grantor
and grantee. This, subsequently, did not affect the validity of the contract between the grantor
and the third party.
In the result, the SCA upheld the appeal and aside the order of the high court and replaced it
with one ordering the plaintiff to submit a duly signed agreement to the defendants in respect
of Portions 6 and 11 of the farm Swart Rust (the farm), failing which, the Sherriff was
authorised and ordered to sign the agreement on behalf of the defendants.
--------oOo--------
|
3740
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 972/2020
In the matter between:
SAGADAVA NAIDOO
FIRST APPELLANT
ODORA TRADING CC
SECOND APPELLANT
and
THE DUBE TRADEPORT CORPORATION FIRST RESPONDENT
SIVARAJ NAIDOO SECOND RESPONDENT
THE REGISTRAR OF DEEDS THIRD RESPONDENT
PIETERMARITZBURG
Neutral citation: Naidoo and Another v The Dube Tradeport Corporation and Others
(Case no 972/2020) [2022] ZASCA 14 (27 January 2022)
Coram:
MOCUMIE, MAKGOKA, MOTHLE, MABINDLA-BOQWANA JJA and
WEINER AJA
Heard:
25 NOVEMBER 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal website
and release to SAFLII. The time and date for hand down is deemed to be 10h00 on
the 27th day of January 2022.
Summary: Civil procedure – Exception proceedings – proper approach restated.
Close Corporations – common law derivative action – whether available in respect of
close corporations – whether an alleged beneficial owner of member’s interest in a
close corporation can invoke derivative action on behalf of close corporation. Section
54 of Close Corporations Act 69 of 1984 – third party’s reliance thereon must be bona
fide and innocent.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court, Durban (Lopes J sitting as
court of first instance):
The appeal is upheld with costs.
The order of the high court is set aside and substituted with the following:
‘1 The exception is dismissed with costs’.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Makgoka JA (Mocumie, Mothle, Mabindla-Boqwana JJA and Weiner AJA
concurring):
[1] This is an appeal against the order of the KwaZulu-Natal Division of the High
Court, Durban (the high court), which upheld the exception of the first respondent, The
Dube Tradeport Corporation (Dube Tradeport), to the appellants’ particulars of claim.
In the action, the first appellant, Mr Sagadava Naidoo (Sagadava) and the second
appellant, Odora Trading CC (Odora), a close corporation, sued the first defendant,
Mr Sivaraj Naidoo (Sivaraj) and Dube Tradeport to set aside the sale of certain farms,
known as the Penare Farm Properties (the properties) by Odora to Dube Tradeport.
Sagadava and Sivaraj are brothers, hence the reference to them by their first names.
This is without any disrespect, but solely to distinguish the two brothers.
[2] Sivaraj is the sole registered member of Odora, and accordingly holds the entire
member’s interest in it. However, it was alleged in the particulars of claim that
Sagadava was the actual beneficial owner of the member’s interest in Odora, and that
Sivaraj holds the member’s interest on behalf of Sagadava, and as his nominee. This
was alleged to be pursuant to certain oral agreements between Sagadava and Sivaraj.
Accordingly, it was alleged, Sivaraj had no right to sell the property to Dube Tradeport
without Sagadava’s consent. On that basis, it was alleged that Sagadava had instituted
a derivative action on behalf of Odora, and a personal action in his own name to set
aside the sale of the properties.
[3] The properties were the sole assets of Odora, and were sold pursuant to a
written purchase agreement between Odora (under the controlling mind of Sivaraj)
and Dube Tradeport. Pursuant to the sale, the properties were transferred and
registered in the name of Dube Tradeport, hence the formal citation of the third
respondent, the Registrar of Deeds, against whom no relief was sought, and who, as
a result, did not oppose the action and does not participate in this appeal.
[4] In the particulars of claim, Sagadava’s claim to be the beneficial owner of the
member’s interest in Odora and of the properties, was explained as follows. Initially
Sagadava held the entire member’s interest in Odora. During December 2001 Odora
purchased the properties. On 20 January 2001 Sagadava and Sivaraj concluded an
oral agreement in terms of which certain assets in Sagadava’s possession, were to be
divided between the two brothers on a 50/50 percent basis (the 2001 agreement).
Those assets included Sagadava member’s interest and loan account in Odora. As
already stated, the properties in issue were already the assets of Odora at that stage.
Accordingly, the properties became part of the 2001 agreement. The ultimate
agreement was that the assets would be registered in the personal names of
Sagadava and Sivaraj. However, the latter repudiated the 2001 agreement and
refused to sign any record of it. In response, Sagadava refused to accept Sivaraj’s
repudiation and elected to hold him liable to the agreement.
[5] In the alternative to the 2001 agreement, it was pleaded that during 1998,
Sagadava and Sivaraj concluded an agreement in terms of which Sivaraj would hold
certain assets on behalf of Sagadava, as his nominee (the 1998 agreement). Shortly
thereafter, in 2001, Odora purchased the properties, which became part of the 1998
agreement. On 13 January 2014, Sagadava instituted action in the high court against
Sivaraj seeking an order that his (Sagadava’s) member’s interest in Odora be
transferred and delivered to him. Sivaraj defended the action, also claiming to act on
behalf of Odora. While that action was pending, on 18 December 2015, Sivaraj,
purportedly on behalf of Odora, sold the properties to Dube. This is the impugned
purchase agreement.
[6] Regarding locus standi, it was alleged that Odora was being prevented from
pursuing its rights itself by virtue of the alleged unlawful actions of Sivaraj, as the
registered holder of the entire member’s interest in Odora. Thus, it was averred,
Sagadava brought a ‘partially derivative action’ on behalf of Odora in relation to the
purchase agreement referred to above, and a personal action in respect of his own
rights. Accordingly, an order was sought declaring the purchase agreement to be null
and void, and for directing the properties to be re-transferred to Odora, together with
certain ancillary relief.
[7] In response to the summons, both Dube Tradeport and Sivaraj filed notices of
intention to defend, and later, exceptions to the particulars of claim. Before the matter
was argued in the high court, Sivaraj withdrew his exception. Accordingly, the court
only considered Dube Tradeport’s exception, which was predicated on the contention
that because Sagadava was not a member of Odora he could not bring an action on
its behalf, and that, in any event, s 54 of the Close Corporations Act 69 of 1984 (the
Close Corporations Act) protected Dube Tradeport. That section provides that a
member of a close corporation is an agent of the close corporation in dealings with a
third party and has the power to bind the close corporation, except where a third party
knows or ought to have known of the member’s lack of authority to transact on behalf
of the close corporation. I consider the provisions of this section in more detail later.
[8] In its judgment, the high court first considered whether a common law derivative
action is available in respect of close corporations, and held that it was. However, it
concluded that because Sagadava was not a registered member of Odora, he was not
entitled, in terms of that law, to institute an action on its behalf or in its name. According
to the high court, neither s 49 nor s 50 of the Close Corporations Act granted Sagadava
the right to institute an action in the name of Odora. In any event, concluded the high
court, as Sagadava had relied on the common law derivative action to advance the
suit of Odora, he could not rely on s 50.
[9] The high court also considered s 54 of the Close Corporations Act. It held that
its provisions preclude the action by both Sagadava and Odora against Dube
Tradeport, as the latter had transacted with Sivaraj, the sole member of Odora, and
who, as its agent, had the power to bind it. Thus, the high court reasoned, Dube
Tradeport was protected against the negative effects of the ultra vires doctrine and the
doctrine of constructive notice.
[10] On these findings, the high court concluded that the appellants’ pleaded case
did not set out a cause of action against Dube Tradeport. It accordingly upheld the
exception with costs. Based on its finding in respect of s 54, the high court found it
pointless to afford the appellants leave to amend their particulars of claim, ‘as they
cannot amend to succeed against [Dube Tradeport]’. The issue in the appeal, with the
leave of the high court, is whether its findings and conclusion are correct.
[11] Before I consider the contentions before us, it is necessary to briefly explain the
origin and nature of the common law derivative action. It is an exception to the rule
enunciated in the English decision of Foss v Harbottle (1843) 2 Hare 461; 67 ER 189
that individual shareholders have no cause of action in law for any wrongs done to
the corporation and that if an action is to be brought in respect of such losses, it must
be brought by the corporation itself. The exception is available where what has been
done amounts to fraud and the wrongdoers are themselves in control of the company.
Although there has not been an express adoption by this Court of the English law of
derivative actions as part of our common law, it has been consistently applied.
In Francis George Hill Family Trust v South African Reserve Bank and Others 1992
(3) SA 91 (A) the question was left open as it was deemed unnecessary to determine
it because the court considered that the facts of the case did not fall within the
exception. However, as noted in Lewis Group Ltd v Woollam & Others [2017] 1 All SA
192 (WCC); 2017 (2) SA 547 (WCC) para 30, subsequent decisions of this Court
appear to have accepted, without discussion, that the common law exception forms
part of our law.1
1 In Lewis Group Ltd v Woollam & Others [2017] 1 All SA 192 (WCC); 2017 (2) SA 547 (C) para 30,
reference is made to: Wimbledon Lodge (Pty) Ltd v Gore NO and Others 2003 (5) SA 315 (SCA); [2003]
[12] In this Court, the following contentions were advanced on behalf of Dube
Tradeport. Because the common law derivative action was abolished in s 165(1) of
the Companies Act 71 of 2008 and replaced with a statutory derivative action, there
was no common law derivative action applicable to close corporations. In any event,
the appellants were barred from bringing the action by reason of ss 49 and 50 of the
Close Corporation Act. Both sections are expressly limited to proceedings being
instituted by registered members of a close corporation designated in the founding
statement. Section 49(1) provides that:
‘Any member of a corporation who alleges that any particular act or omission of the corporation
or one or more other members is unfairly prejudicial, unjust or inequitable to him or her, or to
some members including him or her, or that the affairs of the corporation are being conducted
in a manner unfairly prejudicial, unjust or inequitable to him or her, or to some members
including him or her, may make an application to a Court for an order under this section.’
Section 50 gives the right to a member to institute proceedings against fellow-
members on behalf of corporation, where among other things, a member or a former
member of a corporation is liable to the corporation for (a) breach of a duty arising
from his or her fiduciary relationship to the corporation in terms of s 42; or (b)
negligence in terms of s 43.
[13] The contention on behalf of Dube Tradeport was that, as Sagadava is not a
member of Odora, he is excluded from pursuing any legal proceedings on behalf of
Odora. It was also incompetent, so was the contention, for Odora to bring an action
itself or to be assisted by a non-member, Sagadava.
[14] It seems to me there are three issues for determination. The anterior issue is
the locus standi of both Sagadava and Odora. That is dependent on Sagadava’s claim
that he is the ‘beneficial owner’ of the member’s interest in Odora. The second issue
is whether a common law derivative action upon which Sagadava relies, is available
2 All SA 179 (SCA), Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others
2009 (4) SA 89 (SCA); Letseng Diamonds Ltd v JCI Ltd and Others 2009 (4) SA 58 (SCA); Cassim and
Another v Voyager Property Management and Others 2011 (6) SA 544 (SCA); Communicare and
Others v Khan and Another 2013 (4) SA 482 (SCA); Gihwala and Others v Grancy Property Ltd and
Others [2016] ZASCA 35; [2016] 2 All SA 649 (SCA) and Itzikowitz v Absa Bank Ltd 2016 (4) SA 432
(SCA).
in respect of close corporations. If it is, a subset of that is whether Sagadava is entitled
to bring such action on behalf of Odora. The third is whether s 54 of the Close
Corporations Act protects Dube Tradeport. Needless to say, both the second and third
issues arise only if the anterior issue is answered in the affirmative.
[15] With regard to the anterior issue, regard must be had to the pleadings.
As mentioned already, Sagadava was cited in the summons as the first plaintiff and
Odora as the second plaintiff. The complaint in the exception is that Sagadava should
have brought the action in his own name on behalf of Odora, and not in Odora’s name.
To consider this complaint, the allegations in the particulars of claim must be read as
a whole and in context. In relevant parts, the particulars of claim contain the following
allegations:
‘[3] As pleaded more fully below this action is partially a derivative action by [Sagadava] on
behalf of [Odora] which is prevented from pursuing its rights itself by virtue of the unlawful
actions of [Sivaraj] as the present registered member of the entire members' interest in
[Odora].
…
[20] The present action is a derivative action in respect of [Odora’s] rights in relation to the
purchase agreement and is also a personal action by [Sagadava] in respect of his own rights.
…
(31) [Odora] is prevented by [Sivaraj’s] said unlawful control and actions from taking action
itself in relation to the purchase agreement, and [Sivaraj], purporting to act on behalf of
[Odora], has refused to do so.
[32] [Sagadava] is accordingly entitled, by derivative action, to do so on behalf of [Odora].’
[16] On a simple and sensible reading of these allegations, the essence is clear that
it is not Odora itself that is suing, but Sagadava suing on its behalf, and in his own
name. Thus, Sagadava was suing in two capacities, namely in his personal capacity
as a victim of an alleged fraud perpetrated against him by Sivaraj, and in his
representative capacity on behalf of Odora. On the basis of established principles of
derivative action, Odora was not supposed to be cited as a plaintiff. But merely
because it has been cited, does not detract from the fact that Sagadava purported to
sue on behalf of Odora. This is expressly averred. However, despite the imperfections,
the essence of Sagadava’s locus standi was clear. An over-technical approach should
be avoided because it destroys the usefulness of the exception procedure, which is to
weed out cases without legal merit.2 On the face of it, Sagadava’s case cannot be
classified in the category of those ‘without legal merit’.
[17] I have earlier detailed Sagadava’s claims to the membership of Odora. To
recap, he alleges that he was in fact, the sole member, alternatively, a 50 percent
member, of Odora and that there was an oral agreement between him and Sivaraj that
the latter would hold the membership of Odora on his behalf as his nominee. The high
court seemingly doubted Sagadava’s assertions in this regard. It said:
‘[Sagadava] is not the registered member of Odora, and accordingly, he is not capable of
passing a resolution as a member authorising the institution of such an action. An acceptance
by me that he is in fact the sole member or a 50 per cent member, (for the purpose of the
exception) does not solve the [his] problem. As a legal stranger to Odora, albeit one who
claims a right to be a member, does not enable him to authorise the institution of proceedings
in the name of Odora.’
[18] With respect, the high court erred. This being an exception stage, the factual
averments by Sagadava must have been accepted as correct, unless they are
manifestly false,3 which fact is not apparent from the pleadings. The high court should
not have gone beyond the allegations. It could well be that at the trial, the allegations
turn out to be false. But for the purposes of the exception, their truthfulness should
have been accepted. The high court’s reasoning also suffers an internal contradiction.
The high court said that even if it accepts that Sagadava is the sole, or 50 percent
member of Odora, he is ‘a stranger to Odora’ who could not institute an action on its
behalf. It defies logic that as a member, even a sole member, Sagadava could, in the
same breadth, be ‘a stranger’ to it. It follows that for the purposes of the exception,
facts regarding Sagadava’s membership of Odora, and therefore his locus standi to
2 Telematrix (Pty) Ltd v Advertising Standards Authority SA [2005] ZASCA 73; 2006 (1) SA 461 (SCA)
[2006] 1 All SA 6 (SCA) para 3.
3 Natal Fresh Produce Growers' Association and Others v Agroserve (Pty) Ltd and Others 1990 (4) SA
749 (N) at 754J-755B; Voget and Others v Kleynhans 2003 (2) SA 148 (C) para 9; 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.
bring a derivative action on its behalf, had been established and should therefore have
been accepted by the high court.
[19] This brings me to the second issue, namely, whether a common law derivative
action is available in respect of close corporations. As already mentioned, the high
court answered this question in the affirmative. That conclusion was assailed in this
Court on behalf of Dube Tradeport on the basis that such action is excluded by ss 49
and 50 of the Close Corporations Act. It is therefore necessary to consider this
contention.
[20] Prior to the promulgation of the Companies Act, a common law derivative action
was recognised in respect of companies, and by extension, to close corporations.4
Statutorily, ss 266-268 of the repealed Companies Act 61 of 1973, offered rights to
members to take legal proceedings, or cause legal proceedings to be taken on behalf
of the company when, acting through its directors, the company failed to take such
proceedings. In respect of close corporations, ss 49 and 50, to which I have already
referred, provide members with similar rights. These statutory rights, have always
been parallel, and complimentary to, the common law rights of shareholders of
companies and members of close corporations to pursue derivative actions on behalf
of their respective corporate entities. They were never meant to oust those common
law rights.
[21] The Companies Act, however, abolished the common law right of derivative
action in s 165, and substituted it with a statutory right.5 This, however, has not affected
the common law rights in respect of close corporations which were incorporated prior
to the commencement of the Companies Act but which have not converted to
companies pursuant to that Act.6 The comparison sought to be drawn by the
4 In TWK Agriculture Ltd v NCT Forestry Co-Operative Ltd & Others 2006 (6) SA 20 (N) the common
law derivative action was extended in respect of co-operatives. It was there decided that the common
law principles of minority protection in companies are applicable to co-operatives, and that, accordingly,
a common derivative action is available to a member of a co-operative.
5 Section 165 of the Companies Act 71 of 2008 reads:
‘Any right at common law of a person other than a company to bring or prosecute any legal proceedings
on behalf of that company is abolished, and the rights in this section are in substitution for any such
abolished right.
6 In terms of Schedule 3(3) of the Companies Act, close corporations will continue to exist indefinitely
until they are deregistered or dissolved under the current Close Corporations Act, or converted to a
respondent between ss 49 and 50 of the Close Corporations Act and s 165 of the
Companies Act is misplaced. Not only is the abolition of common law derivative actions
expressly stated in s 165(1) of the Companies Act, s 165(d) provides for a third party
right, which is not found in ss 49 and 50 of the Close Corporations Act. The situation
remains therefore that the common law rights of members of close corporations,
including an actual, unregistered owner of a member’s interest, to bring a derivative
action, are still available.
[22] In the particulars of claim it was averred that Odora has not converted to a
company, and that s 165 of the Companies Act therefore does not apply to it. It follows
that Sagadava is entitled, as he has done, to pursue a derivative action according to
the common law on behalf of Odora. It is important to point out that Sagadava has not
purported to rely on ss 49 or 50. He pursues his common law rights as the actual and
factual, albeit unregistered, member of Odora.
[23] I now turn to the third issue, which concerns s 54 of the Close Corporations Act,
and whether Dube Tradeport is protected by it. The section deals with the powers of
members to bind a close corporation. It reads:
‘1. Subject to the provisions of this section, any member of a corporation shall in relation to a
person who is not a member and is dealing with the corporation, be an agent of the
corporation.
2. Any act of a member shall bind a corporation whether or not such act is performed for the
carrying on of the business of the corporation unless the members so acting has in fact no
power to act for the corporation in the particular matter and the person with whom the member
deals, has or ought reasonably to have knowledge of the fact that the member has no such
power.’
[24] Evidently, the purpose of this section is to protect third parties who had bona
fide transacted with a member of a close corporation, against the negative effects of
company under in terms of s 1(1) of Schedule 2 of the Act. The current Close Corporations Act (with
slight amendments) and the new Companies Act will exist concurrently and close corporations will be
required to comply with the provisions of both Acts.
the ultra vires doctrine and the doctrine of constructive notice. It was submitted on
behalf of Dube Tradeport that it was protected under this section as it transacted with
a member of Odora, Sivaraj, who, on the basis of s 54, was an agent of Odora and
had the authority to bind it. Also, because he was the sole registered member.
[25] At face value, this submission is attractive. However, the caveat in sub-rule (2)
is equally important. Where the third party knows, or ought reasonably to know, that
the member he or she is dealing with has no power to act for the close corporation,
such third party does not enjoy the protection afforded by the section. In the present
case, in their particulars of claim, the appellants alluded to the dispute between
Sagadava and Sivaraj in respect of the membership of Odora and the ownership of
the properties. They pointed out that Sagadava had, pursuant to that dispute, instituted
an action for, among others, an order directing Sivaraj to transfer and deliver to him,
Odora’s member’s interest, which action was pending. The appellants went on to make
extensive allegations of fraud, unlawfulness and misrepresentations against Sivaraj in
relation to Odora and in particular, the sale of the properties to Dube Tradeport.
[26] Importantly, in respect of Dube Tradeport, the appellants alleged that Dube
Tradeport (a) was aware of the dispute between Sagadava and Sivaraj, and the
pending action in respect thereof; (b) accordingly knew or ought to have known of
Sagadava’s claimed rights; and (c) was therefore not a bona fide possessor who was
unaware of Sagadava’s prior claims. In essence, the appellants alleged that Sivaraj
had no actual power to sell the properties on behalf of Odora because he was a 50%
member of Odora or alternatively a mere nominee of Sagadava, and that Dube
Tradeport knew it, or in the circumstances, ought to have known it. In this regard, it is
important to have regard to the impugned purchase agreement between Odora and
Dube Tradeport, which is attached to the particulars of claim and therefore part of the
exception proceedings. Clause 4.3 thereof is a so-called ‘escape clause’, created in
favour of Dube Tradeport, in the event Odora was unable to deliver the purchased
properties to it. It reads as follows:
‘4.3 In the event that this Agreement is cancelled or set aside, or the transfer of the Properties
to [Dube Tradeport] is cancelled or set aside, (either before or after the Registration Date), or
[Odora] being unable to deliver the Properties to [Dube Tradeport] for any reason, (whether
as a result of the said dispute, or for any other reason), then [Odora] will repay the Purchase
Price and interest to [Dube Tradeport], no occupational rental will be paid by [Dube Tradeport],
and [Odora] will refund [Dube Tradeport] any costs or rates paid by [Dube Tradeport].
[27] The high court accepted that Dube was aware of the dispute between
Sagadava and Sivaraj over the membership of Odora and the properties when it
concluded the impugned purchase agreement with Odora. It also accepted that the
‘escape clause’ was inserted with this in mind. However, it concluded that this was not
enough for Dube Tradeport to lose the protection afforded in s 54, ‘because of the lack
of knowledge of [Dube Tradeport] as to the truth of the membership ownership.’ The
high court further said:
‘… [I] cannot conclude that [Dube] knew, or reasonably ought to have known the truth of the
membership arrangement between [Sagadava] and [Sivaraj]. [Dube Tradeport] was plainly
aware that the two brothers were in dispute. That is clear from the incorporation of the dispute
in the sale agreement as a mechanism for the first respondent to escape from the sale
agreement. Even so, does that mean that Dube TradePort knew of the truth, or reasonably
should have done so? Surely they probably did not - that is why the escape clause was
included in the sale agreement - just in case they were being misled. Had they known, or been
capable of establishing the truth, they would almost certainly have done so. The sale
agreement was, after all, no trifling matter.’
[28] I am in respectful disagreement with this reasoning. Section 54 has two
requirements as pertains to the knowledge of a third party of a member of a close
corporation’s lack of authority: actual or imputed knowledge. These requirements are
in the alternative. The appellants relied on the latter. Whether a third party knew or
ought to have known of the member’s lack of power to act for the corporation is a
factual question, the truthfulness of which can only be determined at the trial. The court
said that Dube Tradeport ‘… surely … probably did not know…’. The high court was
not sitting in the trial of the main action. It was therefore in no position to determine
probabilities or throw doubt on the facts alleged in the particulars of claim, for the
simple reason that it had only one version before it, namely that of the appellants. As
stated already, it had to accept that version, unless it was patently false, which is not
the case here.
[29] For the purposes of exception proceedings, it was sufficient that the appellants
had alleged that Dube Tradeport was aware of: (a) the dispute between the parties;
(b) the nature thereof and (c) that it concerned the very properties it purchased from
Odora. Accepting these to be true for the purposes of the exception, Dube Tradeport
did not have to know the truthfulness of Sagadava’s claims regarding the membership
of Odora. It is sufficient that it subjectively foresaw the possibility of their truthfulness,
but proceeded with the purchase agreement nevertheless.
[30] This is how the doctrine of constructive notice applies. In terms of that doctrine,
a person who acquires an asset while aware that someone else has a prior personal
right to it, may be held bound to give effect to that right. In Meridian Bay Restaurant
(Pty) Ltd v Mitchell SC NO [2011] ZASCA 30; 2011 (4) SA 1 (SCA) para 17, it was
pointed out that the only requirement for the operation of the doctrine is actual
knowledge (or perhaps dolus eventualis) with regard to the prior personal right on the
part of the acquirer. Once this requirement is satisfied, the holder of the personal right
is afforded what is in effect a limited real right against the acquirer. This Court
explained at para 18:
‘Thus C, the acquirer of the real right, does not need to have actual knowledge of B’s prior
right. It suffices that C subjectively foresaw the possibility of the existence of B’s personal right
but proceeded with the acquisition of his real right regardless of the consequences to B’s prior
personal right...’
[31] Dube Tradeport’s position is also akin to a purchaser described thus in
Dhayanunth v Narain 1983 (1) SA 565 (N) at 565:
‘… [A purchaser who] has been apprised, prior to purchasing the property, of the existence of
some right in the property vested in a third party in such a way as to make it incumbent upon
him to enquire, before purchasing the property, precisely what that right comprised. If he does
not do so, he cannot be heard … to say that he did not know the precise nature of the third
party’s right. The imperfection of his knowledge is attributable to his own act in wilfully shutting
his eyes and failing to see what was perfectly obvious.’
[32] In the present case, there is more than sufficient basis to accept that Dube
Tradeport subjectively foresaw the possibility of the truthfulness of Sagadava’s claims
in respect of Odora and the properties, but proceeded with the acquisition of the
properties regardless of the consequences of those claims. Importantly, the dispute
concerned the very properties that Dube Tradeport purchased from Odora. What is
more, should Sagavada’s claim be true, the transaction, being one to dispose of
immovable property of a close corporation, would be subject to the provisions of
s 46(b)(iv) of the Close Corporations Act, in terms of which the consent in writing of
both Sagadava and Sivaraj would be required.
[33] Given the acrimonious nature of the dispute between Sagadava and Sivaraj, of
which Dube Tradeport was aware, the latter could not reasonably have believed that
the required written consent would be given. By proceeding with the purchase
agreement under these circumstances, Dube Tradeport accepted the risk that
Sagadava’s claims might be upheld. In that event Odora could not deliver the
properties, hence the ‘escape clause’ in the purchase agreement.
[34] The upshot of these considerations is that Dube Tradeport was not a bona fide,
innocent purchaser. It had the imputed knowledge envisaged in s 54(2) of the Close
Corporations Act. This removed from it the protection of s 54(1). It follows that the
s 54 issue should also have been decided against Dube Tradeport.
[35] In sum, the main flaw in the judgment of the high court is the failure to apply the
established approach in respect of exceptions, namely to accept as true and correct,
the factual averments in the particulars of claim, unless clearly false and untenable.
This led to a wrong conclusion that Sagadava is not a member of Odora. Had it
adopted the proper approach, it would have accepted the appellants’ uncontested
averments that Sagadava is the beneficial owner of the member’s interest in Odora,
and that Sivaraj was his nominee. On that basis, it should have found that Sivaraj had
no authority to sell the properties to Dube Tradeport. As regards Dube Tradeport, the
high court should have found that given the allegations made against it in the
particulars of claim, its reliance on s 54(1) was unavailing.
[36] It must be borne in mind that an excipient who alleges that a summons does
not disclose a cause of action must establish that, upon any construction of the
particulars of claim, no cause of action is disclosed.7 In my view, this cannot be said
of the appellants’ particulars of claim. In all the circumstances Dube Tradeport’s
exception should have been dismissed. The appeal must therefore succeed.
[37] In the result the following order is made:
1 The appeal is upheld with costs.
2 The order of the high court is set aside and substituted with the following:
‘1 The exception is dismissed with costs’.
____________________
T Makgoka
Judge of Appeal
7 Fairoaks Investment Holdings (Pty) Ltd. and Another v Oliver and Others [2008] ZASCA 41; [2008] 3
All SA 365 (SCA); 2008 (4) SA 302 (SCA) para 12.
APPEARANCES:
For appellants:
G D Harpur SC
Instructed by:
Dwarika, Naidoo & Company, Durban
Fixane Attorneys, Bloemfontein.
For first respondent:
A J Dickson SC
Instructed by: PKX Attorneys, Pietermaritzburg
Lovius Block 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:
27 January 2022
STATUS:
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Naidoo and Another v The Dube Tradeport Corporation and Others (Case no 972/2020) [2022]
ZASCA 14 (27 January 2022)
Today, the Supreme Court of Appeal (the Court) upheld an appeal against an order of the
KwaZulu-Natal Division of the High Court, Durban, which upheld the exception of the first
respondent, The Dube Tradeport Corporation (Dube Tradeport), to the appellants’ particulars
of claim. In the action, the first appellant, Mr Sagadava Naidoo (Sagadava) and the second
appellant, Odora Trading CC (Odora), a close corporation, sued the first defendant, Mr Sivaraj
Naidoo (Sivaraj) and Dube Tradeport to set aside the sale of certain farms which belonged to
Odora and had been sold to Dube Tradeport under the controlling mind of Sivaraj.
Sivaraj is the sole registered member of Odora, and accordingly holds the entire member’s
interest in it. However, it was alleged in the particulars of claim that Sagadava was the actual
beneficial owner of the member’s interest in Odora, and that Sivaraj holds the member’s
interest on behalf of Sagadava, and as his nominee. This was alleged to be pursuant to certain
oral agreements between Sagadava and Sivaraj. Accordingly, it was alleged, Sivaraj had no
right to sell the property to Dube Tradeport without Sagadava’s consent. On that basis, it was
alleged that Sagadava had instituted a derivative action on behalf of Odora, and a personal
action in his own name to set aside the sale of the properties.
Dube Tradeport filed an exception to the particulars of claim, predicated on the contention that
because Sagadava was not a member of Odora he could not bring an action on its behalf, and
that, in any event, s 54 of the Close Corporations Act 69 of 1984 (the Close Corporations Act)
protected Dube Tradeport. That section provides that a member of a close corporation is an
agent of the close corporation in dealings with a third party and has the power to bind the close
corporation, except where a third party knows or ought to have known of the member’s lack
of authority to transact on behalf of the close corporation. These contentions found favour with
the high court.
On appeal, the Court considered three issues. First, the locus standi of both Sagadava and
Odora, which depended on Sagadava’s claim that he is the ‘beneficial owner’ of the member’s
interest in Odora. Second, whether a common law derivative action upon which Sagadava
relied, is available in respect of close corporations, and if it is, whether Sagadava was entitled
to bring such action on behalf of Odora. Third, whether s 54 of the Close Corporations Act
protected Dube Tradeport.
On the first issue, the Court concluded that this being an exception stage, the factual
averments by Sagadava must have been accepted as correct, unless they were manifestly
false, which fact was not apparent from the pleadings. For the purposes of the exception, his
locus standi had been established. With regard to the common law derivative action for close
corporations, the Court considered the effect of the abolishment of the common derivative
action by s 165(1) of the Companies Act 71 of 2008 and concluded that this did not affect
close corporations that had not converted to companies. Thus, the common law derivative
action was still available in respect of such close corporations. Turning to s 54 of the Close
Corporations Act, the court considered that Dube Tradeport had known of the nature of the
dispute between Sagadava and Sivaraj about the membership of Odora and the properties, it
was sufficient, at least at exception stage, that the imputed knowledge in terms of s 54(2)
should be attributed to it. As a result, it did not enjoy the protection of s 54 of the Close
Corporations Act.
Accordingly, the Court, per Makgoka JA (with Mocumie, Mothle, Mabindla-Boqwana JJA and
Weiner AJA concurring), upheld the appeal with costs.
--END--
|
2313
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 474/08
In the matter between:
ROAD ACCIDENT FUND
Appellant
and
PIERRE FRANCOIS CLOETE N O
First Respondent
ROGER RENÈ JULIA THOMAS
Second Respondent
ADV H M CARSTENS SC (ARBITRATOR)
Third Respondent
Neutral citation:
Road Accident Fund v P F Cloete NO (474/2008) [2009]
ZASCA 126 (29 September 2009)
Coram:
Harms DP, Heher, Maya JJA and Griesel and Tshiqi AJJA
Heard:
11 September 2009
Delivered:
29 September 2009
Summary:
Arbitration – question of law for opinion of the court stated
by arbitrator in terms of s 20(1) of Arbitration Act 42 of
1965 – whether High Court had jurisdiction to hear matter
– nature of discretion of arbitrator and of court.
ORDER
On appeal from: the High Court, Cape Town (Cleaver J).
Order:
1.
The appeal is dismissed with costs.
2.
The cross-appeal is upheld with costs.
3.
The costs shall include the costs of two counsel.
4.
The order of the court below is set aside and substituted with the
following:
‘The application is dismissed with costs, including the costs of two
counsel, where so employed.’
JUDGMENT
GRIESEL AJA:
[1] This is an appeal and cross-appeal against a judgment of the High
Court, Cape Town (Cleaver J), which comes before us with leave of that court.
The matter arises from an arbitration between the parties in the course of which
the arbitrator stated a question of law for the opinion of the court in terms of
s 20(1) of the Arbitration Act 42 of 1965 (‘the Act’).1
[2] The appellant, the Road Accident Fund (‘the Fund’), established in
terms of the Road Accident Fund Act 56 of 1996, is the defendant in the
1 Section 20(1) of the Act provides:
‘An arbitration tribunal may, on the application of any party to the reference and shall, if the
court, on the application of any such party, so directs, or if the parties to the reference so agree,
at any stage before making a final award state any question of law arising in the course of the
reference in the form of a special case for the opinion of the court or for the opinion of counsel.’
arbitration. The first respondent (the first claimant in the arbitration) is the
curator ad litem for Dr Els Thomas, a young medical practitioner from Belgium,
who was seriously injured in a motor collision near Cape Town on 8 October
1996 while on vacation in South Africa. The second respondent (the second
claimant in the arbitration) is her father, Mr R R J Thomas, acting as her duly
appointed ‘bewindvoerder’ (equivalent of a curator bonis) in Belgium. (In what
follows, I refer to the respondents individually by name and collectively as ‘the
claimants’.) The arbitrator, senior counsel at the Cape Bar, has been joined as
the third respondent. He abides the decision of the court and has played no
active role in these proceedings.
Factual background
[3] Dr Thomas had commenced her own practice near Antwerp in Belgium
not long before the accident happened. As a result of the injuries sustained in
the collision, she suffers from mental, physical and psychological handicaps
which prevent her from practising as a medical doctor and from being gainfully
employed at all. After the appointment of a curator ad litem to represent her,
action was instituted in the Cape Town High Court against the Fund to recover
damages, inter alia, in respect of the cost of medical care, the cost of accommo-
dation and loss of earning capacity in respect of Dr Thomas. That litigation was
in due course settled on the basis that the Fund admitted liability for 70 per cent
of the damages suffered by Dr Thomas due to her injuries. By agreement
between the parties, the quantum of her claim was thereupon referred for deter-
mination by way of arbitration in terms of the Act.
[4] The hearings relating to the quantum of the claim took place before the
arbitrator in Belgium over three sessions, during February 2003, August/
September 2003 and September 2005, before final argument was addressed to
the arbitrator during March 2006. He made an interim award on 15 June 2006,
as well as a further (final) award on 19 September 2006.
[5] At the heart of the dispute between the parties lies the entitlement of Dr
Thomas to certain benefits in terms of the Belgian social security system and
the question whether any such benefits should be deducted from the damages
payable by the Fund. According to Prof Guido van Limberghen, professor in
Social Security Law at the Vrije Universiteit Brussel who submitted an expert
report on behalf of the claimants, self-employed persons in the position of Dr
Thomas qualify for social security benefits consisting of medical and ‘invalidity’
(disability) insurance; a family benefit insurance; pension insurance; and
insolvency insurance. The social security system was established by legislation
and administered by the state. It is compulsory and regulated by public
legislation, not by private contract.
[6] The social security scheme for medical insurance is administered
through insurance institutions, of which the Onafhankelijk Ziekenfonds is one.
Dr Thomas is a member of the Onafhankelijk Ziekenfonds and has received
benefits from it arising from the injuries sustained in the collision. Part of those
benefits relate to compulsory cover, and the remainder to optional cover she
enjoyed under those schemes.
[7] The fact that the accident occurred in South Africa does not deprive Dr
Thomas of the right to the assistance of the Belgian medical cost insurance for
the self-employed. This entails a right to compensation for the treatment she
received in a South African nursing institution and the treatment she
subsequently received after her return to Belgium.
[8] She is also entitled to employment disability benefits for the period that
she was treated in South Africa and for the period after her return to Belgium.
Under Belgian law the statutory insurance (or social security) institutions are
obliged to pay compensation to Dr Thomas in anticipation of recovery of
damages from any accountable third party or its insurer involved. The Belgian
insurance institution (in this case the Onafhankelijk Ziekenfonds) is entitled to
recover such compensation from the wrongdoer if the accident occurred in
Belgium or in a country that recognises its right to recover, of which South
Africa is not one.
[9] It appeared, further, that there is no entitlement to benefits once actual
compensation has been received from an accountable third party. Thus Dr
Thomas’s right of recovery against the Belgian scheme will fall away once she
receives compensation from the Fund. There is a statutory duty on a claimant to
keep the relevant insurance institution fully informed as to the existence of
claims against wrongdoers and diligently to pursue such claims. In this regard,
Prof van Limberghen expressed the following view regarding the possibility of
Dr Thomas recovering double compensation in respect of her injuries:
‘To enable the [Belgian] insurance institution to recuperate the compensation of the
medical and invalidity insurance, to prevent doctor Thomas from being compensated
twice and to prevent the Road Accident Fund from escaping its obligations towards
doctor Thomas, the only solution is an agreement entered into between doctor Thomas
and the Belgian insurance institution. In that agreement doctor Thomas has to
undertake to repay the compensation she receives from the Road Accident Fund to the
insurance institution insofar as it covers the compensation that she had already
received from the insurance institution.’
[10] The evidence further revealed that Mr Thomas, on behalf of himself and
his daughter, had in fact furnished an undertaking to refund to the Belgian
insurance institutions such benefits as Dr Thomas may receive from the Fund
for the self-same loss.
[11] Based on the above evidence the Fund took the view, notwithstanding
the undertaking mentioned above, that the benefits received and to be received
by the claimants from the various social security funds fall to be deducted from
the damages to be awarded to the claimants.
[12] The Fund’s view was resisted by the claimants, relying inter alia on the
judgment of Scott J in Zysset & others v Santam Limited.2 In that case, the four
plaintiffs, all Swiss citizens domiciled and resident there, were injured in a motor
collision in Namibia. They received financial benefits from one or other of two
legislatively constituted compulsory social insurance schemes in Switzerland,
whose object was the protection of the entire population of Switzerland against
certain consequences of disease and accident. They sued the defendant for
2 1996 (1) SA 273 (C).
damages as the insurer under the Compulsory Motor Vehicle Insurance Act 56
of 1972 of the other motor vehicle involved in the collision. The defendant
admitted the negligence of the driver of the insured vehicle but claimed that the
financial benefits received from the two social insurance schemes had to be
deducted from the damages they had sustained. It appeared that the plaintiffs
had entered into an agreement with the Swiss insurance schemes that, in the
event of the plaintiffs receiving the full amount of their damages, they would
repay to the schemes the compensation received from those schemes. The
issue before the court was whether or not the financial benefits from the Swiss
schemes were to be deducted from the damages to be awarded by the court in
the actions against the defendant.
[13] The court held that there could be no question of a deduction if the
plaintiffs were not doubly compensated and the effect of the agreement was
that the plaintiffs would not be doubly compensated if they were awarded their
full damages, since they would then have to repay to the Swiss schemes
whatever they had received from them in benefits in respect of their patrimonial
loss; further, that it was irrelevant that the plaintiffs had not been legally bound
to enter into the agreement.3
[14] The court accordingly issued an order declaring that, with regard to the
claim of each plaintiff, no deduction from the damages as finally determined by
the court was to be made in respect of any amount or any portion thereof which
was or is to be received from the Swiss schemes and which in terms of the
agreement fell to be repaid to the Swiss schemes.4
The application in terms of s 20(1)
[15] It is apparent from the above synopsis that the same, or similar,
questions that arose in Zysset also arose in the present case. On the face of it,
therefore, Zysset would constitute binding authority in respect of the issues to
be decided in the present arbitration. However, it was contended on behalf of
3 At 281G–282B.
4 At 282E.
the Fund that Zysset had been wrongly decided. For this reason, the Fund
sought an opportunity of persuading the court of its view. It accordingly asked
the arbitrator in terms of s 20(1) of the Act to state the following questions of law
for the opinion of the court in the form of a special case:
‘1.1
Whether the value of any of the benefits referred to below received or to be
received by the First and/or Second Claimants, or anyone appointed as curator bonis
or “bewindvoerder” on behalf of Dr Els Thomas, should be excluded or deducted from
any damages to be awarded to the Claimants or not:
1.1.1
any benefits received or receivable from the Belgian Onafhankelijk
Ziekenfonds pursuant to compulsory cover she enjoyed from that fund; and/or
1.1.2
any medical and/or disability benefits received or receivable pursuant to
compulsory cover she enjoyed under the Belgian Medical and Invalidity
Insurance Act of 1994 (“ZIV-Wet 1994”); and/or
1.1.3
any benefits received or receivable pursuant to compulsory cover she enjoyed
under the Royal Decree of 3 July 1996 (Belgium); and/or
1.1.4
any benefits received or receivable pursuant to compulsory cover she enjoyed
under the Belgian medical Cost Decree for the Self-employed of 1997; and/or
1.1.5
any benefits received or receivable pursuant to compulsory cover she enjoyed
under the Royal Decree of 3 July 1996 and/or the Employment Disability
Decree for the Self-employed (Arbeidsongeschkiktheidsbesluit voor Zelf-
standigen); and/or
1.1.6
any benefits received or receivable from the Vlaams Fonds voor Sociale
Integratie van Personen met een Handicap.’
[16] The arbitrator was not prepared to state a question in the terms
requested by the Fund. In his ‘Ruling’, handed down on 15 June 2006, the
arbitrator referred to the test laid down by Lord Denning MR in Halfdan Grieg &
Co A/S v Sterling Coal and Navigation Corporation and another5 and adopted
in several subsequent South African decisions,6 where it was held as follows
with regard to comparable provisions in the English Arbitration Act of 1959:
‘The point of law should be real and substantial and such as to be open to serious
argument and appropriate for decision by a court of law as distinct from a point which is
dependent on the special expertise of the arbitrator or umpire. The point of law should
be clear cut and capable of being accurately stated as a point of law – as distinct from
the dressing up of a fact as if it were a point of law. The point of law should be of such
importance that the resolution of it is necessary for the proper determination of the
case – as distinct from a side issue of little importance.
If those three requisites are satisfied, the arbitrator or umpire should state a case.’
[17] Having quoted the above passage, the arbitrator proceeded as follows:
‘The questions posed [by the Fund] will inter alia involve the construction of the
statutory enactments dealt with by Prof van Limberghen in his report. That part of the
report has been admitted and is no longer open to debate. Secondly, on Prof Van Lim-
berghen’s interpretation (as I read it) the obligation under the Belgian medical– and
invalidity insurance schemes to pay Dr Els Thomas will fall away once she receives
compensation from the defendant. The issue of double compensation then does not
arise. Thirdly, an argument that the value of benefits “receivable” (as opposed to
“received” or “to be received”) is deductible is in my view without merit and does not
meet the first of the criteria referred to above.’
[18] The arbitrator noted, however, that the solution proposed by Prof van
Limberghen accorded with the judgment in the Zysset matter and, since it was
contended on behalf of the Fund that this case had been wrongly decided and
an opportunity had been sought to persuade a court to re-examine the judgment
and the issues raised therein, he was prepared to grant the Fund such an
opportunity – inter alia in view of the fact that ‘a large amount of money is
5 [1973] 2 All ER 1073 (CA) at 1077c-g (other case references omitted).
6 Cf Administrator, Transvaal v Kildrummy Holdings (Pty) Ltd & another 1978 (2) SA 124 (T) at
127H–128A; Dorman Long Swan Hunter (Pty) Ltd v Karibib Visserye Ltd 1984 (2) SA 462 (C) at
472G–H; Government of the Republic of South Africa v Midkon (Pty) Ltd & another 1984 (3) SA
552 (T) at 560E.
involved here’.7 He accordingly directed that a special case in the following
terms be referred to the court for an opinion in terms of s 20(1) of the Act:
‘1.
In the matter of Zysset & others v Santam Limited 1996 (1) SA 273 (C) this
Honourable Court made the following order (at 282D–E):
“With regard to the claim of each plaintiff no deduction from the damages as finally determined
by this Court is to be made in respect of the amount, or any portion thereof, which was, or is to
be, received from IV, SUVA, or Berner and which in terms of the agreement of 7 December
1992 falls to be repaid to IV, SUVA or Berner. Any portion of the amount received from IV,
SUVA or Berner in respect of patrimonial loss which in terms of the agreement is not repayable
shall be deducted from the damages so determined.”
2.
The issues which arose from the Zysset matter have also arisen in the present
arbitration.
3.
The defendant questions the correctness of the decision in the Zysset matter;
the claimant contends that it was correctly decided.
4.
This Honourable Court is accordingly in terms of s 20 of the Arbitration Act 42
of 1965 requested to determine the following issue: Whether on the facts stated therein
the order in the Zysset matter was correctly made or not. If not, the court is requested
to state what the order should have been.’
The high court
[19] The Fund was not satisfied with the arbitrator’s formulation of the issue
and applied to the high court for an order (1) compelling the arbitrator to state
the questions of law in the form as initially formulated on behalf of the Fund;8
alternatively, and in any event, (2) to determine the issue as formulated by the
arbitrator in the special case. The claimants opposed the application and sought
to persuade the court that it should decline to hear the matter.
[20] The learned judge, like the arbitrator, felt obliged, inter alia in the light of
the test laid down in Halfdan Grieg and ‘in view of the amount involved and the
7 The eventual award in favour of the claimants exceeded R25 million.
8 As quoted in para 15 above.
importance of the issue’, to deal with the question of law stated by the
arbitrator. Having heard argument, the high court upheld the Fund’s argument
that the Zysset case had been wrongly decided. The court, however, did not
consider it ‘necessary or appropriate to redraft the order’, as requested by the
arbitrator. (The correctness or otherwise of the high court’s opinion as such is
not in issue before us by reason of s 20(2) of the Act, which provides that ‘(a)n
opinion referred to in subsection (1) shall be final and not subject to appeal and
shall be binding on the arbitration tribunal and on the parties to the reference.’)
[21] The learned judge thereafter dealt with the relief claimed in para 1 and
stated as follows (at paras 29–31):
‘Counsel were in agreement that it would not be appropriate at this stage either to
direct the arbitrator to refer the questions to this court, or for me to decide the questions
myself. The reason is that it will be necessary to establish what the objects of the
Belgian scheme are in order to come to a decision as to whether payments received
under this scheme are payments which are to be deducted from the amount of
damages awarded.
I accordingly direct that in respect of the questions raised, the arbitrator may receive
such further evidence as the parties may wish to present concerning the objects of the
Belgian scheme and he may then state the questions as points of law (together with his
findings of fact) if he concludes on such further evidence that the objects of the Belgian
scheme are materially different from those of the Swiss scheme considered in Zysset.
The authority to refer the matter back to the arbitrator relates only to the question of
benefits already received from the Belgian scheme and not to any future benefits which
Dr Thomas may receive. …’
[22] The order issued by the registrar pursuant to the judgment did not
reflect the directives contained in paras 30 and 31 quoted above and read as
follows:
‘1.
The court concluded that the decision in Zysset & others v Santam Ltd 1996
(1) SA 273 (C) is incorrect and that in that case the amount or any portion thereof
which was received by any of the plaintiffs from IV, SUVA or Berner should have
been deducted from the amount of damages awarded to him or her.
2.
First and second respondents [claimants] are to pay the applicant’s [Fund’s]
costs.’
[23] Both sides were dissatisfied with the judgment as well as the form of the
order of the high court and sought leave to appeal and to cross-appeal against
it. In his judgment granting the necessary leave, the learned judge clarified the
original order by explaining that ‘what [he] had intended to convey, was that in
respect of past benefits [he] neither granted nor refused the application, but in
respect of future benefits the application was refused’. In terms of the provisions
of uniform rule 42(1)(b), the original order was accordingly amended by
insertion of the following new para 2 (and consequential renumbering of the
existing para 2):
‘2.
The relief sought in para 1 of the notice of motion is refused insofar as it
pertains to benefits ‘to be received’ / ‘receivable’ by or for the benefit of Dr Thomas.
Save as aforesaid no order is made on para 1 of the notice of motion.’
On appeal
[24] In its appeal to this court, the Fund took issue, mainly, with the rider
added in the new para 2 of the order (based on the first sentence in para 31 of
the judgment quoted above) to the effect that future benefits were to be
excluded from the scope of any further enquiry before the arbitrator. The Fund
contended that there was no distinction in principle or in law between past and
future benefits and asked that para 2 of the order (as amended) should be set
aside.
[25] In their cross-appeal, on the other hand, the claimants argued that the
high court should have declined to deal with the Zysset question at all and
should have dismissed the application. The cross-appeal is based on two
alternative grounds: first, that the high court had no jurisdiction to furnish its
opinion on the question as stated by the arbitrator; second, that the court erred
in exercising its discretion to furnish its opinion. In the light of the issues
raised, I find it convenient to deal with the cross-appeal first.
Jurisdiction
[26] Regarding the question of jurisdiction, the claimants argued that in
terms of s 20(1) of the Act an arbitrator is not entitled mero motu to refer a
question of law to a court.9 In this case, the question as formulated by the
arbitrator was one which neither party had asked him to state. A comparison of
the questions raised in para 1 of the notice of motion and the question actually
stated by the arbitrator reveals that they are materially different questions. The
questions which the appellant asked to be stated did not in their formulation
mention Zysset at all. In effect, therefore, the arbitrator decided mero motu to
state the question – something which he was not legally empowered to do.
[27] The claimants submitted, further, that although Zysset would no doubt
have been raised in argument before a court had the arbitrator reserved the
questions requested by the Fund, it is by no means obvious that the court would
have had to determine whether Zysset was right or wrong or that a finding on
that question (if made) would have been decisive of the questions of law which
the Fund actually asked the arbitrator to state.
[28] I doubt whether it would be correct, on these facts, to hold that the high
court had no jurisdiction to hear the matter. In my view, the argument amounts
to no more than this, that the high court erroneously exercised the powers it
enjoyed in terms of s 20(1); not that it did not have the necessary power at all.10
[29] There was also some debate before us as to whether the question
stated by the arbitrator meets the jurisdictional threshold of being a ‘question of
law’. In the form that the question has been framed, it requires the court to
examine the facts in Zysset in order to determine whether or not the court, on
9 See Midkon, n 6 above, at 559I.
10 Cf in this regard the dictum by Lord Steyn in Lesotho Highlands Development Authority v
Impregilo SpA [2005] UKHL 43 para [24], quoted with approval in this court in Telcordia Tech-
nologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) para 52.
those facts, came to the correct conclusion; it does not require examination of
the correctness or otherwise of any underlying legal principle as to which
benefits are collateral and which are deductible from the patrimonial damages
suffered by a plaintiff. In any event, with regard to the latter aspect, this court
has held that questions regarding the deductibility of collateral benefits cannot
be answered by reference to a single juridical test; instead, ‘it is acknowledged
that policy considerations of fairness ultimately play a determinative role’.11
Moreover,
‘[p]erceptions of fairness may differ from country to country and from time to time; the
task of Courts is to articulate the contemporary perceptions of fairness in their
respective areas of jurisdiction.’12
[30] More recently, this court, after quoting the above extract from Dug-
more’s case, expressed agreement with the statement that ‘questions regarding
collateral benefits are normative in nature; they have to be approached and
solved in terms of policy principles and equity’ and that, in doing so, ‘there
should always be a weighing-up of the interests of the plaintiff, the defendant,
the source of the benefit as well as the community in establishing how benefits
resulting from a damage-causing event should be treated’. 13
[31] Although this argument is not without merit, I do not find it necessary, in
the light of my views regarding the alternative argument, to come to a final
conclusion on this aspect of the case. I accordingly turn to consider the question
whether the high court erred in the exercise of its discretion in furnishing its
opinion.
11 Standard General Insurance Company Ltd v Dugmore NO 1997 (1) SA 33 (A) at 42B.
12 At 42B–C.
13 Erasmus, Ferreira and Ackermann & others v Francis [2009] 3 All SA 500 (SCA) para 17,
quoting with approval from Neethling, Potgieter and Visser Law of Delict 5ed (2006) pp 215–
216.
Discretion
[32] Counsel for the claimants referred to English authority14 in support of
the proposition that the court enjoys a discretion whether or not to deal with the
question of law stated by an arbitrator. It is correct, as pointed out by counsel
for the Fund, that the cases relied on were decided on the wording of the
English Act, which is materially different from s 20 of our Act.15 Nonetheless, I
have no doubt that the position in our law is similar; in other words, the mere
fact that an arbitrator has seen fit to state a question of law for the opinion of the
court does not oblige the high court to furnish such opinion. If the court should
consider, for example, that on proper analysis the question of law posed is
irrelevant to the issues in the arbitration or that the facts recorded in the special
case do not enable the law point to be sensibly adjudicated, the court would be
justified in declining to decide the point. This must be so, as otherwise the
courts could theoretically be swamped with irrelevant and unnecessary
questions of law arising from arbitrations.
[33] As for the factors influencing the exercise of an arbitrator’s discretion in
terms of s 20(1), it has until recently been accepted by our courts that, when the
three requisites as laid down by Lord Denning in the Halfdan Grieg matter are
satisfied, an arbitrator should be obliged to state a case.16 In Telcordia,17 how-
ever, this court firmly rejected that approach. In a unanimous judgment, Harms
JA re-examined the scope of s 20 of the Act and inter alia said the following:
‘The first matter I wish to address is the nature of the arbitrator’s discretion. Eloff J, in
Kildrummy, sought to curtail the general and unrestricted discretion the section gives to
the arbitrator. There is no reason, having regard to the wording of the section, for such
an approach. Rules circumscribing the way any discretion has to be exercised are
14 See Babanaft International Co SA v Avant Petroleum Inc [1982] 3 All ER 244 (CA) at 252h–i;
Taylor Woodrow Holdings Ltd & another v Barnes & Elliott Ltd [2006] EWHC 1693 (TCC) paras
55–56.
15 See Midkon, n 6 above, at 526G–I; Telcordia, n 10 above, para 152; Butler & Finsen
Arbitration in South Africa – Law and Practice (1993) p 207.
16 See para 16 above.
17 Note 10 above.
generally unacceptable. Eloff J sought to justify his approach with reference to a
dictum by Denning MR in Halfdan Grieg.’18
[34] After quoting the dictum from Halfdan Grieg on which the arbitrator
relied, Harms JA pointed out that Lord Denning was ‘a proponent of the view
that all matters of law should fall within the sole domain of courts’ and that the
other two members of the court, Scarman and Megaw LJJ, did not associate
themselves with the limitation placed on the discretion of an arbitrator by Lord
Denning. Harms JA thereupon proceeded to hold that ‘there is no obligation on
an arbitrator to state a case if the requirements set out by Denning MR are
present. They are important factors to consider but they are not definitive’.19
[35] In the light of this judgment, it is clear, to the extent that both the
arbitrator and the high court regarded themselves as bound by the test laid
down in Halfdan Grieg, that they had unduly fettered their respective discretions
and had exercised it on the basis of an incorrect principle. It follows from the
foregoing that this court is at large to consider the matter afresh.
[36] Further factors relevant to the exercise of the court’s discretion become
evident when one has regard to the purpose of s 20. It has been stated that the
purpose of s 20 is ‘to ensure that the ultimate control over legal issues arising in
the course of an arbitration is left to the Court’.20 This can no longer be regarded
as good law. The fact is that when parties agree to refer their disputes to
arbitration, they select an arbitrator as the judge of fact and law. Ordinarily, the
award of the arbitrator is final and conclusive, irrespective of how erroneous,
factually or legally, the decision was.21 Section 20, therefore, constitutes an
exception to the general principle that it is the function of the arbitrator to decide
finally all matters referred to him, including questions of law.22 For this reason,
and out of deference to the principle of party autonomy,23 the court’s powers in
terms of s 20 should in my view be sparingly exercised. As it was put by
18 Para 151.
19 Para 152.
20 Dorman Long, n 6 above at 472H; Kildrummy’s case, note 6 above at 129A; 130D–E.
21 Telcordia para 55.
22 Butler & Finsen op cit p 206.
23 Cf Telcordia para 4.
Donaldson LJ in Babanaft’s case,24 with reference to the (now repealed) s 2
of the English Arbitration Act of 1979:
‘Section 2 is the successor in title to the old consultative case, which more aptly
describes its nature. Put colloquially, the arbitrator or the parties nip down the road to
pick the brains of one of Her Majesty’s judges and, thus enlightened, resume the
arbitration. It is essentially a speedy procedure designed to interrupt the arbitration to
the minimum possible extent and it is an exception to the general rule that the courts
do not intervene in the course of an arbitration.’
[37] Further guidance as to the factors that should be taken into account by
a court before exercising its powers in terms of s 20(1) can be found, I suggest,
in the provisions of s 45(1) and (2) of the current English Arbitration Act of 1996,
under the heading ‘Determination of preliminary point of law’.25 Sub-section (1)
provides that the court may ‘determine any question of law arising in the course
of the proceedings which the court is satisfied substantially affects the rights of
one or more of the parties’. Sub-section (2)(b) inter alia provides further that an
application under this section shall not be considered unless ‘… the court is
satisfied – (i) that the determination of the question is likely to produce
substantial savings in costs, and (ii) that the application was made without
delay’.
[38] Applying the above principles to the question posed by the arbitrator in
this case, the high court rightly expressed reservations with regard to the form
of the question, pointing out that ‘(i)t is of course unusual for the validity of an
existing judgment to be called in question in the course of arbitration pro-
ceedings’. In my respectful opinion, however, it is not only ‘unusual’, but also in-
appropriate, where the very issue stated by the arbitrator has already been
decided by a single judge in the same Division and where there are no conflict-
24 Note 14 above, at 252i–253a (emphasis added).
25 Section 45 of the 1996 Act is comparable with s 2 of the repealed 1979 Act.
ing judgments on the point,26 to state that same point yet again for the
opinion of another court.
[39] The mere fact that the Fund sought an opportunity to persuade a court
to re-examine the judgment and the issues raised in Zysset should not have
persuaded the arbitrator to state a question of law for the opinion of the court,
nor should it have persuaded the court to answer the question so stated. When
the parties agreed to have their dispute resolved by arbitration instead of
litigation they must be assumed to have agreed that it would be decided on the
basis of prevailing South African law, inter alia as laid down in Zysset.27 If either
of them had wished for an opportunity to ask the court to review or change the
substantive law, eg by reversing a binding precedent, then arbitration was the
incorrect procedure to achieve that result. I accordingly agree with the sub-
mission on behalf of the claimants that it is neither appropriate nor just to use
the court’s jurisdiction under s 20(1) to reverse, in a way which is not subject to
an appeal, an existing and otherwise binding precedent.
[40] Furthermore, far from being of decisive importance to the dispute
between the parties, the relevance of the question stated in relation to the
arbitration, is questionable. As pointed out above,28 the principal dispute
between the parties in this case related to the question whether certain benefits
in terms of the Belgian social security system to which Dr Thomas is entitled
should be deducted from the damages payable by the Fund. The question
stated by the arbitrator, however, does not seek an answer to this issue. As
matters now stand, it is not known whether the high court’s finding that Zysset
was wrong will have any practical effect on the determination of the dispute: the
court simply does not know whether the result of its finding will be that any past
benefits received by Dr Thomas are deductible from her damages. Were the
order of the high court to be implemented, the matter will first have to go back
26 To the contrary, Zysset’s case has been referred to on several occasions with approval,
including by this court: see Van Wyk v Santam Bpk 1998 (4) SA 731 (C) at 737C–738G;
Ongevallekommissaris v Santam Bpk 1999 (1) SA 251 (SCA) at 261H; D’Ambrosi v Bane &
others 2006 (5) SA 121 (C) paras 27–28.
27 The arbitrator, it may be noted, was eminently qualified to deal with the issues in dispute,
having been counsel for the defendant in Zysset.
28 Para 5 above.
before the arbitrator (whose final award has in the meantime been made) so
as to reopen the arbitration in order to ‘receive such further evidence as the
parties may wish to present concerning the objects of the Belgian scheme’, after
which ‘he may then state the questions as points of law (together with his
findings of fact) if he concludes on such further evidence that the objects of the
Belgian scheme are materially different from those of the Swiss scheme con-
sidered in Zysset’.29 Thus it may appear, once the new evidence has been led,
that the Belgian schemes are different and distinguishable from the Swiss
schemes considered in Zysset, in which event the whole process in terms of
s 20 – including the present appeal – would prove to have been a protracted
and expensive exercise in futility. In that case, an opinion by the court as to
whether or not Zysset had been correctly decided would be completely
academic and hence irrelevant. This would be contrary to the principle that the
court does not ordinarily in terms of s 20(1) give opinions on assumptions or on
academic or hypothetical questions.30 It would also be contrary to the principle
that it would normally be premature to state a question of law for an opinion until
such time as the primary facts relevant to the decision have been determined by
the arbitral tribunal.31
[41] Finally, it has been argued on behalf of the claimants that the matter
has become moot. In this regard, it appeared that since the Fund launched its
application in terms of s 20, the arbitrator handed down his award on 15 June
2006, laying down certain parameters for the quantification of the award. There-
after, the parties and their respective actuaries collaborated, debated and
agreed on the final amount due to the claimants. A final award was subse-
quently made in September 2006 after certain further disputes had arisen. Such
award has been quantified by the parties and payment in full has been made by
the Fund pursuant to such award during October 2006. In making the payment,
the Fund did not reserve any of its rights pertaining to the reduction of the
amount paid or repayment of any portion thereof. The Fund also did not request
that finalisation of the matter be held in abeyance pending finalisation of this
29 Para 30 of the judgment of the high court, quoted in para 21 above.
30 Dorman Long, n 6 above, at 478D; Telcordia, n 10 above, para 155.
31 Butler & Finsen op cit p 208 and the authorities cited in footnote 256.
application. No amount was held back to cover the contingency that the
award might be reduced in consequence of a favourable decision on the points
of law. Furthermore, the Fund failed to exercise the right conferred by the
arbitration agreement to appeal against the arbitrator’s award. In the circum-
stances, so it was argued, the lis referred to arbitration had been finally adjudi-
cated and there was no further scope for the court’s opinion as contemplated in
s 20. Moreover, the arbitrator would not have been entitled to amend his award
of 19 September 2006 and in any event the respondents would be under no
obligation to repay anything to the appellant. Accordingly, so it was argued, the
Fund’s payment was akin to a payment made after an appealable judgment has
been granted, which payment – in the absence of a reservation of rights or
protest – is unequivocal and inconsistent with an intention to challenge the
correctness of the judgment and amounts to peremption.32
[42] Again, it is not necessary to make a definite finding with regard to this
issue. It is sufficient, in this context, to refer to the overarching requirement of
public policy that the principle of finality in litigation should generally be
preserved rather than eroded – interest rei publicae ut sit finis litium.33 In this
instance, it is clear that the high court’s answer to the question in terms of s 20
will not assist, but will rather hamper, finality. The fact of the matter is that the
collision resulting in the damages suffered by Dr Thomas occurred almost
thirteen years ago and yet no finality has been reached. If the procedure
ordered by the high court were now to be followed, the whole process is likely to
be prolonged and the finalisation of the claim will be delayed indefinitely.
[43] In the circumstances, I am satisfied that the high court, in the exercise
of its discretion, should have dismissed the Fund’s application. It follows that the
cross-appeal should succeed. This conclusion renders the appeal on behalf of
the Fund academic. In the instance of both the appeal and the cross-appeal,
costs must follow the result, which should include the costs of two counsel.
32 Dabner v SAR & H 1920 AD 583 at 594.
33 Firestone SA (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A) at 309A.
Conclusion
[44] In the circumstances, the following order is granted:
1.
The appeal is dismissed with costs.
2.
The cross-appeal is upheld with costs.
3.
The costs shall include the costs of two counsel.
4.
The order of the court below is set aside and substituted with the
following:
‘The application is dismissed with costs, including the costs of two
counsel, where so employed.’
B M GRIESEL
Acting Judge of Appeal
HARMS DP (HEHER JA, MAYA JA and TSHIQI AJA concurring):
[45] I have read the judgment of Griesel AJA and I agree with his con-
clusion. My approach differs somewhat from his and, accordingly, I prefer to
state my reasons separately. Since he has stated the facts fully it is not
necessary to mention them in any detail.
[46] I first deal with the arbitrator’s stated case, which is quoted in Griesel
AJA’s judgment (at para 18). The question put was whether Zysset34 was
correctly decided on its facts. That, as put, was not a question of law. What the
arbitrator apparently had in mind was to ask the court whether a party, who
claims compensation, can avoid the application of the rule against double
compensation by voluntarily entering into an agreement with the ‘insurer’ to
repay the latter once compensation is received from the wrongdoer. (The
arbitrator did not intend to refer any question about future benefits because, as
he said, he had found as a fact that Dr Thomas’s right of recovery for future
benefits will fall away once she receives compensation from the RAF.)
[47] The first question that springs to mind is whether this is a question of
law because, unless it is such a question it could not be stated. Griesel AJA has
dealt with the question but chose to leave it open (at paras 29-30). I prefer to
answer the question with reference to the authorities quoted by him: it is a value
judgment.35 In addition, Scott J, in Zysset, in finding that the plaintiff could use
such an agreement, based his conclusion on the facts of the case. He did not
purport to lay down a generally applicable rule that applies in isolation and
divorced from the facts (at 281F–282B). Also, in ‘overturning’ Scott J’s judg-
ment, the learned judge below invoked ‘considerations of public policy, reason-
ableness and justice’.
34 Zysset & others v Santam Limited 1996 (1) SA 273 (C).
35 Media Workers Association of SA v Press Corporation of SA Ltd (’Perskor’) 1992 (4) SA 791
(A).
[48] It is accordingly not surprising that the arbitrator formulated the stated
case with reference to the particular facts of that case. The answer given by the
high court involved a referral back to the arbitrator to enable him to determine
whether the facts in this case (which dealt with Belgian law and social insurance
schemes) differed from the facts in Zysset (which dealt with those of
Switzerland).
[49] Since precedents are quoted for their principles and not for their facts
the arbitrator erred in asking that question. The question and answer were not
‘legal’. I accordingly conclude that the high court had no jurisdiction to consider
the arbitrator’s stated case.
[50] The next issue relates to the RAF’s prayer compelling the arbitrator to
state a question of law for the opinion of the court. The high court dismissed the
application as far as future benefits are concerned because, as mentioned, the
arbitrator had found as a fact that Dr Thomas’s benefits will fall away once the
RAF compensates her. That leaves the question relating to past benefits: can
Dr Thomas avoid the application of the rule against double compensation by
voluntarily entering into an agreement with the ‘insurer’ to repay the latter once
compensation is received from the RAF? I have already held that this is not a
question of law and this means that the high court did not have the jurisdiction
to consider the application.
[51] There is a further reason why the high court did not have jurisdiction. It
is common cause that before the hearing in the court below the arbitrator issued
a final award; the RAF did not use its right of appeal; it did not seek to set aside
the award by way of review; and it paid the award in full without any conditions
attached. A court cannot order an arbitrator to state a question of law that has
no bearing on the arbitration. The question of law must, in terms of s 20(1) of
the Arbitration Act 42 of 1965, be stated before the making of the final award.
This was no longer possible.
[52] It follows from this that matters that Griesel AJA considers to relate to
discretion in my view have a more profound effect – they go to jurisdiction.
L T C HARMS
Deputy President
APPEARANCES:
FOR APPELLANT:
W R E Duminy SC
Instructed by:
Edward Nathan Sonnenbergs Inc.
Foreshore, Cape Town
Webbers
Bloemfontein
FOR RESPONDENTS:
Owen Rogers SC and A S de Villiers
(1st & 2nd Resp)
No appeareance on behalf of 3rd Resp
(Abides the decision of the Court)
Miller Bosman Le Roux
Somerset West
Naudès 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:
29 September 2009
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court
of Appeal.
ROAD ACCIDENT FUND v P F CLOETE NO & OTHERS
The Supreme Court of Appeal today handed down judgment in
favour of Dr Els Thomas, a young Belgian doctor who was seriously
injured in a motor collision near Cape Town while on vacation during
October 1996. In an arbitration presided over by the third respondent,
a senior advocate at the Cape Bar, she won award of damages
against the Road Accident Fund in excess of R25 million.
In the course of the arbitration, the Fund applied to the
arbitrator in terms of section 20 of the Arbitration Act of 1965 to state
a question of law for the opinion of the court with regard to certain
benefits to which Dr Thomas was entitled in terms of Belgian social
security legislation. The question as ultimately stated by the arbitrator
was whether a previous decision of the Cape High Court, handed
down in 1996 in a similar matter involving four Swiss claimants
(Zysset v Santam) was correctly decided.
In the majority judgment, written by Harms DP held that the
question posed by the arbitrator was not a question of law, as
required by the Arbitration Act. The Cape High Court accordingly had
no jurisdiction to decide the matter, with the result that the cross-
appeal of Dr Thomas had to be upheld with costs. At the same time,
the appeal of the Road Accident Fund against part of the high court’s
order was dismissed with costs.
In a separate concurring judgment, Griesel AJA came to the
same conclusion, but for different reasons. He held that the high court
had erred in exercising its discretion to deal with the matter at all.
|
1231
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number: 470/2007
In the matter between:
IZAK ANDREAS GELDENHUYS
Appellant
and
THE STATE
Respondent
CORAM:
STREICHER, CAMERON, NUGENT, VAN HEERDEN JJA and
KGOMO AJA
HEARD:
26 FEBRUARY 2008
DELIVERED: 31 MARCH 2008
Summary: Sexual Offences Act 23 of 1957 – constitutional validity of ss 14(1)(b) and 14(3)(b) of
Act – distinction drawn between heterosexual and same-sex sexual activities by setting legal age
of consent at 16 and 19 years, respectively, held to be unconstitutional – severance and reading-in
so far as to make legal age of consent in respect of both heterosexual and same-sex sexual acts 16
years – qualified retrospectivity of the order of constitutional invalidity – appeal against
conviction on six counts relating to same-sex sexual acts with boy over the age of 16 years but
under the age of 19 years set aside, subject to confirmation by Constitutional Court of order of
constitutional invalidity – appeal against convictions on four counts in respect of sexual acts at
times when boy in question under the age of 16 years dismissed.
Neutral citation: This judgment may be cited as Geldenhuys v The State (470/2007)
[2008] ZASCA 47 (31 March 2008)
____________________________________________________________________
VAN HEERDEN JA
Introduction
[1] During 2004, the appellant was charged, in the Regional Court held at
Pretoria, with 13 counts of indecent assault. The complainant in respect of each of the
first 11 counts was L B, born on 29 June 1983, while counts 12 and 13 related to A,
L’s younger brother by approximately seven years. The State withdrew count 5 on the
first day of the trial and the appellant pleaded not guilty to all the remaining charges,
his defence being a complete denial. On 9 February 2005, the appellant was found
guilty of ten counts of contravening s 14(1)(b) of the Sexual Offences Act 23 of 1957
(the Act), viz the commission of indecent or immoral acts with L (the complainant), a
boy under the age of 19 years at the relevant times. The regional magistrate, Mr
Travers, acquitted the appellant on the two counts relating to the younger brother. On
8 July 2005, the appellant was sentenced to imprisonment of one year each on six of
the ten counts and, on the remaining four counts, to imprisonment of 15 months each,
the total term of imprisonment thus being 11 years.
[2] With the leave of the Regional Court, the appellant appealed to the Pretoria
High Court against both conviction and sentence. On 21 November 2006, his appeal
against conviction was dismissed (Hartzenberg J, Poswa J concurring), but his
effective sentence was reduced to 7 years’ imprisonment. The High Court granted
leave to appeal to this Court against both conviction and sentence, but the appellant
does not persist before us with his appeal against sentence.
[3] In heads of argument filed in the Pretoria High Court, the appellant raised a
constitutional issue in limine. By way of a new ground of appeal, counsel for the
appellant argued that, to the extent that s 14(1)(b) of the Act criminalises sexual
intercourse and other sexual acts of one person with another where the latter (whether
a girl or a boy) is 12 years or older and capable of forming an intention
(“wilsvermoënd”), and who participates voluntarily in such sexual acts, the section
constitutes unfair discrimination on the grounds of, inter alia, gender and/or sexual
orientation in contravention of s 9(3) of the Constitution and is accordingly invalid. In
support of this argument, counsel contended that the South African common law
recognises that a girl of 12 years or older, with the capacity to form an intention, can
legally consent to sexual intercourse and that if she does so, her sexual partner is not
guilty of rape. According to counsel, a ‘necessary implication’ of s 9(3) of the
Constitution in this context is that boys of 12 years and older must have the same
capacity to consent to sexual acts. Moreover, so the argument continued, to categorise
voluntary sexual intercourse or any other sexual act by a girl or boy of older than 12
years, who has the capacity to form an intention, as ‘immoral’ or ‘indecent’ (the terms
used in s 14(1)(b) of the Act) also constitutes unfair discrimination against such girls
and boys in that they are not free to take their own decisions in regard to sexual
activity. Further, as s 14(1)(b) criminalises the conduct of any person who engages in
voluntary sexual intercourse or any other voluntary sexual act with such a girl or a
boy, the section must of necessity constitute indirect discrimination against the former
persons and is, for that reason also, constitutionally invalid.
[4] Although these constitutional arguments were trenchantly rejected by the
Pretoria High Court, the appellant persisted with this ground of appeal before us and
substantially (if not exactly) the same arguments were repeated in the heads of
argument filed on behalf of the appellant in this Court. In view hereof, more than two
months prior to the hearing of this appeal, this Court afforded the Minister of Justice
and Constitutional Development, as the minister of state concerned with the
administration of the Act, an opportunity to intervene in the appeal. The attention of
the Minister was specifically drawn to a further question - arising from the
constitutional issues raised by the appellant – as to whether the distinction drawn in
s 14 of the Act, relating to the so-called ‘legal age of consent’ for sexual acts between
persons of the opposite sex, on the one hand, and such acts between persons of the
same sex, on the other, is constitutional. This question was also brought to the
attention of both parties. Both the parties, as well as the Minister – if she decided to
intervene – were requested to file heads of argument dealing with the constitutional
validity of s 14 and indicating whether, in their view, evidence may assist this Court
in arriving at a conclusion. In addition, notice of the proceedings was given to the
amici curiae in Minister of Home Affairs v Fourie; Lesbian and Gay Equality Project
v Minister of Home Affairs 2006 (1) SA 524 (CC), namely Doctors for Life
International, its legal representative (Mr JJ Smyth QC) in his personal capacity and
the Marriage Alliance of South Africa, as well as to the Lesbian and Gay Equality
Project. The Minister subsequently intervened in this appeal and heads of argument
dealing with the constitutional points were filed on her behalf, as also on behalf of
both parties.
Appeal against convictions on counts 1-4
[5] According to the charge sheet, read together with the two sets of further
particulars supplied by the State in terms of s 87 of the Criminal Procedure Act 51 of
1977, the dates on which and the places where the relevant different acts in respect of
the four charges were allegedly committed were as follows: Count 1 – during January
to April 1998, in an Elwierda tour bus at the Eastgate Airport, approximately 7
kilometres outside Hoedspruit, Mphumalanga; count 2 – during January to April
1998, in a room at the Casa Da Sol Hotel in Mphumalanga; count 3 – also during
January to April 1998, in the appellant’s car in the parking lot of the Corpus Christi
Church in Elardus Park, Pretoria; count 4 – during October to November 1998, in the
complainant’s bedroom at his family home in Mirage Street, Elardus Park, Pretoria.
As the complainant was born on 29 June 1983, he was 14 years old at the time of the
acts allegedly committed in respect of the first three counts and 15 years old in respect
of the act forming the basis of the fourth count. According to the charge sheet for each
of the four counts, the appellant had indecently assaulted the complainant by
masturbating him and enticing him to masturbate the appellant.
[6] It was common cause that, during 1997, the appellant – a qualified dentist who
had been suspended from practice for three years (commencing in 1996) as a result of
his conviction in 1991 on four counts of ‘indecency’ involving children – was
employed by Elwierda, a tour bus company, as one of its drivers. In approximately
July 1997, the complainant’s mother (Mrs B) met the appellant while she was
travelling on an evangelical tour, in an Elwierda bus, to Mozambique. After that, he
became close friends with the family, often visiting their home. According to the
complainant and Mrs B, the appellant slept over at their home quite frequently,
usually in the youngest son’s (A’s) room where there were bunkbeds.
[7] The appellant was generous to the children, and to the complainant in particular,
bringing them sweets and other gifts. The whole family was fond of the appellant, as
he was of them. At that stage, the family was experiencing serious financial problems
and the appellant lent not insubstantial sums of money to both Mr and Mrs B for
various purposes. When he resumed practising as a dentist in Randfontein in
December 1998, the appellant rendered dental services free of charge to one of Mrs
B’s friends, who was a single mother with three dependants. With the knowledge and
approval of the parents, he sometimes took the complainant or A or both of them on
various outings.
[8] The complainant testified that the indecent acts to which the appellant subjected
him started at the end of 1997, when the complainant was 14 years old and in standard
six. As far as count 1 is concerned, the complainant’s evidence was that, some time
during the period January to April 1998, the appellant had to drive a tour bus very late
one night to Hoedspruit to pick up a tour group at the Eastgate Airport. The
complainant accompanied him. They arrived at their destination in the early hours of
the morning and, while they were waiting for the tour group to arrive, the appellant
came to sit next to the complainant in the bus and once again started to touch his
private parts on top of his trousers. The appellant then put his hand under the
complainant’s underpants and masturbated him. He then pulled open the zip of his
own trousers, took out his penis, placed the complainant’s hand on it and performed a
masturbating action, with his hand over the complainant’s. At some stage the
complainant took his hand away but the appellant simply replaced it and the
masturbation continued. This stopped when the tour group arrived and the appellant
then drove the tour bus as the group was taken on a short tour through Mpumalanga.
[9] The events forming the basis of count 2 allegedly happened that same night.
Because of some defect in the tour bus, the appellant and the complainant had to
spend the night with the tour group at the Casa da Sol Hotel in Mpumalanga, while
waiting for another bus to be sent. According to the complainant, he and the appellant
had to share a room with a double bed, where appellant once again started fondling
the complainant, putting his hand into the complainant’s underpants and masturbating
him. Thereafter, he placed the complainant’s hand on his penis, and with his hand
over the complainant’s hand, performed a masturbating action. This carried on until
one of them ejaculated – according to the complainant, this was how it always ended.
[10] After this incident, the appellant gave the complainant money of between R50
and R200. The gifts of money had in fact started before the ‘masturbation and
everything’ began. In his examination-in-chief, the complainant made the unsolicited
comment, referring to the mutual masturbation, that ‘it is a nice feeling, with that I am
not going to quarrel’. Nevertheless, he felt heartsore and disturbed by what had
happened. He was scared to tell his parents because he did not know how they would
react and felt that they might be disappointed in him. His relationship with his parents
at that stage was such that they did not really talk about sex and like matters, so he
kept these things to himself. He found it much easier to talk to his friends about such
matters. He stated that he was scared to say no to the appellant because he (the
appellant) might then do something more serious to him. The complainant also
expressed his belief that the main reason why he was not able to tell his parents about
what was happening was the fact that the appellant gave him gifts of money after
these incidents. He enjoyed being spoiled by the appellant, but this spoiling also made
him feel that he was the guilty party. Under cross-examination, he conceded that he
could have stopped these incidents at the outset, had he wanted to do so. Although he
did not really know why he had not done so, this had all happened at a time when the
family was suffering financially and he believed that the reason why he had kept quiet
about it all was the money with which the appellant had ‘bribed’ him.
[11] As regards count 3, the complainant testified that during the period between
January and April 1998, the appellant was teaching the complainant to drive at the
parking area of the Corpus Christi Church in Elardus Park. The complainant was
sitting in the driver’s seat of the appellant’s vehicle, with the appellant on the
passenger’s side, when the latter started to rub the complainant’s trousers, so that he
got an erection. The appellant then once again put his hand inside the complainant’s
underpants and masturbated him. There then followed the usual mutual masturbation,
which ended when one of them ejaculated. They swapped seats and then returned to
the complainant’s parental home. According to the complainant, after the incident in
the parking area of the church, the mutual masturbation happened frequently in the
appellant’s dental surgery, and also when they were going somewhere together. It was
always initiated by the appellant and, after each incident, the appellant gave money to
the complainant and continued to spoil him.
[12] In respect of count 4, the complainant was studying at home for his end-of-
year standard 7 examinations in October or November 1998. The appellant arrived at
the house when only the complainant and the domestic worker were there. The
appellant and the complainant socialised for a while and then started to play a game of
chess in the complainant’s bedroom. During the game, the appellant came to sit next
to the complainant, he then put his hand into the complainant’s pants and masturbated
him. Once again the mutual masturbation ensued until the complainant ejaculated.
While this was happening, the domestic worker was busy with tasks in and outside the
house.
[13] There were several other instances of mutual masturbation thereafter which
eventually graduated to full anal penetration on more than one occasion. By that stage
though, the complainant had already turned 16. In the light of the conclusion that I
have reached on the constitutional challenge to s14(1)(b) of the Act, those allegations
need not detain us any further.
[14] The last sexual ‘encounter’ between the two of them occurred, according to
the complainant, in September 2001, when the appellant accompanied the
complainant and the latter’s brother A to the Aardklop Festival in Potchefstroom.
They spent the whole day at the festival, returning to the appellant’s flat in
Randfontein, where they spent the night. It would appear that this encounter at the
appellant’s flat was the proverbial ‘last straw’ for the complainant and, according to
him, he decided that he did not want that to ever happen again. From then on, he
deliberately avoided the appellant, seeing to it that he was not at home when the
appellant visited or that he went to bed early on the evenings when the appellant slept
over at his home. Under cross-examination, it was put to the complainant that, after
this ‘final’ incident which had allegedly occurred in September 2001, the complainant
went out for a meal with the appellant at least twice during the course of the year
2002. The complainant readily conceded that they had in fact had a meal together in
that year, but he could not remember another such occasion. The complainant also
acknowledged that he might have spent a night at the appellant’s flat some time
during 2002, when he went to meet the appellant’s parents there. On this occasion,
which might (or might not) have happened in 2002 (the complainant could not
remember the year of the visit), he slept in the sitting room of the appellant’s flat,
without anything untoward occurring.
[15] Although the complainant felt unable to tell his parents about what was
happening between the appellant and himself, he did tell his best friend, J, in April
1998, about the incidents of mutual masturbation that had taken place up to that time.
He asked J not to tell his (the complainant’s) parents because he did not know how
they would react. That much was confirmed by J, who was also called by the State as
a witness. The complainant also testified that, after he had told J about what was
happening between himself and the appellant, he also told approximately seven of his
girl friends about it during the period May 1998 to the end of 1999, and about another
eight of his girl friends after he had started his studies at the Technikon in 2002. He
recalled that, while he was still at school, he had told J’s twin sister and a girl called
N, and later, one of his Technikon friends. He could not remember the names of the
other girls whom he had told about the incidents. He reiterated that he found it much
easier to talk to his friends about these matters than to his parents and that, although
several of his friends had encouraged him to tell his parents, he had not done so
because he was scared how they might react.
[16] The complainant told no one in his family about the incidents between him
and the appellant before January 2003. The B family had spent the December
2002/January 2003 holidays near Wilderness in the Cape. They then celebrated the
New Year by spending New Year’s Eve and the first few days of 2003 in Somerset
West at the home of Mrs B’s cousin, H, and his partner of 18 years’ standing. When
the family returned home by car, the complainant stayed on with H and his partner for
a few days, before flying back to Pretoria on 6 January 2003. On the evening before
his departure, he had told H, with whom he had developed a good and close
relationship, about everything that had happened between himself and the appellant.
He testified that he had not specifically chosen this moment to tell them about what he
had experienced - ‘it just happened’ and he had felt ready to share this with them.
Having told them, he felt much better about it. He asked them not to tell his parents
but, according to the complainant, they had ultimately decided to do so in order to
prevent the same thing happening with his younger brother. H, who was also called as
a State witness, confirmed the essential features of the appellant’s evidence.
[17] H had in the meanwhile discussed the matter with his partner and they had
decided that they had no choice but to notify the complainant’s parents, as they were
concerned about the complainant’s younger brother. Thus, some three or four days
after the complainant’s return to Pretoria, H telephoned the complainant’s father and
told him what the complainant had imparted. Under cross-examination, H testified
that he was somewhat troubled by the father’s reaction. Although he had expected a
major outburst, the complainant’s father, although shocked and ‘a bit upset’, had
remained quite calm and had simply said that he would discuss this with Mrs B.
According to H, he was fully aware of the dangers of HIV and, when the complainant
had told him that no condoms had been used by the appellant, he had told the
complainant to take proper precautions ‘in the future’. He testified that he had
requested the complainant’s parents to report the matter to the police immediately and
to take the complainant to see a doctor.
[18] Some while after H had told Mr B what the complainant had conveyed to him,
he (H) telephoned Mrs B to find out how she was. Mrs B told him that the appellant
was at that moment visiting in their home. As soon as he heard this, H told her to
request the appellant to leave the premises at once. He then telephoned the
complainant on the latter’s mobile phone and told him to remove his younger brother,
A, from the house and to go for a drive. After he had done this, he telephoned Mrs B
again. She then had a ‘major outburst’, becoming quite hysterical and screaming
uncontrollably. H tried to calm her down and told her that he would immediately fly
up to Pretoria to assist and support the family. This he then did.
[19] When H contacted the complainant on the latter’s mobile phone, the
complainant questioned H and heard for the first time that his parents knew ‘the
whole story’. He then followed H’s instructions and drove with A to his friend J’s
house, leaving the appellant behind at the B home. He and A had only been away for
about 15 minutes when H again telephoned the complainant on his mobile phone and
told him to return home at once as his mother needed him. When he got home, he
went into his mother’s bedroom to find her lying on her bed and crying
uncontrollably. His mother then hugged A to her and the complainant realised that A
had also been molested by the appellant. The complainant then also started crying
because he thought that it was all his fault. It was after this that he decided to lay
charges against the appellant, so as to prevent the same thing happening to other
children.
[20] At the end of his examination-in-chief, the complainant explained how his life
had been influenced by what had happened between him and the appellant. From time
to time thereafter, he started to ‘wonder’ about himself (referring, no doubt, to his
sexual orientation). There were times when he saw a ‘guy’ and said to himself that the
‘guy’ was sexy. The ‘last thing he wanted to be was gay’ and he had to fight this
struggle taking place inside him. When he went to public toilets and encountered
other men who were older than he, he felt very uncomfortable and scared because he
did not know which of them did ‘such things’. He did not want to be alone in a public
toilet with such a man and hence always went into the cubicle to urinate, locking the
door behind him.
[21] Mrs B, the complainant’s mother, who was at that stage working as a nurse
and was frequently on night duty, confirmed in her testimony that the appellant had
become a close family friend. According to her, sometimes, if there were other guests
in the house, the appellant, the complainant and A all slept in A’s bedroom, A and the
appellant each on a bunk bed and the complainant on the floor. She testified that the
whole family was very fond of the appellant. Despite what had happened, they still
loved him; indeed she felt sorry for him. She also confirmed that their financial
position was bad at that time and the appellant often gave the children gifts that they
could not afford to give them and that he was generous to the family. She saw nothing
sinister in the fact that he frequently visited them and slept over at their home and also
saw nothing untoward in him spending time alone with her children. She could not
understand why her children had not told her about the molestation by the appellant.
According to Mrs B she knew that, during the course of 2002, the appellant was the
accused in a criminal trial involving the molestation of a child in his dental surgery.
When she asked him about this, he told her that he was not guilty and that the parents
simply wanted to make money out of him. Her response was to ask him not to do
anything of the kind to her own children, whereupon he assured her that he would not.
Little did she know that her children had already been molested by him. When Mr B
was informed by H about the complainant’s revelations, she and Mr B had decided
that, should the appellant return to their home, Mr B would speak to him ‘in a
Christian manner to sort the matter out.’ However, when A told her, on the morning
of Sunday 19 January 2003, that the appellant was coming to visit them that
afternoon, she realised that she could no longer permit him to be in their home. She
called A to her and, telling him that she would never reproach him, asked him whether
the appellant had ‘messed with him’. A replied that the appellant had ‘played with his
penis’ and she then realised that ‘everything’ was true.
[22] According to Mrs B, after the complainant and A had left the house that
afternoon, she had asked the appellant how he could have molested her two sons when
the whole family loved him and cared about him. The appellant turned deathly pale
and kept repeating that he was sorry. She informed him that he must go and that she
did not want to see him ever again. He kept on saying that he was sorry and then left
the house. She still felt heartsore and did not understand how he could have done such
a thing. She reiterated that she felt sorry for him.
[23] Mrs B testified that it was a psychologist who had reported the matter to the
police. Both children had been taken to see this psychologist approximately a week
after her confrontation with the appellant. They had two sessions with him. He then
said that they must first ‘get through the court case’ before continuing with the
sessions. After the boys had testified, both of them had immediately been taken back
to the psychologist.
[24] After the complainant’s parents had become aware of what had happened, the
matter was reported to the police and the complainant was medically examined by a
Dr Winn on 15 February 2003. The complainant had informed Dr Winn that he had
been sodomised by a person known to him three times during the year 1999 to 2000.
All the findings flowing from the doctor’s examination of the complainant showed
signs of anal penetration. During his anal examination of the complainant, he had
found an old abrasion and an old scar on the skin surrounding the anus; fissures and
cracks along the circumference of the anus; thickening and folding of the anal orifice;
inversion of the anal canal and swelling around the rim of the anus. The skin
surrounding the anus was also red and painful to his touch. All these symptoms were
in his view probably due to repeated anal penetration. The redness and pain, as well as
some of the other injuries, could have been caused by chronic constipation, but his
findings favoured penetration of the anus with a sexual organ.
[25] Under cross-examination, Dr Winn stated that fissures and cracks which he
had found along the circumference of the anus were approximately one to one and
half years old. He also stated that the funnelling which he had found was one of the
signs of chronic anal penetration. He expressed the view that his findings indicated
more than three or four anal penetrations; all the signs pointed to ‘habitual’ or
frequent penetration, perhaps on a monthly or even on a daily basis. He was however,
unable to say definitively that his findings indicated chronic anal penetration as there
could possibly have been another cause for the symptoms found, such as internal or
external haemorrhoids. However, the combination of all his findings pointed in the
direction of repeated anal penetration, certainly more than three incidents thereof.
[26] The appellant testified in his own defence and denied all the allegations of
wrongdoing against him. He stated that he was diagnosed as having Romano Ward
syndrome when he was in standard one at school. This syndrome is a genetic
deviation of the main nerve of the heart, creating the risk of instant death in the event
of any emotional arousal (such as anger or excitement) which makes the heart beat
faster. He did reasonably well at school and then went on to obtain his dental degree
at the University of Pretoria. In May 1980, he began practising as a dentist in Balfour
in the Eastern Transvaal. However, in 1990, five charges of indecent assault were laid
against him. One was withdrawn, but he pleaded guilty to the other four charges and
was convicted on these charges in 1991. On two of the charges, taken together, he
was sentenced to three years’ imprisonment, suspended for five years on certain
conditions, one of which was that he had to undergo psychotherapeutic treatment with
a registered psychologist for a period of 18 months. On the other two charges, also
taken together, he was sentenced to 2000 hours of periodical imprisonment.
[27] In consequence of these convictions, the appellant was suspended from
practising as a dentist in 1993. He appealed against the suspension, but the appeal
failed and the suspension took effect in May 1996. The appellant then started
working for the Elwierda tour bus company as a bus driver. It was on one of the bus
tours that he met Mrs B in 1997. He thereafter met the rest of the B family and
quickly became a close family friend. According to the appellant, shortly after he had
met the B family, he told the oldest son, F, then in matric, about his previous
convictions. He thereafter told Mrs B about this as well. They were supportive and did
not reject him and he remained friends with the whole family. When cross-examined
about how it had come about that he told F about his previous convictions, the
appellant replied that he had ‘simply felt that the family should know’.
[28] According to the appellant, he had never slept over at the B family home in
1997. He had terminated his employment at Elwierda in January 1998 and had gone
straight to his parents’ home in Warden, staying with them until the end of November
1998. He testified that he did not visit the B family home during 1998, apart from one
brief visit in August or September, when he was in Pretoria for a sitting of the medical
council. He had definitely not visited the B family on other occasions in 1998, as the
engine of his motor vehicle packed up at the beginning of January of that year and he
did not have transport.
[29] He started practising as a dentist again, in Randfontein, on 1 December 1998
and in February 1999 moved into a flat close to his practice. He moved to another flat
in Mimosa Street in Randfontein at the beginning of May 1999, which was where the
B boys had slept over upon returning from their outing with him to the Aardklop
festival in Potchefstroom.
[30] The appellant testified further that he had started visiting the B family again
from about February 1999. He slept over at the B home in Pretoria only four times
during the course of 1999, as far as he could remember, and twice during the course
of 2000 (in April and in May). When he stayed the night at the B home, he usually
slept in A’s bedroom, where there were bunkbeds, and sometimes A slept in the room
with him. According to the appellant, Mr and Mrs B had borrowed relatively large
sums of money from him, the first such loan (in an amount of R2500) being made to
Mr B in 1997, allegedly for a mortgage bond repayment and policies which had to be
paid. Mr B had repaid this loan after the appellant started practising again. Mr B had
asked the appellant for a second loan in 1997, but the appellant could not afford it.
Both F, as well Mrs B, had also borrowed money from the appellant. The B’s
daughter, H, had twice written to him asking him for a ‘donation’, once for her glass
work and once for a pair of shoes. He had also purchased an outfit for her. A had
asked him for money to go on a cricket tour, as well as for ‘presents’ which he (the
appellant) could not afford, such as a tennis racket and a mobile telephone. Under
cross-examination, the appellant stated that he had at no stage felt that he was being
abused, and that the requests for money and for free dental services had not influenced
his friendship with the family.
[31] The appellant confirmed that he had received psychological treatment after his
1991 convictions on charges of child molestation, and that this was a condition of
suspension of his sentence because he had tendencies towards paedophilia. Under
cross-examination, the appellant alleged that this psychological treatment had
‘helped’ him. When asked why, if that were so, he was convicted on a similar charge
in 2002, the appellant’s response was that he had pleaded not guilty in the ‘second
case’.
[32] According to the appellant, the complainant had told him that he had had a
sexual relationship with one of his school friends (a boy) for approximately four
years. As far as he could remember, the complainant had made this revelation to him
in the first quarter of 2000. In response to a question posed by counsel for the State,
the appellant said that his attitude to sexual matters was on the conservative side and
that he had been somewhat shocked and taken aback when the complainant had told
him of this relationship. His reaction was to tell the complainant that it was wrong and
that he must never do such a thing again. He however could not remember the precise
circumstances of this conversation between himself and the complainant, although he
knew that it had taken place at the B home.
[33] Regarding the confrontation between Mrs B and himself in January 2003, the
appellant testified that he was visiting the B family on a Sunday afternoon after A had
telephoned him that morning. After the complainant and A left, telling him that they
were going somewhere by car, Mrs B entered the lounge where the appellant was
reading the newspaper and asked him to leave their home. She alleged that the
appellant had molested the complainant and A. He left the house.
[34] Under cross-examination, he testified that he had felt ‘somewhat shocked’
when Mrs B had made these accusations against him. He had not, however, then told
her about the complainant’s alleged homosexual relationship or about an incident that
had allegedly happened in the first quarter of 2002 – about which he had testified in
his examination-in-chief – during which he (the appellant) had woken up to find A
trying to open the zip of his trousers. According to the appellant, A had accompanied
him to visit the T family and, at the T family home, the appellant had taken two
painkillers because of a headache and had gone to lie down in one of the bedrooms.
When he woke up, A was tampering with the zip of his trousers. He (the appellant)
took A to task about this, told him that he must never do it again and took him back
home.
[35] The reason given by the appellant for his failure to mention either of these
things to Mrs B when she accused him of having molested her sons, was that he did
not want to get into an argument with her, impliedly because of his medical condition.
The appellant conceded that, in view of his previous convictions, he had to be very
careful in his relationships with children and that if his version of the boys’ conduct,
particularly A’s behaviour, were true, this could have placed him in a very difficult
and dangerous position. He reiterated, however, that he had rebuked A for his
behaviour and that the latter had never again behaved in such a manner. He insisted
that the incidents of sexual activity about which the complainant and A had testified
had never happened and that both boys had been lying to the court. He had been very
good to the B family and had no idea why they would lay such charges against him.
[36] The appellant admitted that, before this confrontation between himself and
Mrs B in 2003, he had again been charged with a sexual offence, committed in
Randfontein, the allegation being that he had indecently assaulted a minor child on 2
November 2000. He was convicted on this charge and sentenced on 21 November
2002. According to the appellant, he had told Mrs B about the pending matter in
November 2000, long before it had been finalised. He had pleaded not guilty to the
charge, but had nevertheless been convicted and sentenced to a fine of R20 000 or
five years’ imprisonment, plus a further five year’s imprisonment suspended for five
years on certain conditions, including community service. The appellant testified that
there had been no change in his relationship with Mrs B or in her attitude to him as a
result of this criminal trial and that he had informed her of the outcome of the trial in
November 2002.
[37] During his examination–in-chief, the appellant admitted that he had been in
the complainant’s company on the various different occasions during which the
alleged sexual activity referred to in counts 1 to 4 had actually occurred, although not
all during the time periods referred to by the complainant. So, for example, in respect
of the first two counts, the appellant testified that, at the end of December 1997, after
Christmas, he had indeed been accompanied by the complainant on a late night bus
journey to the Eastgate Airport to pick up an overseas tour group. Mr B was allegedly
worried about the appellant’s being able to stay awake should he undertake the late-
night drive alone, and had therefore suggested that the complainant accompany him to
keep him awake. Apart from the incident of mutual masturbation in the bus while they
were waiting for the tour group to arrive, about which the complainant had testified,
and which the appellant denied, the appellant’s account of the journey and what had
happened the following day largely tallied with the complainant’s version.
[38] The appellant agreed that, because of a defect with the bus, he and the
appellant unexpectedly had to spend the night at the Casa da Sol Hotel in
Mphumalanga while they were waiting for a new bus to be sent out by the tour
company. According to the appellant, however, the hotel room which he and the
complainant had to share did not contain a double bed, but only two single beds and a
sofa which could be converted into a bed. He, the complainant and another bus driver
employed by Elwierda, by the name of Bernard Docco, shared the room, he and the
complainant each sleeping on a single bed and Bernard on the sofa-bed. He alleged
that he had made enquiries about the whereabouts of Mr Docco, but that he been
informed that Mr Docco was now in the United States of America. The appellant also
alleged that the person who had driven the replacement bus to the hotel, arriving in
the early hours of the morning, had also used the bathroom facilities in the hotel
bedroom in which he, the complainant and Mr Docco were sleeping. He could not,
however, remember whether this person had also slept in the room. He denied that
there had been any mutual masturbation between himself and the appellant that night.
[39] As regards the third count, the appellant agreed that he had started to teach the
complainant to drive at the latter’s request, and that the complainant had practised
driving with him once or twice in the beginning of December 1997. This had taken
place in the parking area of the Corpus Christi Church, as the complainant had
testified. However, he and the complainant had never been alone on any such
occasion; on the contrary, A and, as far as he could remember, also the complainant’s
sister (H) had been with them and no mutual masturbation had taken place between
him and the complainant in the car. The driving lessons could not have taken place in
the period from January to April 1998 – as the complainant had testified – as he (the
appellant) had resigned from Elwierda in early January 1998 and had immediately
gone to his parental home in Warden, where he had stayed until November 1998. He
had helped out at Elwierda on a free-lance basis from mid-September to late October
1998 and had certainly not visited the complainant’s family in October or November
of that year. He testified that he could not therefore, have visited the complainant at
the latter’s home during the complainant’s study ‘leave’ in October or November
1998 and indulged in mutual masturbation with the complainant in the complainant’s
bedroom as the latter had testified.
[40] The appellant testified that he had indeed taken the complainant and A to the
Aardklop festival in Potchefstroom in September or early October 2001. They had
spent a day at the festival and, on their return to Randfontein, the boys had spent the
night at his apartment, sleeping in his spare room while he spent the night in his own
bedroom. The appellant denied the complainant’s allegations that, during the period
January to March 2001, he (the appellant) had engaged in sessions of mutual
masturbation with the complainant or that he had anally penetrated the complainant
on the diverse occasions testified to by the latter. Here again, in the light of my
approach to the constitutional challenge and its impact upon the remaining unlawful
acts allegedly perpetrated by the appellant after the complainant had turned 16, and
my assessment of the veracity of the appellant’s version, it is not necessary to deal in
any greater detail with rest of the appellant’s evidence.
Assessment of evidence
[41] Counsel for the appellant contended that neither the regional magistrate, nor
the high court, attached sufficient weight to the contradictions and improbabilities in,
and the unreliable nature of certain aspects of, the evidence of the complaint and other
State witnesses. Moreover, it was submitted, both the regional magistrate and the high
court erred by not finding that there was insufficient corroboration of the
complainant’s evidence in respect of the alleged sexual incidents. According to
counsel, the evidence of the appellant should not have been rejected as not being
reasonably possibly true. Finally, counsel repeated – and elaborated upon in
considerable detail – the argument which he had advanced before the regional
magistrate and the High Court, namely that the complainant was conspiring with the
rest of his family to incriminate the appellant falsely, in order to conceal from the
outside world his homosexual orientation and, possibly, the identity of his
homosexual partner.
[42] I do not find any of these arguments convincing. As Hartzenberg J pointed in
his judgment, there were indeed contradictions in the complainant’s evidence and that
of some of the other State witnesses. On the whole, however, the complainant
remained consistent although he was testifying about events some of which occurred
more than five years before the commencement of the trial. It is true that the
complainant’s evidence that the appellant had penetrated him anally only three times
and that he had never been involved in a homosexual relationship with any other
person, cannot really be reconciled with Dr Winn’s evidence that all the findings
which emerged from his anal examination of the complainant pointed to repeated
(‘chronic’) anal penetration. However, it was also clear from the complainant’s
evidence that, in his view, considerable stigma attached to being inclined to same-sex
sexual activity. There are many possible reasons why the complainant might not have
wanted to disclose the fact of a possible homosexual relationship with another person
occurring at the same time as the occurrence of the sexual acts between himself and
the appellant, or of such a homosexual relationship occurring after these events. In
this regard, the reasoning of Hartzenberg J in the High Court is compelling-
‘That superficially speaking his [the complainant’s] evidence and that of Dr Winn cannot be
reconciled, is clear. The magistrate was clearly aware of it because he pointed out that the medical
examination was done eighteen months after the last incident of anal penetration by the appellant.
There are a number of possibilities. He may have had a homosexual relationship with someone else
after his last encounter with the appellant. He may even have had such a relationship during the same
time although one would have expected his family to have been aware of it. He may have had more
such incidents with the appellant, but if I understand the evidence of Dr Louw correctly, he may have
subconsciously dissociated himself from them or Dr Winn may have exaggerated his clinical findings.’
[43] It is true that the complainant’s evidence was not above criticism. However,
the regional magistrate was clearly aware of the areas of criticism and nevertheless
accepted his evidence. This evidence was corroborated in number of important
respects. In particular, the appellant’s conduct when initially confronted by Mrs B,
when (according to her evidence) the appellant went deathly pale and repeatedly said
that he was sorry, is reconcilable only with the truth of the complainant’s evidence
and not with the appellant’s evidence. It must also be remembered that most of the
occasions on which the sexual incidents between the complainant and the appellant
allegedly happened, are common cause. The appellant himself conceded that he and
the complainant were together on those occasions. It was common cause that the
appellant was very friendly with all the B children and, in particular, with the
complainant, and that he took the latter on outings and spoiled him with gifts.
[44] On the other hand, there are many aspects of the appellant’s evidence which to
my mind, are most unconvincing. So, for example, the appellant’s version of how he
had reacted when initially confronted by Mrs B on January 2003, namely that he had
simply said that he was not aware of the events in question and that they had not
happened is extremely unlikely. Not only did the appellant, on his version of events,
not ask Mrs B any questions about the allegations against him or express any shock or
outrage about these allegations, but he also did not tell her that A had on one occasion
‘fiddled’ with the zip of his trousers and that the complainant had informed him of a
four-year long homosexual relationship with a school friend, involving anal sex. His
ostensible reason for not doing any of these things was that he did not want to get into
a conflict with her. So he simply left the house as she had requested him to do. I find
this very difficult to believe.
[45] The ‘conspiracy theory’ advanced by counsel for the appellant does not ring
true. In the words of Hartzenberg J:
‘The argument on behalf of the appellant entails that the complainant falsely told the uncle [H] about
the appellant’s conduct, and on top of it asked the uncle not to inform his parents, in the hope that he
would tell them. According to the argument he must have done that to protect someone who was
anyway not suspected of anything by anybody. It is much more likely that he told the uncle the truth.
Moreover, the whole B family, except possibly A, was clearly sympathetic towards the appellant and
did not create the impression of trying to have an innocent man convicted.’
[46] Faced with the competing versions of the complainant and the appellant, the
regional magistrate, and thereafter the High Court, concluded that the appellant’s
version, when viewed against the totality of the evidence adduced, as well as against
the inherent probabilities, was false. Each of these courts correctly adopted a holistic
approach to the evidence and I am not persuaded that either court misdirected itself on
the evidence before it, nor that its conclusion was wrong.
[47] It follows from the above that the appellant’s appeal against his convictions on
the first four counts must fail.
Application in terms of s 322(1)(b) of the Criminal Procedure Act 51 of 1977
[48] Before this Court, the respondent applied for an amendment, in terms of
s 322(1)(b) of the Criminal Procedure Act 51 of 1977, of the appellant’s convictions
on ten counts of contravening s 14(1)(b) of Act 23 of 1957 to 10 convictions of
indecent assault and also, should this application be successful, for an increase in the
sentences imposed on the appellant by the regional court and confirmed by the high
court. The gist of the argument advanced by counsel for the state was that, right from
the start, the power relationship between the appellant and the complainant was totally
unequal because of the complainant’s age in relation to that of the appellant (who was
nearly 28 years older than the complainant) and the relationship of friendship and trust
that existed between the appellant and the B family. With reference to each count,
counsel attempted to illustrate that, although the complainant may have appeared to
have consented to the sexual act in question, this was not voluntary consent. Counsel
relied in this regard on the evidence of the clinical psychologist who had treated both
the complainant and A after Mr and Mrs B had become aware of what had happened.
The psychologist testified that a child who becomes sexually involved with an adult in
this manner is traumatised and, from the outset, is in the position of a victim. As such,
the child is paralysed and one of the common reactions is that the child ‘disassociates’
and places an emotional distance between himself or herself and the adult. Where the
adult follows a pattern of ‘spoiling’ the child by, for example, taking the child on
outings and giving the child presents and money, there is a gradual process of
conditioning and manipulation.
[49] The problem we have in this case is that it is clear from the record that the
regional magistrate adopted a prima facie view, at an early stage of the trial, that the
complainant had been a willing participant in all the various sexual interludes between
him and the appellant, to which view the prosecutor appears to have assented. Thus,
during the examination-in-chief of the complainant, the following exchanges took
place between the regional magistrate and the complainant:
‘Die lank en die kort van die storie is jy het basies altyd die goed toegelaat en saamgespeel nie waar
nie? – ‘Ek het dit toegelaat maar . . .
‘En jy het ook saamgespeel want jy het ook vir hom gemasturbeer as dit nodig is? – Later ja maar dit
was altyd ook net eerste van sy kant af ek het . . . nooit begin nie.’
‘En as ek jou reg verstaan het jy op geen stadium vir hom gesê wat blyk dat jy dit nie wil doen nie?’ –
‘Ja ek het dit nooit vir hom gesê nie.’
After the examination-in-chief of the complainant had been completed, the regional
magistrate remarked:
‘Op die stadium soos ek die omstandighede nou lees tensy ek anders oortuig kan word, wil dit vir my
voorkom of die seun basies saamgespeel het en toegestem het.’
[50] On appeal to the Pretoria High Court, Hartzenberg J commented as follows on
the attitude adopted by the regional magistrate in this regard:
‘In fairness to the magistrate the answer to the argument [that the magistrate was wrong not to have
found the appellant guilty of indecent assault on the complainant] is that the incidents occurred over a
period of four years and that the complainant was an intelligent and well-developed lad. The appellant
certainly was justified to think that the complainant was a willing participant. That was exactly the
attitude of the magistrate expressed at an early stage of the trial. In the result this question was not
really investigated. There is therefore no foundation upon the evidence, to find that the magistrate was
wrong and that the appellant was guilty of indecent assault.’
[51] Before us, counsel for the respondent relied on R v Taylor 1927 CPD 16 as
support for his argument that, in a case of indecent assault, the onus of proving
consent rests upon the accused. This is clearly not correct, as was pointed out by
Munnik J in S v D 1963 (3) SA 263 (EC) at 266B-D:
‘Although absence of consent is not part of the definition of the crime of [indecent] assault as is the
case in rape, the definition as quoted in Gardener & Lansdown includes an averment of
“unlawfulness”. The State must, therefore, prove that the act complained of was unlawful . . .
Since the act complained in the present case was not malum in se and is only unlawful because of the
complainant’s lack of consent, prove of unlawfulness necessarily involved proof of absence of consent.
It seems to me therefore that the onus of proving absence of consent rested upon the State.’
(See also S v M 2006 (1) SA 135 (SCA) paras 68 and 284-285; and generally JRL
Milton South African Criminal Law and Procedure Vol II Common-law Crimes 3 ed
(1996) p 476.)
[52] It is therefore clear that, in this case, the onus rested on the State to prove
absence of consent by adducing sufficient evidence to negative the reasonable
possibility that the complainant consented to the sexual acts in question. From the
evidence as a whole, I agree with the regional magistrate and the High Court that the
State did not discharge its onus of proof in this regard.
[53] Although it may perhaps be unfortunate that, because of the prima facie view
expressed by the magistrate early in the trial, the question of consent was not really
investigated, this does not affect my conclusion. As was pointed out by Nugent JA in
S v M, supra, para 277:
‘The process of examination and cross-examination in a court of law is on occasions a blunt instrument
for revealing the truth, and that is particularly so where, as in this case, the evidence concerns matters
that might be emotionally and psychologically complex and nuanced. But then it is common for the full
truth not to emerge in the course of a criminal trial, which has the limited function of determining
whether there is sufficient and adequate evidence to establish beyond reasonable doubt that the accused
person committed an offence. In the absence of such proof in relation to each element of the offence
the accused person is entitled to be acquitted albeit that the full truth might not have emerged. That
applies no matter the nature of the offence.’
Constitutional validity of s 14(1)(b) of Act 23 of 1957
[54] I turn now to deal with the constitutional challenge to s 14(1)(b) of the Act. The
relevant provisions of s 14 (headed ‘Sexual offences with youths’), read as follows –
(1) Any male person who –
(a)
has or attempts to have unlawful carnal intercourse with a girl under the age of 16 years; or
(b)
commits or attempts to commit with such a girl or with a boy under the age of 19 years an
immoral or indecent act; or
(c)
solicits or entices such a girl or boy to the commission of an immoral or indecent act,
shall be guilty of an offence.
(2) . . .
(3) Any female who –
(a)
has or attempts to have unlawful carnal intercourse with a boy under the age of 16 years; or
(b)
commits or attempts to commit with such a boy or with a girl under the age of 19 years an
immoral or indecent act; or
(c)
solicits or entices such a boy or girl to the commission of an immoral or indecent act;
shall be guilty of an offence.’
‘Unlawful carnal intercourse’ is defined in s 1 of the Act as meaning ‘carnal
intercourse otherwise than between husband and wife’.
The prescribed penalty for an offence referred to in ss 14(1) or 14(3) is imprisonment
for a period not exceeding 6 months, with or without a fine not exceeding R12 000 in
addition to such imprisonment (s 22(f) of the Act).
[55] It may be noted that, in terms of s 68(2) of the Criminal Law (Sexual Offences
and Related Matters) Amendment Act 32 of 2007, read with the Schedule to such Act,
the whole of s 14 of the Sexual Offences Act is repealed. Moreover, in terms of s
68(1)(a), ‘[t]he common law relating to - (a) the irrebuttable presumption that a
female person under the age of 12 years is incapable of consenting to sexual
intercourse’ is also repealed. With the exception of Chapters 5 and 6 thereof, Act 32
of 2007 (the 2007 Act) came into operation on 16 December 2007 (see s 72(1)).
[56] Part 1 of Chapter 3 of the 2007 Act, headed ‘Consensual sexual acts with
certain children’ replaces the provisions of s 14 of the Sexual Offences Act of 1957.
Part 1 comprises ss 15 and 16, which sections read as follows:
‘Acts of consensual sexual penetration with certain children (statutory rape)
15(1) A person (“A”) who commits an act of sexual penetration with a child (“B”) is, despite the
consent of B to the commission of such an act, guilty of the offence of having committed an act of
consensual sexual penetration with a child.
(2)(a) The institution of a prosecution for an offence referred to in subsection (1) must be authorised in
writing by the National Director of Public Prosecutions if both A and B were children at the time of the
alleged commission of the offence: Provided that, in the event that the National Director of Public
Prosecutions authorises the institution of a prosecution, both A and B must be charged with
contravening subsection (1).
(b) The National Director of Public Prosecutions may not delegate his or her power to decide whether a
prosecution in terms of this section should be instituted or not.
Acts of consensual sexual violation with certain children (statutory sexual assault)
16 (1) A person (“A”) who commits an act of sexual violation with a child (“B”) is, despite the consent
of B to the commission of such an act, guilty of the offence of having committed an act of consensual
sexual violation with a child.
(2)(a) The institution of a prosecution for an offence referred to in subsection (1) must be authorised in
writing by the relevant Director of Public Prosecutions if both A and B were children at the time of the
alleged commission of the offence: Provided that, in the event that the Director of Public Prosecutions
concerned authorises the institution of a prosecution, both A and B must be charged with
contravening subsection (1).
(b) The Director of Public Prosecutions concerned may not delegate his or her power to decide whether
a prosecution in terms of this section should be instituted or not.’
In terms of s 1(1) of the 2007 Act, ‘child’ means –
‘(a) a person under the age of 18 years; or
(b) with reference to sections 15 and 16, a person 12 years or older but under the age of 16 years.’
(Emphasis added)
The definitions of ‘sexual penetration’ and ‘sexual violation’ in s 1(1) of the 2007 Act
are very detailed and it is not necessary, for the purposes of this case, to reproduce
them. Suffice it to say that ‘sexual penetration’ includes both vaginal and anal
penetration by, inter alia, the male genital organ, while ‘sexual violation’ includes all
the other ‘immoral’ or ‘indecent’ acts which the appellant is alleged to have
committed with the complainant in this case.
I will return to the relevance of these provisions of the 2007 Act later.
[57] The constitutional arguments advanced by counsel for the appellant can be
disposed of briefly. While it may be true that the cognitive development of a boy or a
girl of the age of 12 years may in certain cases be such that the child might be
regarded as competent to make rational and informed decisions concerning his or her
sexual activity with other persons, this does not mean that the legislature necessarily
acted unconstitutionally by setting, in s 14 of the 1957 Act, what counsel dubs an
‘arbitrary age of (legal) consent’ above the age of 12 years for all children. (Indeed,
counsel conceded that the ‘unisex’ age limit of 12 years championed by him is also
arbitrary, as also is the legislative setting of most age limits, such as the age of 18
years as that at which a person is eligible to vote or to obtain a driver’s licence, for
example.)
[58] It must be remembered that the State is both constitutionally and
internationally obliged to protect its children from all forms of abuse. Section 28(1)(d)
of the Constitution guarantees the right of every child ‘to be protected from
maltreatment, neglect, abuse or degradation,’ while s 28(2) provides that ‘a child’s
best interests are of paramount importance in every matter concerning the child’.
[59] In relation to sexual exploitation and abuse of children, article 34 of the United
Nations Convention on the Rights of the Child (1989), which South Africa ratified on
16 June 1995, is of particular importance. It reads as follows:
‘States Parties undertake to protect the child from all forms of sexual exploitation and sexual abuse. For
these purposes, States Parties shall in particular take all appropriate national, bilateral and multilateral
measures to prevent;
(a)
The inducement or coercion of a child to engage in any unlawful sexual activity;
(b)
The exploitative of use of children in prostitution or other unlawful sexual practices;
(c)
The exploitive use of children in pornographic performances and materials.’
The content of this prohibition on the sexual exploitation and sexual abuse of children
is substantially duplicated in article 17 of the African Charter on the Rights and
Welfare of the Child (1990), ratified by South Africa on 7 January 2000.
[60] These constitutional and international obligations have been incorporated in
the Children’s Act 38 of 2005, certain sections of which came into operation on 1 July
2007. Two of the sections already in operation echo the abovementioned provisions
of the Constitution and of the international instruments referred to. So, s 9 of the
Children’s Act provides that ‘in all matters concerning the care, protection and well-
being of a child the standard that the child’s best interest is of paramount importance
must be applied.’ Section 7 of the Act gives further content and scope to the ‘best
interests of the child standard’. Particularly important in the present context are
paragraphs (h) and (l) of s 7(1) in terms of which –
‘(1) Whenever a provision of this Act requires the best interest of the child’s standard to be applied, the
following factors must be taken into consideration where relevant, namely –
. . .
(h) the child’s physical and emotional security and his or her intellectual, emotional, social and
cultural development;
(l) the need to protect the child from any physical or psychological harm that may be caused by –
(i) subjecting the child to maltreatment, abuse, neglect, exploitation or degradation or exposing the
child to violence or exploitation or other harmful behaviour; or
(ii) exposing the child to maltreatment, abuse, degradation, ill-treatment, violence or harmful behaviour
towards another person’.
[61] Counsel for the appellant also contended that, by way of international
comparison, there are ‘many examples’ of European countries which set lower age
limits for legal consent, to both same-sex and heterosexual sexual acts, than those
stipulated in s 14(1)(b) of the Act. He also pointed out that there are ‘many examples’
of European countries which have eliminated any previous distinction that existed in
such countries between same-sex and heterosexual legal ages of consent. While the
latter contention is certainly true of both European countries and other countries in the
world, the former contention is not entirely correct. As far as I have been able to
ascertain, there are very few countries where the legal age of consent for heterosexual
sexual activity is lower than 14 years, while by far the majority of countries set the
legal age of consent in this regard at 15 or 16 years, or even older. The age of consent
for sexual acts is uniform for homosexuals and heterosexuals in the majority of
countries outside South Africa. It would appear that most countries have set this
uniform age at 16 years, whilst there are some who have set it at 18 years and an
isolated few at between 13 and 15 years.1
[62] There is a world-wide and growing awareness of the particular vulnerability of
children and of the fact that child abuse, including sexual exploitation of children, is a
serious and ever-escalating problem. In South Africa, unfortunately, the extent of this
problem is truly appalling. Some of the (alarming) statistics and of the factors that
contribute to and exacerbate this problem have been highlighted by the South African
Law Reform Commission.2
1 See htpp://www.ageofconsent.com/ageofconsent.htm, accessed 4 March 2008 and also
http://www.avert.org/aofconsent.htm, accessed on 4 March 2008). Both these websites contain very
useful and comprehensive tables listing the ages, in most countries of the world, at which people of
various sexual persuasions (heterosexual, gay and lesbian) can legally consent to voluntary vaginal and
anal intercourse, as also to other sexual activities. The table from the latter website, headed ‘Worldwide
ages of consent’, is annexed to the respondent’s supplementary heads of argument. This website notes
that, in many countries, the legal age of consent is higher when one partner is in a position of trust with
regard to the other, or one partner takes advantage of the other’s immaturity (see for example, s 3(1) of
the United Kingdom Sexual Offences (Amendment) Act of 2000, s 153(1) of the Canadian Criminal
Code and Article 207(b) of the Austrian Criminal Code, as introduced in 2002). It is also noted that the
average legal age of consent across the world for heterosexual, gay and lesbian persons is 16 years.
2 See Issue Paper, Project 108 Sexual Offences against Children (31 May 1997) Chapter 3. An
interesting perspective, by South African children themselves, on the protection of children against
[63] To my mind, it is clear that the establishment of a legal age of consent to
sexual activities – a chronological age which is a line separating ‘valid’ and ‘invalid’
consent – is perfectly in line with South Africa’s constitutional and international
obligations. The State has a duty to protect children against sexual exploitation and
the consequences thereof where such children have not reached an age at which, in the
majority of cases, the child in question will have the requisite cognitive development
and intellectual maturity to fully understand and appreciate the nature and
consequences of sexual activities and to be able to give an informed consent to such
activities. I therefore do not accept the argument that s 14(1)(b) of the Sexual
Offences Act is unconstitutional in that it sets the general legal age of consent by
either boys or girls to sexual intercourse and other sexual activities at higher than 12
years, even though there may be individual cases where the boy or girl in question
might be capable of forming an intention and participating voluntarily in such sexual
acts.
[64] This brings me to the further constitutional question which this Court
specifically drew to the attention of the parties and of the Minister before the hearing,
namely whether the distinction drawn in s 14 of the Act between heterosexual and
same-sex sexual activities by setting the legal age of consent at 16 and 19 years,
respectively, is inconsistent with the Constitution. On the face of it, the same-
sex/heterosexual legal age of consent distinction drawn in s 14 of the Act does
unfairly discriminate against persons on the grounds of their sexual orientation, even
when viewed in the light of the State’s constitutional and international obligations to
protect young people against, inter alia, sexual exploitation.
[65] It was for this reason that we invited both parties and the Minister to address
us on the constitutional question and to indicate whether evidence may assist this
court in arriving at a conclusion. So too, notice of the proceedings was given to
sexual exploitation and abuse can be found in Children’s Rights Project (1998-1999) Report on
Children’s Rights: ‘They should listen to our side of the story’ (a publication of the Community Law
Centre, University of the Western Cape) part H.
Doctors for Life International, its legal representative in his personal capacity, the
Marriage Alliance of South Africa and the Lesbian and Gay Equality Project.
[66] None of the non-governmental organisations who were notified of this appeal
applied to intervene as amicus curiae. Moreover, counsel for the appellant, for the
respondent and for the Minister all agreed that this distinction does constitute
discrimination on the grounds of sexual orientation and/or age in terms of s 9(3) of the
Constitution, which discrimination is in terms of s 9(5) deemed to be unfair unless the
contrary is established. Counsel for the respondent expressed one qualification, to the
effect that any unconstitutionality flowing from the distinction between same-sex and
heterosexual acts in s 14 of the Act should be ‘cured’ by raising the age of consent to
heterosexual acts from 16 years to 19 years and thus eliminating the distinction, or by
setting the legal age of consent for both same-sex and heterosexual acts at the age of
18 years (the new age of majority as from 1 July 2007 in terms of s 7 of the Children’s
Act 38 of 2005). This would, however, create a criminal offence which did not
hitherto exist, in a situation where a Parliamentary choice of a uniform age of 16 years
has already been made in the 2007 Act. In the alternative, counsel contended that s
14(1)(b) of the 1957 Act should remain unchanged so as not to diminish the
protection of children in respect of the period prior to the promulgation of the 2007
Act.
[67] It is clear that the broader governmental purpose underlying s 14 of the 1957
Act was the legitimate one of protecting children against potentially exploitative
sexual conduct, a purpose in line with s 28 of the Constitution. However, in the 14
years since the advent of a constitutional democracy in this country in 1994, South
African courts, including the Constitutional Court, have repeatedly recognised that
gays and lesbians are in ‘certain respects in a uniquely vulnerable position as far as
legal protection and the exercise of political power are concerned’ (see Edwin
Cameron ‘Sexual Orientation and the Constitution: A Test Case for Human Rights’
(1993) 110 SALJ 450 at 456). To be faithful to the guarantees contained in the Bill of
rights, however ‘[s]exual orientation is – or should be – a matter of indifference
morally and constitutionally. There is thus no basis which can be countenanced before
the law for treating homosexual men and woman differently’ (per Ackermann J in
National Coalition for Gay & Lesbian Equality v Minister of Justice 1999 (1) SA 6
(CC) para 25).
[68] As pointed out above, no justification in terms of s 36(1) of the Constitution
was proffered by any of the parties or relevant non-governmental organisations for
maintaining the age differential in s 14 of the Act, which age differential on the face
of it discriminates unfairly on the grounds of sexual orientation. On the contrary, as
already pointed out, the representative of the Minister responsible for the
administration of the Act effectively conceded that there is no such justification. On
what we have before us, this concession appears to be correct.
[69] Here at home, the legislature would similarly appear to have come to the same
conclusion that there is no justification for the age differentiation in s 14 of the Sexual
Offences Act of 1957. This section has been repealed with effect from 16 December
2007 and replaced by ss 15 and 16 of the 2007 Act, which sections set a uniform age
of consent of 16 years for both same-sex and heterosexual sexual acts (see para 8
above). The promulgation of the 2007 Act was the culmination of a lengthy process of
research and consultation by the South African Law Reform Commission, which
process commenced in 1996. The initial investigation concerned only sexual offences
by and against children and, in May 1997, an Issue Paper on Sexual Offences against
Children was published for general information and comment. Hereafter, the scope of
the investigation was expanded to include sexual offences against adults and a general
overhaul of the criminal justice system in relation to sexual offences. Parliament has
thus already spoken by making an unequivocal choice of a uniform age of consent – a
choice made after years of research, consultation and public debate. Parliament opted
to achieve the legitimate governmental purpose of protecting children in a manner that
did not at the same time discriminate against homosexual and gay persons. In my
view, it would take a great deal to convince any court that this choice is
constitutionally invalid. This, in turn, lends much weight to my conclusion that ss
14(1) and 14(3) of the 1957 Act are indeed constitutionally invalid to the extent that
these sections distinguish between same-sex and heterosexual sexual acts by setting
different legal ages of consent to such acts. It follows that, in terms of s 172(1)(a) of
the Constitution, we must declare these sections to be invalid to the extent of their
inconsistency with the Constitution.
The appropriate remedy
[70] In terms of s 172(1)(b) of the Constitution, a court which has declared a
statutory provision to be unconstitutional and hence invalid may make any order that
is just and equitable, including ‘an order suspending the declaration of invalidity for
any period and on any conditions, to allow the competent authority to correct the
defect.’
[71] In a case such as the present, where a statutory provision creating a criminal
offence is declared to be constitutionally invalid, the ‘general principle’ that ‘an order
of invalidity should have no effect on cases which have been finalised prior to the date
of the order of invalidity’ is particularly important (see S v Bhulwana; S v Gwadiso
1996 (1) SA 388 (CC) para 32). Furthermore, the order must be formulated in such a
way that the interests of good government are properly taken into account. In the
words of Ackermann J in National Coalition for Gay & Lesbian Equality v Minister
of Justice 1999 (1) SA 6 (CC) para 94:
‘The interests of good government will always be an important consideration in deciding whether a
proposed order under the 1996 Constitution is ‘‘just and equitable’’ for justice and equity must also be
evaluated from the perspective of the State and the broad interests of society generally.’
[72] An order of constitutional invalidity which is retrospective without any
qualification could easily have undesirable consequences that would seriously disrupt
the criminal justice system. As in the National Coalition for Gay & Lesbian Equality
v Minister of Justice case (supra), the least disruptive way of giving relief to persons
in respect of past convictions for contraventions of ss 4(1)(b) and ss 14(3)(b) of the
Sexual Offences Act is, in my view, through the established court structures:
‘On the strength of the order of constitutional invalidity, such persons could note an appeal against
their convictions . . . where the period for noting such appeal has not yet expired or, where it has, could
bring an application for condonation of the late noting of an appeal or the late application for leave to
appeal to a Court of competent jurisdiction. In this way effective judicial control can be exercised.
Although this might result in cases having to be reopened, it will in all probability not cause dislocation
of the administration of justice of any moment.’ (Para 97)
[73] It must also be borne in mind that, with effect from 16 December 2007, s 14 of
the Sexual Offences Act has been repealed in its entirety by the 2007 Act. Sections
15 and 16 of the new Act now regulate the conduct that was previously regulated by
ss 14(1) and 14(3) of the 1957 Act. These sections set a uniform age of consent of 16
years for both same-sex and heterosexual acts. Counsel for the Minister thus
contended, in my view correctly, that it would make no sense simply to declare
ss 14(1)(b) and 14(3)(b) of the 1957 Act to be constitutionally invalid and to leave it
to the legislature to deal with the consequences of such an order – the legislature has
already done so.
[74] To my mind, ‘appropriate relief’ in the present case (see s 38 of the
Constitution) lies in a combination of the severance of words and the reading in of
other words into the relevant statutory provisions. As was pointed out by the
Constitutional Court in National Coalition for Gay & Lesbian Equality v Minister of
Home Affairs 2000 (2) SA 1 (CC) paras 74-75:
‘[74]
The severance of words from a statutory provision and reading words into the provision are
closely related remedial powers of the Court. In deciding whether words should be severed from a
provision or whether words should be read into one, a Court pays careful attention first, to the need to
ensure that the provision which results from severance or reading words into a statute is consistent with
the Constitution and its fundamental values and, secondly, that the result achieved would interfere with
the laws adopted by the Legislature as little as possible. . .
[75] In deciding to read words into a statute, a Court should also bear in mind that it will not be
appropriate to read words in, unless in so doing a Court can define with sufficient precision how the
statute ought to be extended in order to comply with the Constitution. Moreover, when reading in (as
when severing) a Court should endeavour to be as faithful as possible to the legislative scheme within
the constraints of the Constitution.’
[75] The remedial solution in this case lies in a severance of the words ‘under the
age of 19 years’ after the words ‘a boy’ in s 14(1)(b) of the 1957 Act and the reading-
in of the words ‘under the age of 16 years’ in its stead. So too, in respect of s 14(3)(b)
of the 1957 Act, the words ‘under the age of 19 years’, after the words ‘a girl’ must be
severed from that section, to be replaced by the words ‘under the age of 16 years’.
After the severance and reading-in, ss 14(1)(b) and 14(3)(b) would read as follows:
‘(1)
Any male person who –
. . .
(b) commits or attempts to commit with such a girl or with boy under the age of 16 years an immoral
or indecent act; or
. . .
shall be guilty of an offence.
(3)
Any female who –
. . .
(b) commits or attempt to commit with such a boy or with a girl under the age of 16 years; or
. . .
shall be guilty of an offence.’
[76] It is clear that a pre-existing provision of a law which is unconstitutional
became invalid at the moment the Constitution took effect. This is the effect of the
supremacy clause of the Constitution (s 2), in terms of which the Constitution is the
supreme law of the Republic and all law or conduct inconsistent with it is invalid.
Item 2(1) of Schedule 6 to the Constitution provides that all law that was in force
when the Constitution took effect, continues in force until amended or repealed, but
only to the extent that it is consistent with the Constitution. In accordance with the
doctrine known as ‘objective constitutional invalidity’,3 a Court making a declaration
of invalidity simply declares invalid what has already been invalidated by the
Constitution. As indicated above, however, the operation of the doctrine of objective
constitutional invalidity is subject to the possibility that the court making the
declaration of invalidity may, in the interests of justice and equity, limit the
retrospective effect of such declaration in terms of s 172(1)(b)(1) of the
Constitution.
[77] By virtue of s 172(2)(a) of the Constitution, the orders of constitutional
invalidity to be made by this Court will have no force unless and until they are
confirmed by the Constitutional Court. Should this confirmation occur, then the
appellant’s convictions on the last 6 counts (viz counts 6-11) will effectively cease to
exist. Thus, although this Court should make an order setting these convictions aside,
this order will be subject to the confirmation by the Constitutional Court of our order
of constitutional invalidity.
Sentence
3 See Ferreira v Levin NO; Vryenhoek v Powell NO 1996 (1) SA 984 (CC) paras 27-28; National
Coalition for Gay and Lesbian Equality v Minister of Justice 1999 (1) SA 6 (CC) para 84; Gory v
Kolver NO 2007 (4) SA 97 (CC) para 39.
[78] As I have already indicated, although the High Court granted the appellant
leave to appeal against both conviction and sentence, counsel for the appellant did not
persist with the appeal against sentence before us. The sentence of imprisonment for a
period of one year imposed by the regional magistrate, and confirmed by the High
Court, in respect of each of the first four convictions therefore stands.
[79] It appears from the record that the appellant has been in prison since 3
December 2003, as he was not granted bail pending his trial or pending his appeals.
On 8 July 2005, the regional court sentenced him to an effective period of 11 years’
imprisonment. Thereafter, on 21 November 2006, the appellant’s effective sentence
was reduced by the High Court to seven years’ imprisonment. This means that, at the
time we heard this appeal, the appellant had served more than two years and seven
months of his seven year sentence. If the Constitutional Court confirms the order of
constitutional invalidity to be made by this Court, then the appellant’s convictions on
the last six counts will be set aside and only the sentences imposed in respect of the
first four counts (four years in total) will stand. This being so, this is an appropriate
case in which we should exercise our power in terms of s 172(2)(b) of the
Constitution by granting temporary relief to the appellant, pending the decision of the
Constitutional Court. It would seem that the best way to do this would be to make an
order suspending the sentence imposed on the appellant in respect of counts 6 to 11
until such time as the Constitutional Court has decided whether or not to confirm our
orders of constitutional invalidity. The effect of this is that, pending the decision by
the Constitutional Court in this regard, the appellant’s effective sentence must be
regarded for all relevant purposes as being four years’ imprisonment.
Order
[80] In the circumstances, the following order is made:
1.1
It is declared that, with effect from 27 April 1994, ss 14(1)(b) and 14(3)(b) of
the Sexual Offences Act 23 of 1957 are inconsistent with the Constitution and hence
invalid to the extent that these sections differentiate between heterosexual and same-
sex sexual activities by setting the legal age of consent at 16 and 19 years,
respectively.
1.2
It is declared that, with effect from 27 April 1994, s 14(1)(b) of Act 23 of 1957
is to be read as though the words ‘under the age of 19 years’ after the words ‘a boy’
have been replaced with the words ‘under the age of 16 years’.
1.3
It is declared that, with effect from 27 April 1994, s 14(3)(b) of Act 23 of 1957
is to be read as though the words ‘ under the age of 19 years’ after the words ‘ a girl’
have been replaced with the words ‘under the age of 16 years’.
1.4
In terms of s 172(1)(b) of the Constitution, it is ordered that the orders in
paragraphs 1.1, 1.2 and 1.3 shall not invalidate any conviction for a contravention of
s 14(1)(b) or 14(3)(b) of Act 23 of 1957 unless an appeal from or a review of the
relevant judgment is pending, or the time of noting an appeal from that judgment has
not yet expired, or condonation for the late noting of an appeal or late filing of an
application for leave to appeal is granted by a court of competent jurisdiction.
2.
These orders, insofar as they declare provisions of Act 23 of 1957 to be
invalid, are referred to the Constitutional Court for confirmation in terms of
s172(2)(a) of the Constitution.
3.
The appeal in respect of the appellant’s convictions on counts 1, 2, 3 and 4
fails.
4.
Subject to the confirmation by the Constitutional Court of the orders of
constitutional invalidity set out in paragraph 1 above the appeal in respect of the
appellant’s convictions on counts 6, 7, 8, 9, 10 and 11 succeeds and those convictions
are set aside.
5.
In terms of s 172(2)(b), the sentences imposed on the appellant in respect of
counts 6, 7, 8, 9, 10 and 11 are suspended pending the decision by the Constitutional
Court in respect of the confirmation of the orders of constitutional invalidity.
6.
The registrar of this Court is directed to:
6.1
forward a copy of this judgment, together with the record, to the Registrar of
the Constitutional Court
6.2
serve a copy of this judgment on the Department of Correctional Services and
on the head of the prison in which the appellant is currently incarcerated.
___________________
BJ VAN HEERDEN JA
CONCUR:
STREICHER JA
CAMERON JA
NUGENT JW
KGOMO AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
31 March 2008
STATUS: Immediate
Izak Andreas Geldenhuys v The State
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today declared sections 14(1)(b) and 14(3)(b)
of the Sexual Offences Act 23 of 1957 to be inconsistent with the Constitution
and hence invalid to the extent that these sections differentiate between
heterosexual and same-sex sexual activities by setting the ‘legal age of
consent’ in respect of such activities at 16 and 19 years, respectively. It held
that the age differential on the face of it discriminates unfairly on the grounds
of sexual orientation and that no justification for maintaining this differential
had been shown. The Court severed certain words from these sections and
read other words into these sections in order to set a uniform age of consent
of 16 years for both same-sex and heterosexual activities. It pointed out that
section 14 of the 1957 Act has been repealed with effect from 16 December
2007 by the Criminal Law (Sexual Offences) Amendment Act 32 of 2007 and
replaced by section 15 and 16 of the 2007 Act which set a uniform age of
consent of 16 years for all consensual sexual activities.
The appellant in this appeal had been convicted in the regional court of ten
counts of contravening section 14(1)(b) of the 1957 Act (viz the commission of
immoral or indecent act with the complainant, a boy under the age of 19 years
at the relevant times). The regional court had sentenced him to an effective 11
years’ imprisonment. His appeal to the Pretoria High Court against his
convictions failed, but that court reduced his effective sentence to seven
years’ imprisonment. In the High Court, the appellant raised a constitutional
challenge to section 14(1)(b) of the 1957 Act, but this challenge was rejected
by the High Court.
On a further appeal to the Supreme Court of Appeal, the constitutional
challenge to sections 14(1)(b) and 14(3)(b) succeeded. The effect of the
orders of constitutional invalidity made by the SCA is that, if the Constitutional
Court confirms these orders, then the appellant’s convictions on the last six
counts (relating to acts perpetrated on the complainant while he was over the
age of 16 years) will be set aside. The SCA held, however, that the regional
court and the High Court could not be faulted in their conclusion that the
appellant’s version in respect of the first four counts, when viewed against the
totality of the evidence adduced, as well as against the inherent probabilities,
was false. The appellant’s appeal against his convictions on the first four
counts was therefore dismissed.
The SCA noted that the appellant had been in prison since 3 December 2003,
as he was not granted bail pending his trial or pending his appeals. He had
been serving his sentence since 8 July 2005. Therefore, at the time this
appeal was heard, the appellant had served more than two years and seven
months of his effective seven year sentence (as reduced by the High Court).
The SCA granted temporary relief to the appellant pending the decision of the
Constitutional Court, by making an order suspending the sentence imposed
on the appellant in respect of the last six counts until such time as the
Constitutional Court has decided whether or not to confirm the SCA’s orders
of constitutional invalidity. The effect of this was that, pending the decision by
the Constitutional Court in this regard, the appellant’s effective sentence must
be regarded for all relevant purposes as being four years’ imprisonment.
ends.
|
4004
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 771/21
In the matter between:
ADRIAN JOHN SAMUELS
APPELLANT
and
GAYAAT SALIE-HLOPHE
RESPONDENT
Neutral citation: Samuels v Salie-Hlophe (Case no 771/21) [2023] ZASCA
49 (13 April 2023)
Coram:
MOLEMELA, NICHOLLS, MOTHLE and MEYER JJA and
OLSEN AJA
Heard:
15 February 2023
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be at 11h00 on 13 April 2023.
Summary: Civil procedure - Contempt of court - whether appellant was
entitled to a postponement to allow him to present his case before high court
made the order committing him to prison - high court did not determine
whether the appellant’s conduct was male fide and wilful beyond a reasonable
doubt - this must take place before there is an order for committal.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Kubushi J, sitting as court of first instance):
1 The appeal is upheld, with no order as to costs.
2 The order of the Western Cape Division of the High Court, Cape Town,
is set aside and substituted with the following order:
‘1
The application for postponement is granted.
The respondent is to pay the wasted costs occasioned by the
postponement on the unopposed scale.’
The appellant is to file his answering affidavit in the application for
committal within 15 days of the date of this order, and the respondent may file
a replying affidavit within 10 days of receipt of the answering affidavit.
JUDGMENT
Nicholls JA (Molemela, Mothle and Meyer JJA and Olsen AJA
concurring)
[1] This appeal arises out of a maintenance order made in the Western Cape
Division of the High Court, Cape Town (the high court), pursuant to a
longstanding and acrimonious matrimonial dispute. The central question is
whether the appellant should be committed to prison for three months for
contempt of court, as a result of his failure to make payment in terms of the
maintenance order. Aligned to this, is whether the appellant was entitled to a
postponement to present his case before the high court made the order that he
be committed to prison.
[2] The appellant, who was the respondent in the high court, is a practising
advocate in the Western Cape. The respondent, the applicant in the high court,
is a Judge in the same division. To avoid any suggestion of impropriety,
judges from other divisions presided over matters concerning the parties.
[3] Pursuant to divorce proceedings, on 29 July 2013 Samela J granted an
order against the appellant, which inter alia, provided that he pay a
contribution towards the maintenance of the minor children in the sum of
R6000 per month per child; all amounts owing to the Springfield Convent
School (the school); and all educational costs, including the costs of extra-
mural activities and uniforms at the school. The appellant did not appeal this
order.
[4] The appellant failed to make the payments as ordered. After making
numerous attempts, over a period of many years, to enforce compliance with
Samela J’s order, the respondent finally brought an urgent application for
payment of the sum of R138 413.90. This was allegedly the outstanding
maintenance amount in terms of Samela J’s order. The urgent application was
successful and on 4 December 2020 the high court (per Mudau J) ordered the
appellant to comply with the order of Samela J and that R138 413.90 be paid
to the respondent by no later than 17h00 on Friday 18 December 2020.
Further, if the appellant failed to comply, the respondent was granted leave to
set the matter down on 48 hours’ notice for an order that the appellant be
declared in contempt of court, a warrant be issued for his arrest and he be
committed to imprisonment for a period to be determined by the court.
[5] The appellant failed to make payment of the sum of R138 413.90, or
any part thereof, before 18 December 2020. As provided for in Mudau J’s
order, the respondent launched an application that the appellant be held in
contempt of Samela J’s order and that a period of imprisonment be imposed
as a result of his wilful disregard of the court order.
[6] The application for committal was heard by Kubushi J in the high court,
on 2 March 2021. The high court was satisfied that the respondent had made
out a case for the relief that she sought and ordered that the appellant be
declared in contempt of Samela J’s order of 29 July 2013 and be committed
to a period of three months’ imprisonment. An application for a postponement
brought by the appellant on the day of the hearing was dismissed.
[7] The appellant applied for leave to appeal against the decision of the
high court dismissing his application for a postponement and for finding him
in contempt of court. In respect of the latter, his grounds of appeal were that
he only owed R20 000 as the unpaid school fees were due to the school and
not the respondent who, at best, had a claim of unjustified enrichment against
him. He repeated his stance that the COVID-19 pandemic had ‘profoundly
diminished’ his financial situation. Leave to appeal was dismissed by the court
a quo but granted by this Court.
[8] In this Court, the respondent has elected to abide by the Court’s
decision. The thrust of the appellant’s argument is that the high court erred in
refusing him a postponement in order to provide him with an opportunity to
file a further affidavit in response to the respondent’s supplementary affidavit.
It is therefore the refusal of the postponement that is the focus of this appeal.
[9] In her supplementary founding affidavit to the application for
committal, the respondent set out details of the appellant’s conduct after
Mudau J’s judgment and order on 4 December 2020. A few days later, on
8 December 2020, the appellant’s attorneys wrote to the attorneys of the
respondent indicating that the appellant would not be in a position to pay
school fees given his ‘precarious financial circumstances’. It was therefore
clear that he would not abide by the court order.
[10] This prompted the respondent to re-issue a writ of execution against the
appellant, in an attempt to attach a Range Rover SUV which was registered in
his name. The Sheriff attended the premises on 10 and 14 December 2020,
and observed the said motor vehicle parked at the property. However, the
return of service included only a list of movables in the sum of R19 000 which
were the subject of an interpleader application. When the sheriff returned on
21 February 2021, there was a Mercedes Benz and a Mini Cooper parked at
the premises but the Range Rover was nowhere to be seen. The appellant
handed over an affidavit stating that he had sold the Range Rover and it had
not been in his possession since 17 December 2020. He refused to inform the
sheriff to whom it had been sold or the whereabouts of the vehicle. An eNatis
inquiry, conducted on 22 February 2021, revealed that the appellant was still
the registered owner.
[11] The respondent alleged that this was a pattern of behaviour that she had
previously borne the brunt of. After successfully obtaining an anti-dissipation
order against the appellant on 08 September 2015, the respondent alleged that
the appellant had sold an immoveable property which he held as an
investment, to a cousin, in an attempt to ensure that it would not be placed in
trust as ordered by the court.
[12] As regards the payment of school fees, on 10 December 2020, the
appellant unilaterally gave notice of termination to the children’s school
because of his precarious financial position which rendered him unable to pay
school fees. He requested the appellant to consider a more affordable
secondary school.
[13] The notice of set down for the committal of the appellant was served
on him on 24 February 2021, to be heard on 2 March 2021. In his affidavit
requesting a postponement, the appellant stated that on 22 February 2021, two
days before receiving the notice of set down, he received a report from a
neurosurgeon at Kingsbury hospital that his sister had been diagnosed with
terminal 4th stage lung and spinal cancer. This unexpected news of her
imminent death had a devastating effect on him.
[14] Despite being an advocate practising mainly in criminal law, the
appellant stated that he was unable to secure the services of a legal team before
1 March 2021. It is inexplicable why he was unable to secure the services of
a legal team before 1 March 2021. In any event, he had an attorney throughout.
It can safely be assumed that the appellant was not oblivious to the
consequences of failing to comply with a court order. Requests to the
respondent’s legal representatives for a postponement were turned down,
forcing the appellant to bring a substantive application for postponement on
the day of the hearing.
[15] Other than his sister’s illness, the appellant’s grounds for postponement
are as follows. Firstly, he states that a substantial portion of the monies
claimed are not due. As a result, the respondent has no locus standi to bring
this application which is an abuse of the legal process. The appellant is only
in arrears for a small amount and this was occasioned by the adverse effects
of COVID-19 on his practice. Thus, the quantum is in dispute. Secondly, the
application for his committal is based on inadmissible hearsay evidence and
the appellant requires time to deal with what he refers to as ‘spurious
allegations’. A further complaint is that the respondent’s husband should have
recused himself from the process rather than securing judges from outside the
province. Finally, the respondent seeks radical relief which has been brought
with indecent haste and has the effect of trammelling his constitutional right
to liberty.
[16] The high court criticised the appellant for bringing the application for
postponement on the day of the hearing, when he was aware as early as
24 February 2021 that the respondent was going to oppose the application.
Moreover, he was aware that the proceedings could be brought on 48 hours’
notice. The court did not engage with the reasons advanced for requesting
postponement but found that the appellant’s argument that the amount in
arrears was in dispute and much less than R138 413.90 did not assist him,
especially as he was in arrears before the COVID-19 pandemic, which he
blamed for his inability to pay. As the full amount was not paid and the
appellant remained in contempt of court, the application for postponement
was dismissed on the basis that the grounds raised by the appellant did not
assist him in the main application.
[17] All South Africans have a duty to respect and abide by the law. As the
Constitutional Court stated in Secretary of the Judicial Commission of Inquiry
into Allegations of State Capture, Corruption and Fraud in the Public Sector
including Organs of State v Zuma and Others,1 courts ‘unlike other arms of
the State . . . rely solely on the trust and confidence of the people to carry out
their constitutionally mandated function’2 which is to uphold, protect and
apply the law without fear or favour.3 Disregard of court orders is an attack
on the very fabric of the rule of law.
[18] The attempt to evade payment of maintenance orders is particularly
egregious as it also undermines the best interest of the child principle.4 If court
orders in respect of maintenance are habitually evaded with relative impunity,
not only is the justice system discredited but also the interests of the child are
not adequately protected. Courts are enjoined to be alive to recalcitrant
maintenance defaulters who use legal processes to side-step their obligations
towards their children.5
1 Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud
in the Public Sector including Organs of State v Zuma and Others [2021] ZACC 18; 2021 (9) BCLR 992
(CC); 2021 (5) SA 327 (CC).
2 Ibid para 1.
3 See also S v Mamabolo [2001] ZACC 17; 2001 (3) SA 409 (CC); 2001 (5) BCLR 449 (CC) para 17.
4 Section 28(2) of the Constitution provides that ‘[a] child’s best interests are of paramount importance in
every matter concerning the child.’
5 Bannatyne v Bannatyne and Another [2002] ZACC 31; 2003 (2) BCLR 111; 2003 (2) SA 363 (CC) para
32.
[19] The requirements for contempt of court are now trite. They are the
existence of a court order; the contemnor must have knowledge of the court
order; there must be non-compliance with the court order; and, the non-
compliance must have been wilful or male fides. Once the first three elements
have been shown, wilfulness and male fides will be presumed and the
evidentiary burden switches to the contemnor.6
[20] It has been recognised by our courts that where a committal is ordered,
the standard of proof in civil contempt matters has to be the criminal standard.7
In those circumstances, wilfulness and male fides have to be shown beyond
reasonable doubt.8 Put differently, the contemnor has an evidential burden to
create a reasonable doubt as to whether his conduct was wilful and male fide.
There is a different standard of proof where no criminal sanction is sought;
then, the standard of proof is that of a balance of probabilities. While all wilful
disobedience of a court order made in civil proceedings is a criminal offence,
civil mechanisms that are designed to induce compliance without resorting to
committal, are competent when proved on a balance of probabilities.9 The
hybrid nature of contempt proceedings which results in committal, combine
civil and criminal elements. But this does not mean that contemnors are not
6 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA); Pheko and Others v
Ekurhuleni Metropolitan Municipality [2015] ZACC 10; 2015 (5) SA 600 (CC); 2015 (6) BCLR 711 (CC);
Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in
the Public Sector including Organs of State v Zuma and Other [2021] ZACC 18; 2021 (9) BCLR 992 (CC);
2021 (5) SA 327 (CC).
7 Matjhabeng Local Municipality v Eskom Holdings Limited and Others; Mkhonto and Others v
Compensation Solutions (Pty) Limited [2017] ZACC 35; 2017 (11) BCLR 1408 (CC); 2018 (1) SA 1 (CC)
para 61.
8 Ibid para 62.
9 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) para 17; Matjhabeng Local
Municipality v Eskom Holdings Limited and Others; Mkhonto and Others v Compensation Solutions (Pty)
Limited [2017] ZACC 35; 2017 (11) BCLR 1408 (CC); 2018 (1) SA 1 (CC) paras 64-67.
afforded the substantive and procedural protections which apply to any
individual facing the loss of his freedom.
[21] It is in the light of the above that the refusal of the postponement must
be considered. Whether or not the request for postponement was merely a
delaying tactic, once there is the potential of an individual’s loss of liberty, it
was incumbent on the court to ensure that the appellant’s conduct was
male fide and wilful beyond a reasonable doubt. Whether the failure to meet
his financial obligations to the respondent was intentional, or as a result of the
deterioration of his financial circumstances, was not an issue that was
considered by the high court, despite the appellant having raised it in his
application for postponement. Nor was this aspect considered by Mudau J,
who left that question open and merely stated ‘[w]hether or not that
explanation is truthful is irrelevant to the first part of this application,
paragraphs 1 and 2 of the relief sought by the applicant remains uncontested’.
Paragraph 1 referred to the urgency of the matter, while in paragraph 2, the
respondent sought an order that the appellant comply with Samela J’s order
of 29 July 2013, by making payment of the sum of R138 413.90, into the trust
account of the respondent’s attorneys by no later than 17h00 on 18 December
2020. This means that whether the conduct of the appellant was wilful and
male fides beyond reasonable doubt has not been determined. Such an
exercise must take place before there is an order for his committal.
[22] The maintenance orders are for the benefit of the appellant’s minor
children, not his ex-wife, the respondent. While I am mindful of the fact that
the appellant was forced to approach this Court, thereby incurring costs, I am
equally mindful that the respondent did not oppose the appeal and undertook
to abide. I am therefore of the view that the circumstances are such that there
should be no costs order in this appeal.
[23] In the result I make the following order:
The appeal is upheld, with no order as to costs.
The order of the Western Cape Division of the High Court, Cape Town,
is set aside and substituted with the following order:
‘1 The application for postponement is granted.
2 The respondent is to pay the wasted costs occasioned by the
postponement on the unopposed scale.’
The appellant is to file his answering affidavit in the application for
committal within 15 days of the date of this order, and the respondent may file
a replying affidavit within 10 days of receipt of the answering affidavit.
________________________
C H NICHOLLS
JUDGE OF APPEAL
Appearances
For appellant:
J van der Schyff
Instructed by:
NSW Attorneys, Cape Town
Phatshoane Henney Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
13 April 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
Samuels v Salie-Hlophe (Case no 771/21) [2023] ZASCA 49 (13 April 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with no order as to costs,
an appeal against the decision of the Western Cape Division of the High Court, Cape Town (the high
court).
The core issue before the SCA was whether the appellant should be committed to prison for three
months for contempt of court, as a result of failing to make payment in terms of a maintenance order.
Aligned to this, was whether the appellant was entitled to a postponement to allow him to present his
case before the high court made the order committing him to prison.
Pursuant to divorce proceedings, a maintenance order was granted against the appellant, which inter
alia, provided that he must make a contribution towards the maintenance of the minor children in the
sum of R6000 per month per child; all amounts owing to the school that the children attend, including
the cost of extra-mural activities and school uniforms. The appellant failed to make payments as
ordered. After numerous attempts, over a period of many years, the respondent approached the high
court and launched an urgent application, to enforce compliance with the maintenance order. The
urgent application was successful and resulted in the respondent being ordered to comply with the
maintenance order and that the arrear maintenance must be paid to the respondent by no later than
17h00 on Friday 18 December 2020. Failing which, the respondent could set the matter down on 48
hours’ notice for an order that the appellant be declared in contempt of court, a warrant be issued for
his arrest and he be committed to prison for a period to be determined by the court. The appellant failed
to comply with this order and the respondent accordingly launched the said application.
The high court was satisfied that the respondent had made out a case for the relief that she sought. As
a result, the high court declared the appellant to be in contempt of the maintenance order and ordered
that he be committed to prison for a period of three months. The appellant’s application for a
postponement, made on the day that the application for committal was heard, was dismissed. The
appellant applied for leave to appeal this decision. His grounds of appeal were that the amount of arrear
maintenance claimed by the respondent was incorrect and that the COVID-19 pandemic had
significantly diminished his financial situation. Leave to appeal was dismissed by the high court but
granted by the SCA.
The SCA held that where a committal is ordered, the standard of proof in civil contempt matters has to
be the criminal standard, ie wilfulness and male fides have to be shown beyond reasonable doubt. The
hybrid nature of contempt proceedings which results in committal, combine civil and criminal elements.
But this does not mean that contemnors are not afforded the substantive and procedural protections
which apply to any individual facing the loss of his freedom. The SCA found that the high court did not
determine that the appellant’s conduct was mala fide and wilful beyond a reasonable doubt. As a result,
the SCA upheld the appellant’s appeal and made an order that the appellant’s application for
postponement in the high court succeeds. No order was made as to costs.
~~~~ends~~~~
|
2373
|
non-electoral
|
2013
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 130/12
In the matter between:
IMVULA QUALITY PROTECTION (PTY) LTD
Appellant
and
LICINIO LOUREIRO
First Respondent
VANESSA LOUREIRO
SecondRespondent
LUCA-FILIP LOUREIRO
ThirdRespondent
JEAN-ENRIQUE LOUREIRO
Fourth Respondent
Neutral citation: Imvula Quality Protection (Pty) Ltd v Licinio Loureiro &
others (130/12) [2012] ZASCA 12 (15 March 2013)
Coram:
Mthiyane DP, Cloete, Mhlantla and Bosielo JJA and Mbha
AJA
Heard:
21 Nov 2012
Delivered:
15 March 2013
Summary: Contract ─ Delict ─ contract concluded by appellant and first
respondent for guarding services for first respondent’s property and family ─
invalidity of limited cession ─ conduct of the guard not negligent ─
respondents failed to prove breach of contractual terms and legal duty owed
to them.
______________________________________________________________
ORDER
________________________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Satchwell J
sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and replaced with the following:
‘The plaintiffs’ claims are dismissed with costs.’
JUDGMENT
MHLANTLA JA (Mthiyane DP, Bosielo JA and Mbha AJA concurring):
Introduction
[1] This is an appeal from a judgment of the South Gauteng High Court,
Johannesburg (Satchwell J) in which Imvula Quality Protection (Pty) Ltd
(the appellant) was found liable to Mr Licinio Loureiro (the first respondent)
in contract, and to Mrs Vanessa Loureiro and their two minor sons (the
second to fourth respondents respectively) in delict for the loss they allegedly
suffered in a robbery which occurred at their home on 22 January 2009. It is
that incident which gave rise to the above claims.
Background
[2] The incident can be best understood by reference to the following
background facts. On 25 November 2008, the first respondent and his family
moved into their house at 50 Jellicoe Avenue, Melrose, Johannesburg. He
arranged with Mr Barbosa of Sky Leah Sales to install a comprehensive
security system at the house. This involved electric fencing, perimeter
protection, beams, multiple alarm systems, guard house, intercom and closed
circuit television. There was a safe room concealed by large mirrors inside
the house. The first respondent, his nephew (Ricardo Loureiro) and Ricardo’s
father were members of Combined Ceilings and Partitions CC (CC&P). The
first respondent requested Ricardo to arrange a 24-hour service of armed
guards to be placed at his house. The appellant, a private security firm, was
employed for this purpose. The guards were placed at the entrance of the
respondents’ home with effect from 2 December 2008.
[3] The first respondent became concerned about the conduct of the
guards who allowed access to visitors without his prior authorisation. On 10
December 2008 he instructed Barbosa to partially disable the intercom so
that the guards would not be able to open and close the main driveway gate.
This arrangement, however, affected the movement of the guards during their
change of shifts. To alleviate this problem, the first respondent provided the
guards with a key to open the pedestrian gate during the shift change only.
He prohibited them from using the key to open the gate to allow access to
anyone without his prior authorisation.
[4] On 22 January 2009, the first and second respondents left their home
at about 19h45 to attend a school function. They left their children in the care
of the domestic workers and the houseman Francis. Mr July Mahlangu
(Mahlangu), a grade A security guard and instructor, was on duty. He was at
the guard house when he saw a white BMW vehicle flashing a police blue
light approaching. It drove past and stopped partially on the driveway near
the guard house. A passenger alighted from the front seat. He was wearing
dark blue clothing, a reflective vest marked “Police” and a police cap. The
man walked towards the thick bullet-proof glass of the guard house and
produced a card. He showed Mahlangu a police identity card. Mahlangu did
not have sufficient opportunity to inspect the card and thus could not see the
photo thereon in order to compare it to the man before him. Mahlangu was
adamant that the card was a valid police identity card as it had a police
emblem on it. After seeing the card, he went to the intercom and tried to
speak to the policeman. There was no response from the latter. He could not
hear anything through the intercom and could not hear the sound of the car.
He realised that the intercom was not working. He looked and realised that
the policeman was no longer waiting in front of the window. He decided to
open the gate and go outside in order to establish what the police officer
wanted as he was obliged to co-operate with the police and members of other
security services.
[5] He took the key to the pedestrian gate and opened the gate. He found
the policeman standing about two metres from him. Mahlangu was startled
when this ‘policeman’ immediately produced a firearm and pointed it at his
head. Other armed intruders joined this ‘policeman’. It was then that
Mahlangu realised that he had been duped by a person posing as a police
officer. The intruders forced him into the premises. They ordered him to lead
them to the main house where they accosted the occupants and waited for the
owners to return.
[6] The first and second respondents returned at approximately 21h00 and
were accosted by the intruders as they entered the garage. The intruders
robbed them and stole their belongings, mostly jewellery which had been
stored in the safe room. The total value of the items stolen was in excess of
R11 million. After the robbery, the first respondent, who had concluded an
“Agreement of Loss” with Insurance Zone Administration Services (IZAS),
submitted an insurance claim for the first loss in terms of his insurance
policy. This agreement contained a clause relating to a cession of the claim. I
shall return to the details of the agreement in due course. The first respondent
was paid an amount of R1 556 442.43.
[7] The respondents subsequently instituted an action against the
appellant, based both in contract and delict, for damages for the loss they had
suffered.1 The appellant raised a special plea that the first respondent had no
locus standi as he had ceded all of his rights and remedies arising from the
incident to IZAS. In its plea, the appellant pleaded that the contract for the
guarding services had been concluded with CC&P and not with the first
respondent. Consequently, the appellant alleged, the first respondent had no
claim against it. Regarding the delictual claim, the appellant pleaded that the
second to fourth respondents had failed to prove any blameworthy conduct
on the part of the appellant and/or the guard.
[8] The matter came before Satchwell J. The learned judge granted an
order separating the issues and proceeded to determine the merits. Regarding
the special plea, the judge held that the cession related to the loss set out in
the document and was limited to the amount paid to the first respondent. She
declared the cession between the first respondent and IZAS invalid as it
1 In their particulars of claim they inter alia alleged:
‘5. On or about 1 December 2008 and at Cyrildene, the first plaintiff, represented by RICARDO
LOUREIRO, and the defendant, represented by a duly authorised representative, entered into an oral
agreement (“the guarding service agreement”) which was amended orally on 10 December 2008 by the
addition of the terms set out in paragraph 6.8 below when the first plaintiff represented himself and the
defendant was represented by a duly authorised representative.
6. The express, alternatively, implied, alternatively tacit terms of the guarding services agreement included the
following terms, further alternatively, the guarding service agreement properly constructed and interpreted
provided inter alia that:
6.1 …
6.2 …
6.3 …
6.4 …
6.5 The defendant would take all reasonable steps to:
6.5.1 prevent persons gaining unauthorised access and/or entry to the plaintiffs’ premises; and
6.5.2 protect the persons and property of the plaintiffs and/or the first plaintiff and his family and/or any other
persons lawfully present at the plaintiffs’ premises;
6.6 …
6.7 …
6.8 the defendant was not entitled to permit any person to gain access to the plaintiff’s residence other than the
plaintiffs and their two minor sons, unless the defendant had obtained prior authorisation from the first plaintiff
alternatively the second plaintiff to allow such persons access to the plaintiffs’ residence.’
amounted to a splitting of one cause of action between two creditors. In so far
as the question relating to the contract was concerned, the judge held that the
first respondent had concluded a contract for armed guards with the
appellant. On the issue of the vehicle and the passenger, she held that
Mahlangu had been ‘presented with an apparent SAPS [South African Police
Services] vehicle and an apparent member of the SAPS who came to the
guard house and that he could not be criticised for assuming that this was a
police patrol and a policeman’. She however found that Mahlangu was
negligent as he had failed to take reasonable steps to prevent the anticipated
harm from happening and that his conduct in opening the pedestrian gate
caused the intruders to enter the premises and rob the family. The judge then
concluded that the appellant was liable for the loss and/or damages suffered
by the respondents.
Issues on appeal
[9] This appeal, with leave of the court a quo, is against that ruling and
four issues arise for consideration by this court. The first is whether on a
proper interpretation of the written ‘agreement of loss’, the first respondent
had ceded his right to claim from the appellant to IZAS. The second is
whether the first respondent was the party that concluded the agreement for
guarding services with the appellant. The third is whether the appellant
and/or its employee breached the terms of the contract. And the fourth is
whether the conduct of the guard in opening the pedestrian gate constituted
negligence and is causally linked to the damages sustained by the
respondents.
[10] I shall consider the issues in turn.
The cession
[11] It is common cause that IZAS and the first respondent concluded an
“Agreement of Loss” which contained a cession, the details of which are as
follows:
‘It is hereby mutually agreed between INSURANCE ZONE ADMINISTRATION
SERVICES and L. LOUREIRO (policy IZIP4150) without admission of, or denial of any
liability whatsoever, that the loss which occurred on 22 January 2009, as a result of
THEFT, in respect of claim number IZP4150/1
In respect of Jewellery
R1 500 000.00
General All Risks
R 300 000.00
Household Contents
R 256 672.00
LESS EXCESS
R 250.00
LESS INTERIM PAYMENT R 500 000.00
R 1 556 422.43
ONE MILLION FIVE HUNDRED AND FIFTY SIX THOUSAND FOUR HUNDRED
AND TWENTY TWO RAND AND FORTY THREE CENTS
A
Re-imbursement of above goods by Insurance Zone Administration Services is
considered full and final settlement of all and any claims whatsoever which the insured as
owner has or may have against Insurance Zone. I/We hereby authorize Insurance Zone
irrevocably and in rem suam in my/our name to dispose of the salvage of the property and
to retain any proceeds for its sole and absolute benefit.
B
I/We warrant and declare that the property is fully paid for and is not subject to
any Hire Purchase, Lease, Rental or any other agreement affecting or limiting any rights
of ownership and/or possession of the property.
C
Should the property or any part thereof be located after replacement of the above
items, I/ we undertake to render all reasonable assistance in the identification and physical
recovery of the property if called upon to do so by Insurance Zone provided all reasonable
expenses in rendering such assistance shall be reimbursed by Insurance Zone. Failure to
comply with this condition will render me/us liable to repay upon demand all amounts
paid pursuant to this agreement.
D
I/We declare that there is no other insurance in force covering the property.
E
I/We hereby cede, assign and transfer to and in favour of Insurance Zone all rights
which I/we might have against any other party arising from the loss referred to above.’
(My emphasis.)
[12] Counsel for the appellant submitted that on a proper interpretation of
the agreement of loss, the cession had to be taken to include the entire loss
allegedly sustained by the first respondent on 22 January 2009 and
consequently that the first respondent had ceded away his rights and had no
locus standi. I do not agree. In its plain and ordinary meaning the word ‘loss’
in the agreement expresses a cession of the claim in relation to a limited loss
and not the full loss. The amount paid out to the first respondent was only in
respect of the insured items in the categories listed. The cover was limited
and did not include all the items lost in the armed robbery. It is accordingly
evident that the cession was limited to the loss set out and that it was subject
to four qualifiers, namely:
(a) The loss that occurred on 22 January 2009;
(b) as a result of theft;
(c) in respect of claim no. IZIP4150/1; and
(d) in respect of the items listed and up to the amount set out in the
document.
In the circumstances the submission that the cession was in relation to the
entire loss falls to be rejected.
[13] In Scottish Union & National Insurance Co Ltd v Native Recruiting
Corporation Ltd,2 a case involving the construction of an insurance policy,
Wessels CJ said:
‘We must gather the intention of the parties from the language of the contract itself, and if
that language is clear, we must give effect to what the parties themselves have said; and
we must presume that they knew the meaning of the words they used. It has been
repeatedly decided in our Courts that in construing every kind of written contract the
Court must give effect to the grammatical and ordinary meaning of the words used
therein. In ascertaining this meaning, we must give to the words used by the parties their
plain, ordinary and popular meaning, unless it appears clearly from the context that both
the parties intended them to bear a different meaning.’
2 Scottish Union & National Insurance Co Ltd v Native Recruiting Corporation Ltd 1934 AD 458 at 465.
[14] In the result, the first respondent is not precluded from claiming the
difference between the total value of the alleged loss and what was paid out
by IZAS. Similarly, IZAS would have no right to claim the full R11 million
of the alleged loss. In this regard, Mr Allen Johnston, a managing director of
IZAS and the first respondent’s insurance broker testified that IZAS only
sought to recover the amount it had paid out. The cession accordingly
related to the limited indemnity. It follows that the conclusion of the court
below cannot be faulted. The special plea was correctly dismissed. The
appeal on this ground fails.
The identity of the contracting parties
[15] I turn now to consider the next issue, which is the identity of the
contracting parties. It was argued on behalf of the appellant that the first
respondent had failed to prove that he was a party to the contract and that this
contract had been concluded between the appellant and CC&P. On the
evidence this argument is without merit. The first respondent and Ricardo
testified about the circumstances relating to the conclusion of the contract.
The first respondent had requested Ricardo to arrange the guard service since
the latter already knew the relevant persons in the industry. Ricardo was
adamant that he acted in his capacity as a family member and not as a
member of CC&P. The services order form was issued in the name of the
first respondent and the invoices were addressed to ‘Rick’, (a clear reference
to Ricardo) and not CC&P. These invoices referred to the first respondent.
The appellant did not adduce any evidence to contradict Ricardo’s evidence.
Furthermore, when the contract was amended at some point it was the first
respondent and not CC&P who did so, clearly indicating that the first
respondent was accepted as a party to the contract. It is therefore clear that
the parties to the contract were the appellant and the first respondent. Any
argument to the contrary is without merit. Accordingly, the first respondent’s
version relating to the conclusion of the contract must be accepted.
Breach of contract
[16] I turn now to consider whether the first respondent has established the
breach of the contractual terms relied upon. Counsel for the respondents
submitted that the appellant breached the contract, that is the guarding
service agreement, in that its employee had opened the pedestrian gate to the
premises notwithstanding express instructions given by the first respondent
to Mr Green, employed by the appellant as a supervisor of the security
guards, not to do so. In my view, the evidence of what happened at the gate is
crucial to the determination of the alleged breach and the alleged liability in
delict. This is because this court is required to consider the reasonableness of
the conduct of the security guard in both legs of the respondents’ claims.
That, too, is the approach adopted by the first respondent in the heads of
argument and in the pleadings. Counsel for the first respondent averred in
paragraph 18 of the heads that:
‘[The] appellant was contractually obliged to take all reasonable steps to prevent
unauthorised access and/or entry to the premises and to protect the persons and property
of the respondents at the Loureiro home.’(My underlining.)
[17] In response to questions from the bench during argument counsel
sought to distance himself from this proposition. In my view this was a futile
attempt to wriggle out of a conundrum in which the first respondent found
himself because the position adopted in the heads is precisely how the first
respondent’s case was pleaded. In paragraphs 6.1 and 6.7 of the particulars of
claim it is alleged that the agreement, properly construed, was that the
appellant ‘would provide guarding services’ at the first respondent’s
residence and ‘would take reasonable steps to ensure that no persons gained
unlawful access to the plaintiff’s [the first respondent’s] premises’. During
argument counsel for the first respondent sought to place sole reliance on
paragraph 6.8 of the particulars of claim for the proposition that the appellant
‘was not entitled to permit any person to gain access to the residence’
without the prior authorisation of the first respondent, as if this stood alone
(emphasis added). But this argument ignores paragraph 6.7 of the particulars
of claim in which it is alleged that the appellant (and therefore the security
guard) was required to take reasonable steps in deciding whether or not to
permit access to the premises. The first respondent’s part of the claim based
on negligence also required of the security guard to conduct himself as the
bonus paterfamilias (reasonable person) would do in the circumstances.
[18] The construction of the contract to mean that the guard was not
permitted to allow any person into the premises is not sustainable. In so far as
this contractual term is concerned, one must read it in such a way as to
provide for a tacit term that excludes the police from the group of people
who are not allowed access to the premises, otherwise the prohibition will for
instance be in contravention of the provisions of section 25(3)3 of the
Criminal Procedure Act 51 of 1977. (See Alfred McAlpine & Son (Pty) Ltd v
Transvaal Provincial Administration 1974 (3) SA 506 (A) at 531A-532A.)
[19] It is accordingly critical to consider the actions of the security guard on
the night of the incident and establish whether he acted reasonably. But
before doing so, it is apposite at this stage to comment on the remarks made
by the judge and the doctrine of judicial notice she invoked.
Mahlangu’s qualifications
3 Section 25(3) reads:
‘(3) A police official may without warrant act under subparagraphs (i), (ii) and (iii) of subsection (1) if he on
reasonable grounds believes−
(a) that a warrant will be issued to him under paragraph (a) or (b) of subsection (1) if he applies for such
warrant; and
(b) that the delay in obtaining such warrant would defeat the object thereof.’
[20] Regarding Mahlangu’s qualifications, the judge remarked as follows:
‘[T]he defendant company holds itself out as providing specialist services of a security
nature and, in this particular instance, guarding of residential premises. The invoice is in
respect of only a “Grade D” armed guard but nonetheless this is an employee who could
be expected to have been trained (not only as regards specific duties) in the nature of
criminal trends in the relevant area and the appropriate security response thereto.’
[21] This criticism is totally unjustified. The evidence showed that
Mahlangu was qualified as a Grade A security guard and was in addition a
training instructor. His qualifications were not challenged during the trial. He
was accordingly properly trained in accordance with the security industry
standards. According to his testimony he knew that he had to ‘make sure that
the property and the people [were] safe’. Mahlangu explained further that he
had to apply common sense. It was not necessary for the appellant to rebut
any evidence of what the training of a Grade A or D guard entailed and
whether that was adequate. No evidence was adduced of the standard of
training applied in the security industry to establish what could reasonably be
expected or that Mahlangu’s qualifications were inadequate.
Application of the doctrine of judicial notice
[22] The judge accorded undue weight to the existence of the notorious
members of the ‘blue light gang’ which had received media publicity. These
allegations were never pleaded nor proved in court. It was never suggested to
Mahlangu that there was a blue light gang operating in the area and that their
nefarious activities were of such public knowledge that Mahlangu should
have been aware of them. No statistics were provided to show the number of
offences committed in the area by such persons. There was no scope for the
judge to take judicial notice of the scourge of criminals in police uniforms. In
my view the judge incorrectly invoked the doctrine and accordingly erred in
this regard.
[23] It follows that the first respondent has failed to establish that the
appellant breached the contract.
Negligence
[24] I turn now to that part of the first respondent’s claim based on
negligence on the part of the appellant. This necessarily involves a
consideration of Mahlangu’s actions on the night in question. The classic test
for negligence was articulated by Holmes JA in Kruger v Coetzee4 as
follows:
‘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.
... Whether a diligens paterfamilias in the position of the person concerned would take
any guarding steps at all and, if so, what steps would be reasonable, must always
depend upon the particular circumstances of each case. No hard and fast basis can be
laid down.’
[25] Van den Heever JA elaborated this in Herschel v Mrupe5 where he
said:
‘The concept of the bonus paterfamilias is not that of a timorous faint-heart always in
trepidation lest he or others suffer some injury; on the contrary, he ventures out into the
world, engages in affairs and takes reasonable chances. He takes reasonable precautions to
protect his person and property and expects others to do likewise.’
[26] On the element of foreseeability, Scott JA expressed himself as
follows in Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock
Cold Storage (Pty) Ltd & another:6
4 Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-G.
5 Herschel v Mrupe 1954 (3) SA 464 (A) at 490E-F.
‘It is probably so that there can be no universally applicable formula which will prove to
be
appropriate in every case. ... Notwithstanding the wide nature of the inquiry postulated in
para (a)(i) of Holmes JA’s formula – and which has earned the tag of the absolute or
abstract theory of negligence – this Court has both prior and subsequent to the decision in
Kruger v Coetzee acknowledged the need for various limitations to the broadness of the
inquiry where the circumstances have so demanded. For example, it has been recognised
that, while the precise or exact manner in which the harm occurs need not be foreseeable,
the general manner of its occurrence must indeed be reasonably foreseeable.’
[27] Turning to the facts of this case, this court is required to determine
whether a reasonable person in Mahlangu’s position would have foreseen the
reasonable possibility that the person or persons who approached him at the
gate were not genuine policemen, and having so realised failed to prevent
them from gaining access to the premises. The judge alluded to what
Mahlangu should have done before deciding to open the pedestrian gate. She
said:
‘He did not try to use the intercom to contact the occupants of the house which could have
confirmed whether or not the intercom worked. … He made no attempt to establish if
these were members of the SAPS, [whether they were] at the correct address and what
they wanted. … He did not speak through the peephole or through the gate.’
[28] This is an unjustified criticism especially given the finding by the
judge that Mahlangu could not be faulted for assuming that the person who
alighted from the vehicle was a policeman. The evidence was that the
persons concerned came in a vehicle flashing a blue light which itself is
indicative of an emergency and the need to act urgently. There was some
suggestion that there was a peephole in the vicinity of the guard house. But
that is a neutral fact as even the second respondent did not think that one
could talk through the peephole. So the guard had to step out of the guard
6 Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock Cold Storage (Pty) Ltd & another 2000 (1) SA
827 (SCA) para 22.
house and approach the person to find out the purpose of his visit. In a case
such as this there is a temptation to be wise after the fact. It must be borne in
mind that the court cannot approach the case as an arm-chair critic with the
benefit of hindsight. Ex post facto knowledge is irrelevant. In S v Bochris
Investments (Pty) Ltd & another,7 Nicholas AJA said:
‘In considering this question, one must guard against what Williamson JA called “the
insidious subconscious influence of ex post facto knowledge” (in S v Mini 1963 (3) SA
188 (A) at 196E-F). Negligence is not established by showing merely that the occurrence
happened (unless the case is one where res ipsa loquitur), or by showing after it happened
how it could have been prevented. The diligens paterfamilias does not have “prophetic
foresight”. … In Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The
Wagon Mound) 1961AC 388 (PC) ([1961] 1 All ER 404) Viscount Simonds said at 424
(AC) and at 414G-H (in All ER):
“After the event, even a fool is wise. But it is not the hindsight of a fool; it is the
foresight of the reasonable man which alone can determine responsibility.”’
[29] Mahlangu was a candid and honest witness. No adverse findings were
made against him. He stated that he intended to open the gate to find out
what the policeman wanted, not to allow access to anyone. He thought he
could help the police officer and believed that the police officer wanted
something. He did not invite the intruders into the premises, they forced their
way in after pointing a firearm at him. There was nothing suspicious about
the person that could and should have put Mahlangu on his guard. Mahlangu
was not unreasonable in believing that the individual, who was for all intents
and purposes dressed like a genuine police officer, was a policeman. It
follows that he was not negligent in opening the gate to establish what the
police officer wanted. In my view Mahlangu was also a victim as he was
duped by what appeared to him to be a police officer. That it later transpired
that he was a member of a gang of robbers is irrelevant. There was no time to
push the panic button or draw a firearm because he did not anticipate any
7 S.v Bochris Investments (Pty) Ltd & another 1988 (1) SA 861 (A) at 866J-867B.
crisis when he went to open the pedestrian gate. There was equally no reason
to call his superior, Mr Green. A bonus paterfamilias would not have
foreseen that he was opening the gate to robbers and that he would be
overpowered.
[30] I agree with the court below that Mahlangu cannot be criticised for
assuming that he was dealing with a policeman engaged in official patrol.
However, I do not agree with its subsequent finding that Mahlangu was
negligent in opening the gate. That finding is not supported by the evidence.
In my view, no reasonable person in Mahlangu’s position could have
believed that he was not dealing with a genuine policeman. Mahlangu was
not negligent in being duped by the robbers. It follows therefore that no
blameworthy conduct on the part of the guard has been proved. In the result,
the first respondent has failed to prove the alleged breach of the contractual
term; the express prohibition outlined in paragraph 6.8 of the particulars of
claim could not have been intended to apply to police officers performing
official duties.
The second to fourth respondents’ claims
[31] The second to fourth respondents rely on the conduct of the guard and
the vicarious liability of the employer for their delictual claims. Regarding
the element of unlawfulness, the respondents can only succeed if they can
prove that by opening the gate Mahlangu acted unlawfully and breached the
legal duty he owed to them. The circumstances under which he opened the
gate must be assessed in order to establish whether Mahlangu’s conduct was
unlawful or not. The same considerations relating to negligence as discussed
earlier apply to the determination of these claims.
[32] Harms JA articulated the principle of the law of delict in Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA8
as follows:
‘The first principle of the law of delict, which is so easily forgotten and hardly appears in
any local text on the subject, is, as the Dutch author Asser points out, that everyone has to
bear the loss he or she suffers. The Afrikaans aphorism is that ‘skade rus waar dit val’.
Aquilian liability provides for an exception to the rule and, in order to be liable for the
loss of someone else, the act or omission of the defendant must have been wrongful and
negligent and have caused the loss. But the fact that an act is negligent does not make it
wrongful although foreseeability of damage may be a factor in establishing whether or not
a particular act was wrongful….
‘[C]onduct is wrongful if public policy considerations demand that in the circumstances
the plaintiff has to be compensated for the loss caused by the negligent act or omission of
the defendant. It is then that it can be said that the legal convictions of society regard the
conduct as wrongful….’
[33] Consideration has to be given to the legal convictions or the boni
mores of the community.9 It must also be borne in mind that private industry
security officers have a duty to act in accordance with the provisions of the
Code of Conduct for Security Service Providers, 2003. The Code includes an
obligation to co-operate with the members of State security services. Clauses
7(1) to (3) thereof read:
General Obligations towards the Security Services and organs of State:
‘(1) A security service provider must, within his or her ability, render all reasonable
assistance and co-operation to the members and employees of the Security Services to
enable them to perform any function which they may lawfully perform.
(2) A security service provider may not interfere with, resist, obstruct, hinder or delay a
member or an employee of a Security Service or an organ of State in the performance of a
function which such person may lawfully perform.
8 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461
(SCA) paras 12-13.
9 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 17.
(3) A security service provider must, without undue delay, furnish all the information and
documentation to a member or employee of a Security Service or an organ of State which
such member or employee may lawfully require.’
[34] Having regard to the facts of this matter, Mahlangu’s conduct finds
resonance in clause 7 of the Code. He could not lawfully resist opening the
gate to a policeman’s demand for entry to the premises if he had legitimate
grounds for doing so. It was never suggested to Mahlangu that he should
have ignored the policeman. He, at all times, acted in good faith under the
impression that he was assisting the police. He tried to communicate with the
policeman through the intercom. He could not speak through the armoured
gate. In this regard, the second respondent did not think that one could talk
through the gate. This aspect was only established during the inspection in
loco that persons could hear each other when the gate was closed. It follows
that Mahlangu cannot be held to have acted unlawfully when he opened the
gate to speak to the policeman. The second to fourth respondents have
therefore failed to prove a breach of the legal duty owed to them.
Accordingly the appellant is not vicariously liable for the loss and/or
damages they suffered as a result of the armed robbery. The appeal must
therefore succeed.
[35] In the result, I make the following order:
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and replaced with the
following:
‘The plaintiffs’ claims are dismissed with costs.’
_____________________
N Z MHLANTLA
JUDGE OF APPEAL
CLOETE JA:
[36] I have had the advantage of reading the judgment of my learned
colleague Mhlantla JA. I agree with the conclusion reached on the identity of
the contracting parties. I also agree with the conclusion (in para 13) that the
cession by the first respondent to the insurance company was limited and did
not extend to all the items stolen in the robbery. The consequence is that the
cession constituted an attempt to split one cause of action between two
creditors (the first respondent and the insurance company) and since there
was no question of consent by the debtor (the appellant), the cession was
invalid for the reasons given in Van der Merwe v Nedcor Bank Bpk 2003 (1)
SA 169 (SCA) para 6. But in my view the appeal should nevertheless be
dismissed.
[37] In the particulars of claim, the respondents alleged:
‘5.
On or about 1 December 2008 and at Cyrildene, the first plaintiff, represented by
RICARDO LOIREIRO, and the defendant, represented by a duly authorised
representative, entered into an oral agreement (“the guarding service agreement”) which
was amended orally on 10 December 2008 by the addition of the terms set out in
paragraph 6.8 below when the first plaintiff represented himself and the defendant was
represented by a duly authorised representative.
6.
The express, alternatively, implied, alternatively tacit terms of the guarding
services agreement included the following terms, further alternatively, the guarding
service agreement properly constructed and interpreted provided inter alia that:
. . .
6.5
The defendant would take all reasonable steps to:
. . .
6.5.2 protect the persons and property of the plaintiffs and/or the first plaintiff and his
family . . .
. . .
6.8
the defendant was not entitled to permit any person to gain access to the plaintiffs’
residence other than the plaintiffs and their two minor sons, unless the defendant had
obtained prior authorisation from the first plaintiff alternatively the second plaintiff to
allow such persons access to the plaintiffs’ residence.’
[38] This court has confirmed the finding of the high court that the
appellant contracted with the first respondent. The first respondent therefore
has an action in contract against the appellant for patrimonial loss suffered by
himself, his wife and their children in consequence of a breach of the
contract ─ if it was breached.
[39] The evidence of the first respondent was that on 7 December 2008 he
was hosting a family get-together at his home. His brother arrived at the front
door. That upset him because he did not want the security guard to admit
anyone. The first respondent then caused the button in the guardroom that
enabled the guard to open the main gate, to be disconnected. This caused a
problem because the appellant’s security staff could not gain access to the
premises. The problem was explained to the first respondent by Mr Green,
the area manager of the appellant, who requested a key to the smaller
(pedestrian) gate next to the main gate. The first respondent’s response, in his
own words, was:
‘I said look, I have got a problem giving you the key because I do not want nobody in my
property, I do not want you guys to open the door for nobody because we have had an
incident of you guys opening the doors for people and you know, I am being surprised at
the door by family members that you opened the door for and it is an issue for me. I said
to him I will give you the key, the shift key under one condition, under one condition, it is
only for shift change and nothing else and Mr Green can verify that I did say that. I said
this key is only for shift change and nothing else.’
After the robbery, Green came to see the first respondent again and according
to the first respondent, he said to Green:
‘What was my instructions on 8 December or 10 December saying to you that you do not
open the door for nobody. I did tell them, well what happened here? . . . My instructions
were to you when you came to see me when you came asked me for that key and you
promised you know, when I said to you this key is only for shift change, what happened
after that?’
None of this evidence was controverted.
[40] It was therefore an express term of the agreement that the key to the
small gate would not be used except to enable the guard on duty to admit his
colleague who was relieving him, and to leave the premises himself, when
the shift changed. As is clear from the evidence just quoted the prohibition
was not merely against using the key to allow access to someone without
prior authorisation, as my colleague suggests in para 3; although it was
obviously a tacit term (as pleaded in para 6.8 of the particulars of claim) that
the standing instruction could be relaxed on specific occasions by the first
respondent or a person authorised by him, and the evidence establishes that it
was. The guard’s evidence was:
‘Now if somebody comes to the gate and tells you at the intercom that they want to visit
inside, what will you do? -- If he is a visitor I cannot just open for that person. What can I
do? I can tell him to stand there so that I can confirm with the people inside.
How do you do that? -- There are many way because of if it is during the course of
the day the people, especially the garden boy was just around most of the day and it was
simple to go to his, the place where he is staying you see, to tell him that there is a person
there, can he talk to somebody maybe inside, maybe that guy is visiting someone inside
the house or himself. Then if he is allowing me to open the gate I would open the gate for
that person with his instructions.
. . .
Why will you not phone through to the house? -- Then if ever, because there was
an intercom there, if the intercom is working for the house I could also use it to confirm to
the intercom.
Who will you speak to on the intercom? -- It depends who is going to be visited.’
The evidence of the first respondent was to the same effect, as appears from
the following passage in his evidence, which also describes the status of the
man called Francis to whom the guard referred as ‘the garden boy’:
‘Francis is . . . actually my right hand man . . . he does everything for me basically. If
there is ever a query or anything to ask, there was an intercom system, the guard could
come and ask me or when he wanted to get hold of me. Francis was there just for me, to
assist me in anything that I needed to get done or said or whatever, that is basically what
Francis’ duties are, it is to assist me.
I understand. You have a busy business life. -- Correct.
And management areas around the house you delegated to Francis. -- Correct.’
[41] When the robbers arrived on the night in question, the first respondent
was not there; but we know that Francis was because he was tied up by the
robbers. The only permitted purpose (absent an authorisation to admit
someone) for which the key could be used, was to change shifts. The guard
obtained no authorisation to admit anybody. It is an undeniable fact that he
used the key for a purpose other than to change shifts. He thereby breached
the contract. That breach was undoubtedly the cause of the loss.
[42] The appellant’s counsel advanced two arguments as to why there was
no breach. The first was based on a tacit term and the other was what I shall,
for want of a better term, call compulsion of law.
[43] The tacit term for which counsel contended was that the obligation not
to use the key save for the purpose for which it was given, had to be subject
to a qualification that imported reasonableness. To use the hypothetical
bystander test, this would mean that if the parties were asked ‘Could the
guard use the key for a purpose other than admitting a colleague when the
shift changed, if such use would be reasonable?’ they would both have
answered in the affirmative. I have no doubt that the first respondent, in view
of his emphatic evidence that I have quoted above, would have given exactly
the opposite answer. He would never have agreed to vest a discretion in the
guard. Therefore on the facts of this case, the guard was not entitled to open
the gate to speak to the person he thought was a policeman, no matter how
reasonable that belief or his conduct might have been.
[44] I turn to deal with counsel’s second argument effectively upheld by
my colleague in para 18. Obviously if a policeman, who was entitled to do
so, demanded entry to the premises, the guard would be obliged in law to
comply with that demand, irrespective of the express term of the contract to
which I have referred. But if the demand was not made by a policeman
entitled to make it (and I emphasise that a policeman is not, without more,
entitled to demand access to private property), the admission of the person
making the demand would not be justified and the guard would breach the
contract in using the key to open the gate. Negligence does not arise for
consideration. The guard would only be entitled to disregard the contract if
he was in fact obeying the lawful command of a policeman ─ not if he
reasonably thought that he was doing so. The position is reinforced by
regulation 7(1) in the Code of Conduct for Security Service Providers, 2003
made under s 35 of the Private Security Industry Regulation Act 56 of 2001.
The regulation reads:
‘A security service provider must, within his or her ability, render all reasonable
assistance and co-operation to the members and employees of the Security Services to
enable them to perform any function which they may lawfully perform.’
(‘Security Services’ are defined as meaning the South African Police Service,
the South African National Defence Force, the Directorate of Special
Operations, the National Intelligence Agency, the South African Secret
Service, the Department of Correctional Services and any other official law
enforcement agency or service established by law, irrespective of whether
such an agency or service resorts at national, provincial or local government
level.)
In terms of the regulation not only does the person to whom the assistance
and co-operation has to be rendered, have to be a member or employee of the
security services, but the assistance must be to enable that person to perform
any function he or she ‘may lawfully perform’.
[45] In view of the approach adopted by my colleague (in paras 16 and 17)
to the pleadings and argument, and her statement (in para 16) that it is
‘crucial’ to the determination of inter alia the alleged breach of contract to
consider whether the security guard acted reasonably, there are two points
that require emphasis. The first relates to the terms of the contract. The
second relates to the function of pleadings and the effect of argument.
[46] As to the first point: I have set out the relevant terms of the contract
pleaded, in para 37 above. The obligation to take reasonable steps pleaded in
para 6.5 that qualifies the obligation in para 6.5.2 simply does not, as a
matter of linguistic interpretation, qualify the obligation in para 6.8 viz the
prohibition against allowing persons to gain access ─ however counsel
argued the matter. Nor, more importantly, did it qualify the express
prohibition against using the key to the smaller gate for any purpose other
than to effect shift changes ─ the term that was established on the
uncontradicted evidence quoted in para 39 above. The reasonableness of the
guard’s actions, far from being crucial, is entirely irrelevant to the claim in
contract based on a breach of that term.
[47] As to the second point: cases are decided on the evidence, not on the
pleadings or counsel’s argument. Of course, if the case is formulated in the
pleadings in such a way that the opposite party is prejudiced, the position is
different ─ but that is not the general rule. As Innes CJ said in Robinson v
Randfontein Estates GM Co Ltd 1925 AD 173 at 198:
‘The object of pleading is to define the issues; and parties will be kept strictly to their
pleas where any departure would cause prejudice or would prevent full enquiry. But
within those limits the Court has a wide discretion. For pleadings are made for the Court,
not the Court for pleadings.’
Furthermore, argument advanced by counsel (absent some special feature,
such as an admission of fact that is not permitted to be withdrawn) does not
bind the client, much less the court. That is trite. Lastly on this point, I record
that there was no suggestion of any prejudice whatever when the argument
that the appellant is liable for breach of the express term of the contract
established by the evidence, was put to the appellant’s counsel ─ nor could
there have been; and counsel for the respondents, in terms, adopted the
argument as correct.
[48] I would therefore dismiss the appeal on these grounds. I would do the
same in regard to the claim based in delict.
[49] I share the view of the high court that the guard was negligent ─
particularly because he was a trained security guard and he was stationed at
the entrance of the property for the very purpose of keeping out unauthorised
persons, because of the ease with which precautions could have been taken
and the serious consequences that could ensue if they were not ─ for the
following reasons appearing from the judgment of Satchwell J:
‘[A] reasonable security guard in these circumstances should have ensured that he had
sight of the card presented; gestured back the policeman when he left the window without
giving the guard the opportunity to read the card; gestured back the policeman or the
driver when the guard realised the policeman had left the intercom and was not
responding (or even attempting to respond) through the intercom; perhaps gone to the
pedestrian gate to enquire (through the gate without opening it) which station the SAPS
had come from, which address they wanted and for what purpose; attempted to contact the
main house through the intercom to enquire whether the SAPS had been called and for
what purpose and seeking authorisation to let him in. I find that Mr Mahlangu, in opening
the pedestrian gate, failed to take reasonable appropriate steps to prevent the anticipated
harm from happening. By opening the pedestrian gate the security guard let down the
drawbridge and allowed the intruders to enter the Loureiro castle. This was negligence.’
[50] It only remains for me to record my respectful dissent from the
conclusion reached by my colleague (in para 34) that the second to fourth
respondents should be non-suited in their delictual claim because the guard
did not act unlawfully, and they did not establish that they were owed a legal
duty. (I prefer to use the term ‘wrongfully’ which, although a synonym for
‘unlawfully’ in this context ─ Telematrix (Pty) Ltd t/a Matrix Vehicle
Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para
13 ─ conveys lack of justification without necessarily conveying illegality.)
[51] Of course, as my colleague postulates, the guard could not lawfully
resist opening the gate to a policeman’s demand for entry to the premises if
the latter was lawfully entitled to make that demand. But the person outside
the gate was no policeman and he made no lawful demand. Justification for
the guard’s actions on this basis was therefore absent.
[52] The guard’s subjective state of mind and his actions described by my
colleague are not relevant to the question of wrongfulness ─ which is
whether it would be reasonable, taking into account considerations of public
policy, to impose legal liability on the appellant for harm resulting from the
guard’s conduct; but to the question of negligence ─ which is whether the
guard’s conduct was reasonable, judged in accordance with the test in Kruger
v Coetzee 1966 (2) SA 428 (A) at 430E-F. The test for reasonableness in
each case is entirely different. In Roux v Hattingh 2012 (6) SA 428 (SCA)
para 33 Brand JA quoted the following passage in the majority judgment he
gave as Brand AJ in the Constitutional Court in Le Roux v Dey (Freedom of
Expression Institute and Restorative Justice Centre as Amici Curiae) 2011
(3) SA 274 (CC) para 122, with the addition of the words in parenthesis:
‘In the more recent past our courts have come to recognise, however, that in the context of
the law of delict: (a) the criterion of wrongfulness ultimately depends on a judicial
determination of whether ─ assuming all the other elements of delictual liability to be
present ─ it would be reasonable to impose liability on a defendant for the damages
flowing from specific conduct; and (b) that the judicial determination of that
reasonableness would in turn depend on considerations of public and legal policy in
accordance with constitutional norms. Incidentally, to avoid confusion it should be borne
in mind that, what is meant by reasonableness in the context of wrongfulness has nothing
to do with the reasonableness of the defendant’s conduct [which is part of the element of
negligence], but it concerns the reasonableness of imposing liability on the defendant for
the harm resulting from that conduct.’
[53] As the courts have repeatedly emphasised for over 30 years,
wrongfulness and negligence are discrete elements of the modern Aquilian
action. In my view, both were established by the second to fourth
respondents. I have already dealt with the element of negligence. And I have
no hesitation in concluding that public policy requires the guard’s employer,
the appellant, to be held liable for the guard’s negligence, and that a legal
duty was therefore owed to the second to fourth respondents: The guard
opened the small gate. That was a positive act and the cause of the loss. The
loss was not pure economic loss (the criticism by Prof Neethling, ‘Delictual
liability of a security firm for the theft of a vehicle guarded by its employee’
(2011) 74 THRHR 169 at 170, of Viv’s Tippers (Edms) Bpk v Pha Phama
Staff Services (Edms) Bpk h/a Pha Phama Security 2010 (4) SA 455 (SCA)
para 5, is in my respectful view well founded ─ cf AB Ventures Ltd v
Siemens Ltd 2011 (4) SA 614 (SCA) para 6, n 6). There is therefore a
presumption that the action by the guard was wrongful: see eg Trustees, Two
Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138
(SCA) para 10; Roux para 32 and authorities there cited. The presumption
was not rebutted.
[54] Either way, therefore, whether in contract or delict, the respondents
should in my view succeed.
_______________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES
For Appellant
W H G Van der Linde SC (with him D A Turner)
Instructed by:
Norton Rose South Africa, Johannesburg
Webbers, Bloemfontein
For Respondent:
T W Beckerling SC (with him J G Smit)
Instructed:
Cliffe Dekker Hofmeyr, Sandton
Naudés, 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:
15 March 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.
IMVULA QUALITY PROTECTION (PTY) LTD v LICINIO LOUREIRO &
OTHERS
The Supreme Court of Appeal (SCA) today by a majority upheld an appeal against an order
of the South Gauteng High Court, Johannesburg declaring that the appellant (Imvula
Quality Protection (Pty) Ltd) was liable to the respondents in both contract and delict for
the loss they had suffered as a result of a robbery that had occurred at their family home.
The SCA held that the respondents had failed to prove both the contractual and delictual
claims.
The appellant had provided a 24-hour guarding service at the respondents’ home pursuant
to an agreement concluded by the appellant’s representative and the first respondent’s
nephew. The service was paid for by a close corporation of which the first respondent, his
nephew and his father were members. The guards provided by the appellant were placed at
a guardhouse at the entrance of the respondents’ home. Subsequent to the conduct of the
guards in opening the main driveway gate to visitors without the first respondent’s prior
approval, the intercom was partially disabled so that the guards would not be able to open
and close the main gate. The first respondent then gave the key to the pedestrian gate to the
guards which, he said, was for purposes of shift changes only.
On the day of the robbery, a vehicle flashing a blue police light arrived at the respondents’
home and stopped near the guardhouse. A passenger wearing what appeared to be a police
uniform, including a reflective vest marked ‘Police’, alighted and approached the bullet-
proof glass of the guardhouse. He showed the guard on duty what appeared to be a police
identity card. The guard testified that he did not have sufficient opportunity to inspect the
card, nor did he see the photo thereon to compare it to the man before him. To him, the card
looked like a valid police identity card. The guard had difficulty establishing
communication with the man and as result decided to open the pedestrian gate to assist
what appeared to him to be a policeman, as he was obliged to do so by law. It later
transpired that he had opened the gate to robbers who overpowered him at gunpoint. As a
result of gaining entry to the respondents’ house, the robbers stole belongings valued at
R11 million, including jewellery. The first respondent was paid a certain amount of money
by an insurer in respect of the value of part of the jewellery that had been stolen.
The respondents then instituted proceedings against the appellant for the loss they had
suffered. Their claims, based both in contract and delict, were upheld by the high court.
While the high court held that the guard could not be criticised for believing that he was
dealing with a genuine policeman, it nevertheless held that he was negligent in failing to
take reasonable steps to prevent the harm from happening and that his conduct resulted in
the robbery. The court held that the appellant was liable to the respondents. Aggrieved by
the order of the high court, the appellant then appealed to the SCA.
Before the SCA there were four issues. The first was whether on a proper interpretation of
the written ‘agreement of loss’ the first respondent had concluded with the insurer, the first
respondent had ceded his entire right to claim from the appellant to the insurer. The
appellant contended that the first respondent had ceded his right to the insurer. In rejecting
this argument the SCA held that the agreement expressed a cession of the claim in relation
to a limited loss and not the full loss. Thus, the first respondent was not precluded from
claiming the difference between the total value of the alleged loss and the amount paid out
by the insurer. The second issue related to the identity of the parties to the guarding
services agreement. The appellant argued that the close corporation, and not the first
respondent, was a party to the agreement, and that the first respondent had no locus standi
to claim from the appellant. The argument was premised on the fact that the guarding
services were paid for by the close corporation. The SCA did not agree with this argument.
It held that the invoices relating to the agreement referred to the first respondent and that
the appellant did not adduce any evidence to contradict the evidence of the first
respondent’s nephew that he had acted as a family member and not as a member of the
close corporation.
The third issue was whether the appellant or its employee, the guard, had breached the
contract. The first respondent contended that the appellant had breached the contract in that
the guard had opened the gate contrary to instructions not to do so. The SCA stated that the
evidence of what happened at the gate was crucial to the determination of the alleged
breach and the alleged liability in delict. This was so as the court was required to consider
the reasonableness of the guard’s conduct in both legs of the respondents’ claim. The SCA
held in respect of the contractual claim that no reasonable person in the position of the
guard could have believed that he was not dealing with a genuine policeman. The
respondent had therefore failed to prove blameworthy conduct on the part of the guard, and
had also failed to prove the alleged breach of the contract. The first respondent’s instruction
that the guards should not open the pedestrian gate for any purpose other than shift changes
could not have been intended to apply to police officers performing official duties.
The fourth issue related to the second to fourth respondents’ delictual claims and was based
on the vicarious liability of the appellant for the conduct of the guard. It was whether the
conduct of the guard in opening the pedestrian gate constituted negligence and was causally
connected to the damages suffered by the respondents. The SCA stated that the second to
fourth respondents could only succeed if they could prove that the guard had acted
unlawfully and breached the legal duty owed to them. The circumstances under which the
guard had opened the gate were also relevant in determining this issue. With regard to those
circumstances and the fact that the guard was by law required to assist members of the
police, the SCA held that the guard could not be held to have acted unlawfully when he
opened the gate. It followed that the respondents had failed to prove the legal duty owed to
them and that the appellant was not vicariously liable for the loss and/or damages they had
suffered as a result of the robbery.
The minority held that the guard had been negligent and that the respondents’ claims should
succeed.
Having answered the last two issues in favour of the appellant, the majority upheld the
appeal.
|
2690
|
non-electoral
|
2012
|
REPORTABLE
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 542/11
In the matter between:
M M
Appellant
and
The State
Respondent
Neutral citation: MM v S (542/11) [2012] ZASCA 5 (8 March 2012)
Coram:
MTHIYANE DP, HEHER, MAJIEDT and WALLIS JJA
and NDITA AJA.
Heard:
24 February 2012
Delivered: 8 March 2012
Summary: Criminal law – rape on a seven year old girl– whether rape
proved – failure to call the doctor who examined the complainant to
explain contents of medical report – conviction altered to one of indecent
assault – appropriate sentence.
ORDER
On appeal from: Limpopo High Court, Thohoyandou (Makgoba AJ
sitting as court of first instance) it is ordered that:
The appeal is upheld to the extent that the appellant’s conviction for rape
is replaced by a conviction of indecent assault and his sentence of life
imprisonment is altered to one of ten years imprisonment.
JUDGMENT
WALLIS JA (MTHIYANE DP and MAJIEDT JA concurring)
[1] This appeal is against the appellant’s conviction of the rape of a
seven year old girl and the sentence of life imprisonment imposed upon
him for that offence. The alleged rape occurred on Wednesday, 31 March
2004. The appellant was arrested on 7 April 2004 and remained in
custody pending his trial. The trial was conducted before Makgoba AJ on
11 and 12 October 2004, on which latter date the appellant was convicted
and sentenced. The appeal is before us with leave granted by Mann AJ on
11 May 2009.
[2] Two disturbing features emerge from that brief recital of events.
The first is that it took four and a half years for the appellant to have his
application for leave to appeal heard and the second that it has taken
nearly three more years after being given leave to appeal for his appeal to
come before this court. That is entirely unacceptable. In terms of
s 35(3)(o) of the Constitution the appellant had a right to an appeal to, or
review of his conviction and sentence by, a higher court. Delays of this
duration negate that right either wholly or in part. That this is largely
what has occurred in this case is apparent from the following sorry litany
of facts.
[3] The appellant sought leave to appeal within one month of the
conclusion of the trial. A request to process that application on his behalf
made in December 2004 to the Justice Centre in Thohoyandou, which had
provided him with legal representation during his trial, appears to have
gone unanswered. In February 2005 the appellant submitted a request to
the high court to be furnished with the complete court record. There was
no response. Further enquiries by the appellant in July and September
2005 went unheeded. He resorted to a complaint to the Minister of
Justice, who caused her administrative secretary to write to the registrar
of the high court in Thohoyandou in October 2005 to remind him that in
terms of s 34 of the Constitution everyone has a right of access to court
and that a public officer should not prejudice that right. The lack of
response prompted a reminder on 14 November 2005. Eventually on
12 December 2005 the registrar wrote to the appellant to tell him that in
2004 he (the registrar) had asked the Justice Centre to assist him with his
appeal. There was no apparent attempt by the registrar to ascertain why
the Justice Centre had not done so. The letter went on to add:
‘Should you wish to proceed with the matter without a legal representative, feel free
to confirm such intention with my office.’
[4] In December 2005 the appellant invoked the assistance of the
Public Protector, who wrote to the registrar. No response was received
and the Public Protector wrote again in February 2006. That prompted the
registrar to send a copy of the December letter addressed to the appellant.
Meantime apparently a representative of the Justice Centre visited the
appellant in January 2006 and in February he was told that he would have
to pay for the court to prepare the record of proceedings. In March 2006
money was deducted from his account at the prison for this service but no
record was forthcoming. In May, after a further communication from the
Public Protector, the registrar wrote to the appellant saying that
‘transcribed records are obtainable from Sneller Verbatim (Pty) Ltd’ and
that payments must be forwarded to their offices prior to quotation. His
cheque was returned. The appellant then sought a quotation from Sneller
for the preparation of the record and in October 2006 was told R3 500
was required. He did not have this, but made unsuccessful attempts to
raise the money with the assistance of his family. In February 2007 he
wrote to the Judge President of the high court in Thohoyandou and in
May 2007 he again wrote to the registrar asking that the State pay for the
transcription of the record as he was in jail and his parents were
pensioners. That finally attracted an affirmative answer in July 2007,
while in June 2007 the Justice Centre was again asked to assist him with
his appeal. The record was finally produced on 10 August 2007 but
nothing happened thereafter. It appears from subsequent correspondence
that he was told that it had been sent to the trial judge for him to correct.
Whether this is correct is unclear because in dealing with the application
for leave to appeal Mann AJ noted that the record was a simple one, with
no inaudible passages, and the judge’s notes were in the file.
[5] The continued inaction prompted the appellant once more to
approach the office of the Minster of Justice. Nothing came of this and in
February 2008 the appellant again wrote to the registrar asking ‘how long
it takes for the Judge to complete his honourable corrections of the
record’. His next letter in March 2008 starts somewhat plaintively:
‘I suppose you would be wondering what happened to me’;
and goes on to complain that six months have elapsed with no progress or
response concerning the judge’s ‘processing his honourable corrections’.
It ends by asking, ‘For how long should I continue to wait?’ There was
apparently a further letter in May because on 2 July 2008 the registrar
wrote saying that:
‘The records of your case has been asked for. You will receive same as soon as it is
received.’
That was not a helpful response and it is no surprise to find that the
appellant then wrote an angry letter describing these letters as
‘accumulated empty promises’ and complaining that between the registrar
and the Legal Aid Board they were playing ‘hide and seek’ with him.
[6] There were then further delays that are undocumented in the record
but resulted in the application only being heard on 4 May 2009 and
judgment granting leave to appeal being given on 11 May 2009. At least
Mann AJ had a proper appreciation of the need for swift action. However
once he had granted leave to appeal the delays set in once again. In
August 2009 the Thohoyandou Justice Centre wrote to the registrar
expressing surprise that the records ‘regarding argument’ had not been
transcribed. The fact that this was entirely unnecessary and contrary to
the rules of this court governing the preparation of records appears to
have escaped them. By September 2009, however, they had been
prepared and sent to the Justice Centre with a letter saying that they ‘now
owe our office a fully prepared record’ for this court. It was only in
November 2009 that the registrar of the high court sent the record to the
registrar of this court. That record commences with an indictment in an
entirely different case and is followed by a statement of substantial facts
and list of witnesses in that other case.1 No notice of appeal was
delivered, but in January 2010 an application to condone the late filing of
the appeal record and reinstating the appeal was lodged together with
affidavits by the representative of the Justice Centre and the appellant in
which there is no explanation at all for the failure to lodge a notice of
appeal.
[7] This sorry mess is attributable to all concerned having no regard to
the appellant’s rights and the difficulties confronting him, as a prisoner
serving a life sentence, in pursuing his appeal properly. No-one seems to
have had any regard for the need to deal with applications of this sort
expeditiously. Nor was any regard paid to the provisions of the Criminal
Procedure Act2 and the provisions of the rules of this court in regard to
the preparation and lodging of records and the preparation of cases for
consideration by this court. In the result some seven and a half years have
elapsed since the appellant’s conviction, during which he has been
incarcerated,3 whilst he has tried steadfastly to pursue the appeal that is
his right. The one person who has not been at fault in all this is the
appellant, most of whose letters have been couched with studied courtesy
and patience. To the extent that his appeal has not been pursued in
accordance with the letter of the law that non-compliance should be
condoned. As to the rest the registrar of this court will be directed to send
a copy of this judgment to the Director-General of the Department of
Justice for consideration of appropriate action against the registrar of the
High Court in Thohoyandou and to the head of the Justice Centre for
1 The correct documents were filed with counsel’s heads of argument.
2 Act 51 of 1977.
3 He has in all been in custody for almost exactly eight years.
consideration of the conduct of the officials employed in the Justice
Centre in Thohoyandou.
[8] I turn then to the merits of the appeal. The appellant is alleged to
have raped a seven year old girl in her own home on the afternoon of
31 March 2004. According to the complainant she and two other girls, her
cousin and a friend, were looking for locusts in a field when the
appellant, who is her uncle, called them. She was given a bag to carry and
take inside the homestead, which she did. She said that the appellant
followed her into the home and shut the door. She then asked him for
money to go and buy chips and he gave her 80 cents. She said that he
then undressed her, placed her on the sofa and ‘put his penis on my
private part’. She explained that he had removed the clothes that he was
wearing before doing this. As far as the other two girls were concerned
she says that the appellant had ordered them to leave before this incident
occurred.
[9] The complainant’s evidence was very brief and in some respects
cryptic. She was not asked to explain what she meant when she said that
the appellant placed his penis ‘on’ her private part. It is clear that this is
the expression she used, because the trial judge asked her, at the
conclusion of her evidence in chief, ‘what did he put on your private
parts?’ Then, after the judge had asked her several leading questions, she
said that the appellant ‘did evil things to her’ and when asked to explain
what type of things said: ‘He was raping me.’ Unfortunately there was no
attempt to explore with her what she understood by this, nor is it clear,
she having given evidence through an interpreter, whether this accurately
reflected her description of the incident. She was after all a child and
children do not usually use technical language such as ‘rape’ to describe
sexual acts or ‘vagina’ and ‘penis’ to describe their private parts.4
Euphemisms of some or other sort are more usual. However, an
interpreter might well in the formal arena of a courtroom use the more
technical expression as an equivalent. It would have greatly assisted in
considering this appeal if some care had been taken to ascertain whether
the statement that the appellant was ‘raping’ her was compatible with her
earlier description of the appellant’s penis being placed ‘on’ her private
part.
[10] There are a number of problems with the interpretation of the
evidence and this was complicated by the defence attorney apparently
being oblivious to these nuances. Thus she put to the complainant that the
appellant would deny that he had ‘sexual intercourse’ with you, without
explaining the implications of the expression. Hardly surprisingly that
attracted the response:
‘He did have sexual intercourse with me.’
What one cannot tell is whether this reflected the actual words used by
the complainant or was the interpreter’s manner of conveying a denial of
the basic proposition couched in the language of the cross-examiner. A
perusal of the record demonstrates that the interpreter’s use of English
was uncertain. On occasions the interpreter added explanations that
clearly were not a reflection of what the witness had said. Once, having
started to translate an answer, the interpreter corrected the translation
halfway through from a literal word for word translation to one that was
more grammatically correct in English. In the course of doing so the word
4 When asked where she had been injured the complainant merely pointed to her private parts. The
interpreter said ‘She is pointing to her private part my lord, vagina.’ This suggests that the interpreter
might have been concerned to use the formal English word. The complainant did not reply to this
question by saying ‘on my vagina’ yet elsewhere in her evidence she is reflected as freely and
accurately using that expression.
originally used to translate what the witness said fell away.5 On that
occasion it did not in substance alter the meaning of the answer but it
reveals that the interpretation may not have been precise in rendering
what the witnesses actually said. All in all one is left with a measure of
uncertainty as to the accuracy of the translation in relation to critical
issues in this case.
[11] In cross-examination the focus largely fell on whether and to
whom the complainant had reported this incident. She initially said that
she had not spoken to anyone about it, but then said that she had told her
grandmother who was looking after her at the time. When confronted
with the discrepancy she reversed her position and said that she had not
told her grandmother. From that point on she maintained that she had not
told anyone about the incident. It was put to her that the appellant would
say that she had gone into the house with him because she had asked him
for money to go and buy chips and that he gave her 80 cents, but she
wanted two Rand from him. When she tried to take some more money he
held her by her tummy and pushed her out of the house. When this
happened she knocked against a chair.
[12] The complainant’s cousin, herself a 13 year old girl, gave evidence
that largely corroborated that of the complainant. She confirmed that they
were out looking for locusts; that the appellant approached them and gave
the complainant a bag to take into the house for him; that he followed her
into the house and closed the door and then, speaking through a window,
he instructed her and the other girl to leave. Contrary to the complainant’s
denial she said that on the following day the complainant had told her
5 The result was that instead of saying that the appellant ‘undressed’ the interpreter rendered the answer
as ‘he took off the clothes he was wearing’.
what had happened to her in the house. She denied the suggestion in
cross-examination that she had been present whilst the complainant went
into the house and left with her.
[13] The complainant’s grandmother said that she saw that the
complainant had 80 cents with her when she returned from playing on the
afternoon of 31 March 2004. She said that when she questioned the child
on where she obtained the money she was told about this incident
involving the appellant. Her description matched that of the complainant
but a difficulty in translation emerged over precisely what the appellant
was said to have done to the complainant. The grandmother’s evidence,
as translated, was that she was told that the appellant had ‘slept over her’.
The interpreter explained that she used the Venda expression ‘u lala’.
This was not explored further. It was plainly significant because it reflects
the point already made that children are inclined to use euphemisms to
describe sexual matters. The grandmother said that after learning of this
she took the complainant to the clinic because she observed that she was
not well.
[14] There were contradictions in the grandmother’s evidence regarding
the reports made to her. The impression she gave in chief was that she
learned of the incident from questioning the complainant about the money
in her possession. In cross-examination she said that she initially received
a report from the children the complainant was playing with, and then
further corrected that by saying that the report was made by the mother of
one of these children. It was only after receiving this report on the
Thursday (or possibly the Friday) after the incident that she interrogated
the child and was told about what happened. What is certain, however, is
that she learned of something that aroused sufficient concern for her to
take the complainant to the local clinic on the Saturday morning, from
where she was referred to the Donald Fraser hospital for examination by a
doctor.
[15] As appears to be an increasing feature of cases such as these the
doctor’s report was simply handed in by consent and the doctor was not
called to give evidence. That practice is generally speaking to be
deprecated. It means that there is no opportunity for the doctor to explain
the frequently subtle complexities and nuances of the report; to clarify
points of uncertainty and to amplify upon its implications and the reasons
for any opinions expressed in the report. That may make the difference
between a conviction and an acquittal or perhaps a conviction on a lesser
charge. Depending on the areas where there is a lack of clarity, the lack of
clarification may either benefit or prejudice an accused. Neither result is
desirable. Magistrates and judges who are confronted with these reports
without explanation do not have the requisite medical knowledge to flesh
out their full implications. Unless therefore there can be no confusion, for
example in a case where the fact of rape is admitted and the only issue is
one of identification of the perpetrator, it will generally be desirable for
the doctor to give evidence in support of his or her report. In this case it
was undoubtedly necessary and the fact that the doctor was not called has
rendered the consideration of this appeal far more complicated than it
should have been.
[16] The doctor reported that he observed bruising and abrasions on the
medial aspect of the child’s labia minoris.6 The hymen was disrupted
wide and irregular and the posterior fornix7 was visible, but the
6 The inner folds of skin forming the margins of the vaginal orifice.
7 The rear of the arch shaped cavity in the interior of the vagina.
implications and causes of this were not explained. Nor were the fact that
the complainant had a yellowish discharge from the genital area and the
doctor observed ‘erosions ventrally’.8 The firm conclusion was expressed
that the complainant had been the victim of sexual assault. The report
does not, however, say that she was raped and judging by the difficulties
the doctor encountered with a physical examination9 actual penetration
would have been difficult to achieve. Whether penetration occurred is
fundamental to the correctness of the conviction of rape.10
[17] The appellant’s evidence was in accordance with the case put to the
complainant by his counsel. He said that he encountered the complainant
and her cousin on the road as he was making his way home from the
fields. The complainant asked him for money to buy chips and he was
happy to give it to her as he had done on previous occasions. When they
came to the house he went in with the complainant following him and the
cousin in the entrance. He said that he placed a chair against the door to
prevent it from closing. He gave the complainant 80 cents from some
coins he kept on a shelf but she wanted more and tried to take it. He
stopped her by holding her round the tummy and pushed her away out of
the house. As he did so she bumped herself against the chair holding the
door open and started to cry. However she rapidly composed herself and
he watched her walk away with her cousin, showing her the money she
had been given as they walked. He denied the allegations concerning the
alleged rape.
8 Ulceration in the abdominal area.
9 His note was originally that the vagina was ‘shut’ but he deleted this and wrote ‘little finger’. Again
there was no explanation.
10 Penetration was a common law requirement and it is continued in the present definition of the crime
of rape in s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007,
although that definition extends the scope of the crime to other penetrative acts.
[18] The appellant’s conviction can only be sustained if on a
consideration of all the evidence his version of events cannot reasonably
possibly be true. Whilst in many cases the fact that an accused person
gives a false version of events is not decisive of the merits of a
conviction, in this case where the falsity relates to events on a particular
day at a particular place involving him and the complainant, if his version
cannot reasonably possibly be true its falsity lends strong support to the
truth of the complainant’s evidence.
[19] The objective and undisputed evidence shows that the complainant
was subjected to a sexual assault. She had been in the house with the
appellant on the Wednesday afternoon. Both she and he agree that she
was tearful when she left the house because she had been hurt while
inside. By Thursday, or at latest Friday, her grandmother realised
something was wrong and took her to the clinic on the Saturday morning.
That is when the diagnosis of sexual assault was made. The appellant was
arrested on the following Wednesday, which indicates that the
complainant had identified him immediately as the perpetrator. If the
appellant’s story is correct then another man sexually assaulted the
complainant at another time and probably another place and for some
inexplicable reason this seven year child has from the outset laid the
blame on a close relative who has always been kind to her and chosen to
conceal the identity of the true perpetrator (or if unknown to her to say
that she was assaulted by an unknown man). The appellant’s description
of grabbing the child by her tummy and her hurting herself by bumping
against a chair does not explain the injuries in her vaginal area. His
suggestion that her grandmother put the child up to telling a dishonest
story in order to take revenge for a dispute over the boundaries of a field
at a time when he was at best a youth in his teens is utterly incredible.
[20] When the evidence is weighed in its totality it amply supports the
trial court’s finding that the appellant’s version could not reasonably
possibly be true and that the evidence of the complainant, when viewed
with the appropriate caution called for because of her tender years and the
fact that on the assault itself she was a single witness, could be accepted.
Accordingly a conviction was appropriate. The only issue is whether that
should be of rape or of indecent assault.11 That depends on whether the
evidence was sufficient to show beyond reasonable doubt that penetration
occurred. In my opinion in the light of the lack of certainty about the
purport of the complainant’s evidence and the absence of any explanation
from the doctor of his clinical findings it was not.
[21] I accept for the purposes of this judgment that Professor Milton12 is
correct in saying that the slightest penetration is sufficient and that this
includes any degree of penetration, however minor, into the labia,
although neither Van Leeuwen, whom he cites in support of this
proposition,13 nor the cases he quotes, supports that proposition. It does,
however, accord with the position in England14 and in the United States
of America.15 If the doctor’s report had been unequivocal in saying that
rape had occurred, that would have overcome the concerns about the
11 As the offence was perpetrated before the enactment of the Criminal Law (Sexual Offences and
Related Matters) Amendment Act the offences are those under the common law. Under s 261(1) of the
Criminal Procedure Act, as it read at that stage, indecent assault was a permissible verdict on a charge
of rape.
12 J R L Milton South African Criminal law and Procedure, Vol II, Common Law Crimes (3 ed 1996)
448, footnote 122.
13 Simon Van Leeuwen Censura Forensis 1.5.23.12 (translated by Margaret Hewett, 2001). The
reference to stuprum in this passage accords more nearly with the approach in Germany and some other
jurisdictions than with the view of Professor Milton. See J M T Labuschagne ‘Die Penetrasievereiste
by Verkragting Heroorweeg (1991) 108 SALJ 148.
14 J C Smith Smith and Hogan Criminal Law (10 ed, 2002), 467.
15 James L Rigelhaupt Jr JD What constitutes penetration in prosecution for rape or statutory rape 76
ALR 3d 163 (Annotation). The author provides summaries of a vast number of cases from various
courts in the USA that reveal how difficult it may sometimes be to establish that penetration has
occurred when the medical evidence is inconclusive.
complainant’s evidence and its interpretation, but it is not. Abrasions and
bruising of the surface of the labia minoris are no certain indication of
penetration. They are consistent with being external injuries alone. The
disruption of the hymen may be an indication of penetration, but it is not
decisive unless directly linked to the sexual assault, which, in the absence
of explanation by the doctor, it is not. In addition the complainant’s
evidence is that while she felt pain during the assault there was no
bleeding. The presence of erosions ventrally, the precise location of
which the doctor did not indicate, takes the matter no further. Doctors
conducting examinations of this type are usually aware of the requirement
of penetration for rape and when they are satisfied that a sexual assault
has involved penetration they record that the victim was raped. Had he
been called as a witness and said that there was penetration he would no
doubt have been cross-examined on his failure to say so expressly in his
report. Counsel for the defence would have been foolhardy to insist on
the doctor being called in the light of the inconclusive language of his
report. In the absence of evidence from the doctor as to the precise nature
of the sexual assault that he concluded from his examination of the
complainant had been perpetrated upon her it would be unsafe to say on
the basis of his evidence that penetration has been proved beyond
reasonable doubt. This is not a case such as S v F,16 referred to by my
brother Heher JA, where the fact of penetration was accepted and the
only issue was whether that was with the accused’s penis or his finger.
[22] The question then is whether the lack of clarity in the doctor’s
report is overcome by the complainant’s evidence. I have already drawn
attention to the limitations of her evidence. When using her own words
she expressly said that the appellant placed his penis ‘on’ not ‘in’ her
16 S v F 1990 (1) SACR 238 (A) at 247i-248a.
vagina. On the occasions when she used the words ‘raping’ and ‘sexual
intercourse’ her understanding of these was not explored to see whether
she was, in the expression used in the American cases, ‘a person of
understanding’ in regard to their meaning. The fact that the cross-
examiner did not explore these terms with her does not in my view take
the matter anywhere. It was for the prosecution to do so and to make it
clear that she understood them and understood and intended their
consequences. The difficulty facing the cross-examiner in doing so, when
the version of her client was a denial of any sexual acts, is apparent. Any
attempt to explore these questions could have remedied the deficiencies
in the prosecution case and elicited detail that would be detrimental to her
client’s interests.
[23] The appeal must therefore succeed and the conviction of rape be
altered to one of indecent assault. As the assault was perpetrated on a
child under the age of 16 years it carries with it a statutory minimum
sentence of ten years imprisonment and no substantial reason was
advanced for departing from that sentence in the present case. This was a
violation of a young child and involved both an abuse of authority and an
abuse of trust.
[24] It is most unsatisfactory to have to reach a conclusion on the basis
of uncertainty concerning the meaning of the medical report. Had the
doctor been called as a witness and his evidence had revealed that
penetration had occurred, then the conviction of rape would have been
upheld and in the absence of substantial and compelling circumstances
the sentence decreed by the legislature would have remained in place.
That would have given satisfactory justice to his victim. On the other
hand if the doctor’s evidence had made it clear that it could not be said
with certainty that penetration had occurred the trial judge would no
doubt not have convicted the appellant of rape, but of the lesser offence
of indecent assault and a substantial but lesser sentence would have been
imposed. Given current norms for the grant of parole the appellant would
probably have been released from prison by this time. All of this
demonstrates that the decision not to call the doctor was erroneous.
Regrettably this is too frequently a feature of rape cases and judging by
the experience of the members of this court it is increasingly rare for the
doctor who examined the complainant in such cases to be called to
explain the medical report. We were however informed from the Bar that
there is no instruction in the office of the National Director of Public
Prosecutions that doctors should not be called. That is a start to
addressing the problem and it may be helpful to afford some guidance to
prosecutors. In principle unless there is no issue about the fact of rape the
doctor should be called as a witness. Certainly wherever the implications
of the doctor’s observations are unclear the doctor should be called to
explain those observations and to guide the court in the correct inference
to be drawn from them.
[25] In the result the appeal succeeds to the extent that the conviction of
rape is set aside and replaced by a conviction of indecent assault. The
sentence of life imprisonment is set aside and replaced by one of ten
years imprisonment.
M J D WALLIS
JUDGE OF APPEAL
HEHER JA (dissenting, NDITA AJA concurring):
[26] I have read the judgment of Wallis JA. I disagree only on the
question of whether the State proved that the appellant penetrated the
complainant (as is necessary to constitute the crime of rape). As there was
no direct evidence establishing the fact, it was necessary that, on a
conspectus of all the circumstances, the only reasonable inference was
that penetration had occurred.
[27] What is required is penetration of the labia by the penis albeit to a
slight extent: South African Criminal Law and Procedure 3 ed (by J R L
Milton) Vol II 448, fn 122 and the authorities there cited.
[28] The complainant was a young child. Her evidence was
uncomplicated. The interpretation from the Venda language shows signs
of deriving from a speaker who was not thoroughly at home with English.
Nevertheless there can in my view be no reasonable doubt about what
happened to the victim.
[29] The appellant divested himself and the complainant of their
clothes. He took her to a sofa and lay down on top of her. He placed his
penis ‘on’ (thus the interpretation) her vagina. She felt pain in her vaginal
region. She screamed. Afterwards she did not bleed. She was able to walk
home unassisted.
[30] In relation to what happened, the complainant used the words
‘raping’ and ‘sexual intercourse’ (thus also the interpretation). Neither
expression was placed in issue by the cross-examiner and no investigation
was conducted by the court to test the justification for their use.
[31] The complainant was medically examined, probably on the second
day following the incident. The doctor recorded his findings:
1.
The medical aspect of the labia minora was abraded and bruised.
2.
The hymen was ‘disrupted wide’.
3.
The posterior arch of the vagina was visible.
It was not suggested by counsel that the injuries derived from a non-
traumatic cause (eg disease) or from the insertion of a foreign object
(other than the appellant’s penis) such as a finger, or were self-inflicted.
In the absence of facts such possibilities were no more than speculation:
cf S v F 1990 (1) SACR 238 (A) at 247i-248a.
[32] ‘Abraded’ means ‘worn by friction’; ‘disrupted’ connotes
disturbance by breaking or shattering. These are the unambiguous
ordinary senses of the words used by the doctor (common to the Shorter
Oxford, Websters and Encarta dictionaries). The findings are consistent
only with penetration. If counsel for the appellant wished to test the
appropriateness of the words chosen he should have asked for the
evidence to be led and not simply admitted the report. But he did not do
so. The doctor’s examination was painful for the complainant. Her vagina
admitted only the doctor’s little finger. Neither of those considerations is,
in my view, sufficient to militate against the clear inference that the
appellant attempted, and, at least partially, succeeded in achieving
penetration.
[33] The inference is consistent with the manifest intention of the
appellant, an intention not interrupted or frustrated or resisted before he
had carried out his purpose
[34] I would dismiss the appeal against the conviction. As this is a
minority judgment it is unnecessary to consider whether the sentence
should stand.
____________________
J A Heher
Judge of Appeal
Appearances
For appellant:
M J Manwadu,
ThohoyandOu Justice Centre,
Care of Bloemfontein Justice Centre
For respondent:
NR Nekhambele
National Director of Public Prosecutions,
Thohoyandou.
|
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: 8 March 2012
Status: Immediate
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.
M M v The State
The Supreme Court of Appeal (by a majority) set aside the
appellant’s conviction of rape and substituted a conviction of indecent
assault. His sentence of life imprisonment was altered to one of ten years
imprisonment. The court criticised the officials who had failed to assist
the appellant in pursuing his appeal, with the result that it took five years
for his application for leave to appeal to be heard and further three years
before the appeal cold be heard. In the result the appeal was only
disposed of after the appellant had already served eight years of his
sentence.
The appeal succeeded because of the inconclusive nature of the
complainant’s evidence as to the precise nature of the assault perpetrated
on her and the equivocal terms of the doctor’s report. The court stressed
that unless the doctor’s report is unequivocal in its terms and accepted a
correct it is desirable to call the doctor as a witness and not simply to
hand in the medical report by consent. Only by the doctor giving
evidence can the court be informed of the nature and effect of the
doctor’s observations and conclusions from the examination of the
complainant. The failure to call the doctor as a witness, where the
medical report is equivocal, may lead to an injustice either to the
complainant or to the accused.
|
2826
|
non-electoral
|
2012
|
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
SCA CASE NO: 583/11
Reportable
In the matter between:
MONWABISI MORRIS NJEMLA APPELLANT
and
KSD LOCAL MUNICIPALITY RESPONDENT
Neutral Citation:
Njemla v KSD Local Municipality (583/11) [2012] ZASCA 141 (28
September 2012)
Coram:
Navsa, Van Heerden, Snyders and Bosielo JJA and Southwood
AJA
Heard:
23 August 2012
Delivered:
28 September 2012
Summary:
Interdict and allied costs order obtained in the Land Claims
Court on the basis of misleading information – interdict
rendered academic by subsequent events – application for
rescission of costs order justified on the basis of the court
having been misled.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
Land Claims Court, Johannesburg (Bam JP sitting as court of first
Instance):
(1)
The application for leave to deliver further written argument dated 27 August
2012 is dismissed and the appellant’s attorney, Mr M Tshiki of Tshiki & Sons
Incorporated, Mthatha, is ordered personally to pay the costs thereof.
(2)
The appeal is dismissed with costs.
(3)
The registrar is directed to serve this judgment on the relevant law society for
investigation and action in relation to what is stated in para 26.
______________________________________________________________
JUDGMENT
______________________________________________________________
NAVSA JA (Van Heerden and Bosielo JJA and Southwood AJA concurring)
[1] As will become apparent the facts of this case are peculiar. The present appeal,
with the leave of this court, follows on a successful application by the respondent, the
King Sabata Dalindyebo Municipality (the Municipality), for rescission of a costs order
granted against it in the Land Claims Court. Earlier, Mr Monwabisi Morris Njemla,
claiming to represent the Kwalindile Community (the Community) as its chief, had
brought an application in the Land Claims Court. He had sought, inter alia, an order
interdicting a development taking place, at the instance of the Municipality, on that
portion of the Remainder of Erf 912 Mthata that lies alongside the fenced area of the
Enkululekweni Ministerial Complex, pending the finalization of a land claim lodged by
the Community with the Office of the Regional Land Claims Commissioner in terms of
the Restitution of Land Rights Act 22 of 19941(the Act).
[2] The basis of the application for the interdict was that the Community had lodged
a number of land rights claims over various portions of land, including that part on which
the development was to take place. It was contended that the development, if it
continued, would frustrate the objective of the Community’s land rights claim. The
Municipality, in resisting the application for the interdict, objected to Mr Njemla’s
authority to represent the Community. It did so on the basis that no resolution by the
Community, in terms of which the respondent was so authorized, had been presented to
that court. The Land Claims Court (Bam JP), however, found that the appellant had the
requisite locus standi and granted an order in favour of the Community, as follows:
‘A. (i) The interim interdict prayed for in paragraph 2.1 of case number LCC66/07 is granted
and is immediately operative pending the finalization of serious and consultative
negotiations with all parties concerned but before 30 November 2007. This does not
concern any of the respondents who neither supported nor opposed the application.
(ii) In the event of the negotiations contemplated in paragraph 1 reaching an impasse, on or
before 30 November 2007, the 1st respondent (KSD) is granted leave, if so advised, to make
an application in terms of s 342 of the Restitution of Land Rights Act No. 22 of 1994 as
amended.
(iii) The respondents opposing the application in case no. LCC66/07 are ordered to pay the
costs of the application jointly and severally, the one paying the other to be absolved.’
1 Section 10 of the Act provides for the lodgment of claims and representation of communities. Section
10(1) reads as follows:
‘Any person who or the representative of any community which is entitled to claim restitution of a right in
land, may lodge such claim which shall include a description of the land in question, the nature of the right
in land of which he, she or such community was dispossessed and the nature of the right or equitable
redress being claimed, on the form prescribed for the purpose by the Chief Land Claims Commissioner
under section 16.’
2 Section 34(1) of the Act reads as follows:
‘Any national, provincial or local government body may, in respect of land which is owned by it or falls
within its area of jurisdiction, make application to the Court for an order that the land in question or any
rights in it shall not be restored to any claimant or prospective claimant.’
[3] No reasons were provided for the order. Subsequent to the order the parties
engaged in the envisaged negotiations. During the negotiations, the Municipality
persisted in its objections to the authority of Mr Njemla to represent the Community.
Furthermore, it contested the authority of the appellant’s then attorneys, Messrs Tshiki
and Sons Incorporated, to represent the Community. Consequently, the Municipality
issued a notice in terms of rule 7(2)3 of the rules of the Land Claims Court challenging
their authority. The respondent, in turn, filed a power of attorney, reflecting his authority
to represent the Community. Thereafter, on 14 December 2007, Tshiki and Sons
Incorporated sent a letter to the Land Claims Commissioner, copied to the Municipality’s
attorneys, the material part of which reads as follows:
‘In view of the fact that the pending negotiations are aimed at settlement of the land claim by
Kwalindile Community, we have had to revisit the fact that the land lying outside the fenced
Enkululekweni Ministerial Complex, which includes the land under discussion in the pending
negotiations, was never dispossessed by the former government of Transkei and has in fact
been used and is still being used by the Kwalindile Community for grazing purposes, we have
advised our client as follows: -
1. That the said land lying on the Eastern, northern, western and southern parts of the fenced
Enkululekweni Ministerial Complex is not subject to the jurisdiction and powers of the Land
Claims Commission including the Eastern Cape Land Claims Commissioner in that the land
claims that fall within the jurisdiction of the said authorities are land claims in respect of land that
was dispossessed from persons or communities after 1913 under racially discriminatory laws.
[4] As can be seen, the letter stated that the land under development did not form
part of land which could rightfully be the subject of a land claim by the Community. In
light thereof, the Municipality’s attorneys wrote to Tshiki and Sons Incorporated,
enquiring whether Mr Njemla was willing to abandon the order in the Community’s
favour. On 21 January 2008, during continuing negotiations, attorneys M Magigaba
Incorporated presented the parties thereto with a letter and resolution indicating that
3 Rule 7(2) reads as follows:
Any party that disputes the authority of a person acting on behalf of any party may deliver a notice –
(a)
within ten days after it has come to his or her notice that such person is so acting; or
(b)
with the leave of the Court on good cause shown at any other time, calling on that person to
prove his or her authority
they were now authorized to represent the Community. Neither Messrs Tshiki and Sons
Incorporated, nor Mr Njemla, was present when this was done.
[5] It is necessary to record that it is common cause that the Community had not in
the past been dispossessed of the land situated around the fenced Enkululekweni
Ministerial Complex, are currently using it for grazing purposes and are protected
therein in terms of the Interim Protection of Informal Land Rights Act 31 of 1996.
[6] Thus, the Municipality approached the Land Claims Court for an order
rescinding only the earlier costs order in favour of the Community, contending that the
related orders had now become academic – the time period for negotiations referred to
in the order of the Land Claims Court set out in paragraph 2 above had passed – and,
having regard to what appears in the preceding paragraph, the Municipality,
understandably, did not proceed to court for an order in terms of s 344 of the Act.
[7] The Municipality sought rescission of the costs order, contending that the order
issued by Bam JP, set out in paragraph 2 above, had been obtained because Mr
Njemla had misled the court by supplying false information. The basis of the application
was said to be the lack of authority by Mr Njemla to represent the Community, and the
fact that the land was wrongly stated to be the subject of a valid land claim by the
Community. It was submitted on behalf of the Municipality that, had the court known the
true facts, the order would not have been granted. Essentially, it was contended that, if
the land in question was not subject to a valid land claim, the Land Claims Court would
not have had jurisdiction in terms of s 225 of the Act and there would have been no
need for that court to grant an interdict.
[8] In opposing the application for rescission Mr Njemla claimed that, since Bam JP
had not furnished reasons for the orders set out in paragraph 2 above, it might well be
4 See note 2.
5 The exclusive jurisdiction of the Land Claims Court to determine rights to restitution of any right in land
and allied matters is set out in s 22 of the Act.
that the costs order had been granted on a basis wholly unrelated to the Community’s
land claim. Mr Njemla pointed out that, since attorneys M Magigaba Incorporated only
entered the scene subsequent to the interdict having been granted, it does not
necessarily follow that neither he nor Tshiki and Sons Incorporated were unauthorised
at the time that the order had been made.
[9] Bam JP, in dealing with the application for rescission, rejected the first ground
relied on by the Municipality, namely, that Messrs Tshiki and Sons Incorporated and Mr
Njemla lacked authority to represent the Community at the time of the application for the
interdict. He reasoned that the subsequent authority presented by attorneys M
Magigaba Incorporated did not necessarily mean that Mr Njemla or the initial attorneys
had lacked authority at the time that the interdict was granted.
[10] Bam JP did, however, hold in favour of the Municipality in respect of the other
ground referred to in paragraph 7, namely, that the court below had wrongly been
brought under the impression by Mr Njemla that the land in question was the subject of
a valid land claim by the Community. In this regard, Bam JP referred to the
correspondence set out above and to the affidavit by Mr Njemla opposing the
application for rescission, from which it appears clearly that the land had not been
dispossessed in circumstances entitling a land claim by the Community in terms of the
Act. The learned judge president stated the following:
‘The revelation, on the part of the respondent himself, that the property being developed was
never dispossessed, has turned the whole interim interdict order upon its head and, in view of
the fact that it was based entirely on the belief that the contrary situation might prevail, it has to
be reversed.
It now appears that this court did not have jurisdiction at all and not just because the applicant
asserted it, but because the fons et origo of that application himself asserted the same. It is still
a mystery to this court why the respondent opposed the review application6 and also why, once
it had “revisited” its earlier stance, the respondent had not then abandoned the order for the
interdict in its entirety and tendered costs.’
6 Bam JP is referring to a review application brought by the Municipality for the setting aside of a notice in
the Government Gazette, in which a land claim in relation to the land in question was published.
[11] Bam JP found it necessary to disclose in his judgment that it was with ‘some
surprise and amazement’, that he received ‘late’ supplementary heads of argument on
behalf of Mr Njemla, containing a ‘submission’ that the Community had not been
dispossessed of the land in question. Considering the affidavits filed on behalf of Mr
Njemla, and the very basis of the application for the interdict, it is not wholly unexpected
that Bam JP ignored that submission. The learned judge president also recorded the
following:
‘I also, subsequently ignored, as being unethical, a direct communication between the
respondent’s legal representative and the court, after judgment on the applications had been
reserved, to the effect that the land fell outside the jurisdiction of the commission. Neither the
late heads nor the unethical communication had any impact upon the orders given on the 2
October 2008.’
[12] Later, the learned judge president, with reference, inter alia, to Childerly Estate
Stores v Standard Bank of SA Ltd 1924 OPD 163 and Nyingwa v Moolman NO 1993 (2)
SA 508 (TK), said the following:
‘I am satisfied that there is authority that the court may assume its inherent jurisdiction to
rescind in the interest of justice. In the instant case it would be manifestly inequitable and not in
the interest of justice to implement the costs order given against the applicant. Indeed the costs
order is the only portion still alive in the temporary interdict in case LCC66/07 on the 2 October
2007 order.’
[13] It is against that conclusion that the present appeal is directed. It is necessary to
record that before the appeal was heard in this court, Mr Njemla passed away and his
place in the litigation has now been taken by the executor of his estate. I shall hereafter
refer to the executor as the appellant. The appellant submitted that it had not been
competent for the Municipality to apply to rescind the costs order without the court
below having provided the reasons for the order. Moreover, it was contended that since
the Municipality, in its founding affidavit, had relied on s 35(11)7 of the Act, read with
7 Section 35(11) reads as follows:
rule 648 of the Land Claims Court Rules, in the application for rescission, it could not
thereafter rely on the court’s common law power to rescind judgments allegedly
wrongfully obtained. It is difficult to discern the precise nature of an additional ground of
attack on the decision of the court below. What follows is best gleaned from the
appellant’s argument. It was contended that the interdict, set out in paragraph 2 above,
encompassed not just the Community’s claim to the land on which the development was
due to take place, it also included a claim for restitution of a right in land by the
Abathembu Community and that the costs order might also have ensued because of
that other claim. This submission appears to be an extension of the argument that no
reasons were supplied and that the application for rescission was therefore premature.
[14] In oral argument before us, it was contended on behalf of the appellant that,
considering that Bam JP, as recorded in his judgment, had been informed of the true
state of affairs by way of the late supplementary heads of argument and by way of direct
communication to the court after judgment had been reserved, it can hardly be argued,
as the Municipality now does, that had Bam JP known the truth, he would not have
granted the costs order.
[15] The submission that the Land Claims Court’s failure to supply reasons for the
costs order precluded an application for rescission is fallacious. It must surely be so that
the application by Mr Njemla was granted on the basis that the requirements for an
interim interdict had been met. Those requirements are trite and, having regard to the
‘The Court may, upon application by any person affected thereby and subject to the rules made under
section 32, rescind or vary any order or judgment granted by it -
(a) in the absence of the person against whom that order or judgment was granted;
(b) which was void from its inception or was obtained by fraud or mistake common to the parties;
(c) in respect of which no appeal lies; or
(d) in the circumstances contemplated in section 11 (5):
Provided that where an appeal is pending in respect of such order, or where such order was made on
appeal, the application shall be made to the Constitutional Court or the Appellate Division of the Supreme
Court, as the case may be.’
8 Rule 64(1) reads as follows:
‘Subject to section 35(11) of the Restitution of Land Rights Act, the Court may suspend, rescind or vary,
of its own accord or upon the application of any party, any order, ruling or minutes of a conference which
contains an ambiguity or a patent error or omission, in order to clarify the ambiguity or to rectify the patent
error or omission.’
facts asserted by Mr Njemla in his founding affidavit, it can hardly now be contended
that the application should not have been granted. The costs order by the Land Claims
Court in favour of the Community could only have been reached on the basis that costs
followed the result. This ground of appeal must be rejected.
[16] The contention that because the Municipality, in its founding affidavit filed in
support of the application for rescission, relied on s 35(11) of the Act read with rule 64 of
the Land Claims Court Rules, the court below was not entitled to rely on its common law
power of rescission is, in my view, equally without merit. The facts are common cause.
The court had been misled, leading to an understandable, but erroneous conclusion that
the requirements for the grant of an interim interdict had been met. Put simply, the
Community had not been dispossessed of the land in question, was enjoying grazing
rights in terms of a different statutory regime and was thus not entitled to the interim
interdict. The rescission order was undoubtedly correct.
[17] It was submitted that, since another community, namely, the Abathembu
community, had submitted a claim for the restitution of rights to the land in question on
the basis of having been dispossessed of rights therein, the interdict and the allied costs
order were in any event justified. This submission, too, is without foundation. The
Community, and the Community alone, sought the interim interdict on the basis that
they had been dispossessed of rights to the land in question. The Abathembu
community was never party to the litigation. The very object of the application for the
interdict by the Community was to thwart the development on that part of the land not
subject to a claim by it under the Act. That basis having fallen away, the Community
was not entitled to any order in its favour.
[18] It is thus not necessary to debate further whether, in the light of a land rights
claim being lodged by the Community, in terms of s 10 of the Act, the processes set out
in sections 11 to 14 had to be followed before the court could be said to lack jurisdiction,
or whether the substratum of the claim having been admitted to be lacking, the court
was deprived of jurisdiction, rendering the order a nullity ab initio. In my view, it is
enough for the court to have rescinded its order on the basis that it had been misled into
granting the order that it ultimately set aside.
[19] The submission on behalf of the appellant, that Bam JP had been alerted in the
late supplementary heads of argument to the true state of affairs, and that this somehow
justified the costs order, is misplaced. Instead of filing the late supplementary heads, Mr
Njemla ought, rightly, to have withdrawn the application and tendered the Municipality’s
costs.
[20] I can see no reason why, considering the court’s common law powers of
rescission, the court below should not have ordered the rescission of the costs order,
which was the only remaining live issue.
[21] Another issue remains to be addressed briefly. Appeals against costs orders only
are generally discouraged.9 In the present case opposition to the application for
rescission was ill-advised. Taking it further, particularly since Mr Njemla has passed
away, this is even more so. This appeal should never have been pursued.
[22] During the hearing before this court, the appellant’s attorney made repeated
reference to the documents filed in support of the application for the interdict. A full set
of those papers had not been placed before the court. At one stage the appellant’s
attorney submitted that it might be better if he applied to have those documents now
admitted on appeal. It was put to him that there was no formal application before us and
that, in the event that he sought to pursue that path, he would have to file the necessary
application with an attendant affidavit explaining why a fuller record had not been placed
before us earlier. It was also put to him that the Municipality would probably seek an
opportunity to respond and that this would necessitate a postponement which would
have cost implications. The appellant’s attorney was given an opportunity, during an
9 Farlam, Fichardt and Van Loggerenberg Erasmus Superior Court Practice Loose leaf edition at A1-50.
adjournment, to consider his options. Subsequent to the adjournment he informed the
court that he would not pursue the ‘application’.
[23] Twelve days after the hearing of the appeal, the appellant’s attorney filed
documents in the registrar’s office entitled ‘Application for Leave to Deliver Further and
Written Argument of the Appeal with Reference to the Founding Affidavit in the Main
Application’. Careful scrutiny of the further written argument reveals nothing novel. The
supporting affidavit is distressing. Regrettably, because of what I intend to say about it
thereafter, it is necessary to repeat the rather lengthy relevant parts thereof:
‘The following transpired during argument of the appeal namely:-
3.1 That the record in the main application which was not before court was indeed necessary to
have been placed before court as only the record of the rescission application was before court.
3.2 The court wanted to know the grounds upon which the main application was founded and I
was unable to recollect these grounds from the cuff.
3.3 The court also enquired from me as to the content of the founding affidavit in the main
application which were of relevance to the appeal after I had indicated a desire to have the
matter postponed in order for the appellant to place the said record before court before the
appeal is decided. I was unable to recollect the said content save to mention what I recalled
nebulously that the founding affidavit has the content of the letter that I wrote to the Eastern
Cape Regional Claims Commissioner namely that the land on which development was taking
place was never dispossessed from the applicant’s community as they continued to graze their
livestock from this land. I was discouraged from insisting in the application by intimidation by the
court that it has negative costs implications for the appellant. I ended up not applying for a
postponement.
3.4 These is a lot that generally turned on the record of the main application which was not
before court especially the applicant’s founding papers
4.
Upon adjournment of the appeal for judgment thereon, I was curious to remind myself about the
content of the applicant’s founding affidavit, copy of which is annexed hereto marked “BB”, save
some of the annexures that bear no relevance to the instant appeal, in the main application
which I quickly perused and then discovered the following relevant information therein, namely:-
4.1 That the claim by the applicant’s community is not limited to the land on which the
development was taking place at the time the main application was launched. That land on
which development is taking place is only a small piece of the land claimed by the applicant’s
community being the land situated below and outside the fenced Enkululekweni Ministerial
Complex and the land inside the fenced Complex being claimed land claimed by the applicant’s
community. This Honourable Court evinced some impression that the land claimed by the
applicant’s community was limited to the one the development was taking place so much so that
the communication that was made on behalf of the applicant’s community that this land was not
dispossessed from the applicant’s community revealed absence of jurisdiction of the Land
Claims Court to have adjudicated on the main application. I confirmed that this is not the
position. The land on which development was taking place is only a small piece of the whole
land claimed by the appellant’s community.
4.1.1 I annex hereto marked “BBB” a copy of the land claim made by the applicant’s community.
4.2 I further recalled that the land claimed by the applicant’s community is held under a title
deed which was issued to the respondent after the same land had been donated by the Eastern
Cape Provincial government to the respondent’s predecessor called Municipality of Umtata. The
donation of the said land was pursuant to the advent of the new constitutional dispensation in
South Africa regarding disposal of the state land the right to which, in terms of the Disposal of
State Land Act of 1961, vests in the State President which powers, in terms of the Land
Administration Act of 1995, the President may delegate to the National Minister of Land Affairs
who, in terms of the latter Act may also delegate to the provincial Mec’s in control of the land in
a particular province at which the particular land is situated subject to the conditions which the
Minster of Land Affairs may stipulate.
4.2.1 The said title was first issued to the Eastern Cape Provincial Government and a copy
thereof is annexed hereto marked “CCC” which is annexure “TJP2” in the main application.
4.3 The said land was, in the process of exercise by the MEC in the Eastern Cape Province
dealing with land matters, donated to the respondent’s predecessor the Municipality of Umtata
which later acquired ownership over the said land.
4.3.1 I annex hereto marked “DDD” a copy of the said title deed holding the remainder of Erf
912.
4.4 The said land was donated by the National Minister of Land Affairs to the Province of the
Eastern Cape subject to certain conditions to which a list of all the properties being donated was
attached and the remainder of erf 912 is one of such properties.
4.4.1 A copy of the said conditions stipulated by the National Minister of Land Affairs is annexed
hereto marked “EEE”.
4.5 As stated above, the same land was donated to the respondent’s predecessor by the
Eastern Cape Provincial government. This donation itself was subject to the same conditions
stipulated by the National Minister of Land Affairs as those set out in annexure “EEE” above.
4.5.1 A copy of the said donation is annexed hereto marked “FFF”.
4.6 I further recalled that amongst the grounds for the application which are set out in the
founding affidavit in the main application, the applicant relied on the violation of the conditions of
delegation annexure “EEE” above which according to the applicant rendered the purported
alienation of the land in question by the Government to the respondent and by the respondent to
some tenants who are developers by means of lease agreements invalid and a nullity. An order
was also sought for the setting aside of the said lease agreements.
4.6.1 I noted the said grounds in themselves when upheld by the court a quo could form a solid
basis for the award of the costs of the application to the applicant without any reference to the
merits of the land claims of the applicant and Abathembu Nation.
4.7 I was further reminded about the fact that the main application had the support of the Acting
Chieftainess of Abathembu controlling the area over which the claimed land is situated. She
supported it by means of a confirmatory affidavit which was annexed to the applicant’s founding
affidavit in the main application. I thus noted that in such circumstances, the applicant was not
just championing the cause of Abathembu Nation when he brought the main application also
protecting the land claim by Abathembu but had the consent of their leader Chieftainess No-Italy
Mtirara.
4.7.1 I annex hereto marked “GGG” a copy of the confirmatory affidavit of Chieftainess No-Italy
Mtirara and “HHH” the land claim by Abathembu the existence of which precluded development
as commanded by the Deed of Ministerial Delegation of Statutory powers.
4.8 I was also alerted to the fact that the claimed land which is described as the remainder of erf
912 had, at the time the main application was launched, been gazetted. I recalled that it was
one of the arguments against the development of the land in question by the developers at the
instance of the respondent that the gazetting of the said land by itself precluded anyone from
developing the said land. I thus noted that this ground alone could have formed a solid basis
under the provisions of section 11 subsection 7 paragraph (Aa) of the Restitution of Land
Rights Act, 1994 (Act No. 22 of 1994) basis for the court to have awarded the costs of the
application to the applicant as the development of the land in question was prohibited under the
said section.
4.8.1 I annex hereto marked “JJJ” a copy of the said gazette.’
[24] There are several problems with what the appellant’s attorney stated in the
affidavit over and above the procedural improprieties attendant upon what he has
resorted to. I deal with the last aspect first. There was no formal application before the
hearing of the appeal, nor is there one now, to have the record supplemented. The
appellant’s attorney has put part of the record of the application for the interdict before
us by subterfuge. The problem is not only that there is no guarantee of the authenticity
of what was attached to the affidavit. It is not the full record and one has no idea of what
the answering affidavit contained in response to all the issues raised. Furthermore,
there is no explanation on affidavit as to why the documents now deemed necessary for
adjudication were not put before us in the first place.
[25] Turning to what is set out in the passages, reproduced in para 23 above, the
following observations must be made:
The appellant’s attorney has been intimately involved with this case, apparently from
inception. His claim, that during the exchange with this court when the appeal was
heard, he was unable to recollect the grounds on which the application for the interdict
was based, is entirely unconvincing. His statement that during the exchange he recalled
‘nebulously’ that the founding affidavit had made reference to the letter he wrote to the
Regional Claims Commissioner in which he had informed her that the community had
never been dispossessed of the land in question lacks credibility and reflects negatively
on him. Whilst it is true that in the founding affidavit he has now attached to the
application there is reference to the fact that the community used the ground in question
as grazing land, there is no reference to the letter, nor is it clear that the community had
never been dispossessed of the land. In fact, all the indications are to the contrary. His
statement that, subsequent to the appeal, he was ‘curious’ to remind himself about the
contents of the founding affidavit is, in my view, dubious. The title deed conditions now
referred to appear to have featured in litigation conducted some years before and they
add nothing more to the appellant’s case. During the hearing, the appellant’s attorney
was rightly, in my view, informed of this court’s concern about escalating costs,
particularly because an estate was involved and it might well have an increasingly
prejudicial effect on a widow who might be financially vulnerable. The appellant’s
attorney was provided full opportunity to decide in turn whether to seek an adjournment
in order to decide whether to apply formally to supplement the record with a full
explanation as to why the parts now considered necessary had not been placed before
us earlier. The appellant’s attorney’s statement that he was discouraged by the court
does not redound to his credit. A legal representative’s duty is to assert his client’s case
fearlessly, after considering all the implications of the propositions put to him or her by
the court. By attaching a part of the record to his affidavit to support an application to
permit further written argument the appellant’s attorney was seeking to achieve that
which he had expressly stated he had decided against pursuing. At the very least that
conduct is disingenuous.
[26] The respondent wisely decided not to respond to the application referred to in the
immediately preceding paragraphs. In any event, none of what is now improperly being
sought to be placed before us affects the reasoning that appears earlier in the
judgment. It provided no new insights and does not impact in the least on the very basic
propositions that the land in respect of which the interdict was sought had never been
the subject of a land claim by the community represented by the appellant. More
importantly, as stated and acknowledged by the attorney himself, that community had
not been dispossessed of that part of the land in respect of which the interdict had been
sought. The attorney’s conduct, in bringing the belated application in the manner
described above, is in my view deserving of severe censure and he should be ordered
personally to pay the costs of the belated application. In addition, the registrar will be
directed to bring this judgment to the attention of the relevant law society for
investigation and for such action as it might deem appropriate in relation to the issues
raised in paragraphs 24, 25 and 26 above and concerning his conduct in connection
with what was initially placed before Bam JP, in the application for the interdict.
[27] Subsequent to the appeal hearing and after judgment was reserved, but before
this judgment was finalised, Snyders JA became indisposed. This judgment is therefore
a decision of the remaining members of the court.
[28] The following order is made:
1. The application for leave to deliver further written argument dated 27 August 2012 is
dismissed and the appellant’s attorney, Mr M Tshiki of Tshiki & Sons Incorporated,
Mthatha, is ordered personally to pay the costs thereof.
2. The appeal is dismissed with costs.
3. The registrar is directed to serve this judgment on the relevant law society for
investigation and action in relation to what is stated in para 26.
____________________
MS NAVSA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
M Tshiki
Instructed by
Tshiki & Sons Incorporated
Mthatha
Mthembu & van Vuuren
Bloemfontein
FOR RESPONDENT:
Adv. T.M Ntsaluba
Instructed by
Mnqandi Incorporated
Mthatha
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
28 September 2012
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Njemla v KSD Local Municipality (583/2011) [2012] ZASCA 141 (28 September 2012)
The Supreme Court of Appeal (SCA) today dismissed an appeal against a
judgment of the Land Claims Court, which set aside a costs order it had
granted in favour of Mr Monwabisi Morris Njemla. It set aside the costs order
on the basis of misleading information that led it to grant an interim interdict
against the respondent, the KSD Local Municipality, together with the costs
order.
The Land Claims Court granted the interim interdict to halt a development on
land which Mr Njemla had alleged was the subject of a land claim in terms of
the Restitution of Land Rights Act 22 of 1994 by a community he represented.
The interdict later became academic because processes in terms of that Act
had run their course.
Subsequent to the interim interdict being granted, it came to light by way of
information supplied by Mr Njemla’s attorney himself, that that part of the land
in respect of which the interdict had been sought was not subject to a land
claim by the community represented by Mr Njemla. This caused the
Municipality to seek rescission of the costs order granted by Bam JP, the then
judge president of the Land Claims Court. Unsurprisingly, the judge president
rescinded the costs order on the basis of the court’s common law power to
rescind a judgment obtained in the circumstances referred to above. One
would have expected the matter to end there. It did not. An appeal to this
court followed. In the interim, Mr Njemla passed away and the executor of his
estate took his place.
The Supreme Court of Appeal dismissed the appeal with costs and ordered
the appellant’s attorney to personally pay the costs of an application to submit
further written argument. In its judgment, particularly at paras 23 to 26, this
court dealt with what it considered improper conduct by the appellant’s
attorney. In addition to the orders referred to above, it directed the registrar to
serve the judgment on the Law Society concerned for investigation and action
in relation to what is stated in para 26.
|
3252
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case number: 303/07
In the matter between:
OWEN FLOYD APPELS
Appellant
and
THE STATE
Respondent
CORAM:
NUGENT JA, HURT and KGOMO AJJA
HEARD:
6 NOVEMBER 2007
DELIVERED:
28 NOVEMBER 2007
Summary: Appeal against conviction for murder dismissed. No reasonable possibility that
accused's version may be true
Neutral citation: This judgment may be referred to as Appels v The State [2007] SCA 151
(RSA)
_____________________________________________________________________
HURT AJA
[1] The appellant was convicted of murder in the Regional Court, Kimberley. He
appealed to the full bench of the High Court but the appeal was dismissed. He was
however given leave to appeal to this court against the conviction only.
[2] At the commencement of the trial, the appellant pleaded not guilty to the charge of
murder and reserved his defence. By the time the appellant's case was closed, though, the
court was left with a narrow issue to resolve.
[3] It was common cause that there was a party at the appellant's house on the night in
question. One of his guests was Mr Tyro Guys, who lived diagonally across the road. At
about midnight Mr Guys' wife (to whom I will refer as 'the deceased') walked across the
road to the appellant's house in order to call her husband away from the party. While she
was in the course of doing this, an altercation developed between her and some of the
guests at the party which led to the appellant's mother intervening. The deceased and the
appellant's mother exchanged insults and the appellant, in turn, intervened and told the
deceased to leave the premises. He escorted her, or followed her, into the street where the
altercation continued. There the verbal dispute turned into physical aggression. It is at this
point in the sequence of events that material conflicts between the version of the State and
that of the accused emerged. But it is not in dispute that the appellant struck the deceased,
while he was holding a glass in his hand. After she had been struck, the deceased was
seen to be bleeding profusely from the area of her neck. She made her way back into her
yard where she collapsed and died a matter of minutes later.
[4] The District Surgeon, Dr Olivier, who performed the post mortem examination, told
the court that she had identified the cause of death as a gross loss of blood caused by a
laceration of the subclavian artery which is located below the collarbone. She said that the
deceased had sustained three injuries, a 1cm triangular-shaped laceration to the right of
her right eye, an 11cm relatively superficial laceration extending from immediately below
the triangular laceration downwards to the corner of the mandible and a 10cmx7cm incised
wound in the neck, extending obliquely from below the right mandible to the vicinity of the
notch in the centre of the collarbone. In response to questions by counsel and by the court,
she had said that she considered that these injuries must have been caused by at least two
blows. However, on more than one occasion, she made the concession that it was
'possible' that the injuries could have been sustained by a single blow. She expressed the
firm view, though, that such a blow would have had to be directed in a downward direction.
[5] The divergence between the State and defence versions was simply this. According
to the State witness, Emma Guys, the 16 year-old daughter of the deceased, the appellant
struck the deceased twice. When the first blow was struck, against the side of the
deceased's face, the glass broke and the appellant immediately stabbed the deceased on
the neck with the broken remnant which was still in his hand. The appellant's version was
that he had only struck one blow, not realizing that he was holding the glass in his hand.
The significance of this divergence is that if the appellant stabbed the deceased with a
broken glass in the vital area of the deceased's neck, then the only reasonable inference
(and counsel were in agreement in this regard) must be that he foresaw death as a
possible result and that he had criminal intent in the form of dolus eventualis. That being
so, the conviction for murder was correct. Such an inference cannot properly be drawn,
though, if the appellant struck only one blow. In that case, the offence would have been
culpable homicide or assault with intent to do grievous bodily harm. To secure a conviction
for murder, the State had to prove beyond reasonable doubt that the appellant had acted
with dolus eventualis, and, in the light of the restricted issue referred to, this equated
effectively to proof beyond reasonable doubt that two blows were struck. If, after a
consideration of all the evidence, there remained a reasonable possibility that the appellant
had only struck the deceased once, he could not be convicted on the murder charge.
[6] In arguing the appeal before us, Mr Nel, who appeared for the appellant emphasized
two aspects of the evidence adduced in the trial court. The first was that Emma had been a
single witness to the attack on her mother, and her evidence was by no means free of
blemish. The second was that Dr Olivier had conceded that the injuries she had observed
at the post mortem could possibly have been caused by a single blow. These two features,
counsel submitted, should have led the magistrate to conclude that there was a
reasonable possibility that Emma might have been mistaken and that, in fact only one blow
was struck.
[7] In S v Van der Meyden 1999 (2) 79 (W), Nugent J discussed the test for a
'reasonable possibility' in these terms ( at p 82) :
'The proper test is that an accused is bound to be convicted if the evidence establishes his guilt beyond
reasonable doubt, and the logical corollary is that he must be acquitted if it is reasonably possible that he
might be innocent. The process of reasoning which is appropriate to the application of the test in any
particular case will depend on the nature of the evidence which the court has before it. What must be borne in
mind, however, is that the conclusion which is reached (whether it be to convict or to acquit) must account for
all the evidence. Some of the evidence might be found to be false; some of it might be found to be unreliable;
and some of it might be found to be only possibly false or unreliable; but none of it may simply be ignored.'
[8] In his judgment the magistrate acknowledged that Emma's evidence had to be
approached with caution. She was only 16 years old at the time; she was a single witness;
she was the deceased's daughter, which fact, alone, must have affected her ability to give
an objective and dispassionate account of what she observed; there were conflicts between
what had been recorded in her statement to the police on the day after her mother had died
and the evidence which she gave in court; and she had contradicted herself on occasions
while giving that evidence. But, having considered all of these aspects, he nevertheless
concluded that Emma was a truthful witness. A court of appeal is, of course, obliged to
attribute considerable weight to such a finding. Nor, in my view, is there any basis to be
found in the record for questioning the magistrate's conclusion as to Emma's credibility. The
crucial part of her evidence concerned a brief and simple sequence of events. She
observed the appellant's attack on her mother from a distance of one or two metres. She
said she had covered her eyes when the first blow was struck but that she had been
watching when the appellant administered the second and she had seen that the glass in
his hand was already broken when he struck the deceased with it.
[9] The magistrate considered the appellant's version and rejected it. The appellant had
demonstrated to the court the single blow which he said he had struck. It was described by
the magistrate as a 'dwarsklap' ie a blow which travelled in a horizontal plane to the side
of the deceased's face. In discounting such a blow as the possible cause of the deceased's
injuries, the magistrate had relied upon Dr Olivier's evidence to the effect that if a single
blow had caused all the injuries, it would have been administered in a downward trajectory
to the side of the deceased's head.
[10] Despite the question of credibility, of course, the court had to be satisfied that there
was no reasonable possibility that Emma had been mistaken when she said that there had
been two blows. This was an aspect which the magistrate did not specifically mention in his
ex tempore judgment. Mr Nel's submission was that the concessions by Dr Olivier to the
effect that it was possible that the deceased could have sustained all the injuries as a result
of a single blow, had been overlooked (or possibly erroneously discounted) by the
magistrate.
[11] To deal with this submission, it is necessary to consider the 'concessions' in their
context in the evidence. When asked by the prosecutor whether one blow could have
caused the injuries, Dr Olivier's reply was ;
'Dit kon een handeling gewees het. As dit van bo af was is dit moontlik dat dit kon een handeling gewees het,
maar nie met 'n soliede glas nie.'
She made similar comments at other stages during her examination-in-chief. Later, during
cross-examination, she elaborated on her theory in the following terms :
'Wat ek sou net oor wil helderheid gee is dat, sou 'n person van bo af tipe van gesteek word met 'n stuk glas
dan kan dit een handeling wees wat dan altwee laserasies veroorsaak het. Wanneer 'n glas net breek op die
gesig kan die boonste een veroorsaak gewees het, die een op die wang, want dit was nie 'n baie diep
laserasie nie, maar die een in die nek dan – sou dan 'n tweede handeling moes gewees het met 'n stuk glas.
(HOF) En dit bring ons by mnr Jameson se stelling wat hy nou net gemaak het. As die glas gebreek het met
die kontak gemaak teen die wang, maar hy breek so dat daar 'n stuk in die hand oorbly en met die deurvoer
van die klap kon dit die tweede wond . . .(tussenkoms)? - - - Dit is 'n moontlikheid ja, dit is.'
It is abundantly clear that Dr Olivier's evidence on this aspect amounted to no more than
that a particular type of blow could possibly have caused all the injuries, and that was a
blow with a downward trajectory. That qualification can obviously not be ignored in
understanding what Dr Olivier considered to be possible. At the stage when she gave her
evidence, the appellant had not testified and, significantly, his counsel did not put to Dr
Olivier that the appellant would say that he struck only one blow in a more or less horizontal
plane. There can be no doubt whatsoever that if it had been suggested to Dr Olivier that
such a blow could possibly have caused all the injuries she would have replied firmly in the
negative.
[12] The suggestion that there was a reasonable possibility that the appellant had struck
only one blow can thus only be valid if the appellant's own evidence is ignored. That, as
indicated in S v Van der Meyden, is not an acceptable approach. It follows that the
magistrate was correct in concluding that the State had discharged the onus resting upon it.
[13] The appeal is dismissed.
N V HURT AJA
CONCUR:
NUGENT JA
KGOMO AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 November 2007
Status:
Immediate
O F Appels v The State
The Supreme Court of Appeal today gave judgment dismissing the appeal by
Owen Appels against his conviction by the Regional Court, Kimberley for the
murder of Mrs Brenda Guys on 15 February 2003.
--- end ---
|
3229
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
CASE NO: 482/2006
In the matter between
TETRA MOBILE RADIO (PTY) LIMITED APPELLANT
and
THE MEMBER OF THE EXECUTIVE COUNCIL OF
THE DEPARTMENT OF WORKS 1ST RESPONDENT
THE CHAIRMAN OF THE CENTRAL
PROCUREMENT COMMITTEE 2ND RESPONDENT
INFOTRUNK (PTY) LIMITED 3RD RESPONDENT
THE CHAIRMAN OF THE APPEALS TRIBUNAL 4TH RESPONDENT
THE MEMBER OF THE EXECUTIVE COUNCIL OF
THE DEPARTMENT OF FINANCE 5TH RESPONDENT
CORAM:
HOWIE P, MTHIYANE, LEWIS, HEHER and VAN
HEERDEN JJA
HEARD:
29 AUGUST 2007
DELIVERED:
28 SEPTEMBER 2007
Summary:
Interpretation and application of the KwaZulu Natal
Procurement Act 3 of 2001 – Access to information under
the said Act.
Neutral Citation:
This judgment may be referred to as Tetra Mobile Radio v
MEC, Department of Works [2007] SCA 128 (RSA).
MTHIYANE JA
MTHIYANE JA:
[1] This is an appeal, with the leave of this court, against the judgment
and order of Murugasen AJ sitting in the Pietermaritzburg High Court,
refusing to grant the appellant, Tetra Mobile Radio (Pty) Limited, an
order directing the respondents to make available to it certain documents
relating to a provincial tender. The appellant required the documents in
order to formulate its grounds of appeal to the Appeals Tribunal against
the decision of the Central Procurement Committee (‘the Procurement
Committee’) awarding the tender to the third respondent, Infotrunk (Pty)
Limited.
[2] The appellant was one of three tenderers who had tendered for the
award of contract ZNT 2482W: Province of KwaZulu Natal, for the
maintenance of repeater networks. The appellant had held a similar
contract for the previous four years and had anticipated that the new
contract would be awarded to it because of its track record in providing
the service. However, the Procurement Committee awarded the tender to
the third respondent. The appellant noted an appeal to the Appeals
Tribunal against the decision of the Procurement Committee in terms of
s 20 of the (now repealed) KwaZulu Natal Procurement Act 3 of 2001
(‘the Procurement Act’). The relevant provisions of the section read:
‘20(1) The following entities aggrieved by a decision of the Central Procurement
Committee . . . may appeal to the Appeals Tribunal in the prescribed manner.
(a)
. . .
(b)
a tenderer.
(2)(a) . . . [a] tenderer must, within five days of receipt of the notification under
section 5(1)(b) or 35(2) of the decision appealed against, deliver written notification
of an intention to appeal.
(b)
. . . [a] tenderer may, together with the notification of intention to appeal under
paragraph (a), deliver a request for written reasons for the tender award decision.
(c)
The Central Procurement Committee . . . must deliver to the appellant the
written reasons requested under paragraph (b) within ten days.
(d)
The appellant must, within ten days of receipt of the written reasons delivered
under paragraph (c), or, failing a request for written reasons under paragraph (b),
within the ten days referred to in paragraph (c), submit written representations to the
Appeals Tribunal indicating sufficiently and without unnecessary elaboration the
grounds and the basis of the appeal and the nature of the complaint.
(3)
Upon receipt of a notice of intention to appeal under subsection (2)(a), the
Appeals Tribunal must notify other tenderers who may be adversely affected by the
appeal in writing of the appeal and invite them to respond within five days.
(4)
No oral hearing of appeals will be allowed unless the Chairperson of the
Appeals Tribunal, in the interests of justice issues a directive indicating otherwise, in
which event the procedure to be followed will be as prescribed.
(5)
A decision of the majority of the members of the Appeals Tribunal will be the
decision of the Appeals Tribunal.’
[3] The notice of appeal was accompanied by a request for reasons in
terms of s 20(2)(b) for the decision taken by the Procurement Committee.
The deponent to the founding affidavit, a director of the appellant, stated
that the grounds of appeal were submitted without the appellant having
had sight of various documents which in his view were vital for it to
formulate a proper set of grounds of appeal and the basis of its appeal.
[4] While reasons for the decision taken by the Procurement
Committee to award the tender to the third respondent were furnished, the
appellant did not consider them adequate. The appellant’s complaint was
that they merely indicated the points allocated, the basic method of
allocating points and the fact that the third respondent had received the
highest points. It contended that it still needed further documents and
information.
[5] The information requested by the appellant was the following or
was contained in the following documents:
‘(a)
Copies of all tenders received by you in response to tender enquiry ZNT
2482W;
(b)
A Schedule setting forth the dates upon which each and every tender was
received by you;
(c)
Copies of all applications for preference points (ZNT 30) received by you
from the various tenderers;
(d)
The names of the members of the Tender Evaluation Committee which
Committee was responsible for the evaluation of the tenders received in response to
tender enquiry ZNT 2482W;
(e)
The name of the chairperson of the abovementioned Tender Evaluation
Committee;
(f)
Copies of the ratification of the appointment of the members of the Tender
Evaluation Committee by the Minister responsible for the administration of your
department;
(g)
Copies of all reports, minutes and other documentation of whatsoever nature
received in response to tender enquiries ZNT 2482W and dealt with by the Tender
Evaluation Committee;
(h)
A copy of the recommendation made by the Tender Evaluation Committee to
the Tender Award Committee in terms of the provisions of section 29(2)(3) of the said
Act;
(i)
The name of the members of the Tender Award Committee which Committee
adjudicated the tenders received under tender enquiry ZNT 2482W as provided for in
section 29(a) of the said Act and awarded the contract in question;
(j)
In the event of any persons having been co-opted as advisors to either the
Tender Evaluation Committee or the Tender Award Committee or to both said
Committees in terms of Section 38 of the said Act, the name(s) of such advisor(s);
(k)
Whether the function to consider and award the tenders received under tender
enquiry ZNT 2482W was delegated to an official in the employ of your department as
provided for in section 39 of the said Act. In the event of such a delegation having
taken place, you are requested to provide a copy of the written delegation;
(l)
Copies of all reports, minutes and other documentation of whatsoever nature
received by the Tender Award Committee under or in the process of adjudicating
tender enquiry ZNT 2482W;
(m)
Copies of the minutes of the deliberations of the Tender Award Committee;
(n)
A detailed exposition of the points awarded to each of the tenderers in
accordance with the provisions of the said Act.’
[6] The first, second, fourth and fifth respondents (‘the institutional
respondents’), through the Head of the Department of Works: Province of
KwaZulu Natal (‘HOD’), responded to the request by furnishing the
appellant’s attorneys with an ‘adjudication report’, together with what the
HOD considered to be the ‘the relevant portions of the minutes of the
Tender Evaluation Committee and the Tender Award Committee’. The
reasons furnished to the appellant were considered by the HOD to
provide an answer to the request contained in paras (g), (h), (l), (m) and
(n) above. As to the request in para (b), the HOD said all tenders were
received and opened on the date of the closing of tenders. As to paras (d),
(e) and (i), the response was that the members of the Departmental
Committee which considered the tenders, as well as the chairpersons of
these committees were named in the relevant minutes. As to para (j), the
HOD replied that the tenders were considered by the Departmental
Tender Evaluation Committee and the Tender Award Committee. The
HOD went on to say that the successful tenderer was approved by the
Procurement Committee. The HOD refused to furnish any information on
the details of the tenders ‘as it is considered to be confidential
information belonging to each tenderer.’
[7] The appellant launched an application in the court a quo seeking an
order directing the respondent to furnish it with written reasons for the
decision of the Procurement Committee and the information listed in
paragraph 5 above. As already indicated, the application was
unsuccessful in the court a quo – hence this appeal. The appellant is no
longer persisting in its request for reasons but is pressing on with its
claim for access to the documentation referred to and the respondents
persist in their refusal to furnish it.
[8] It was argued before us that the appellant, as unsuccessful tenderer,
had a right of appeal against the decision of the Procurement Committee
(s 20(1) of the Procurement Act set out above). Until the information
requested is furnished it is impossible, contends the appellant, for it to
formulate and prosecute an appeal pursuant to the Procurement Act.
Counsel submitted that a tender process and all the proceedings
associated with it have to be fair. Indeed the stated purpose of the
Procurement Act as it appears in the long title is to give effect to s 217 of
the Constitution and to provide for matters connected therewith. Section
217 guarantees fair, equitable, transparent, competitive and cost-effective
procurement processes. In addition, the decision awarding or refusing a
tender constitutes administrative action and therefore engages the right to
just administrative action. This requires that in considering a tender, the
decision-maker must conduct itself in a procedurally fair manner. In the
present matter, the conduct of the second respondent, the Chairperson of
the Procurement Committee, is of course not under scrutiny. The
appellant is still attempting to get to that enquiry. The appellant contends,
however, that a fair hearing before the Appeals Tribunal will be
impossible unless it is furnished with the documents it requires. It thus
argues that the only way to achieve a fair hearing is for the appellant to be
provided with the required documentation: otherwise the right of appeal
is rendered nugatory.
[9] The appeal procedure, as already indicated, is provided for in s 20
of the Procurement Act. Under this section the appellant is entitled to
reasons for the decision (subsection (2)(b)) and the Procurement
Committee is obliged to furnish reasons to the unsuccessful tenderer
(subsection (2)(c)). But s 20 says nothing about any entitlement to receive
documentation for the purposes of noting an appeal or that the
Procurement Committee or any other relevant body must act fairly
towards the unsuccessful tenderer. Counsel for the third appellant,
Infrotrunk (Pty) Ltd, asserted during argument that there was thus no
obligation on the part of the Procurement Committee to act fairly. The
argument is misplaced. First, it ignores the fact that the Procurement Act
has as its object the giving of effect to s 217 of the Constitution, to which
I have already referred. Second, fairness is inherent in the tender
procedure. Its very essence is to ensure that before Government, National
or Provincial, purchases goods or services, or enters into contracts for the
procurement thereof, a proper evaluation is done of what is available and
at what price, so as to ensure cost-effectiveness and competitiveness.
Fairness, transparency and the other facts mentioned in s 217 permeate
the procedure for awarding or refusing tenders. (See Logbro Properties
CC v Bedderson NO;1 Metro Projects CC v Klerksdorp Local
Municipality;2 Steenkamp NO v Provincial Tender Board, Eastern
Cape.3)
1 2003 (2) SA 460 (SCA).
2 2004 (1) SA 16 (SCA) paras 11 and 12.
3 2007 (3) SA 121 (CC) paras 20 and 21.
[10] Although there is no specific mention of fairness in the section, it
therefore stands to reason that the requirement has to be read in. The right
of appeal afforded by the Procurement Act is partly to give effect to the
requirement of procedural fairness.
[11] It is significant also that the appeal provided for in s 20 is in
substance a review. This is demonstrated by s 21 of the Act which sets
out the grounds of appeal. These are that interference by the Appeals
Tribunal may occur only where the Procurement Committee, a Tender
Award Committee or a member of any such committee:
‘(a)
committed misconduct in relation to their duties as members;
(b)
committed a gross irregularity;
(c)
exceeded its or their power;
(d)
awarded a tender in an improper manner; or
(e)
awarded a tender inconsistent with the objectives of this Act.’
An Appeals Tribunal cannot determine whether any of these grounds has
been established without reference to the documents that were before the
relevant committee, the record of the relevant meetings and the reasons
for the decision. In this matter the Tribunal would need sufficient
information in order to determine (inter alia) whether the third
respondent was capable of undertaking the work. This follows from the
very nature of the process and the grounds for interference. There is little
purpose served if the unsuccessful tenderer does not know what case it
must meet.4 This is a basic tenet of fairness, which in turn is a
fundamental requirement of administrative action.
[12] The appellant argues that the fairness contemplated in the tender
procedure means that it should have been given sufficient information, by
4 Naude v Fraser 1998 (4) SA 539 (SCA) at 563F-G.
way of disclosure of documents, to enable it to know what material was
before the Tender Evaluation Committee when it concluded that the third
respondent was capable of undertaking the work, why the appellant was
unsuccessful and its reasons for coming to these conclusions. This, argues
the appellant, flows from the nature of the process and enquiry rather than
from any specific provision of the Procurement Act. The appellant argues
that it should have been ‘put in possession of such information as will
render [its] right to make representations a real and not an illusory one.’
(See Heatherdale Farms (Pty) Ltd v Deputy Minister of Agriculture.5)
[13] The argument advanced by the institutional respondents that the
appellant should have followed the procedure set out in the Promotion of
Access to Information Act 2 of 2000 (‘PAIA’) cannot be upheld. One has
only to look at the disparity between the time frames prescribed for the
request for information under the Procurement Act (s 20) and those laid
down for access to information under PAIA (s74─77) to conclude that
the latter Act is irrelevant to the appellant’s claim. Although the argument
based on PAIA was not abandoned, it is not one that counsel for the
institutional respondents pursued with any degree of conviction. What
counsel persisted in vigorously was that the institutional respondents
could not furnish the documentation because it was confidential. The
appellant, continued the argument, thus failed to prove its entitlement to
the documents in question.
[14] The appellant contended that the respondents had not made out a
case for reliance on confidentiality: if there was any apprehension on the
part of the respondent regarding any specific document, that concern
could be met by making an order similar to the one granted by
5 1980 (3) SA 476 (T) at 486F-G.
Schwartzman J in ABBM Printing & Publishing (Pty) Ltd v Transnet
Ltd,6 where the parts of the documents in respect of which disclosure
might result in breach of confidence were to be identified and marked as
confidential and the applicant’s attorney was prohibited from disclosing
such parts to any other party, including the applicant, save for the purpose
of consulting with counsel or an independent expert. In that way a fair
balance could be achieved between the appellant’s right of access to
documentation necessary for prosecuting its appeal, on the one hand, and
the third respondent’s right to confidentiality, on the other.
[15] It is true that the appeal provisions embodied in s 20 of the
Procurement Act are very terse. But they do not, in my view, prevent a
conclusion that the Appeals Tribunal must have before it the same
information that was before the Procurement Committee in order to
provide a fair hearing to the aggrieved party, in this case the appellant. By
the same token the appellant, too, must have at least that information to
enable it to formulate its grounds of appeal. It is clear that s 20 of the
Procurement Act, read with s 217 of the Constitution, contemplates a fair
system which envisages that, from the time of the award, the appellant
has the right of access to information necessary to formulate its appeal
properly. The argument by counsel for the third respondent that fairness
is not inherent in the appeal procedure provided for in s 20 would, if
adopted, lead to absurd or even unconstitutional results, by denying the
appellant access to information, a right to which is entrenched in s 32 of
the Constitution. The argument also ignores the grounds of appeal which
by their very nature embody the requirement of fairness.
6 1998 (2) SA 109 (W) at 122I – J to 123A-B.
[16] I turn to the question of costs. Counsel for the institutional
respondents argued that his clients should not be ordered to pay costs as
they had engaged in litigation simply in order to assist the court. The
respondents, so goes the argument, were caught between the competing
interests of the appellant, on the one hand, and those of the third
respondent, on the other. This argument is in my view untenable as the
institutional respondents effectively did oppose the application for access
to documents. The deponent for these respondents, Dr Kwazi Brian
Mbanjwa, even asked for the appellant’s application to be dismissed with
costs. The same approach was adopted in the heads. In its turn the third
respondent seeks to avoid costs by contending that it came on appeal to
argue a constitutional point and should for that reason not be mulcted in
costs. In my view this argument is also flawed. We are concerned here
with the interpretation and application of the Procurement Act –
legislation passed to give effect to the right of access to information under
the Constitution. We are not directly concerned with the interpretation
and application of the provisions of the Constitution. I see no valid reason
why costs should not follow the event.
[17] In the result the appeal is upheld. The respondents are ordered
jointly and severally to pay the appellant’s costs of appeal, including
those of the application for leave to appeal and the costs of two counsel
where so employed, the one paying the other to be absolved. The order of
the court a quo is set aside and replaced with the following:
‘1.
The first, second, fourth and fifth respondents are ordered to
furnish the applicant with the following documentation within
fourteen days of this order:
(i)
The minutes of the Central Procurement Committee meeting
at which contract ZNT 2482W was awarded;
(ii)
The complete set of tender documents submitted by the
Third Respondent and in particular;
(a)
the Tender Form “Main Contract”;
(b)
the application for preference points claim form
(ZNT30, pages 1 – 12);
(c)
the document entitled “additional particulars of the
tenderer” at pages 1 – IV;
(d)
the tax clearance certificate submitted by Third
Respondent;
(e)
the authority to sign the tender;
(f)
the declaration of interest;
(g)
the site inspection certificate relating to Third
Respondent;
(h)
the “Addendum A” form which contains the list of
proposed specialist sub-contractors;
(i)
the whole of part 6, together with product pamphlets
submitted by the Third Respondent;
(j)
the whole of part 7;
(k)
a detailed exposition of the points awarded to each of
the tenderers in accordance with the provisions of the
KwaZulu-Natal Procurement Act (No. 3 of 2001).
(iii) Letters and/or reports, if any, submitted by consultants GA
du Toit (Pty) Ltd in connection with the various tenders;
(iv)
The further documentation which was before the Central
Procurement Committee when it made its decision with
regard to the aforesaid tender and which has not been
included in the above.
2.
The respondents are ordered to pay the costs of this application
jointly and severally, the one paying the other to be absolved;
3.1
On the copy of each document referred to in para 1 above, the
respondents shall mark or record that part of the document which it
considers to be confidential.
3.2
Save for purposes of consulting with counsel or an independent
expert, the applicant’s attorney shall not disclose to any other
party, including the applicant, any part of a document in respect of
which the respondents claim confidentiality.
3.3
Should the applicant dispute any claim to confidentiality and
should the parties be unable to resolve such dispute, the applicant
shall on notice to the respondents and any person having an interest
therein, have the right to apply to a judge of the Pietermaritzburg
High Court in chambers for a ruling on the issue.
3.4
Should circumstances require, either party shall have the right to
apply to a judge of the Pietermaritzburg High Court in chambers
for an amendment to paras 3.1, 3.2 and 3.3 of this order.’
_____________________
KK MTHIYANE
JUDGE OF APPEAL
CONCUR:
HOWIE P
LEWIS JA
HEHER JA
VAN HEERDEN 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:
28 September 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
TETRA MOBILE RADIO v MEC, DEPARTMENT OF WORKS
[2007] SCA 128 (RSA).
[1] The SCA today upheld an appeal by Tetra Mobile Radio against
the decision of the Pietermaritzburg High Court. The High Court had
dismissed Tetra Mobile’s application for an order directing the MEC of
the Department of Works of the Province of KwaZulu Natal and other
tender bodies to make available to it certain documentation required for
purposes of noting an appeal to the Appeals Tribunal against the decision
of a Central Procurement Committee.
[2] Tetra Mobile had been an unsuccessful tenderer for the award of a
contract for the maintenance of repeater networks in KwaZulu Natal. The
tender had been awarded to another company, Infotrunk (Pty) Limited.
The request for documentation was refused by the MEC of the
Department of Works and other tender bodies on the basis that the
documents were confidential. The SCA held that fairness dictated that the
documents that were before the Central Procurement Committee be made
available to Tetra Mobile, so as to enable it to prosecute a fair hearing
before the Appeals Tribunal. The order made in the High Court was
accordingly set aside and replaced with an order directing that the
required documents be made available to Tetra Mobile. To meet the
concern raised by the respondents in relation to confidentiality, the SCA
ordered that, where confidentiality is claimed the document concerned
should be marked and identified, and the reason given as to why non-
disclosure is claimed in respect thereof.
|
2554
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 210/2014
In the matter between:
PAUL ANTHONY KALIL NO
FIRST APPELLANT
WILHELMINA CECILIA KALIL NO SECOND APPELLANT
STEPHANUS ABRAHAM CLOETE
BEZUIDENHOUT NO
THIRD APPELLANT
BROLL PROPERTY GROUP (PTY) LTD
FOURTH APPELLANT
and
MANGAUNG METROPOLITAN
MUNICIPALITY FIRST RESPONDENT
MEMBER OF THE EXECUTIVE COUNCIL
FOR LOCAL GOVERNMENT FOR THE
FREE STATE PROVINCE
SECOND RESPONDENT
EXECUTIVE MAYOR OF THE CITY OF
MANGAUNG METROPOLITAN
MUNICIPALITY
THIRD RESPONDENT
THE MUNICIPAL MANAGER OF THE CITY
OF MANGAUNG METROPOLITAN
MUNICIPALITY
FOURTH RESPONDENT
Neutral citation: Kalil v Mangaung Metropolitan Municipality (210/2014)
[2014] ZASCA 90 (4 June 2014)
Coram:
Mpati P, Brand, Bosielo, Leach and Wallis JJA
Heard:
4 June 2014
Delivered:
4 June 2014
Summary: Municipal rates - public participation in budget process -
whether proper notice of rates increase given - municipality empowered to levy
higher rates on business properties than on residential properties - duties of
municipal officials in public interest litigation.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Free State Division, Bloemfontein (Mhlambi AJ sitting as
court of first instance):
(a)
The order of the court below as to costs is set aside and replaced with the
following:
‘The first respondent is ordered to pay the applicant’s costs.’
(b)
Subject to (a) the appeal is dismissed with no order as to costs.
________________________________________________________________
REASONS FOR JUDGMENT
________________________________________________________________
Leach JA (Mpati P, Brand, Bosielo and Wallis JJA concurring)
[1] This appeal relates to a resolution taken by the first respondent, the
Mangaung Metropolitan Municipality (the Municipality) at a council meeting on
30 May 2013 in which it approved municipal rates for the budget year of
2013/2014. Shortly before that meeting was scheduled to be held the appellants,
who are or represent municipal ratepayers, launched urgent motion proceedings
in the high court seeking an order prohibiting the Municipality from adopting
the resolution, as well as certain declaratory relief. In addition to the
Municipality, its executive mayor, municipal manager and the MEC for local
government were cited as respondents but the latter played no part in the
proceedings and abided the decision of the court.
[2] The application came before Mhlambi AJ who, on 29 May 2013, dismissed
it with costs. Leave to appeal to this court was subsequently granted by Naidoo J
on 20 March 2014. The appeal was heard as a matter of urgency on 4 June 2014
as the municipal budget of 2014/2015 was due to be considered by the
Municipality a few days later. After hearing argument we issued an order in
which, save for altering the order as to costs of the court below, the appeal was
dismissed for truncated reasons. In doing so we indicated that our full reasons
would follow in due course. These are those reasons.
[3] The resolution that the appellants sought to prohibit the Municipality from
adopting on 30 May 2013 (but which was in fact passed after the application
was dismissed in the court below) involved the approval of an increased rate to
be applied on commercial properties in the municipal area. Both in this court as
well as in the court below, the Municipality relied upon the Constitutional
Court’s warning that courts are to be conscious of the ‘vital limits on judicial
authority and the Constitution’s design to leave certain matters to other branches
of government’ and should not interfere ‘in the processes of other branches of
government unless to do so is mandated by the Constitution’.1 I accept that
principle unhesitatingly, but it is now axiomatic that the exercise of all public
power must comply with the Constitution and the doctrine of legality.2 And
where those in government, whether national, provincial or municipal, act
beyond the constraints of the law a court should not hesitate to declare their
actions illegal, thereby controlling and regulating public power.3 As the decision
the appellants sought to impugn was not administrative in nature4 it could not be
assailed on the grounds of non-compliance with the Promotion of
Administrative Justice Act 3 of 2000. Consequently, in seeking relief, they
1 See Glenister v President of the Republic of South Africa &others 2009 (1) SA 287 (CC) para 34 and the
authority there cited.
2 Per Ngcobo CJ in Albutt v Centre for the Study of Violence and Reconciliation & others 2010 (3) SA 293 (CC)
para 49. See further Gauteng Gambling Board & another v MEC for Economic Development, Gauteng 2013 (5)
SA 24 (SCA) para 1.
3 See eg Affordable Medicines Trust & others v Minister of Health & others 2006 (3) SA 247 (CC) paras 48 and
49.
4 Fedsure Life Assurance Ltd & others v Greater Johannesburg Transitional Metropolitan Council &
others1999 (1) SA 374 (CC) para 45 .
relied solely upon the legality principle. The matter thus turned on whether the
Municipality’s 2013/14 budget could lawfully be adopted.
[4] The appellants raised a three-pronged argument in contending that the
adoption of the budget would be unlawful. First, they contended that since the
levying of property rates was an integral part of the budget process in terms of
the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act),
the Local Government: Municipal Finance Management Act 56 of 2003 (the
Finance Act) and the Local Government: Municipal Systems Act 32 of 2000
(the Systems Act), the decision to increase the rates on business properties
required community participation which had not occurred. Second, they argued
that the ratio between the proposed rate for commercial properties and that on
residential properties exceeded the permissible ratio prescribed under s
19(1)(b) of the Rates Act as read with the regulations promulgated thereunder.
The third and final thrust of the appellant’s case was that the implementation of
the proposed rates would materially and unreasonably prejudice national
economic policies, economic activities across municipal boundaries, or the
national mobility of goods, services, capital or labour, contrary to s 229 of the
Constitution.
[5] The allegations relevant to this third contention were fleetingly made, and
the appellant did not persist in its argument on this issue, either in the court
below or in this court. Consequently, no more need be said about it and I turn to
consider the first two issues, upon which the appellants continued to rely.
[6] Sections 152(1)(b) and (2) of the Constitution oblige municipalities to
provide services to their communities in a sustainable manner. In order to do
so, a municipality is empowered by s 229 of the Constitution to raise funds by
imposing rates on property in a process regulated by national legislation – the
applicable legislation being the Systems Act, the Finance Act and the Rates Act.
The preamble to the latter records that local government should have a
‘sufficient and buoyant source of revenue necessary to fulfil its development
responsibilities’ and that income ‘from property rates is a critical source of
revenue for municipalities to achieve their constitutional objectives’.
[7] In South African Property Owners Association v Johannesburg
Metropolitan Municipality5 (a decision now commonly known as SAPOA) this
court held that the process of levying rates was an integral part of a
municipality’s budget process. The statutory matrix applicable to the
assessment of rates and the approval of a municipality’s budget was
exhaustively set out and analysed in SAPOA and it would be superfluous to
repeat that exercise here.6 Suffice it to mention for present purposes that
s 16(1)(a)(iv) of the Rates Act requires a municipality to ‘encourage, and create
conditions for, the local community to participate in . . . the preparation of its
budget’ and that, when the annual municipal budget is tabled, the municipal
council is obliged under s 23(1) of the Finance Act to consider the views of the
local community. In order to facilitate that process, chapter 4 of the Systems Act
provides in detail for community participation and the necessity for the
community to be effectively informed of all matters requiring its participation.
Inter alia, s 21A(1) of the Systems Act requires all documents which must be
‘made public’ by a municipality to be conveyed to the local community:
‘(a) by displaying the documents at the municipality's head and satellite offices and libraries;
(b) by displaying the documents on the municipality's official website, if the municipality
has a website . . .; and
(c) by notifying the local community . . . of the place, including the website address, where
detailed particulars concerning the documents can be obtained.’
5 South African Property Owners Association v Johannesburg Metropolitan Municipality and others 2013 (1)
SA 420 (SCA).
6 A summary of the statutory requirements is set out in SAPOA para 15.
[8] Section 17(3) of the Finance Act details numerous documents that are to
accompany an annual budget when it is tabled,7 including draft resolutions
approving the budget and imposing any municipal tax, and a projection of cash
flow by revenue source. Under s 22 of the Finance Act, after the annual budget
is tabled in a municipal council the accounting officer must ‘make public’ the
budget and the documents referred to in s 17(3) which must therefore be
conveyed to the local community in the manner required by s 21A of the
Systems Act.
[9] Whether the Municipality complied with its statutory obligations in regard
to publication and community participation before adopting its budget was a
matter of dispute in the court below. As held by this court in Democratic
Alliance v Ethekwini Minicipality,8 whether a municipality has satisfied the
requirement of public participation is an issue to be determined by the yardstick
of reasonableness in the given circumstances of each particular case. I turn thus
to the relevant facts.
[10] The appellants’ founding affidavit was deposed to by the second
appellant, Mr Paul Kalil, a trustee of a trust which owns a number of immovable
properties within the municipal area. The material facts upon which he relied
are, unfortunately, somewhat tersely set out, probably as a result of the urgent
situation in which the appellants’ papers were prepared. In any event, he alleged
that at some stage municipal officials were asked to provide the formula which
the Municipality intended to use to calculate rates in the 2013/2014 budget.
Who these persons were and when, in what manner and terms they were
requested to provide the information the appellants sought, does not appear from
the record. Be that as it may, Mr Kalil alleged that although it was mentioned
that the ratio of residential to commercial properties for purposes of rates would
be 1:3.8 (ie that the rates payable on a commercial property would be 3.8 times
7 Under s 16(3) of the Finance Act the budget is to be tabled at least ninety days before the start of the budget
year.
8 Democratic Alliance v Ethekwini Minicipality 2012 (2) SA 151 (SCA) para 24.
more than a residential property of the same value) no reliable information was
forthcoming and led to the appellants seeking an urgent meeting with the mayor.
According to Mr Kalil, it took a month, until 23 May 2013, before the appellants
were able to meet with the executive mayor, municipal manager and other
officials of the Municipality. He further alleged that the appellants’ concern
regarding the formula to be applied to calculate the rates on commercial
property was discussed at this meeting, and the proposal that the ratio be
increased to 1:3.8 was confirmed. At the request of the mayor and his officials,
the appellants placed their submissions in regard to the proposed increase in
rates in writing, their letter having been delivered to the Municipality on 27 May
2013.
[11] The legality of the Municipality's conduct was impugned not upon a
failure to take note of the appellant’s representations but, pertinently, upon its
alleged failure to properly publish the proposed budget and related documents to
the local community. In this regard it was alleged that the appellants ‘could not
find any publication in the media, printed and broadcast, informing the public of
the formula to be applied for commercial properties’. All they chanced upon
were articles published in ‘Ons Stad’ and ‘Die Rosestad’ on 23 May 2013,
mentioning that a decision was due to be taken on the budget a week later. In
response, the respondents relied upon the publication of a notice on 13 February
2013 in a newspaper entitled ‘Courant’, calling for public comment in relation
to a new set of policies and bylaws regarding, inter-alia, the Municipality's
property rates policy as well as notices in two other newspapers in regard to a
‘Budget Conference’ to be held at the Bloemfontein City Hall on 17 May 2013.
None of these notices contained any reference to the proposed budget.
[12] The court below held that the Municipality had complied with its statutory
obligations by publishing these notices. The simple answer to this is, of course,
that the proposed budget and related documents envisaged by s 17(3) of the
Finance Act were not published for comment by way of these notices and the
requirements in that regard were thus not met. This does not mean that the
adoption of the budget resolution is necessarily to be vitiated. In African
Christian Democratic Party v Electoral Commission and Others9 the
Constitutional Court, in the context of municipal electoral legislation, held that a
narrow textual and legalistic approach should be avoided.10 Applying this rule in
the later case of Liebenberg NO v Bergrivier Municipality,11 that court
concluded that the enquiry should be as to ‘whether the steps taken by the local
authority are effective when measured against the object of the legislature,
which is ascertained from the language, scope and purpose of the enactment as a
whole and the statutory requirement in particular’.
[13] However, leading counsel for the respondents, Mr Moerane SC, correctly
conceded that on the allegations contained in the papers he could not argue that
there had been an effective consultation with the local community – although, as
he pointed out, given the skimpy answers of the respondents, it may well be that
as a matter of fact further relevant information in regard to the issue was for
some reason not disclosed. That may well be so, but it would be idle to
speculate thereon. On the papers as they stand, the court below erred in reaching
the conclusion it did on this issue, as Mr Moerane further correctly conceded. It
ought instead to have found that there had not been proper public participation
in the Municipality's budgeting process, and granted appropriate relief.
[14] Of course that does not necessarily mean that this court, a year later,
should set aside the budget resolution of 30 May 2013.12 A great deal of water
has flowed under the bridge and the Municipality is now considering its next
annual budget. Counsel for the appellants correctly conceded that at this stage
he could not ask for the budget to be set aside solely by reason of the lack of
proper public participation, and that the outcome of the appeal, in truth, hinged
9 African Christian Democratic Party v Electoral Commission and Others 2006 (3) SA 305 (CC).
10 Para 25.
11 Liebenberg NO v Bergrivier Municipality 2013 (5) SA 246 (CC) para 25
12 See SAPOA paras 69-75.
upon a decision on the appellants’ principal point, namely, that the
determination of a rates ratio of 1:3.8 between residential and commercial
properties offended the principle of legality.
[15] As set out specifically in its founding papers, the appellants’ case on this
latter issue was based squarely on the conclusion of Southwood AJA in
SAPOA13 that s 19(1)(b) of the Rates Act, as read with the regulations
promulgated pursuant to s 19(2), prohibits the imposition of a rate on any
category of non-residential property higher than the rate levied on residential
property. The learned judge accordingly held that levying a rate on business
properties that is 3.5 times the rate on residential properties would be unlawful.
Relying upon this, and the allegation that the rate levied by the Municipality in
respect of business properties in the present matter was 3.8 times the rate to be
levied in respect of residential properties, the appellants alleged that the
Municipality was prohibited from determining such a rate in the budget and that,
at most, no more than the same rate it intended to apply to residential properties
could legally be imposed on commercial properties.
[16] The court a quo evaded the issue, finding there to be no factual basis for
the allegation that the proposed ratio of residential to business properties was
1:3.8. The simple answer to this is that the allegation in the founding papers that
this was the proposed ratio was not disputed by the respondents’ in their
answering papers. Accordingly, far from there being no factual basis laid for the
allegation, the proposed ratio was common cause (indeed, as pointed out by the
appellant before this court, the actual rate between residential and business
properties approved by the first respondent on 30 May 2013 and published in
the Provincial Gazette on 25 October 2013 under s 14(2) of the Rates Act
resulted in a higher ratio of 1:4.5).14 Consequently it becomes necessary to
13 See paras 52-57.
14 PG 60 25 October 2013, Title No. 2: Council Rates Resolution.
consider whether Southwood AJA was correct in his conclusion in respect of the
effect of s 19(1)(b) of the Rates Act and the regulations promulgated thereunder.
[17] But before doing so, it is necessary to make a few introductory comments
relevant to his conclusion. At the outset, it must be recorded that it formed no
part of the ratio decidendi of his judgment. Although the other members of this
court dissented in regard to the order that should issue, they were unanimous
that the municipality, in amending its budget to increase the rates, had failed to
comply with the statutory obligations relating to community consultation and
participation. They were also unanimous in their finding that the decision to
impose the increased rate on business properties had no rational basis. For these
two reasons it was held that the appellant was entitled to relief. In respect of the
appellants attack upon the impugned decision under s 19(1)(b) of the Rates Act,
however, Southwood AJA spoke alone and his views on the issue were not
endorsed by the majority (there was no comment on the issue in the majority
judgement, presumably because it was felt unnecessary). Thus not only was his
the sole voice on the issue but, as he himself said, it was not necessary to decide
whether the proposed increase in respect of business property rates was
prohibited by s 19(1)(b) to determine the appeal.15 In addition, appellant had
abandoned any reliance on the point which had therefore not been argued. In
these circumstances, the conclusion of the learned judge on the issue was obiter
dictum on an issue in respect of which he had not enjoyed the benefit of full
argument and which was not supported by any other members of the court. It
therefore is of limited persuasive value. And in any event, for the reasons that
follow, it was clearly wrong.
[18] Section 11(1)(a) of the Rates Act provides that a rate levied by a
municipality on property must be an amount in Rand on the market value of the
property. Section 19(1)(b) goes on to provide that a municipality may not levy a
rate on non-residential properties that exceeds a prescribed ratio to the rate on
15 Para 52.
residential properties (but not that a rate levied on non-residential properties
may not exceed that imposed on residential properties). On 27 March 2009 the
Minister for Provincial and Local Government promulgated regulations under
the Rates Act.16 Blessed with the so-called short title ‘the Municipal Property
Rates Regulations on the Rate Ratio between Residential and Non-Residential
Properties’, it was these regulations that were before the court in SAPOA. They
were subsequently amended on 12 March 2010 by the ‘Amended Municipal
Property Rates Regulations on the Rate Ratios between Residential and Non-
Residential Properties’.17 In this amended form, the regulations read as follows:
‘INTERPRETATION
Definitions
1. In these regulations, a word or expression to which a meaning has been assigned in the Act,
has that meaning, and unless the context indicates otherwise, -
“agricultural property” means property envisaged in section 8(2)(d)(i), (e) and (f)(i) of the
Act;
“public benefit organisation property” means property owned by public benefit
organisations and used for any specified public benefit activity listed in item 1 (welfare and
humanitarian), item 2 (health care), and item 4 (education and development) of part 1 of the
Ninth Schedule to the Income Tax Act.
REGULATIONS ON THE RATE RATIO BETWEEN THE RESIDENTIAL AND
NON-RESIDENTIAL CATEGORIES OF PROPERTY
Rates ratios to be applied
2. The rate on the categories of non-residential property listed in the first column of the table
below may not exceed the ratio to the rate on residential properties listed in the second
column of the table below, where,
(a)
the first number in the second column of the table represents the ratio to the rate on
residential properties;
(b)
the second number in the second column of the table represents the maximum ratio to
the rate on residential property that may be imposed on the non-residential properties
listed in the first column of the table:
16 GN R363 in GG 32061 of 27 March 2009.
17 GN R195 in GG 33016 of 12 March 2010.
Categories
Ratio in relation to
residential property
Residential property
1:1
Agricultural property
1:0.25
Public service infrastructure property
1:0.25
Public benefit organisation property
1:0.25
Commencement
3. The provisions of regulation 2, as far as they apply to –
(a)
Agricultural and public service infrastructure property are deemed to have taken
effect from 1 July 2009.
(b)
Public benefit organisation property takes effect on 1 July 2010.
Short title
4. These regulations shall be called the Amended Municipal Property Rates Regulations on
the Rate Ratios between Residential and Non-Residential Properties.’
The only material difference between these amended regulations and the
regulations in their original form is the addition to the table in regulation 2 of
the final category ‘Public benefit organisation property’ in the first column and
its ratio to residential property set out in the second column.
[19] These regulations are certainly clumsily and inelegantly drawn. It was the
listing of residential properties at the head of the first column above other non-
residential properties that Southwood AJA found created confusion. He
therefore reasoned:
‘This obviously should have been "non-residential properties", as that is how the properties in
that column are described. The maximum ratio of the rate on residential property to the rate
on non-residential property would therefore be 1:1 – the rates (the months in the rand) on the
two categories of property may be the same, but the rate on non-residential property must not
exceed the rate on residential property.’
[20] As a starting point in considering this approach, although it may of course
at times be necessary to correct an apparent error in the language used in a
statute or regulation in order to avoid an identified absurdity,18 courts should be
slow to alter the words actually used19 and must guard against ‘the temptation to
substitute what they regard as reasonable, sensible or businesslike for the words
actually used’,20 thereby legislating rather than interpreting. With due respect, it
is in this latter respect that I feel Southwood AJA erred.
[21] The first column in regulation 2 is headed ‘Categories’ and not
‘Categories of non-residential property’. And whilst, at the commencement of
regulation 2, mention is made of the rate on the categories of the non-residential
property ‘listed in the first column of the table below’ it does not follow that
only non-residential property will appear in that column. Had it been intended to
be a list solely of non-residential properties, it may have been absurd for
residential properties to have appeared in that column, particularly if the ratio
reflected in the second column had not been 1:1 but some other ratio. But that is
the ratio listed, and the ratio between residential properties and residential
properties is of course 1:1. The first entry relating to residential property can
easily be regarded as being no more than a superfluous illustration of the
operation of the ratio formula outlined immediately above the two columns.
[22] Moreover the words used must be interpreted in their context, both
statutory and historical. There is nothing in the Rates Act or its related
legislation that indicates that the maximum permitted rate on property would be
that imposed in respect of residential properties. Significantly, s 8(1) of the
Rates Act provides that a municipality may in terms of the criteria contained in
its rates policy levy different rates for different categories of property. These
may include categories determined according to the use of the property, the
permitted use thereof or the geographical area in which the property is situated.
Section 8(2) goes on to provide for a host of categories that may be so
18 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 25.
19 Summit Industrial Corporation v Claimants Against the Fund Comprising the Proceeds of the Sale of the MV
Jade Transporter 1987 (2) SA 583 (SCA) at 597A-B.
20 Natal Joint Municipal Pension Fund (supra) para 18.
determined, including residential properties, industrial properties and business
and commercial properties. This list is neither exhaustive nor prescriptive and it
is competent for a municipality to determine a category not mentioned in the
section.21 But despite all these detailed provisions, none point to the necessity to
apply the highest level of rates to residential property. And, as I have already
mentioned, s 19(1)(b) provides that a municipality may not levy a rate on non-
residential properties that exceeds a prescribed ratio to the rate on residential
properties; not that a rate on non-residential properties may not exceed that
imposed on residential properties.
[23] Importantly, as a general rule, higher rates have historically been levied
against commercial, industrial and business properties than those classified as
residential. This is evident from the appellants’ papers which include a
memorandum from ‘a well-known economist and financial expert in national
finance and economics’, Mr Dawie Roodt, who points out that the rates ratio
between residential and business properties was at the time 1:3.5 in the City of
Johannesburg, 1:2.267 in Ethekwini Municipality and 1:2 in the City of Cape
Town. This is also apparent from the websites of the major municipalities and
from the jurisprudence of this court. For example, in City of Johannesburg
Metropolitan Municipality v Chairman of the Valuation Appeal Board for the
City of Johannesburg & another,22 the debate centred upon whether a
municipality had been entitled to levy a higher rate imposed in respect of
business properties when most of the property was being used for residential
purposes which attracted a lower rate.
[24] The reason for imposing a higher rate on certain properties than on others
by reason of their uses is in many cases self-evident. Land used for agricultural
purposes has been rated lower than residential properties23 to encourage the
21 City of Tshwane v Marius Blom & GC Germishuizen Inc & another 2014 (1) SA 341 (SCA).
22 City of Johannesburg Metropolitan Municipality v Chairman of the Valuation Appeal Board for the City of
Johannesburg & another [2014] 2 All SA 363 (SCA).
23 See eg Mosowitz v Johannesburg City Council 1957 (4) SA 569 (T).
agricultural sector to produce for the benefit of the public good. On the other
hand, vacant or undeveloped land is generally rated substantially higher than
residential land in order to encourage landowners to develop their properties.
The use to which land is put is of cardinal importance in determining the rate to
be levied. Commercial, industrial and business properties are used to generate
income while residential properties provide a home and shelter to the domestic
ratepayer, many of whom are financially hard-pressed. In these circumstances it
is understandable that business, commercial and industrial properties historically
have been rated at a higher level than residential properties. As explained in
Municipal Law in the Province of the Cape of Good Hope South Africa:24
‘The motivation is that industry and commerce can absorb additional rating burdens by
passing them on in the prices of commodities and charges for services they provide ─ thus
spreading the load more evenly over all the citizens.’
[25] This motivation applies even more forcefully today in our constitutional
democracy in which the right to access to housing25 and the necessity to respond
to people’s needs26 are enshrined. Placing residential properties in the highest
rates category would tend to frustrate, rather than encourage, the ownership of
housing. In these circumstances, any intention to alter the well-established
position of commercial, industrial and business properties being rated at a
higher level than residential properties seems improbable. It is not without
significance that in SAPOA the view of the Department of Finance was that the
initial regulations had not prescribed a ratio between the rates on residential and
business properties (in other words, that a ratio had been prescribed only in
respect of the few categories of non-residential properties mentioned in the
regulation).27
24 Randell and Bax Municipal Law in the Province of the Cape of Good Hope South Africa 4th ed at 97.
25 Section 26 of the Constitution.
26 Section 95(1)(c) of the Constitution.
27 SAPOA para 3.
[26] It seems to me that this must be correct. There is no reason to read
‘residential property’ in the first column in regulation 2 as meaning ‘non-
residential property’. The regulation must be construed as providing solely for a
ratio in respect of residential property and the other categories of non-residential
property mentioned, namely, agricultural property, public service infrastructure
property, and public benefit organisation property. Consequently a ratio between
residential property and business or commercial property has not been
prescribed by the regulations, and the rates to be levied in respect of the latter
property is a matter to be determined by municipalities; subject, of course, to the
limitations imposed in Part 3 of the Rates Act – including s 16(1) which
provides that rates may not be levied that would materially and unreasonably
prejudice national economic policies, economic activities or the national
mobility of goods, services, capital and labour.
[27] Accordingly, in my respectful view, the conclusion of Southwood AJA in
SAPOA that s 19(1)(b) of the Rates Act, as read with the regulations, prohibited
the imposition of a rate on business or commercial properties higher than that
imposed on residential properties, was incorrect and the appellant’s reliance
thereon was misplaced. As a result, the rate which the Municipality sought to
impose in respect of business properties in its budget of 30 May 2013 has not
been shown to have offended the principle of legality.
[28] To sum up, the high court erred in not finding in favour of the appellants
in respect of the issue of public participation but was correct, albeit for the
wrong reasons, in not holding the proposed rate for business properties to be
unlawful. However, for the reasons already mentioned, it is by now too late for
any meaningful declaratory relief to be granted to the appellants.
[29] That brings me to the question of costs. As the appellants ought to have
achieved substantial success in the high court, the order of costs granted against
them cannot be allowed to stand. It is only to that limited extent that the order of
the high court needs to be altered, and the appeal must otherwise be dismissed.
That is of course relevant to the question of costs in this court. Also relevant is
the fact that the appellants have failed in their argument relating to the
unlawfulness of the rate to be imposed on business properties, which was their
principal concern in instigating this litigation.
[30] That having been said, the manner in which the Municipality approached
the appellants’ application militates against a costs order in its favour. This is
public interest litigation in the sense that it examines the lawfulness of the
exercise by public officials of the obligations imposed upon them by the
Constitution and national legislation. The function of public servants and
government officials at national, provincial and municipal levels is to serve the
public, and the community at large has the right to insist upon them acting
lawfully and within the bounds of their authority. Thus where, as here, the
legality of their actions is at stake, it is crucial for public servants to neither be
coy nor to play fast and loose with the truth. On the contrary, it is their duty to
take the court into their confidence and fully explain the facts so that an
informed decision can be taken in the interests of the public and good
governance. As this court stressed in Gauteng Gambling Board and another v
MEC for Economic Development, Gauteng,28 our present constitutional order
imposes a duty upon state officials not to frustrate the enforcement by courts of
constitutional rights.
[31] It is bitter to record that the Municipality’s officials who deposed to
affidavits in the present matter failed to comply with this duty. The first
respondent's answering affidavit was deposed to by Mr Willem Boshoff, the
acting city manager, who obstructively sought to deny the locus standi of certain
of the appellants, a point later abandoned. More importantly, he denied ‘as if
specifically traversed’ (whatever that might mean) the allegations made by Mr
28 Gauteng Gambling Board and another v MEC for Economic Development, Gauteng 2013 (5) SA 24 (SCA)
para 52.
Kalil in regard to the initial meeting with municipal officials when the
appellants were first informed of the proposed rates ratio for commercial
properties, without in any way advancing the factual basis relied on to support
that denial. If Mr Boshoff was unaware of the meeting, or if he felt he was
unable to meaningfully deal with Mr Kalil’s allegations as they were too vague,
he should have said so. The recent comments of this court in The Director-
General: The Department of Home Affairs and others v Dekoba29 are pertinent.
In that matter a chief control immigration officer who had no personal dealings
with or knowledge of the facts in a particular case made repeated denials
without advancing any facts justifying them. This was deprecated by this court
which said:
‘There was no appreciation on his part that a deponent, who denies the facts deposed to on
oath by witnesses for the other party, accuses those witnesses of lying and lying on oath is a
serious criminal offence. One expects greater care on the part of a senior government official
when deposing to an affidavit.’
[32] The unsatisfactory aspects of Mr Boshoff’s affidavit did not stop there. He
also denied the allegation that it had taken a month to arrange a meeting with the
mayor but, once again, he failed to advance the factual basis for his denial.
Instead he referred to the so-called ‘confirmatory affidavits’ of the mayor and
his personal assistant. They, in turn, each merely referred to Boshoff’s affidavit
and confirmed ‘its contents as true and correct in so far as it relates to me.’
Confirmatory affidavits at times may have their place but, by and large,
constitute a slothful means of placing evidence before a court which is entitled
to expect that the actual witnesses to an event depose to the facts. Be that as it
may, when no facts are alleged, either in a respondent’s answering affidavit or
in a supporting confirmatory affidavit, to substantiate a denial of the version
alleged by an applicant, the denial can be disregarded.
29 The Director-General: The Department of Home Affairs and others v Dekoba (224/2013) [2014] ZASCA 71
(28 May 2014) para 6.
[33] Then there is Mr Boshoff’s denial of the appellants’ version of the
meeting with the mayor when it was eventually held. He denied that the formula
to be applied to calculate the rates to be payable on commercial property was
discussed. In the light of the fact that the meeting had been requested for that
very purpose and that almost immediately thereafter the appellants addressed
the letter of 27 May 2013 to the Municipality concerning the issue of
commercial rates, this further unsubstantiated denial can be rejected as spurious.
[34] In short, the manner in which the Municipality presented its case in its
affidavits is to be deprecated, and fell far short of what was expected from an
organ of state, the legality of whose actions was in dispute. This is a meaningful
factor relevant to the exercise of discretion as to costs and, in the light thereof,
counsel for the respondents, again quite correctly, did not ask for a costs order
in their favour. In these circumstances, although the appeal had to fail, save for
the costs order in the high court, it is just for there to be no order in regard to the
costs of the appeal.
[35] For these reasons the following order was made:
(a)
The order of the court below as to costs is set aside and replaced with the
following:
‘The first respondent is ordered to pay the applicant’s costs.’
(b)
Subject to (a) the appeal is dismissed with no order as to costs.
L E Leach
Judge of Appeal
Appearances:
For the Appellant:
J Y Claasen SC
Instructed by:
Matsepes Inc, Bloemfontein
For the Respondent:
MTK Moerane SC (with him T L Manye)
Instructed by:
Attorneys for the First, Third and
Fourth Respondents:
Moroka Attorneys, Bloemfontein
For the Second Respondent:
The State Attorney, 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:
__ June 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.
Kalil v Mangaung Metropolitan Municipality
The Supreme Court of Appeal (SCA) today unanimously dismissed an appeal against a
judgment of the Free State High Court (Mhlambi AJ) in a dispute which arose between the
first respondent, the Mangaung Metropolitan Municipality (the Municipality) and the
appellants, who are municipal ratepayers in that area, regarding the legality of the
Municipality’s decision to increase the rates on business properties for the 2013/2014 budget
year.
The matter was brought on urgent application in the court below, on 29 May 2013.
The appellants sought to prohibit the municipal council from adopting a resolution at its
meeting scheduled for that purpose on 30 May 2013. The resolution involved the approval of
an increased rate to be applied on commercial properties in the municipal area. The
application having been dismissed in the court below, the offending resolution was
accordingly adopted as planned at the council meeting on 30 May 2013.
On appeal, as in the court below, the appellants argued that the proposed rates ratio of 1:3.8
between residential and commercial properties offended the principle of legality. This
challenge was built on a previous minority decision of the SCA in the case of South African
Property Owners Association v Johannesburg Metropolitan Municipality and others 2013 (1)
SA 420 (SCA), wherein it was determined obiter that s 19(1)(b) of the Municipal Property
Rates Act 6 of 2004, as read with its regulations, prohibit the imposition of a rate on any
category of non-residential property higher than the rate levied on residential property.
Furthermore, they argued that the Municipality had not complied with its statutory
obligations to publish notice and invite public comment in relation to the rates increases.
The SCA held that the Rates Act and its accompanying regulations cannot be read to limit
rates on non-residential properties to any specific ratio in relation to residential property. In
terms of the SCA’s reading, the rates to be levied in respect of business properties is a matter
left open to determination by municipalities subject only to certain limitations imposed in
Part 3 of the Rates Act – including s 16(1) which provides that rates may not be levied that
would materially and unreasonably prejudice national economic policies, economic activities
or the national mobility of goods, services, capital and labour.
The appellants’ case was upheld in part, however, on the basis that the Municipality had
indeed not complied with its statutory obligations to community participation. On this
ground, the court below ought to have granted the urgent order sought on 29 May 2013. This
being said, however, the SCA determined that the budget resolution of 30 May 2013 could
not be set aside for that reason at this late stage, despite its illegality. A great deal of water
has flowed under the bridge since its adoption and the Municipality is now considering its
next annual budget. Counsel for the appellants conceded that at this stage he could not ask for
the budget to be set aside solely by reason of the lack of proper public participation.
The SCA did, however, note its dissatisfaction with the Municipality’s conduct in this
litigation. It depreciated the manner in which the Municipality presented its case in its
affidavits. On this basis, the court determined it just for there to be no order in regard to the
costs of the appeal.
|
3993
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 41/2022
In the matter between:
KRÜGEL HEINSEN INCORPORATED APPELLANT
and
CATHERINE HELEN THOMPSON
FIRST RESPONDENT
COUPLES INVESTMENT CC
SECOND RESPONDENT
Neutral citation: Krügel Heinsen Incorporated v Thompson and Another
(Case no 41/2022) [2023] ZASCA 38 (31 March 2023)
Coram:
SALDULKER, VAN DER MERWE and
MABINDLA-BOQWANA JJA and NHLANGULELA and OLSEN
AJJA
Heard:
27 February 2023
Delivered: 31 March 2023
Summary: Appeal – reception of further evidence on appeal – evidence of
events post-dating judgment of court of first instance – may be received in
special and exceptional circumstances – new evidence demonstrates that no
damages suffered for alleged breach of mandate – evidence allowed and appeal
upheld.
ORDER
On appeal from: The Gauteng Division of the High Court, Pretoria (Mabuse J,
Khumalo J and Ceylon AJ concurring), sitting as court of appeal.
1.
The application to adduce further evidence on appeal is granted.
2.
The appeal is upheld with costs, including the costs of the
application to adduce further evidence on appeal.
3.
The order of the full court is set aside and replaced with the
following order.
‘The appeal is dismissed with costs.’
JUDGMENT
Olsen AJA (Saldulker, Van der Merwe and Mabindla-Boqwana JJA, and
Nhlangulela AJA concurring)
[1] This appeal has its origin in an agreement of compromise which went
wrong in its implementation. The parties to the compromise were:
(a)
Couples Investment CC (Couples), the second respondent, which was cited
together with Catherine Thompson, its sole member and the first respondent; and
(b)
FirstRand Bank Limited (FirstRand), which, for reasons which will
become apparent, is not a party to the present appeal, despite the fact that it was
the second respondent in the court of first instance.
The proceedings commenced with an application launched by Ms Thompson and
Couples in the Gauteng Division of the High Court, Pretoria (the high court). The
refusal of the application by the court of first instance was followed by a
successful appeal to the full court. Special leave to appeal having been granted
by this Court, Krügel Heinsen Incorporated (Krügel Heinsen), the first respondent
in the original application, appeals against the order of the full court.
[2] A summary of the circumstances which gave rise to the compromise, its
content, and an account of how it went awry, is a necessary precursor to an
understanding of the issues which must be decided in this appeal. I am unable to
discern from the papers why it is that Ms Thompson is a party in this litigation.
She chose to be an applicant, and no objection to that was raised by the
respondents. She is obviously the directing mind of Couples, but the rights in
issue in the case are those of Couples.
[3] Ms Thompson was a director of Industrial Lifting Instrumentation and
Pump Supplies (Pty) Ltd (ILIPS), a company which owed money to FirstRand,
as did Couples, which was also a customer of FirstRand. Couples had bound itself
as surety for ILIPS’s debt in favour of FirstRand, and had registered a mortgage
bond in favour of FirstRand over immovable property it owned, to secure its
obligations as surety.
[4] ILIPS could not pay its debts and was wound up finally by an order granted
in 2013. FirstRand then launched proceedings for the winding up of Couples,
asserting claims against Couples which included its obligations as surety for
ILIPS. These proceedings were opposed.
[5] In the meantime Couples found a buyer for its property. That is when
Krügel Heinsen, a firm of attorneys, entered the picture. It was appointed as
conveyancer for the transfer of the mortgaged property to the buyer.
[6] An agreement had to be struck between Couples and FirstRand as to the
terms upon which FirstRand would agree to the cancellation of its mortgage bond
over the property, so that it could be transferred to the buyer. FirstRand wanted
to be paid out the proceeds of the sale of the property. The amount FirstRand
would recover from or contribute to the winding up of ILIPS was a significant
factor in determining the extent of FirstRand’s claim against Couples in the
latter’s role as surety for ILIPS.
[7] Against that background FirstRand and Couples concluded the agreement
of compromise, the express terms of which were recorded in a letter dated 5
December 2014 written by the attorneys acting for FirstRand. They amounted to
this.
(a)
Against the registration of transfer of the mortgaged property FirstRand
would be paid R2 350 000.
(b)
A further amount of R500 000 would be retained out of the proceeds of the
sale, and invested in an interest-bearing trust account by Krügel Heinsen.
(c)
Once the liquidation and distribution account in the winding up of ILIPS
was confirmed, FirstRand’s attorneys would provide Krügel Heinsen with a copy
of the confirmed account and instruct it to pay over the amount of R500 000, or
any lesser amount found payable by FirstRand to the liquidators in terms of the
confirmed account.
(As FirstRand could not make any claim in excess of R500 000, it was implied
that the interest earned on the trust investment would be for the benefit of
Couples. It was equally clear that if less than R500 000 was required by
FirstRand, the balance left would be payable to Couples.)
[8] A little over two years later FirstRand’s attorneys sent a letter to Krügel
Heinsen, the material portion of which read as follows.
‘We enclose herewith a copy of the letter as received from our client enclosing the first and
final liquidation distribution and contribution account.
Our client must refund the estate with the amount of R518 624.29.
You are under these circumstances requested to call up the investment and pay over to our trust
account, the amount of R500 000.00.’
[9] This instruction given by FirstRand’s attorneys followed a letter sent by
FirstRand to its attorneys, which was in turn copied to Krügel Heinsen when the
instruction was given. However the letter from FirstRand made it clear enough
that the account in question had not been confirmed. FirstRand’s attorneys and
Krügel Heinsen overlooked the fact that it was a necessary condition for the
making of the demand that the account should have been confirmed. Acting in
error, in February 2017 Krügel Heinsen then paid R500 000 to FirstRand’s
attorneys, and the interest accrued on the investment to Couples.
[10] FirstRand’s attorneys disbursed the R500 000 in accordance with
FirstRand’s instructions. In a letter sent to FirstRand’s attorneys about six months
later, the attorneys acting for Couples asserted that FirstRand had appropriated
the money paid in error, and had thereby repudiated the agreement of compromise
recorded in the letter of 5 December 2014. The letter recorded that the alleged
repudiation was accepted, and the agreement of compromise cancelled.
[11] Ms Thompson and Couples then launched their application against Krügel
Heinsen and FirstRand. The first prayer in the amended notice of motion was for
orders declaring that both respondents had repudiated the agreement of 5
December 2014, that the applicants had lawfully cancelled that agreement, and
that they were entitled to payment of the amount of R500 000 in issue. They also
sought an order that Krügel Heinsen pay the amount in question ‘plus interest
thereon at the prescribed rate of interest from 11 January 2017 to date of
payment’.
[12] There followed a number of alternative orders largely arising from related
disputes between Couples and FirstRand. However the second alternative claim
was for an order that the amount of R500 000 be reinstated into trust ‘by [Krügel
Heinsen] alternatively [Krügel Heinsen and FirstRand] together with interest at
the prescribed rate from 11 January 2017 to date of payment’.
[13] The case Couples sought to make in its founding affidavit went along the
following lines.
(a)
It had given Krügel Heinsen a mandate to take R500 000 of the proceeds
of the sale of the property of Couples into trust, and to disburse the money in the
manner laid down by the terms of the agreement of compromise Couples had
reached with FirstRand.
(b)
Krügel Heinsen released the money on an instruction from FirstRand’s
attorneys, acceded to by Krügel Heinsen despite the fact that the liquidation and
distribution account of ILIPS had not been confirmed.
(c)
Whilst Couples could concede that the conduct of Krügel Heinsen, and that
of FirstRand, up to this point was a product of error, the subsequent conduct of
FirstRand in appropriating the money constituted a repudiation of the agreement
of compromise which Couples had accepted.
(d)
Given that the agreement of compromise was cancelled, Couples was
entitled unconditionally to repayment of the sum of R500 000.
[14] The claim to an order declaring that Krügel Heinsen had repudiated the
agreement of compromise was doomed to fail from the outset. Krügel Heinsen
was not party to the agreement of compromise. In the circumstances, according
to the judgment of the full court, what was argued before it was that Krügel
Heinsen had breached a duty owed to Couples as its client, and was obliged to
compensate Couples for the loss consequently suffered. This argument depended
for success, inter alia on a finding that FirstRand had repudiated the agreement of
compromise; because if it had not, the agreement would not have been lawfully
cancelled, and all Couples could ask for was that the money be restored to its trust
status and continue to stand as security, as contemplated by the agreement of
compromise. It is clear from the papers that Couples did not want that; it wanted
unfettered access to the money. On its papers in the matter, Couples could only
succeed against Krügel Heinsen on the basis that it had suffered damages as a
result of breach by the latter of its mandate.
[15] In its answering papers Krügel Heinsen, besides making the not unnatural
protest that it no longer held the R500 000 in trust, and was therefore in no
position to disburse that sum again, advanced the case that it had been obliged in
terms of the conditions upon which it received the money into trust to obey the
instructions of FirstRand’s attorneys as to the disposal the money. Counsel for
Krügel Heinsen did not persist in that contention before us, and accepted that an
error had been made.
[16] In their answer FirstRand and its attorneys accepted that the instructions to
call for payment of the R500 000, as well as to the disposal thereof, had been
given in error. It had therefore arranged for the money to be paid to its attorneys
and lodged in an interest-bearing trust account for the benefit of Couples on the
same terms as the money had earlier been lodged in an interest-bearing trust
account by Krügel Heinsen. FirstRand thus denied that it had repudiated the
agreement.
[17] In the high court the application was dismissed with costs. There is no need
to comment on the reasons for that decision beyond observing that the court found
that there was a dispute of fact concerning the question as to whether FirstRand
had repudiated the agreement.
[18] Couples obtained leave to appeal to the full court. Before the appeal was
argued Couples delivered a notice withdrawing the appeal against the judgment
in favour of FirstRand, recording that this had been done ‘as the matter has
become settled, each party to pay its own costs’. I will revert shortly to how the
withdrawal of the appeal against FirstRand was dealt with before the full court,
and how matters with regard to that issue unfolded in this Court.
[19] The full court granted judgment against Krügel Heinsen for payment of the
sum R500 000 to Couples, together with interest thereon at the prescribed rate
from 11 January 2017. Other issues aside, that order could not be made without
first concluding that had it been established that FirstRand had repudiated the
agreement of compromise.
[20] The legal principles applicable to an enquiry into whether a contract has
been repudiated were set out by this Court in Datacolor International (Pty) Ltd v
Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA); [2001] 1 All SA 581 paras 16 to
20. The prominent elements of the principles set out in Datacolor were confirmed
in University of Johannesburg v Auckland Park Theological Seminary and
Another [2021] ZACC 13; 2021 (6) SA 1 (CC);2021(8) BCLR 807 (CC) paras
104 and 105. The test is an objective one: would a reasonable person in the
position of the innocent party conclude from the conduct of the other party that
the latter’s performance would not be rendered? It must be assumed that a
reasonable person would give the matter careful consideration, taking into
account background material and circumstances. Conduct from which
repudiation may be inferred must be ‘clearcut and unequivocal, ie not equally
consistent with any other feasible hypothesis’ (Datacolor, para 18, where the
court observed further that repudiation is a serious matter requiring anxious
consideration, and not lightly to be presumed).
[21] In this case the full court made no attempt at assessing FirstRand’s conduct
against the principles set out in Datacolor. The entire enquiry was dealt with in
single a paragraph of the judgment. Having recorded, correctly, that the release
of the money had been erroneously requested and erroneously granted, the
judgment proceeded as follows:
‘The bank then clearly decided to snatch at the bargain and unlawfully appropriate the amount
contrary to the agreement by effecting payment into that account. This constitutes a repudiation
or at least a breach of the agreement of 5 December 2014. The appellants accepted the
repudiation and therefore the agreement was lawfully cancelled on 1 September 2017. In the
result, Couples is not liable for the bank’s possible contribution obligation to the liquidators of
ILIPS and the bank is not entitled to any form of substituted security. Despite the recent
correspondence the bank and [Krügel Heinsen] have failed to rectify the breach of agreement
and to do justice.’
[22] Of course the position remained that when it realised its error, and the
reaction of Couples to it, FirstRand had paid the money into trust to be held on
the same terms as contemplated by the original agreement of compromise.
Indeed, before FirstRand’s answering papers were delivered, the attorney who
personally handled the matter for FirstRand addressed a letter to the attorney
representing Couples, explaining that he was personally responsible for the bona
fide mistake in instructing Krügel Heinsen to release the sum of R500 000, and
that his firm would tender the costs of the application on an unopposed basis if
the application were withdrawn. The offer was not accepted.
[23] In my view there was no easy answer to the question as to whether Couples
had been entitled to regard the conduct of FirstRand as repudiatory, and
accordingly to cancel the agreement of compromise. What is more, the transition
from a finding that FirstRand repudiated the agreement to a judgement against
Krügel Heinsen was not as obvious as seems to have been assumed by the full
court. The language of ‘duty of care’ was not apposite. And there was no basis
for the finding that the cancellation of the compromise freed Couples from
liability for any contribution that FirstRand had to make to the liquidators of
ILIPS. The suretyship remained extant. However, there is no need to examine
these matters any further. This appeal turns on issues which post-dated the
judgment of the court of first instance.
[24] Before the appeal was argued in the full court it came to the attention of
those representing Krügel Heinsen that the settlement between FirstRand and
Couples involved the latter agreeing to release the R500 000 being held in trust
for Couples by FirstRand’s attorneys, to the liquidators of ILIPS. Quite what
further detail concerning the settlement was known to Krügel Heinsen at the time
is not clear on the papers before us. Be that as it may, when counsel for Couples
and Ms Thompson (as appellants) argued the matter in the full court the
provisions of that settlement were not disclosed. When counsel for Krügel
Heinsen addressed the full court he attempted to make what appears to have been
an application from the bar for the admission of further evidence in the way of a
disclosure of the terms of the settlement to the court, to be taken in to account by
it in determining the appeal. (It must be remembered that at that time Couples had
no judgment in its favour for payment of R500 000. It was seeking it on appeal.)
Counsel for Couples objected, contending that the appeal had to be decided on
the record as it stood. It is common cause that the full court refused to receive
evidence of the settlement. However, the subject was not dealt with in its
judgment.
[25] Given these circumstances Krügel Heinsen has made a formal application
to this Court asking it to receive further evidence in terms of s 19(b) of the
Superior Courts Act 10 of 2013. The founding affidavit in that application,
supported by a confirmatory affidavit from the attorney dealing with the matter
for FirstRand, describes how the settlement came about and what its essential
terms were. Simply put, the agreement reached was to the effect that, in exchange
for:
(a)
Wesbank (a division or trade name of FirstRand) having no further claims
against Couples and Ms Thompson;
(b)
Couples (and Ms Thompson as well) being released from all suretyship
obligations in favour of Wesbank;
(c)
Couples being released from its suretyship liability in favour of FirstRand
(for the loan) that formed the basis of the initial compromise
Couples and Ms Thompson would withdraw their appeal against FirstRand in the
present case and Couples would permit FirstRand’s attorneys to pay the R500 000
in trust to the liquidators of ILIPS.
[26] Couples delivered an affidavit in opposition to the application for the
receipt of further evidence which in my view can only be described as an exercise
in obfuscation. There is no doubt at all that Couples in effect utilised the R500 000
held in the interest-bearing trust account in its name, inter alia, to buy its release
from its obligations to FirstRand and Wesbank. The cynical attempt by Couples
and Ms Thompson to exclude the evidence of the settlement, and to extract the
benefit of another R500 000 out of this litigation by pursuing the appeal in the
full court against Krügel Heinsen, and persisting with those pursuits in this Court
until their counsel rose to address us, is to be deprecated.
[27] In its affidavit opposing the reception of further evidence in this Court
Couples raised the argument that a formal application ought to have been made
to and therefore considered by the full court. In principle that is correct. Replying
to that, the attorney for Krügel Heinsen said that on his side it was assumed that
the provisions of the settlement agreement would be disclosed to the full court by
Couples. It suffices to say that that this appears to have been a quite reasonable
stance.
[28] Receiving further evidence on appeal is not lightly done. An appeal court’s
function is to decide whether the judgment of the court a quo was correct on the
material placed before it. However in Rail Commuters Action Group v Transnet
Ltd t/a Metrorail 2005 (2) SA 359 (CC); 2005 (4) BCLR 301 (CC) paras 42 & 43
the principles were stated thus.
‘[42] In Van Eeden v Van Eeden [1999 (2) SA 448 (C) at 454], the Cape High Court held that
it was well established that the Court's powers as derived from s 22(a) of the Supreme Court
Act should be exercised sparingly. The Court held, further, that in that case the additional
evidence related to facts and circumstances which had arisen after the judgment of the Court a
quo. This raised the question whether it was competent for the court, in the exercise of its power
under s 22(a), to receive such evidence or to authorise its reception. Comrie J held that the
section did not include any express limitation which would exclude the reception of the
evidence then sought to be tendered and that the court exercising appellate jurisdiction had
a discretion whether or not to allow the evidence to be admitted, which discretion should be
exercised sparingly and only in special circumstances. From time to time, he held, cases did
arise which cried out for the reception of post-judgment facts.
[43] In my view, this approach is correct. The Court should exercise the powers conferred by
s 22 'sparingly' and further evidence on appeal (which does not fall within the terms of Rule
31) should only be admitted in exceptional circumstances. Such evidence must be weighty,
material and to be believed. In addition, whether there is a reasonable explanation for its late
filing is an important factor. The existence of a substantial dispute of fact in relation to it will
militate against its being admitted.’
[29] Here the evidence is to the crucial effect that Couples suffered no damages
as a result of the alleged breach of mandate by Krügel Heinsen. The factual
evidence is common cause. These are special and exceptional circumstances. The
interests of justice demand that the evidence be received.
[30] The approach of Couples recorded above to the application for the receipt
of further evidence, and to the appeal generally, was not addressed or defended
in argument before us. Counsel for Couples confined his submissions to the
subject of the interest on the sum of R500 000 which Couples had lost as a result
of the premature release of the money from the trust account of Krügel Heinsen.
His argument was that this Court should adjust the judgment of the court a quo to
allow such a claim.
[31] The issue was touched on in the affidavit in support of the opposition of
Couples to the admission of further evidence, where Ms Thompson stated that
that the ‘mora interest’ (by which she clearly meant interest at the prescribed rate)
on R500 000 from 2 February 2017 to the date of the settlement with FirstRand
is R104 585.17. (The loss of interest on the money which ought to have been held
in trust was also mentioned in passing in the founding affidavit.)
[32] There are a number of difficulties with this argument. The first is that there
was no prayer for interest as damages for breach of contract by Krügel Heinsen
beyond the normal prayer for interest on the capital sum for which judgment was
sought. The second difficulty is that any loss would not be in respect of interest
at the prescribed rate, but the net interest which would have been earned if the
money had remained in the interest-bearing trust account. There is no evidence
of that rate, which may very well have fluctuated from time to time; nor any
account of the agency and administration fees which would have been debited to
the account. (That there were such fees, to which Couples made no objection, is
apparent from a statement of the account annexed to the founding affidavit.)
Nothing is said in the papers about the fate of the interest on the sum of R500 000
whilst it was lodged in the trust account of FirstRand’s attorneys. A case for a
claim for lost interest has not been made out.
[33] The following order is made:
1.
The application to adduce further evidence on appeal is granted.
2.
The appeal is upheld with costs, including the costs of the
application to adduce further evidence on appeal.
3.
The order of the full court is set aside and replaced with the
following order.
‘The appeal is dismissed with costs.’
________________________
P J OLSEN
ACTING JUDGE OF APPEAL
Appearances:
For appellant:
Mr J S Griesel
Instructed by:
Savage Jooste & Adams Inc, Pretoria
Symington & De Kok, Bloemfontein
For respondents: Mr T P Kruger SC
Instructed by:
Jaco Roos Attorneys Inc, Pretoria
Noordmans 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:
31 March 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Krugel Heinsen Incorporated v Catherine Helen Thompson and Another (Case no 41/2022) [2023]
ZASCA 38 (31 March 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment and upheld with costs, an appeal
against a decision of the full court of the Gauteng Division of the High Court, Pretoria.
The appeal originated from an agreement of compromise which went wrong in its implementation. The
parties to the compromise were: Couples Investment CC (Couples), Catherine Thompson, sole member
of Couples, and FirstRand Bank Limited (FirstRand) which was not party to this appeal.
Couples owed money to FirstRand, and its debt was secured by a mortgage bond over its immovable
property. The property had to be sold, but the parties were uncertain as to the amount owed by Couples.
A compromise was reached upon the basis that Krügel Heinsen, a firm of attorneys which was the
appointed conveyancer, would keep R500 000 of the purchase price back, and release that amount, or
any lesser amount found owing by Couples, to FirstRand once there was confirmation of the liquidation
accounts of a company in the same stable as Couples. Those accounts would establish the amount still
owed to FirstRand by Couples in its capacity as surety for its related company in liquidation. As a result
of an error for which both the appellant and FirstRand were responsible, the money was released
prematurely.
Couples claimed that the agreement of compromise had been repudiated, and purported to have
consequently cancelled the agreement. Couples launched an application in the high court against both
Krügel Heinsen and FirstRand, seeking declaratory orders endorsing its contentions that the agreement
had been repudiated and consequently cancelled, and that both FirstRand and the appellant owed it
the sum of R500 000. The primary order for payment was sought against Krügel Heinsen. The
application was successfully opposed in the high court by both Krügel Heinsen and FirstRand.
Couples then obtained leave to appeal to the full court. Before the appeal was heard Couples withdrew
its appeal against FirstRand, recording that it had settled with FirstRand. Krügel Heinsen asked that the
terms of the settlement be disclosed to and considered by the full court in adjudicating the appeal.
Couples opposed that application which was refused by the full court, which then granted judgment
against Krügel Heinsen for payment of the sum R500 000,interest and costs.
On appeal to it, the SCA expressed concern about the manner in which the full court approached the
issue as to whether the agreement had been repudiated. But the case was decided on another footing
in the light of the grant of an application by Krügel Heinsen for the reception of further evidence on
appeal, disclosing the terms of the settlement with FirstRand. In response to the erroneous premature
release of the sum of R500 000 FirstRand had earlier paid a like amount into trust with its own attorneys
to be held as security on the same terms as had been agreed in terms of the original compromise.
Although Couples attempted to obscure it, in effect, in terms of the settlement Couples appropriated the
R500 000 placed in trust by FirstRand, and used it as the price of its release from various obligations it
owed, or was claimed to owe, to FirstRand, Wesbank and the liquidators of its sister company. The
SCA’s judgment is critical of the conduct of Couples in failing to disclose the terms of the settlement.
In the result the appeal against the judgment of the full court was upheld on the basis that Couples had
suffered no loss as a result of Krügel Heinsen’s breach of its mandate.
~~~~ends~~~~
|
1257
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number: 510/07
SASRIA LIMITED
APPELLANT
and
SLABBERT BURGER TRANSPORT (PTY) LTD
RESPONDENT
CORAM :
MPATI AP, STREICHER, MTHIYANE JJA, HURT et
MHLANTLA AJJA
DATE :
22 MAY 2008
DELIVERED :
30 MAY 2008
Summary:
Insurance policy – interpretation – absence of clear indication
that words to be given special meaning rather than ‘ordinary
dictionary meaning’ compatible with their content in the policy –
contra proferentem rule applied.
Neutral citation:
Sasria V Slabbert Burger Transport (510/2007) [2008] ZASCA
73 (30 MAY 2008)
HURT AJA/
HURT AJA:
[1] This is an appeal, with leave of the court a quo, from a judgment in which the
appellant was ordered to pay the respondent R 600,000 as indemnification for the
destruction by fire of a truck belonging to the respondent. I will refer to the parties by
their designations in the court a quo, viz to the respondent as 'the plaintiff' and to the
appellant as 'the defendant'.
[2] After the pleadings had been closed and a conference in terms of rule 37 had
been held, the parties drew up a statement of agreed facts in terms of rule 33(1) and
(2), after which the matter was dealt with in terms of rule 33 (3).
[3] It is not necessary, for the purposes of this judgment, to quote the stated case
in full. It was common cause that the plaintiff, a large transport fleet operator, had
insured a truck with registration number 406 SBH GP ('the truck') under a 'coupon
policy' issued by the defendant. The defendant, in terms of this policy, undertook to
indemnify the plaintiff
'against loss of or damage to (the truck) directly related to or caused by . . . any riot, strike or public
disorder, or any act or activity which is calculated or directed to bring about a riot, strike or public
disorder.'
[4] This policy was in force during February and March 2005. The truck was
destroyed by fire on 2 March 2005. The circumstances of its destruction are set out
thus in the stated case:
'10.
On 1 March 2005 the members of SATAWU,1 including the SATAWU members employed by
the plaintiff, embarked on a lawful strike ('the strike').
11.
As a result of the strike approximately half of the drivers employed by the plaintiff went on
strike.
12.
The drivers employed by the plaintiff who did not go on strike continued to work as drivers.
13.
During the strike:
13.1
drivers who were not participating in the strike were assaulted and threatened;
1 The South African Transport and Allied Workers' Union to which approximately half of the 500
drivers employed by the plaintiff were affiliated.
13.2
trucks were damaged by stones being thrown at them and being set fire to;
13.3
cargo being carried on trucks was looted;
13.4
the SAPS intervened to attempt to prevent the events listed in 13.1 to 13.3 from
taking place.
14.
On 2 March 2005:
14.1
Abel Mtshweni, a driver employed by the plaintiff, who was not participating in the
strike parked the truck at the Caltex truck stop facility at Leslie, in the Leandra area
near Ogies, Gauteng ('the truck stop').
14.2
Three unidentified men, two of whom were wearing dark blue overalls of the same
type as those worn by the plaintiff's drivers, purchased a small quantity of petrol, a
phone card and a box of matches from the shop ('the shop') at the truck stop.
14.3
After the unidentified men left the shop the truck was on fire ('the fire').
14.4
The fire destroyed the truck.
14.5
The fire started when a quantity of flammable liquid was ignited on the front left side
of the truck.
14.6
No-one saw by whom, or how, the flammable liquid was ignited.
14.7
The flammable liquid was not ignited publicly.
15.
The strike ended on 8 March 2005.
16.
The value of the truck was R 600,000 which is the amount the defendant will have to pay to
the plaintiff if it is liable to do so.'
In paragraph 19 of the agreed statement of facts, it is stated that: -
'The issue to be decided is: was the damage to the truck caused by a peril listed in the SASRIA
policy.'
[5] In the court a quo, Goldstein J inferred from the statement of agreed facts
that:-
' . . . the purchase of the petrol and box of matches from the shop at the truck stop must have led to
the fire which destroyed the truck, which was being driven by an employee (of the plaintiff) in defiance
of the strike, and that, given the dress of two of the men, they must have been employees of the
plaintiff.'
Counsel for the defendant endeavoured to persuade us that there were a number of
different inferences which could be drawn from the stated facts and that the learned
judge had erred in using the inference set out above as the basis for his decision as
to the motive behind the destruction of the truck, his attempts were unconvincing. It
is trite that:
' . . . in finding facts or making inferences in a civil case, . . . one may . . . by balancing probabilities
select a conclusion which seems to be the more natural, or plausible, conclusion from amongst
several conceivable ones, even though that conclusion be not the only reasonable one.'2
There can be little doubt that the inference drawn by the learned judge was by far
the most probable of all the conceivable ones and counsel's submissions to the
contrary must be rejected.
[5] The question is thus whether the destruction of the truck was a peril covered
by the policy, i.e. was it 'directly related to or caused by any riot, strike or public
disorder, or any act or activity which is calculated or directed to bring about a riot,
strike or public disorder'.
[6] The judge a quo directed his attention to the question of the meaning of the
words 'any act or activity which is calculated or directed to bring about a riot, strike or
public disorder'. In approaching the question in this way, I think that he imposed an
unnecessary burden on himself. It would have been much simpler to consider, first,
whether the destruction amounted to ' loss or damage . . . directly related to or
caused by any riot, strike or public disorder'.
[7] The main thrust of defendant’s counsel's argument in this connection was that
the words 'riot, strike or public disorder' must be interpreted in the light of the
eiusdem generis or noscitur a sociis principles. In other words the meaning to be
given to the word 'strike' was to be equated to situations of 'riot' and/or 'public
disorder'. He referred us in this regard to a dictum in the case of SASRIA Ltd v
Elwyn Investments (Pty) Ltd3 to the following effect : -
'Although some strikes are lawful, the fact that damage is caused introduces an element of
unlawfulness, which is also the hallmark of a riot or public disorder. The activities are also (in the case
of a strike where damage is caused) of a disorderly nature. In the context, violence leading to
damage is a necessary ingredient.'
2 Per Selke J in Govan v Skidmore 1952 (1) SA 732 (N) at 734 C-D, approved in South British
Insurance Co. Ltd. v Unicorn Shipping Lines Ltd. 1976 (1) 708 (A) at 713 E-H.
3 An unreported judgment of the Full Bench of the Transvaal Provincial Division in case no. A370/93,
per Van Dijkhorst J.
He also referred us to a decision by an arbitration appeal board (comprising three
arbitrators) in which the dictum of van Dijkhorst J was adopted with approval. But in
the Full Bench decision, the court was involved with the interpretation of the word
'riot' and in the arbitration matter the issue turned on the meaning of 'labour
disturbances'. Neither of these decisions is therefore helpful in interpreting the word
'strike' in its context in the policy under consideration.
[8] The ordinary meaning of the word 'strike', in the sense in which it is used in
the policy, is defined in the Shorter Oxford English Dictionary4 as:-
'A concerted cessation of work on the part of a body of workers for the purpose of obtaining some
concession from the employer or employers.'
In his attempts to persuade us that the word should be given a modified meaning by
its juxtaposition with the words 'riot' and 'public disorder', counsel made various
attempts to formulate the effect of applying this modified meaning. He suggested 'a
violent or potentially violent disturbance of the public peace by employees' or 'an act
related to a (lawful or unlawful) strike which has degenerated into public disorder'. In
each attempt in which he endeavoured to incorporate attributes of violence,
unlawfulness and public (as opposed to surreptitious or covert) action, counsel found
himself confronted with the difficulty that the formulation itself rendered the word
'strike' redundant because it fell either within the scope of the word 'riot' or the words
'public disorder'.
[9] In my view the difficulty which Counsel plainly experienced in formulating a
clear and acceptable meaning for the word 'strike' can be attributed simply to his
insistence that the ordinary dictionary meaning of the word was not compatible with
the context in which it appears. I see no difficulty in giving the word its ordinary
meaning. Indeed, if the contention of the insurer is that that meaning was intended to
be modified, then it has only itself to blame for failing to do so in clear language. The
contra proferentem rule would apply to any suggestion that the word 'strike' should
4 Third Ed. Vol II at p 2150.
be given a meaning which would restrict the scope of the defendant's liability to
indemnify the plaintiff in the event of the destruction of the truck.5
[10] On the basis that 'strike' bears its ordinary, dictionary meaning, it is clear that
the destruction of the truck was an act directly related to a strike and that it was
caused by a peril listed in the SASRIA policy.
[11] The appeal is dismissed with costs, such costs to include the costs
occasioned by the employment of two counsel.
…………………..
N V HURT
ACTING JUDGE OF APPEAL
Concur:
MPATI AP
STREICHER JA
MTHIYANE JA
MHLANTLA AJA
5 Concord Insurance Co. Ltd. v Oelofson NO 1992 (4) SA 669 (A) at 674H to 675A.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number: 510/07
In the matter between
SASRIA LIMITED
APPELLANT
and
SLABBERT BURGER TRANSPORT (PTY) LTD
RESPONDENT
From: The Registrar, Supreme Court of Appeal
Date:
2008-05
Status:
Immediate
The Supreme Court of Appeal today dismissed an appeal by Sasria Ltd against a
judgment in the Witwatersrand Local Division in which Sasria was ordered to pay
Slabbert Burger Transport (Pty) Ltd an amount of T600 000 arising from the
destruction of a truck during a strike by SATAWU members in March 2005.
The Appeal Court rejected contention by Sasria that it had not been established in
the statement of agreed facts presented to the trial court, that the truck had been
destroyed by striking workers. It also jected the contention that a special meaning
should be given to the word ‘strike’ in the insurance policy. Sasria was ordered to
pay the costs of the appeal.
|
2237
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 657/08
CLIPSAL AUSTRALIA (PTY) LTD
First Appellant
CLIPSAL SOUTH AFRICA (PTY) LTD
Second Appellant
SCHNEIDER ELECTRIC SOUTH AFRICA (PTY) LTD
Third Appellant
and
GAP DISTRIBUTORS (PTY) LTD
First Respondent
LEAR IMPORTS (PTY) LTD
Second Respondent
SHIMON BOTBOL
Third Respondent
REGISTRAR OF DESIGNS
Fourth Respondent
THE MINISTER OF THE DEPARTMENT OF TRADE
AND INDUSTRY
Fifth Respondent
Neutral citation:
Clipsal Australia v Gap Distributors (657/08) [2009] ZASCA 49
(25 May 2009)
Coram:
STREICHER ADP, CLOETE, SNYDERS JJA, HURT & TSHIQI
AJJA
Heard:
4 MAY 2009
Delivered:
25 MAY 2009
Summary:
Judgment
staying
judicial
proceedings
pending
the
determination of other judicial proceedings held to be
appealable.
_____________________________________________________________________
ORDER
_____________________________________________________________________
On appeal from: High Court Johannesburg (Joffe J sitting as court of first
instance).
The appeal succeeds with costs including the costs of two counsel.
The order of the court below is set aside and replaced with the
following order:
‘The application for a stay of the proceedings pending the determination
of the review application in case no 19081/08 in the High Court, Pretoria
is dismissed with costs.’
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
STREICHER ADP (CLOETE, SNYDERS JJA, HURT and TSHIQI AJJA
concurring)
[1] This is an appeal against a judgment by Joffe J in the High Court,
Johannesburg,1 in terms of which he stayed an application (‘the contempt
application’) by Clipsal Australia (Pty) Ltd (‘Clipsal Australia’), Clipsal
South Africa (Pty) Ltd (‘Clipsal SA’) and Schneider Electric South Africa
(Pty) Ltd (‘Schneider’) (hereinafter jointly referred to as the appellants)
against Gap Distributors (Pty) Ltd (‘Gap’), Lear Imports (Pty) Ltd
(‘Lear’) and Mr Shimon Botbol (‘Botbol’) (hereinafter jointly referred to
as the respondents). The application was for an order holding the
1 Clipsal Australia Pty Ltd and Others v Gap Distributors (Pty) Ltd and Others 2009 (3) SA 305 (W).
respondents guilty of contempt of court in that by importing and
disposing of certain single and double electrical sockets they disobeyed
an order of court. The appeal is with the leave of the court below.
[2] The order of court allegedly disobeyed is an order by this court, in
terms of which it replaced an order by the High Court, Johannesburg,
pursuant to an application (‘the first Clipsal application’) by Clipsal
Australia and Clipsal SA, as the proprietor and local exclusive licensee
respectively of registered design A96/0687, against Gap Distributors and
Trust Electrical Wholesalers both of which are firms owned by Gap.2 The
order interdicted Gap Distributors and Trust Electrical Wholesalers from
infringing registered design A96/0687 by making, importing, using or
disposing of certain Lear G-2000 series single and double electrical
sockets (‘Gap sockets’).
[3] Subsequent to the court order Botbol, who is the sole shareholder
and the managing director of Gap, caused Lear, which was a close
corporation at the time, to be converted into a company of which he is the
sole shareholder and director. Thereafter Lear applied to the High Court,
Pretoria (‘the Lear application’) for an order –
(i) (a) declaring that the word ‘original’ in s 14(1)(a)(ii) of the Designs
Act 195 of 1993 has a different meaning to the one ascribed to it
by this court in the first Clipsal application; alternatively
(b) declaring that s 14(1)(a) alternatively s 20(1) of the Designs Act
is inconsistent with the constitution; and
(ii) revoking Design A96/0697.
2 Clipsal Australia (Pty) Ltd and Another v Trust Electrical Wholesalers and Another 2009 (3) SA 292
(SCA).
[4] Prior to this court’s order against Gap Distributors and Trust
Electrical Wholesalers, Lear was not in the business of importing and
selling electrical sockets in South Africa but subsequent to the order it
started selling such sockets (‘Lear sockets’). This gave rise to the
contempt application. The appellants contend that the Lear sockets differ
only in immaterial respects from the Gap sockets and the sockets that are
the subject of the registered design; that Gap and Lear are but Botbol in
different guises and that the corporate veil between them should be
pierced. The respondents opposed the application and lodged a
counterclaim for the same relief as had been claimed in the Lear
application.
[5] Upon application by the appellants the Lear application was stayed
pending the final determination of the contempt application. Although it
was common cause in the first Clipsal application that the design had
been registered in respect of class 13 and although this court held in that
case that the design was new and original, the respondents, in the
contempt application, as in the Lear application, contend that the
registration of the design is invalid in that no class is reflected in the
register of designs and also in that the design is not new or original. They
contend that the design is not new in the sense in which this court
interpreted the requirement of originality and also in the sense contended
for by them. According to them the originality requirement adopted by
this court was adopted in breach of this court’s constitutional duty to
interpret legislation in a manner that promotes the spirit, purport and
object of the Bill of Rights. In the alternative, if this court’s interpretation
of the originality requirement is the only interpretation that the
requirement is reasonably capable of, they contend that the requirement is
unconstitutional because it unjustifiably restricts ‘constitutional rights to
freedom of expression and freedom of trade, occupation and profession’.
[6] In a yet further application instituted by Lear in the High Court,
Pretoria against the Registrar of Designs, Clipsal Australia and Schneider,
Lear applied for the review of the ‘registration of application A96/0687 in
Part A of the Register without a classification having been recorded in the
Register, in contravention of Section 15(1) of the Designs Act’. The
register referred to is the register of designs.
[7] At the hearing of the contempt application the respondents argued
in limine that it should be stayed pending the determination of the review
application. The appellants argued the contrary. The court below held
that, in light of the fact that it is not apparent from the register of designs
that the design was registered in class 13, the appellants’ entitlement to
the relief which they sought in the first Clipsal application was suspect
and that it had a discretion to stay the contempt application if it
considered it to be in the interests of justice to do so. It thereupon stayed
the contempt application pending the determination of the review
application on the basis that it was indeed in the interests of justice to do
so. An application by the appellants for leave to appeal against the
judgment was opposed by the respondents on the ground, among others,
that it was not a final judgment and therefore not appealable. In
dismissing this argument Joffe J said that the appellants were confronted
with a judgment which effectively precluded them from enforcing the
order they had in their favour, that registration of the design was due to
terminate on 22 July 2011, that the parties could still be litigating by that
time and that the effect of the order staying the determination of the
application was final in effect and thus appealable.
Is the order of the court below appealable?
[8] The order by the court below will only be appealable if it qualifies
as a ‘judgment or order’ within the meaning of those words in the context
of s 20(1) of the Supreme Court Act 59 of 1959 (see Zweni v Minister of
Law and Order 1993 (1) SA 523 (A) at 531B-C). Such a judgment or
order ‘is a decision which, as a general principle, has three attributes,
first, the decision must be final in effect and not susceptible of alteration
by the Court of first instance; second, it must be definitive of the rights of
the parties; and, third, it must have the effect of disposing of at least a
substantial portion of the relief claimed in the main proceedings’ (Zweni
at 532I-533B). The respondents submitted that the order by the court
below was merely a procedural order, was not final, did not grant definite
and distinct relief and did not dispose of a substantial portion of the relief
claimed in the contempt application.
[9] The judgment of the court below did not dispose of any relief
claimed in the contempt application. Once the review application has
finally been determined the appellants will be free to proceed with the
contempt application. But it did dispose of the relief claimed in the
application by the respondents for the stay of the contempt application
and it did so finally. That the court below intended the order staying the
review application to be final and not susceptible to amendment is
apparent from the order itself and is confirmed by Joffe J in his judgment
in respect of the application for leave to appeal (see SA Eagle
Versekeringsmaatskappy Bpk v Harford 1992 (2) SA 786 (A) at 792D-F).
[10] In Caroluskraal Farms (Edms) Bpk v Eerste Nasionale Bank van
Suider-Afrika Bpk; Red Head Boer Goat (Edms) Bpk v Eerste Nasionale
Bank van Suider-Afrika Bpk; Sleutelfontein (Edms) Bpk v Eerste
Nasionale Bank van Suider-Afrika Bpk 1994 (3) SA 407 (A) Eerste
Nasionale Bank applied for the liquidation of the appellants. The
appellants filed certificates in terms of s 21 of the Agricultural Credit Act
28 of 1966, contended that the certificates constituted a bar to the
liquidation proceedings and applied for the dismissal of the proceedings.
Berman J dismissed the application and on appeal the question arose
whether Berman J’s order was appealable. This court, per Hefer JA, held
that if regard was had to the relief claimed by the applicant for liquidation
the order clearly did not qualify as a ‘judgment or order’ but that seen
from the viewpoint of the appellants the position was different. In effect
they raised a special plea which if successful would have had the effect
that the liquidation applications could not succeed until such time as the
certificates had lapsed. That special defence had finally been determined
by Berman J.3 Hefer JA stated that the case was not distinguishable from
cases such as Labuschagne v Labuschagne; Labuschagne v Minister van
Justisie 1967 (2) SA 575 (A), Smit v Oosthuizen 1979 (3) SA 1079 (A)
and Constantia Insurance Co Ltd v Nohamba 1986 (3) SA 27 (A) in
which defences were raised by way of special pleas. In Labuschagne
Wessels JA said at 583D-F:
‘Die verligting wat eerste verweerder na aanleiding van die bewerings in sy spesiale
pleit aangevra het, is hom geweier. Indien die verhoor voortgesit sou gewees het sou
die Hof nie bevoeg gewees het om weer opnuut die vraag te oorweeg of die spesiale
pleit gehandhaaf behoort te word, al-dan nie. By die verdere verhoor en die
daaropvolgende uitspraak sou slegs die geskilpunte betreffende die meriete van eiser
se eis ter sprake gewees het. Die uitspraak waarteen eerste verweerder in hoër beroep
is, is dus, wat betref die Hof wat die uitspraak gegee het, `n finale en onherstelbare
afhandeling van `n selfstandige en afdoende verweer wat eerste verweerder geopper
het as grondslag vir die regshulp wat hy in die spesiale pleit aangevra het.’
3 At 414H-415B.
[11] Having considered these cases and having compared what was said
in Labuschagne with what was said in Heyman v Yorkshire Insurance Co
Ltd 1964 (1) SA 487 (A) where this court held that the dismissal of an
alternative defence which had been heard separately was not appealable,
Hefer JA said at 416C-D:
‘Wanneer dit dan – hetsy in `n aksie of in mosieverrigtinge – gaan om `n spesiale
verweer wat afsonderlik verhoor is, kom dit my logies voor om te let op die effek van
die uitspraak op die regshulp wat deur die verweerder of respondent aangevra is. In
wese is die Verhoorhof in so `n geval gemoeid met `n versoek van die verweerder of
respondent om die eis van die hand te wys op grond van `n verweer wat niks te make
het met die meriete van die saak nie. Dit is die regshulp wat op daardie stadium ter
sprake is.’
He held that Berman J was likewise only concerned with an issue
specially raised by the appellants, which issue had finally been disposed
of by Berman J and that the order made by him was therefore an order
which was appealable.4
[12] In Durban’s Water Wonderland (Pty) Ltd v Botha and Another
1999 (1) SA 982 (SCA) at 993B-D this court held that the dismissal of a
plea that a disclaimer notice at an amusement park exempted a defendant
from liability in respect of any injury or damage arising from the use of
the amenities at the park constituted a final judgment within the meaning
of s 83(b) of the Magistrates’ Court Act so as to render it appealable. It
held that the dismissal ‘had the effect of finally and irretrievably
disposing of a self-contained defence which existed independently of the
respondents’ case’ and that it was therefore appealable.
4 At 416D-F.
[13] Dealing with the appealability of an order refusing an application
for security Hefer JA in Shepstone & Wylie and Others v Geyser NO
1998 (3) SA 1036 at 1042D-E quoted, with approval, the following
passage in Ecker v Dean 1937 (SWA) 3 at 4:
‘(t)he usual test, ie whether the order finally disposes of portion of, or a certain phase
of, the issue between the parties does not really fit circumstances such as these, for the
claim for security was a separate and ancillary issue between the parties, collateral to
and not directly affecting the main dispute between the litigants . . . it is not a
procedural step in attack or defence at all but a measure of oblique relief sought by
one party against the other on grounds foreign to the main issue, ie the financial
situation of one litigant, this relief to be effective if at all only after judgment. The
order determining this collateral dispute is therefore final and definitive for at no later
stage in the proceedings can the applicant obtain the substance of what has been
refused to him. If he has been prejudiced by the order his prejudice is irremediable.’
[14] In the present matter the respondents claimed to be entitled to a
stay of the contempt application pending the determination of the review
application. They were in effect claiming that they had a special defence
to the action albeit a temporary defence, to the effect that the appellants
were not entitled to the relief claimed by them pending the review
application. For present purposes there is no real distinction between that
defence and the special defence raised in Carolus. It is true that in that
case it was claimed that the application for liquidation should be
dismissed because of the existence of the s 21 certificate but it would to
my mind have made no difference to the reasoning of Hefer JA had the
plea been that the application for liquidation should be stayed for as long
as the s 21 certificate remained valid.
[15] The respondents submitted that Joffe J did no more than to
postpone the contempt application and that an order postponing a matter
was not appealable.5 I do not agree. An order postponing a matter is
merely procedural in nature and not an order in respect of a defence
raised. As in Carolus the defence raised by the respondents was a self-
contained defence which was raised independently of the appellants’ case
and as stated above that defence was finally determined by the court
below. In so far as the other two attributes that an appealable ‘judgment
or order’, as a general principle should have, it should be borne in mind
that it is the application for a stay of the contempt application and not the
contempt application itself which constitutes the main proceedings. The
question is whether the order by the court a quo is definitive of the rights
of the parties in respect of the application to stay the contempt
proceedings and whether it disposes of at least a substantial portion of the
relief claimed in that application.6 The answer to those two questions is
clearly in the affirmative. It follows that the order by the court below is
appealable.
Did the court below have a discretion to stay the contempt
proceedings?
[16] As stated above Joffe J held that he had a discretion to stay the
contempt application if he considered it to be in the interest of justice to
do so. In this regard he relied on cases dealing with the stay of
proceedings pending the payment of costs incurred in substantially
similar previous proceedings between substantially the same parties (see
Western Cape Housing Development Board and Another v Parker and
Another 2005 (1) SA 462 (C) at 465I-466C; and Herbstein and Van
5 Union Government (Minister of the Interior) and Registrar of Asiatics v Naidoo 1916 AD 50; and
Zweni at 535F-H.
6 Bookworks (Pty) Ltd v Greater Johannesburg Transitional Metropolitan Council and Another 1999
(4) SA 799 (W) at 804C-E.
Winsen The Civil Practice of the Supreme Court of South Africa 4 ed
(1997) p 254-261).
[17] It is clear that a court does have the power to stay civil proceedings
in certain circumstances eg to prevent an abuse of the process of the court
(see Corderoy v Union Government (Minister of Finance) 1918 AD 512
at 517) and if an action is already pending between the same parties on
the same cause of action (see Herbstein and Van Winsen op cit Chapter
10 p 245). However, Joffe J did not quote any authority to the effect that
a court has a general discretion to stay proceedings whenever it considers
it to be in the interests of justice to do so.
[18] In Abdulhay M Mayet Group (Pty) Ltd v Renasa Insurance Co Ltd
and Another 1999 (4) SA 1039 (T) at 1048H-I Van Dijkhorst J accepted
that he had a discretion to stay an application for an interdict restraining
the respondents from infringing a registered trade mark pending an
application in terms of s 14 of the Trade Marks Act 194 of 1993 on the
basis of honest concurrent use and/or other special circumstances. He
added that at best for the respondents it was a discretion that had to be
exercised sparingly and in exceptional circumstances. But Van
Dijkhorst J apparently based his acceptance of a discretion to do so on the
authority of Fisheries Development Corporation of SA Ltd v Jorgensen
and Another; Fisheries Development Corporation of SA Ltd v AWJ
Investments (Pty) Ltd and Others 1979 (3) SA 1331 (W) at 1340D-1341A
in which it was merely assumed that a court had jurisdiction to stay civil
proceedings on equitable grounds. In that case, dealing with a request that
an action should be stayed in the exercise of the court’s ‘inherent
discretion to avoid injustice and inequity’ Nicholas J said at 1340B-D:
‘The Courts do not however act on abstract ideas of justice and equity. They must act
on principle. CF the Western Assurance Co case supra at 275. And see the remarks of
Innes CJ in Kent v Transvaalsche Bank 1907 TS 765 at 773-774:
“(The appellant) also asked us to stay the proceedings on equitable grounds, urging
that we had an equitable jurisdiction under the insolvency law. The Court has again
and again had occasion to point out that it does not administer a system of equity, as
distinct from a system of law. Using the word ‘equity’ in its broad sense, we are
always desirous to administer equity; but we can only do so in accordance with the
principles of the Roman-Dutch law. If we cannot do so in accordance with those
principles, we cannot do so at all.”’
Nicholas J then proceeded to deal with the application on the assumption
that the court had the power to grant a stay of the proceedings on
equitable grounds and concluded that ‘even if it had the power to do so’ a
case had not been made out for such a stay.7
[19] As I shall presently indicate, I am of the view that if the court
below did have a discretion, on equitable grounds, to stay the contempt
application, the exercise of that discretion in favour of the respondents
was not justified and should be set aside. I shall, therefore, likewise
assume that the court below had such a discretion. I shall furthermore
assume in favour of the respondents that the discretion is a discretion in
the strict or narrow sense ie a discretion with which this court as a court
of appeal can interfere only if the court below exercised its discretion
capriciously or upon a wrong principle, or has not brought its unbiased
judgment to bear on the question or has not acted for substantial reasons
or materially misdirected itself.8
7 At 1341A.
8 Malan and Another v Law Society, Northern Provinces 2009 (1) SA 216 (SCA) para 13.
Should the court a quo’s order in the exercise of its discretion be
interfered with on appeal?
[20] The court below held that ‘eise van geregtigheid’ indicated that the
contempt application should be stayed pending the outcome of the review
application because if the contempt application ‘were to be determined
prior to the review application, enforcement of a court order could be
ordered in circumstances where the enforcer of the court order was not
entitled to the court order in the first instance’. The court would,
according to Joffe J, in the circumstances ‘knowingly compound the
problem’. He added that the determination of the review was important in
so far as issues of mala fides and wilfulness were concerned.9
[21] However, the outcome of the review application is irrelevant to the
question whether the respondents were acting in contempt of court. In
terms of the court order Gap Distributors and Trust Electrical
Wholesalers are interdicted from infringing registered design A96/0687.
That court order is a final order and has to be obeyed even if it is wrong
as is alleged by the respondents. Should the review application be
successful and the registration of the design be set aside, the interdict
would come to an end as there would no longer be a registered design,
but until that happens the interdict stands and has to be obeyed. As was
said by Herbstein J in Kotze v Kotze 1953 (2) SA 184 (C) at 187F-G:
‘The matter is one of public policy which requires that there shall be obedience to
orders of Court and that people should not be allowed to take the law into their own
hands.’
[22] In its judgment the court below itself refers to Culverwell v Beira
1992 (4) SA 490 (W) at 494A-E where Goldstein J said that orders of
9 At paras[25] and [26].
court have to be obeyed until set aside and that chaos may result if people
were allowed to defy court orders with impunity.10 It also refers to the
judgment of Froneman J in Bezuidenhout v Patensie Sitrus Beherend Bpk
2001 (2) SA 224 (E) at 228F-230A where, relying on Culverwell and
Kotze, Froneman J said that an order of a court of law stands and must be
obeyed until set aside by a court of competent jurisdiction.11 Having done
so with apparent approval and having stated that it is obliged to apply the
judgment of this court, it is inexplicable how it could then, on the basis
that the judgment could be wrong, have considered the outcome of the
review application to be of any relevance to the contempt application.
[23] For these reasons I am satisfied that the court below misdirected
itself and did not act for substantial reasons. The following order is
therefore made:
The appeal succeeds with costs including the costs of two counsel.
The order of the court below is set aside and replaced with the
following order:
‘The application for a stay of the proceedings pending the determination
of the review application in case no 19081/08 in the High Court, Pretoria
is dismissed with costs.’
___________________________
P E STREICHER
ACTING DEPUTY PRESIDENT
10 At 312A-B para [21].
11 At para [21].
APPEARANCES:
For appellant:
L Bowman SC
B du Plessis
Instructed by:
Spoor & Fisher, Centurion
Matsepes, Bloemfontein
For respondent:
M M Jansen SC
Instructed by:
Adams & Adams, Johannesburg
Honey Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
25 May 2009
Status:
Immediate
CLIPSAL
AUSTRALIA
(PTY)
LTD
&
OTHERS
v
GAP
DISTRIBUTORS (PTY) LTD
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
* * *
The Supreme Court of Appeal today upheld an appeal against an order in
the High Court, Johannesburg in terms of which the high court stayed an
application for an order holding the respondents guilty of contempt of court
in that by importing and disposing of certain electrical sockets they
disobeyed an order of court. In terms of the order the first respondent was
interdicted from infringing registered design A96/0687.
The high court stayed the contempt application pending an application for
the review of the registration of the design. The SCA held that the outcome
of the review application was of no relevance to the contempt application
as court orders had to be obeyed until set aside.
|
1278
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
CASE NO: 573/2007
MASSTORES (PTY) LTD
Appellant
and
MURRAY & ROBERTS CONSTRUCTION
1st Respondent
(PTY) LIMITED
S ROCHE PROJECTS
2nd Respondent
Neutral citation: Masstores (Pty) Ltd v Murray & Roberts Construction
(Pty) Ltd (573/2007) 94 [2008] ZASCA (12 September 2008)
Coram:
MPATI P, LEWIS, MLAMBO JJA, KGOMO AND
MHLANTLA AJJA
Heard:
22 AUGUST 2008
Delivered:
12 SEPTEMBER 2008
Summary:
Appeal against upholding of exception to claim for
damages for destruction of warehouse and its contents through
negligence on part of contractor effecting additions: excipient raised
exemption clause (indemnification by employer) as a bar to the claim.
Held that on the interpretation of the clause and the contract as a whole,
the clause did preclude an action by the employer against the contractor
for destruction of the warehouse and its contents: appeal dismissed.
ORDER
On appeal from: High Court, Johannesburg (Schwartzman J sitting as court
of first instance).
The appeal is dismissed with costs, including the costs incurred by the
employment of two counsel.
JUDGMENT
LEWIS JA (MPATI P, MLAMBO JA, KGOMO AND MHLANTLA AJJA
concurring)
[1] The appellant (the plaintiff in the high court), Masstores (Pty) Ltd, a
wholesaler of a multitude of commodities, engaged the first respondent (the
first defendant), Murray & Roberts Construction (Pty) Ltd, to extend one of its
stores in Struben’s Valley, Roodepoort. I shall refer to the appellant either as
Masstores or as the employer, and to the respondent either as Murray &
Roberts or as the contractor. Their building contract was embodied in a
standard form published by the Joint Building Contracts Committee – a form
widely used in the construction industry in South Africa. The second
defendant in the matter was a subcontractor of Murray & Roberts and is not
party to this appeal.
[2] While employees of the second defendant were cutting the roof of
Masstores’ existing store with an angle grinder a fire broke out which
destroyed the store and its contents. Masstores sued Murray & Roberts for
breach of contract, claiming R169 365 175, the value of the structure
destroyed and its contents.
[3] The breaches alleged by Masstores – and which allegedly caused the
damage to its building and the contents – include: failure to comply with all
laws and regulations; failure to carry out the work in a proper and workmanlike
manner; failure to ensure that subcontractors appointed by Murray & Roberts
complied with safety levels; and failure to ensure that the work was executed
safely and in such a way as not to endanger the lives and property of people
in the vicinity of the work. These failures are alleged to have been negligent or
grossly negligent.
[4] Murray & Roberts excepted to the particulars of claim on the basis that
clause 9.2.7 of the building contract precludes an action against it – exempts it
from liability for causing damage to Masstores’ existing structure. Clause 9
reads:
‘Clause 9 Indemnities
9.1 Subject to the provisions in terms of 9.2 the contractor indemnifies and holds the
employer harmless against any loss in respect of all claims, proceedings, damages,
costs and expenses arising from:
9.1.1 Claims from other parties consequent upon death or bodily injury or illness of
any person or physical loss or damage to any property, other than the works, arising
out of or due to the execution of the works or occupation of the site by the contractor
9.1.2 A non-compliance by the contractor with any law and regulation and bylaw of
any local or other authority arising out of or due to the execution of the works or
occupation of the site by the contractor
9.1.3 Physical loss or damage to any plant, equipment, or other property belonging to
the contractor or his subcontractors
9.2 The employer indemnifies and holds the contractor harmless against loss in
respect of all claims, proceedings, damages, costs and expenses arising from:
9.2.1 An act or omission of the employer, the employer’s servants or agents and
those for whose acts or omissions they are responsible
9.2.2 An act or omission of a direct contractor appointed in terms of 22.0
9.2.3 Design of the works where the contractor is not responsible in terms of 4.0
9.2.4 The use or occupation of the site by the works
9.2.5 The right of the employer to have the works or any part thereof executed at the
site
9.2.6 Interference with any servitude or other right that is the unavoidable result of
the execution of the works including the weakening of or interference with the support
of land adjacent to the site unless resulting from any negligent act or omission by the
contractor or his subcontractors
9.2.7 Physical loss or damage to an existing structure and the contents thereof in
respect of which this agreement is for alteration or addition to the existing structure
9.2.8 Physical loss or damage to the contents of the works where practical
completion has been achieved in terms of 24.0
9.2.9 The occupation of any part of the works by the employer or his tenants’ (my
emphasis).
[5] Schwartzman J in the high court upheld the exception, finding that
clause 9.2.7 precluded a claim against Murray & Roberts for negligent breach
of contract, but granted leave to appeal against his decision to this court.
[6] The sole question before us is whether clause 9.2.7 has the effect of
exempting Murray & Roberts from liability for negligent, or grossly negligent,
breaches of the building contract. And that depends on an interpretation of the
clause. Counsel for Masstores argue that the clause is ambiguous, riddled
with inconsistency and incoherent. The ambiguity contended for would enable
the court to interpret the clause in such a way as to conclude that Murray &
Roberts would be liable for negligently causing the damages alleged. Counsel
for Murray & Roberts, on the other hand, argue that the clause is clear,
unambiguous and consonant with the balance of the contract which
pertinently allocates various risks to the respective parties. It is a model of
clarity, they contend, and excludes Murray & Roberts’ liability for negligent
breach of contract.
[7] Before considering the alleged ambiguities that might lead to the
conclusion that the clause does not exclude liability for the damage caused to
the existing structure, it is important to state that an ambiguity is not, in my
view, a precondition for a court to interpret a provision by having regard to the
context of the contract and the surrounding circumstances. More than ten
years ago this court said in Pangbourne Properties Ltd v Gill & Ramsden (Pty)
Ltd1 that the time appeared to be ripe for this court ‘to reconsider the
1 1996 (1) SA 1182 (A) at 1187E-F.
limitations placed’ on the ‘use of surrounding circumstances’ in interpreting
documents’. That said, because this matter was determined on exception by
the high court, there is no evidence to which we can have regard in fathoming
the intention of the parties: the provision in issue must be construed by
examining the words used, the structure of the indemnity provision itself and
its meaning within the context of the contract as a whole. And it is as well to
recall at this point that there are no special rules that apply to the construction
of exemption provisions: Durban’s Water Wonderland (Pty) Ltd v Botha;2 First
National Bank of Southern Africa Ltd v Rosenblum3 and Van der Westhuizen
v Arnold.4
[8] The contract is one commonly used in the building industry. It
describes the subject matter as the ‘works’, defined as ‘the works described
in general terms in the schedule, detailed in the contract documents, ordered
in contract instructions and including the contractor’s and his subcontractors’
temporary works. In 8.0 to 13.0, works shall further include materials and
goods . . .’. In the schedule the works description is ‘Alterations and additions
to existing Makro Store at Strubens Valley comprising steel framed building
with sheet steel profiled roof covering and cladding together with associated
siteworks’.
[9] Clause 7 deals with compliance with building regulations and bylaws,
and 7.1, on which Masstores relies, provides:
2 1999 (1) SA 982 (SCA) at 989H-J.
3 2001 (4) SA 189 (SCA) para 7.
4 2002 (6) SA 453 (SCA) paras 18 and 19. Some of the decisions that have questioned the
difference between surrounding and background circumstances are set out in paras 13 and
14.
‘The contractor shall comply with all laws and all regulations and bylaws of local or
other authorities having jurisdiction regarding the execution of the works. . . .’
Clause 8.0 governs the risk in the works. Part of the provision is not strictly
relevant to the dispute before this court but I shall set much of it out since
Murray & Roberts argues that the allocation of risk in this provision is the only
basis of its liability under the contract. As the contractor, it takes responsibility
for the works, and only the works. The clause is headed ‘Works risk’ and it
reads:
‘8.1 The contractor shall take full responsibility for the works from the date on which
possession of the site is given to the contractor and up to the issue or the deemed
issue of the certificate of practical completion. Thereafter responsibility for the works
shall pass to the employer.
8.2 The contractor shall make good physical loss and repair damage to the works,
including clearing away and removing from the site all debris resulting therefrom,
which occurs after the date on which possession of the site is given and up to the
issue or deemed issue of the certificate of final completion and resulting from:
8.2.1 Any cause arising up to the date of issue of the certificate of practical
completion
8.2.2 The contractor or his subcontractors carrying out any operation complying with
the contractor’s obligations after the date of issue of the certificate of practical
completion
8.3 The contractor shall not be liable for the cost of making good physical loss and
repairing damage to the works where this results from the following circumstances:
. . .
[The provisions of 8.3.1 to 8.3.5 list circumstances clearly beyond the control
of the contractor such as war, rebellion, riot, strike, and confiscation.]
8.3.6 The use or occupation of any part of the works by the employer, the employer’s
servants or agents and those for whose acts or omissions they are responsible
8.3.7 An act or omission of the employer, the employer’s servants or agents and
those for whose acts or omissions they are responsible
8.3.8 An act or omission by a direct contractor . . .
8.3.9 Design of the works where the contractor is not responsible . . .
8.3.10 A latent defect in materials and goods specified by trade name, where the
contractor has no right of substitution. The contractor hereby cedes any right of
action to the employer that may exist against the supplier and/or manufacturer of
such materials and goods.
8.4 The limit of the contractor’s liability shall not exceed the amount of the contract
works insurance. . . . The liability of the contractor in terms of 8.2 shall include:
8.4.1 The cost of making good loss and repairing damage
8.4.2 The replacement value of materials and goods supplied by the employer to the
contractor
8.4.3 The additional professional services required of the employer’s agents
. . . .’
[10] The effect of clause 8 is that the contractor assumes the risk of any
loss or damage to the works, as defined, until they are completed and handed
over to the employer. The exceptions to this lie where the loss is caused
either by factors beyond the control of the contractor, or when it is caused by
the employer and those for whom it is responsible. Nowhere in the clause is
provision made for the contractor to be liable other than for the works. And
insurance is required only in respect of the works. Nothing is said of the
existing structure, and indeed, as Murray & Roberts argues, that is to be
expected. Why should the contractor, it asks, assume responsibility for
damage to the existing structure when it is owned by Masstores and its value
is considerably greater than the cost of the works? Why would a contractor
undertake liability for the destruction of a structure and its contents worth
about R169m when the cost of the work to be done by it is only R13m?
[11] Masstores’ answer is that if Murray & Roberts did indeed intend to
exclude liability for their conduct, it did not succeed. It construes clause 9,
particularly 9.2.7, so as not to exclude Murray & Robert’s liability for the
damage negligently caused to the existing structure and its contents. The
effect of the provision, its counsel argue, is to indemnify the contractor against
claims by third parties only, or, alternatively, to exclude the contractor’s liability
only for its non-negligent conduct.
[12] To reach this conclusion Masstores argues that clause 9 is ambiguous.
It raises four respects in which the language of the provision gives rise to
uncertainty: the use of the words ‘indemnify and hold harmless’; the apparent
conflict between 9.1.2 and 9.2.7; the use of the words ‘any loss’ in 9.1 but only
‘loss’ in 9.2; and the failure to specify all the legal grounds for liability in 9.2.7,
especially negligent conduct. To some extent these arguments overlap but I
shall deal with each discretely.
Indemnify and hold harmless
[13] The language is not clear, Masstores contends, first, because of the
use of the words ‘indemnify’ and ‘hold harmless’. It will be recalled that clause
9.2 states that the ‘employer indemnifies and holds the contractor harmless
against loss in respect of all claims, proceedings, damages, costs and
expenses arising from’ – ‘9.2.7 Physical loss or damage to an existing
structure and the contents thereof in respect of which this agreement is for
alteration or addition to the existing structure’. The usual meaning of indemnify
is to protect a person against a claim by another – a third party. Similarly, one
would hold another harmless against the claim of a third party. Can one
indemnify a person against a claim brought by oneself? Thus, the argument
runs, the contractor is not indemnified against claims by the employer, but
only claims by third parties.
[14] The wording of the clause is admittedly not elegant. One would not
normally say ‘I indemnify you against claims against you brought by myself’.
The typical exclusion clause would state that claims by the other party are
excluded, or that a party is exempt from liability against the other. However,
although the use of the words ‘indemnify’ and ‘hold harmless’ may appear at
first to relate only to third party claims, there is ample authority that they mean
also ‘keep free from, or secure against (hurt, harm or loss);5 or to ‘secure
(someone) against legal responsibility for their actions’. Apart from dictionary
definitions, which are not decisive,6 a court must ascertain what words mean
by having regard to the intention of the parties, established, as I have said in
this case, from an examination of the contract in its entirety.
5 Shorter Oxford English Dictionary, 1973, Vol 1. See also Concise Oxford English Dictionary
10 ed (2002).
6 See also Jonnes v Anglo-African Shipping Co (1936) Ltd 1972 (2) SA 827 (A) at 835G-836B
where similar dictionary definitions of ‘indemnify’ are set out.
[15] The provision cannot, in my view, be construed to refer only to claims
brought by third parties. If the parties had intended clause 9.2.7 to govern
claims by third parties they would have said so. They have done so elsewhere
in the indemnity clause, in 9.1, which regulates the contractor’s liability to the
employer: the contractor indemnifies and holds the employer harmless against
‘claims from other parties consequent upon death or bodily injury or illness of
any person or physical loss or damage to any property, other than the works,
arising out of’ the execution of the works or occupation of the site (9.1.1) (my
emphasis). In my view this express reference to claims by third parties tends
to suggest that there is no implicit reference to such claims in 9.2.7. Moreover,
9.2 deals expressly and primarily with the situations in which the contractor
would be indemnified – for an act or omission by the employer or its servants,
or a direct contractor, or the contractor’s use and occupation of the site. These
are instances where the contractor might otherwise be liable. Why should
clause 9.2.7 be different?
[16] Masstores nonetheless argues that unless clause 9.2.7 operates only
to exclude claims by third parties, clauses 8.3.7, 8.3.8 and 8.3.9 would be
superfluous: they exclude the liability of the contractor in the same
circumstances. But clause 8 deals specifically with the works and not with the
existing structure. Clause 9.2.7, on the other hand, deals only with the existing
structure. The clauses regulate different situations. The argument that the
words ‘indemnify and hold harmless’ govern only claims by third parties must
thus fail.
The apparent conflict between clauses 9.1.2 and 9.2.7
[17] A second source of ambiguity contended for by Masstores lies in the
juxtaposition of clauses 9.1.2 and 9.2.7. The former, in the first part of the
clause that governs the indemnities given by the contractor to the employer,
indemnifies the employer against claims resulting from any non-compliance
with any law, regulation or bylaw on the part of the contractor. The claim by
the employer is in part for just that – non-compliance with safety regulations in
executing the works, resulting in physical damage. The high court found,
correctly in my view, that clause 9.1, being ‘subject to’ clause 9.2, is
subservient to it: the provisions of 9.2 thus prevail over those of 9.1, and to the
extent that 9.1.2 may appear to be in conflict with 9.2.7, the latter must prevail.
The indemnity given by the employer to the contractor for all claims for
damage to the existing structure thus limits the indemnity given by the
contractor to the employer in 9.1.2. The conflict is in any event more apparent
than real, for the contractor’s obligation is to execute the works in accordance
with the relevant regulations. The indemnity in 9.2.7 is in respect of the
existing structure.
‘Any loss’ and ‘loss’
[18] Counsel for Masstores argue further that clauses 9.1 and 9.2 employ
different language in regulating the parties’ respective rights. In 9.1 the
contractor indemnifies the employer against any loss arising in certain
situations, whereas in 9.2 the employer indemnifies the contractor against
only loss, thus causing uncertainty as to the ambit of the indemnities. Clause
9.1 appears to be more extensive in its embrace than 9.2. The argument loses
sight of the use of the word ‘all’ that appears in 9.2 – the indemnity is against
loss in respect of ‘all claims. . . .arising from’ the various situations listed in the
provisions that follow. ‘All claims’, in the absence of evidence to the contrary,
has a very wide ambit. Not so, argues Masstores. Exemption clauses are to
be narrowly construed, particularly when a party seeks to escape liability for
negligence.
Failure expressly to exclude negligent conduct as a ground of liability
[19] Masstores relies in this regard on a line of decisions commencing with
South African Railways & Harbours v Lyle Shipping Co Ltd7 in which it was
held that where an exemption clause in a contract specified various causes of
loss for which liability was excluded, but was silent on the question of
negligent conduct, liability for negligence was not excluded. The case
concerned a provision in a contract for the towing of a ship: it stated that the
ship owner accepted assistance or service ‘on the condition that [the tug
operator] will not be liable for any loss or damage that may be occasioned to
the said ship through accident, collision or any other incident whatsoever
occurring whilst the tug . . . is engaged in any operation in connection with
holding, pushing, pulling or moving the said ship’.8 It was alleged that the ship
in question was damaged as a result of the negligence of the tug operator. In
deciding the issue Steyn JA said:9
‘The question raised on appeal is whether or not the clause quoted above exempts
the appellant from liability for negligence. It does not do so either explicitly or in
general terms so all-embracing as clearly to draw such liability into the scope of the
7 1958 (3) SA 416 (A).
8 At 418F-G.
9 At 419A-F.
exemption. It refers in comprehensive language to possible events as a result of
which damages may be sustained, but not to the possible legal grounds of
responsibility for such damages on the occurrence of any such event, with the result
that, having regard only to the wording of the clause, it is open to the interpretation
that it bars actions arising from causes of one or more classes, leaving unaffected
those founded on causes of one or more other classes. The rule to be applied in
construing an exemption of this nature, appears from Essa v Divaris, 1947 (1) SA
753 (A) at 756. Generally speaking, where in law the liability for the damages which
the clause purports to eliminate, can rest upon negligence only, the exemption must
be read to exclude liability for negligence, for otherwise it would be deprived of all
effect; but where in law such liability could be based on some ground other than
negligence, it is excluded only to the extent to which it may be so based, and not
where it is founded upon negligence. Mr Cloete, for the appellant, did not seek to
cast any doubt upon the soundness of this rule, either in equity or as a means,
indicated by the inherent improbability that any person would be content to forgo all
legal protection against the negligence of another, of ascertaining the probable
intention of parties to a contract.
What we accordingly have to examine, are the possible causes of action
which may arise in relation to this contract. Negligence, of course, is one of them. Is
there any other?’
Finding that a breach of contract could give rise to liability, the court held that
liability for negligence was not excluded.
[20] The principle is not applicable if there is no doubt but that negligent
conduct is included within the embrace of the provision in question. In
Government of the RSA v Fibre Spinners & Weavers (Pty) Ltd10 Wessels ACJ
10 1978 (2) SA 794 (A) at 805E-G.
said that it is only where the exemption provision is ambiguous – as he
considered the provision in SAR & H v Lyle to be – that there is room to
search for other legal causes of liability that would give meaning to the
provision in the absence of negligent conduct. Thus where a clause provided
‘you are hereby absolved from all liability for loss or damage however arising’
the wording was ‘sufficiently comprehensive’ to cover liability for negligent
conduct.
[21] In Durban’s Water Wonderland (Pty) Ltd v Botha11 a disclaimer posted
at an amusement park read:12
'The amenities which we provide at our amusement park have been designed and
constructed to the best of our ability for your enjoyment and safety. Nevertheless we
regret that the management, its servants and agents, must stipulate that they are
absolutely unable to accept liability or responsibility for injury or damage of any
nature whatsoever whether arising from negligence or any other cause howsoever
which is suffered by any person who enters the premises and/or uses the amenities
provided.'
Scott JA said, having discussed the manner in which the respondent and her
daughter had been injured at the park:13
‘Against this background it is convenient to consider first the proper construction to
be placed on the disclaimer. The correct approach is well established. If the language
of a disclaimer or exemption clause is such that it exempts the proferens from liability
in express and unambiguous terms, effect must be given to that meaning. If there is
ambiguity, the language must be construed against the proferens . (See Government
of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd. . .) But the
11 1999 (1) SA 982 (SCA).
12 At 988C-E.
13 At 989G-990B.
alternative meaning upon which reliance is placed to demonstrate the ambiguity must
be one to which the language is fairly susceptible; it must not be 'fanciful' or 'remote'
(cf Canada Steamship Lines Ltd v Regem [1952] 1 All ER 305 (PC) at 310C--D).
What is immediately apparent from the language employed in the disclaimer is that
any liability founded upon negligence in the design or construction of the amusement
amenities would fall squarely within its ambit. The first sentence contains specific
reference to the design and construction of the amusement amenities. Even if this
were to be construed as qualifying the 'negligence' contemplated in the second
sentence, that qualification would not therefore exclude from the ambit of the
disclaimer negligence in relation to such design or construction. Various grounds of
negligence were alleged in the particulars of claim. The Court a quo, however, found
the appellant to have been negligent in one respect only . . . . The ground of
negligence relied upon clearly related to the design or construction of the amenity. It
follows that the respondents' cause of action was one which fell within the ambit of
the disclaimer. I did not understand counsel to contend the contrary.’
[22] In First National Bank of Southern Africa Ltd v Rosenblum & another14
it was similarly argued that the absence of express reference to liability for the
dishonest conduct of the bank’s employees rendered an exemption clause
ambiguous, since not all the legal grounds on which liability could be based
had been enumerated. According to the stated case before the court, articles
placed in the bank’s safe deposit box by the respondents had been stolen
from it by employees of the bank. It was assumed that the bank had been
negligent in allowing the employees access to the box. The clause had not
referred to all the ways in which the theft may have been committed, nor was
there reference to the bank’s vicarious liability for its employees’ wrongdoing.
14 2001 (4) SA 189 (SCA).
The respondents argued that not all possible manifestations of theft had been
covered, nor the bank’s liability for gross negligence.
[23] The Johannesburg High Court found for the respondents. On appeal
this court rejected the argument, finding that the bank had successfully
immunized itself from liability. The exclusion clause read:
‘The bank hereby notifies all its customers that while it will exercise every reasonable
care, it is not liable for any loss or damage caused to any article lodged with it for
safe custody whether by theft, rain, flow of storm water, wind, hail, lightning, fire,
explosion, action of the elements or as a result of any cause whatsoever, including
war or riot damage, and whether the loss or damage is due to the bank’s negligence
or
not.’15
Marais JA considered that the ambit of the clause was very wide: it covered
loss caused by factors beyond the control of the bank and the bank’s
negligent conduct. Even its employees’ dishonest conduct (given that their
states of mind could not be attributed to the bank) was included under ‘any
cause whatsoever’. He said of the general approach to the interpretation of
exemption clauses:16
‘Before turning to a consideration of the term here in question, the traditional
approach to problems of this kind needs to be borne in mind. It amounts to this: In
matters of contract the parties are taken to have intended their legal rights and
obligations to be governed by the common law unless they have plainly and
unambiguously indicated the contrary. Where one of the parties wishes to be
absolved either wholly or partially from an obligation or liability which would or could
arise at common law under a contract of the kind which the parties intend to
15 Para 2.
16 Paras 6 and 7.
conclude, it is for that party to ensure that the extent to which he, she or it is to be
absolved is plainly spelt out. This strictness in approach is exemplified by the cases
in which liability for negligence is under consideration. Thus, even where an
exclusionary clause is couched in language sufficiently wide to be capable of
excluding liability for a negligent failure to fulfil a contractual obligation or for a
negligent act or omission, it will not be regarded as doing so if there is another
realistic and not fanciful basis of potential liability to which the clause could apply and
so have a field of meaningful application. (See SAR&H v Lyle Shipping Co Ltd 1958
(3) SA 416 (A) at 419 D – E.)
It is perhaps necessary to emphasize that the task is one of interpretation of
the particular clause and that caveats regarding the approach to the task are only
points of departure. In the end the answer must be found in the language of the
clause read in the context of the agreement as a whole in its commercial setting and
against the background of the common law and, now, with due regard to any
possible
constitutional
implication.’17
[24] Masstores relies on the first paragraph quoted, Murray & Roberts on
the second. In my view, ambiguity need not be the open sesame18 to
construing an exemption clause by having regard to evidence of surrounding
circumstances.19 Given, however, that this appeal is against the upholding of
an exception there is no evidence other than the contract itself. It must be
viewed in its commercial setting, taking account of the structure and purpose
17 Contrast Johannesburg Country Club v Stott 2004 (5) SA 511 (SCA) where the court found
that a portion of an exemption clause purporting to exclude a club’s liability for injury to
members, their guests and their children was ineffective in so far as guests and children were
concerned, and did not cover a dependant’s claim for loss of support on the death of a
member. The decision turned on the inability of a member to forgo the independent claim of a
dependant.
18 The phrase used by Jansen JA in Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty)
Ltd 1980 (1) SA 796 (A) at 805H-806A.
19 Van der Westhuizen v Arnold 2002 (6) SA 453 (SCA) para 22 and the cases cited there.
of the entire contract. I consider that scrutiny of the contract does not support
the contention that negligent conduct is excluded from the embrace of clause
9.2.7.
[25] First, the very way in which the contract is structured so as to allocate
risks between the parties suggests that it is the event or circumstance that
gives rise to liability rather than blameworthy conduct in the form of
negligence or otherwise. Clause 8 specifies circumstances that pertain to the
works where the contractor will bear the risk, and those, beyond its control,
where it is exempt from liability. Clause 9 provides for reciprocal indemnities
that pertain to different risks arising in different circumstances. Thus the
contractor takes responsibility for the works and bears the risk in them
(pursuant to clause 8) in clause 9.1. Under clause 9.2, however, the employer
takes the risk for the conduct of its employees or a direct contractor. Liability is
strict – not dependent on fault, save in clause 9.2.6. Thus the argument of
Masstores that the clause would exempt Murray & Roberts from non-negligent
conduct ordinarily giving rise to a claim – such as for innocent breach of the
bylaws or regulations which Murray & Roberts had undertaken to comply with
– does not succeed. The ground of liability suggested is, it is true, not fanciful
or remote, but the contract does not concern itself with fault – only with
specified events or circumstances.
[26] Second, clause 9.2.6 itself suggests a different construction from that
advanced by Masstores. It provides that the employer indemnifies the
contractor against loss arising from ‘[i]nterference with any servitude or other
right that is the unavoidable result of the execution of the works including the
weakening of or interference with the support of land adjacent to the site
unless resulting from any negligent act or omission by the contractor or his
subcontractors’ (my emphasis).
[27] In my view, the express inclusion of the one exception in the subclause
– liability for a negligent act or omission causing weakening of or interference
with adjacent support – indicates that the parties had considered liability for
negligent conduct in one situation, and specifically rendered the contractor
liable for it. The exclusion of any reference to an exemption from liability for
negligent conduct causing damage to the existing structure must be
deliberate. In clause 9.2.6 the contractor is made to bear the risk of a
negligent act or omission which results in the weakening of the adjacent
support of the site. But in clause 9.2.7 there is no exception made in relation
to negligence: hence the contractor is indemnified against liability for causing
damage to the existing structure irrespective of fault. The express exception in
9.2.6 strengthens the conclusion that in all the other subclauses of 9.1 and 9.2
the presence or absence of negligence plays no role.
[28] Third, the contract anticipates that the parties will insure themselves
against risk. Clause 10 regulates insurance. Clause 10.1 requires insurance
on the works in the joint names of the employer and the contractor. Clause
10.2 provides that when sections of the works are completed or when
alterations or additions to an existing structure are required the employer shall
effect insurance. Naturally the risk in respect of the existing building lies with
the employer, whose choice it is to insure it. The existing building is not the
responsibility of the contractor.
[29] Construed thus in the light of the other contractual provisions, clause
9.2.7 is clearly intended to exclude the contractor’s liability for negligently
damaging or destroying the existing structure and its contents. Masstores
argues that an excipient must show that on any reasonably possible
interpretation of the clause no cause of action exists. I consider that Murray &
Roberts has shown that the only reasonably possible interpretation of the
clause is that Masstores is precluded from suing it for the damage caused to
the existing structure and its contents by negligent breaches of the contract.
[30] Does the provision excluding the contractor’s liability for damage to the
existing structure and its contents also exclude liability for gross negligence?
In Government of the Republic of South Africa v Fibre Spinners & Weavers20
the court stated that there was no reason why a clause excluding liability for
negligence should not also exclude liability for gross negligence – assuming
there is a distinction between degrees of negligence – and that there was no
reason why public policy should preclude enforcement of such an exemption.
This was endorsed in First National Bank v Rosenblum.21 This argument must
also fail. In the circumstances I consider that the high court correctly upheld
the exception to the particulars of claim.
20 1978 (2) SA 794 (A) at 807C-E.
21 Above, para 26.
[31] The appeal is dismissed with costs, including the costs incurred by the
employment of two counsel.
______________
C Lewis
Judge of Appeal
Appearances:
Counsel for Appellant:
C D A Loxton SC
I P Green
Instructed by:
Deneys Reitz Attorneys Johannesburg
Correspondent:
McIntyre & Van der Post Bloemfontein
Counsel for Respondent:
S A Cilliers SC
B Berridge
Instructed by:
Webber Wentzel Bowens Johannesburg
Correspondent:
Honey Attorneys Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
12 September 2008
STATUS: Immediate
Masstores (Pty) Ltd v Murray & Roberts Construction (Pty) Ltd (573/2007) 94 [2008]
ZASCA (12 September 2008)
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today dismissed an appeal against a decision of
Schwartzman J in the High Court, Johannesburg, in which he upheld an exception to the
claim of Masstores against Murray & Roberts for some R169m. The claim was based on
the alleged negligent conduct of Murray & Roberts in not taking steps to prevent a fire,
started by a subcontractor in the roof of a warehouse owned by Masstores, during the
course of effecting additions to the warehouse. The entire warehouse and its contents
were destroyed in the fire.
The contract between the parties provided that Masstores indemnified Murray & Roberts
against claims for damage to the existing structure and its contents. Masstores argued that
the provision related to claims only by third parties, and not itself, and was also
ambiguous, thus not covering negligent conduct.
The Johannesburg High Court found that the provision did exempt Murray & Roberts from
liability. The Supreme Court of Appeal, upholding this finding, concluded that the provision
at issue was not uncertain at all and the contract clearly allocated the risk in the existing
structure, irrespective of fault, to Masstores.
---------------------
|
1444
|
non-electoral
|
2010
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 731/10
No precedential significance
In the matter between
FJ SEWELA
Appellant
and
THE STATE
Respondent
Neutral citation: FJ Sewela v The State (731/10) [2010] ZASCA 159
(01 December 2010)
Coram:
Cloete, Ponnan and Bosielo JJA
Heard:
25 November 2010
Delivered:
01 December 2010
Summary:
Bail – Refusal of – Appeal against – onus in terms of s 60 (11)
(b) of the Criminal Procedure Act 51 of 1977 – failure by the
appellant to prove that the interests of justice permit his release
on bail – s 65 (4) of the CPA.
ORDER
On appeal from: South Gauteng High Court (Johannesburg), (Mabesele AJ
sitting as a court of appeal).
The appeal is dismissed.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
BOSIELO JA (Cloete and Ponnan JJA concurring):
[1] This is an appeal against a judgment of the South Gauteng High Court
(Mabesele AJ), in which the court dismissed an appeal by the appellant against the
refusal by the regional magistrate sitting at Wynberg to grant him bail pending his
trial.
[2] The appellant was arrested on 24 October 2009. There are three co-accused
in this matter, one of whom is the customary wife of the appellant (accused 3).
They are charged with five counts of fraud and the appellant will be charged with
money laundering in contravention of s 5 of the Prevention of Organised Crime
Act, 121 of 1998 (‘POCA’). In essence, the state alleges that all the accused,
acting in concert changed bank account numbers of other people or entities and
created fictitious bank accounts into which they diverted large sums of money
from the South African Revenue Services (SARS). The five accounts involve a
total amount exceeding R77 million.
[3] It is not in dispute that, given the nature of the charges against the appellant,
his bail application falls to be dealt with in terms of s 60 (11) (b) of the Criminal
Procedure Act 51 of 1977 (CPA). This section provides:
‘S 60 (11) Notwithstanding any provision of this Act, where an accused is charged
with an offence referred to —
(b) in Schedule 5, but not in Schedule 6, the court shall order that the
accused be detained in custody until he or she is dealt with in accordance
with the law, unless the accused, having been given a reasonable opportunity
to do so, adduces evidence which satisfies the court that the interests of
justice permit his or her release.’
This section therefore saddles the appellant with the onus to prove, on a balance of
probabilities, that it is in the interests of justice that he be released on bail, failing
which he must be detained in custody.
[4] At the bail hearing before the regional magistrate, the appellant elected to
present his evidence in the form of an affidavit. In opposing the bail application,
the state also relied on affidavits, amongst others by the investigating officer, Mr
Mahlangu and Mr Schoeman, a manager in the Anti-Corruption and Security
Special: Project Unit at SARS.
[5] The following important facts emerged from the appellant’s affidavit:
5.1
the appellant was born on 23 July 1965;
5.2
the appellant has been staying with his wife at his wife’s home at 53
Wandel Street, Woodmead, Sandton for the past five years;
5.3
the appellant owns property at 15 Conway Street, Kelvin, Sandton,
which is fully paid for. The estimated value thereof is R3,5m;
5.4
the appellant is married and has four children aged 17, 12, 9 and 6
respectively;
5.5
the appellant has movables to the value of R300,000,00;
5.6
the appellant is the registered owner of an Audi Q7 motor vehicle
which is fully paid up;
5.7
the appellant has a B.SC degree;
5.8
the appellant is a shareholder in a number of companies;
5.9
the appellant is the sole member of Oxy Trading 847 CC;
5.10 the appellant has a pending case of fraud at Phokeng Magistrate
Court, Rustenburg involving approximately R1,3m;
5.11 although the appellant admitted payment of R8m into Oxy Trading’s
account, he denied any involvement in the fraudulent activities forming part
of the charges;
5.12 the appellant has no previous convictions;
5.13 the appellant undertook, should he be granted bail, to attend court at
all times, comply with all bail conditions, not to communicate with or try to
influence or intimidate state witnesses, not to conceal or destroy any
evidence and not to undermine or prejudice the objectives or proper
functioning of the criminal justice system, including the bail system.
[6] The salient features which I have gleaned from the affidavits filed on behalf
of the respondent which are directly relevant to the bail proceedings are:
6.1
that the appellant is allegedly involved in a crime syndicate which has
targeted SARS and which has committed substantial frauds;
6.2
the modus operandi involved the identification of a duly registered
company which was due to receive a refund; the syndicate registered a
fictitious duplicate company at the Companies and Intellectual Property
Registration Office; the bank details of a legitimate company were altered to
those of the fictitious company; the refunds due by SARS were then
fraudulently diverted from the legitimate company and channelled into the
bank account of the fictitious company; various bank accounts were used to
distribute the money;
6.3
there were five such transactions involving the actual loss to SARS of
some R50, 949, 743, 80 and a potential loss of R26 798 102, 13 which form
the subject matter of the charges against appellant;
6.4
members of the South African Police Service are in possession of
exhibits which directly link the appellant, and his wife (accused 3) to a
fictitious company SBC International Management Service (Pty) Ltd, which
fraudulently received a refund of R31 600 946, 89 from SARS which was
destined for SBC International Management Service Inc.;
6.5
during a prior search and seizure at the appellant’s home at 15
Conway Street, Kelvin, some electronic equipment allegedly used in the
commission of these offences was found and confiscated by SAPS;
6.6
further exhibits which appear to link the appellant to the frauds
including SBC blank letterheads, copies of an SBC audit file, bank
statements of the fictitious SBC and enquiries on SBC letterheads about
payments of refunds were also found at 53 Wandel Avenue, Woodmead, the
house occupied by the appellant and his wife;
6.7
the police are in possession of documents proving that appellant used
R498 000, 00 from the fictitious bank account of SBC International
Management Service (Pty) Ltd to pay for a BMW X5 at Lyndhurst Auto;
6.8
SBC International Management Service Inc lost R31 600 946,89
which was fraudulently diverted into the fictitious bank account of SBC
International Management Service (Pty) Ltd over which the appellant had
control.
[7] It was contended on behalf of the appellant that his personal circumstances
are such that the interests of justice permit his release on bail, particularly the fact
that he is a South African citizen, married with children and that he has valuable
assets both movable and immovable inside the country. Furthermore, it was
submitted that his consistent attendance of his trial at Phokeng Magistrates’ Court
which has been pending since April 2008 is clear and irrefutable testimony that,
should he be released on bail, he will honour his bail conditions and attend trial.
Although Mr Grovè, who appeared for the appellant, conceded that the respondent
has a prima facie case against the appellant in the current case as well as the one
pending in Phokeng, he urged us to remain mindful of the presumption of
innocence operating in favour of the appellant.
[8] On the other hand, it was submitted on behalf of the respondent that this is a
very serious matter and that the respondent has a strong prima facie case against
the appellant which in the event of conviction, exposes the appellant to the
possibility of a very long term of imprisonment. Mr Simpson, who are appeared
for the respondent, submitted that the strength of the state’s case required an
answer from the appellant. He referred in particular to two transactions involving
the purchase of the BMW X5 and the house at Kelvin by the appellant.
Concerning the explanation by the appellant that the R8m which he admitted to
have received, Mr Simpson submitted that the contract of service on which the
appellant relied was vague in its terms and did not avail him. Relying on S v
Mathebula 2010 (1) SACR 55 (SCA) he argued that even though the present
appeal falls to be decided in terms of s 60 (11) (b) it involving a Schedule 5
offence, the evidence incriminating the appellant is so strong that he should have
said more to show that the interests of justice permit his release on bail. He
submitted further that except for the contract of service between Tiespro and
Tiffany Trading, there are no other documents such as receipts or tax invoices
which evidence the receipt by the appellant’s close corporation of R8m for services
rendered under this contract.
[9] This State alleges that this case involves a syndicate or enterprise acting in
the furtherance of a common purpose with the primary objective of defrauding
SARS by unlawfully diverting huge sums of money to be paid by SARS as refunds
to legitimate tax payers to the accounts controlled by the syndicates. Importantly,
the appellant admits that some R8m of this tainted money was paid into the
account of his close corporation, OXY Trading 847, from Tiespro 102 (Pty) Ltd.
However, he alleges that he did not know that the R8m was the proceeds of crime.
According to the appellant these were legitimate payments lawfully made to
Tiffany Trading for services rendered by his close corporation. The appellant has
however not furnished any documentary proof in the form of either a valid
contract, tax invoices or receipts to prove this alleged transaction. In essence there
is no acceptable proof that appellant’s close corporation (Tiffany) rendered any
services to Tiespro 102 (Pty) Ltd which justified the payment of R8m into his
account. The failure by the appellant to produce supporting documents casts grave
doubt on his explanation. We are aware that documents were seized when the
police raided the appellant’s offices but that should not have prevented him from
making the simple statement that such documents exist.
[10] On the other hand there is evidence that some documents pertaining to SBC
International Management Services (Pty) Ltd which, as I have said was a company
used in this fraud, were found at the appellant’s home which he shares with his
wife. Coincidentally there is also evidence that the appellant’s wife (accused 3)
also received some R4,2m from fraudulent transactions involving SBC
International Management Services (Pty) Ltd. Importantly, the State alleges that
there is evidence that appellant received through OXY Trading 847 an amount of
approximately R6,5m not from Tiespro but through an electronic transfer from
SBC and Sun Micro System. This evidence called for an explanation by the
appellant. He failed to provide any acceptable explanation.
[11] One other important fact which, in my view, militates strongly against the
appellant being granted bail is the fact, which he admits, that he has a pending case
of fraud involving approximately R1,3m in the magistrates’ court, Phokeng. It is
worth noting that the same modus operandi was used in the Phokeng case to divert
money destined for a legitimate account to a fictitious one. A s 204 witness
implicates the appellant as the kingpin of this scheme. The fact that the current
offences were allegedly committed whilst the fraud case in Phokeng was pending
suggests that the appellant either has a propensity to commit fraud or is
disrespectful of law and order. In determining whether an applicant for bail, may,
if released on bail commit further offences, a court, not being blessed with some
prophetic foresight, can legitimately rely on the past alleged conduct of such an
applicant. The appellant’s alleged conduct points to a possibility which cannot be
said to be remote or fanciful that he is likely to continue to commit further crimes
should he be released on bail. To release the appellant on bail under these
circumstances would, to my mind, not be in the interests of justice as it is likely to
seriously undermine the criminal justice system including the bail system itself. I
have no doubt that it will seriously undermine and erode the confidence of the right
thinking members of society in our criminal justice system. See s 60 (4) (d) of the
CPA.
[12] Both the regional magistrate and the high court found that the appellant had
failed to prove, on a preponderance of probabilities, as is required by s 60 (11) (b),
that the interests of justice permit his release on bail. I cannot find any fault with
this conclusion. It is trite that the powers of an appeal court to interfere with the
decision by another court to refuse bail are circumscribed by s 65 (4) of the CPA.
It is not as if the court of appeal has carte blanche. A court of appeal can only set
aside such a decision if it is satisfied that it is wrong. S v Barber 1979 (4) SA 218
(D) and S v Faye 2009 (2) SACR 210 (TK).
[13] When all the evidence is considered and weighed against the appellant’s
personal circumstances, I am satisfied that the appellant failed to prove that the
interests of justice permit his release on bail, S v Botha en `n ander 2002 (1) SACR
222 (SCA) para 20. In fact the contrary is true. Accordingly, I am of the view that
the court a quo was correct in upholding the magistrate’s decision to refuse to grant
the appellant bail.
[14] The appeal is dismissed.
________________
L O Bosielo
Judge of Appeal
APPEARANCES:
For Appellant:
N Potgieter
N Grovè
Instructed by:
Nardus Grovè Attorneys: Johannesburg
Symington & De Kok:
Bloemfontein
For Respondent:
A Simpson
Instructed by:
Director Public Prosecutions: Pretoria
Director Public Prosecutions: Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
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.
Sewela v The State (731/2010) [2010] ZASCA 159 (01 December 2010)
The Supreme Court of Appeal today dismissed an appeal brought against the dismissal by
the court a quo of an appeal brought against a decision by a regional magistrate to refuse to
release the appellant on bail pending his trial.
The appellant is charged together with four others on five counts of fraud and money
laundering in contravention of s 5 of the Prevention of Organised Crime Act 121 of 1998
(‘POCA’). The State alleges that the appellant is part of a syndicate which fraudulently
intercepts money from South African Revenue Services (SARS) intended as legitimate
payment to legitimate taxpayers and divert it to fictitious bank accounts controlled by the
syndicate.
The State alleges further that the five charges involve an amount exceeding R77m. There
are serious allegations by the State that approximately R31m of this amount was paid into a
fictitious account of SBC International Management Service (Pty) Ltd over which the appellant
has control. The appellant admitted that an amount of R8m was paid into the account of his
close corporation, Tiffany Trading 847 CC. The appellant failed to adduce satisfactorily
evidence that this payment was legitimate.
Furthermore, the State alleges that the appellant has a case of fraud pending at the Phokeng
Magistrates’ Court involving approximately R1,3m. What this means is that the appellant got
involved in these five counts of fraud whilst he was released on his own recognisances in
respect of the Phokeng fraud. According to the State a similar modus operandi was used in
both cases.
The SCA found that as this bail application was governed by s 60 (11) (b) of the Criminal
Procedure Act, 51 of 1977, this being a Schedule 5 offence, that the appellant bore the onus
to satisfy the court that the interests of justice permitted his release on bail. Both regional
magistrate and the court a quo had found that the appellant had failed to prove that the
interests of justice permitted his release on bail.
Based on the evidence, the SCA found that the State had a strong prima facie case against
the appellant, and that the appellant failed to discharge the onus resting on him.
The SCA found that the strength of the State’s case coupled with the appellant’s past conduct
were such that the release of the appellant on bail would undermine and erode the public’s
confidence in the criminal justice system including the bail system itself.
Finally the SCA found that as the appellant had failed to prove that the court a quo was wrong
in denying him bail, that it could not interfere with that judgment. The SCA dismissed the
appeal.
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